FIRST INVESTMENT BANK AD

INDIVIDUAL FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2022

WITH INDEPENDENT AUDITORS' REPORT THEREON

Individual statement of profit or loss and of other comprehensive income for the year ended

31 December 2022

in thousands of BGN Note 2022 2021

Interest income

310,785

308,556

Interest expense

(40,045)

(45,412)

Net interest income

270,740

263,144

Fee and commission income

172,990

143,015

Fee and commission expense

(33,475)

(24,150)

Net fee and commission income

139,515

118,865

Net trading income

19,717

15,380

Other net operating income

14,195

11,368

TOTAL INCOME FROM BANKING OPERATIONS

444,167

408,757

Administrative expenses

(205,113)

(179,441)

Other income/(expenses), net

(12,960)

4,754

Profit before impairment

226,094

234,070

Allowance for impairment

(135,349)

(122,494)

PROFIT BEFORE TAX

90,745

111,576

Income tax expense

(9,540)

(11,493)

NET PROFIT

81,205

100,083

Other comprehensive income for the period

Items which should or may be reclassified as

profit or loss

Revaluation reserve of investments in securities

(21,860)

(8,968)

Total other comprehensive income

(21,860)

(8,968)

TOTAL COMPREHENSIVE INCOME

59,345

91,115

The statement of profit or loss and of comprehensive income is to be read in conjunction with the notes to and

forming part of the financial statements set out on pages 5 to 74.

The financial statements have been approved by the Managing Board on 30 March 2023 and signed on its

behalf by:

Nikola Bakalov

Chief Executive Officer

Chavdar Zlatev

Executive Director

Svetozar Popov

Executive Director

Ralitsa Bogoeva

Executive Director

Yanko Karakolev

Chief Financial Officer

Audited as per the auditors' report dated 30/03/2023:

Athanasios Petropoulos

procurator

Mazars OOD

Iva Slavkova

Registered auditor

responsible for the audit

George Trenchev, Manager

Registered auditor

responsible for the audit

ECOVIS AUDIT BULGARIA

OOD

Individual statement of financial position as at 31 December 2022

The statement of the financial position is to be read in conjunction with the notes to and forming part of the

financial statements set out on pages 5 to 74.

The financial statements have been approved by the Managing Board on 30 March 2023 and signed on its

behalf by:

Nikola Bakalov

Chief Executive Officer

Chavdar Zlatev

Executive Director

Svetozar Popov

Executive Director

Ralitsa Bogoeva

Executive Director

Yanko Karakolev

Chief Financial Officer

Audited as per the auditors' report dated 30/03/2023:

Athanasios Petropoulos

procurator

Mazars OOD

Iva Slavkova

Registered auditor

responsible for the audit

George Trenchev, Manager Registered

auditor

ECOVIS AUDIT BULGARIA

OOD

BGN '000

Note

2022

2021

ASSETS

Cash and balances with Central Banks

1,911,371

1,868,853

Investments in securities

2,598,137

1,482,699

Loans and advances to banks and other financial institutions

264,984

87,412

Loans and advances to customers

6,384,541

6,315,581

Property and equipment

98,240

75,881

Intangible assets

14,925

13,831

Derivatives held for risk management

1,609

1,042

Repossessed assets

412,996

450,987

Investment Property

750,324

732,850

Investments in subsidiaries

38,526

45,873

Rights of use assets

124,159

77,725

Other assets

114,246

116,136

TOTAL ASSETS

12,714,058

11,268,870

LIABILITIES AND CAPITAL

Due to banks

45,703

29,879

Due to other customers

10,798,450

9,425,251

Liabilities evidenced by paper

116,487

106,271

Financial liabilities at fair value through profit and loss

8,488

2,164

Hybrid debt

256,861

320,733

Derivatives held for risk management

2,166

Deferred tax liabilities

27,823

26,608

Current tax liabilities

398

1,332

Lease liabilities

124,240

77,785

Other liabilities

7,399

7,817

TOTAL LIABILITIES

11,385,849

10,000,006

Issued share capital

149,085

Share premium

250,017

Statutory reserve

39,861

Revaluation reserve of investments in securities

(15,315)

6,545

Revaluation reserve on property

4,500

Other reserves and retained earnings

900,061

818,856

TOTAL SHAREHOLDERS’ EQUITY

1,328,209

1,268,864

TOTAL LIABILITIES AND GROUP EQUITY

12,714,058

11,268,870

Individual statement of cash flows for the year ended 31 December 2022

BGN '000

2022

2021

Net cash flow from operating activities

Net profit

81,205

100,083

Adjustment for non-cash items

Allowance for impairment

135,349

122,493

Net interest income

(270,740)

(263,145)

Depreciation and amortization

12,060

11,379

Tax expense

9,540

11,433

(Profit) from sale and write-off of tangible and intangible fixed assets, net

(5)

(11)

Profit from sale of other assets, net

1,134

6,025

(Positive) revaluation of investment property

(14,769)

(30,340)

(46,226)

(42,083)

Change in operating assets

(Increase) in financial assets at fair value through profit or loss

(2,859)

(1,914)

Decrease/(increase) in financial assets at fair value in other comprehensive income

406,355

(241,685)

Decrease/(Increase) in loans and advances to banks and financial institutions

2,869

(4,109)

(Increase) in loans to customers

(297,535)

(491,458)

(Increase)/decrease in other assets

(43,499)

47,765

65,331

(691,401)

Change in operating liabilities

Increase in due to banks

15,823

15,539

Increase in amounts owed to other depositors

1,375,988

342,450

Net increase/(decrease) in other liabilities

42,896

(60,371)

1,434,707

297,618

Interest received

395,403

346,863

Interest paid

(49,705)

(62,497)

Dividends received

578

401

Tax on profit, paid

(5,528)

(3,853)

NET CASH FLOW FROM OPERATING ACTIVITIES

1,794,560

(154,952)

Cash flow from investing activities

(Purchase) of tangible and intangible fixed assets

(35,523)

(13,464)

Sale of tangible and intangible fixed assets

Sale of other assets

44,708

14,037

(Increase) of investments

(1,540,427)

(117,365)

NET CASH FLOW FROM INVESTING ACTIVITIES

(1,531,227)

(116,758)

Financing activities

Increase in borrowings

16,679

4,238

(Decrease)/Increase in subordinated liabilities

(57,275)

53,068

NET CASH FLOW FROM FINANCING ACTIVITIES

(40,596)

57,306

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

222,737

(214,404)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD

1,915,640

2,130,044

CASH AND CASH EQUIVALENTS AT THE END OF PERIOD

2,138,377

1,915,640

The cash flow statement is to be read in conjunction with the notes to and forming part of the financial

statements set out on pages 5 to 74.

The financial statements have been approved by the Managing Board on 30 March 2023 and signed on its

behalf by:

Nikola Bakalov

Chief Executive Officer

Chavdar Zlatev

Executive Director

Svetozar Popov

Executive Director

Ralitsa Bogoeva

Executive Director

Yanko Karakolev

Chief Financial Officer

Audited as per the auditors' report dated 30/03/2023:

Athanasios Petropoulos

procurator

Mazars OOD

Iva Slavkova

Registered auditor

responsible for the audit

George Trenchev, Manager

Registered auditor

responsible for the audit

ECOVIS AUDIT BULGARIA OOD

Individual statement of shareholders’ equity for the year ended 31 December 2022

BGN '000

Issued

capital

premium

Other

reserves

and

retained

earnings

Revaluation

reserve of

investments

in securities

Revaluation

reserve on

property

Statutory

reserve

Total

Balance at 01 January 2021

149,085

250,017

718,773

15,513

4,500

39,861

1,177,749

Total comprehensive income

for the period

Net profit for the year ended 31

December 2021

100,083

Other comprehensive income

for the period

Revaluation reserve of

investments in securities

(8,968)

Balance as at 31 December

2021

149,085

250,017

818,856

6,545

4,500

39,861

1,268,864

Total comprehensive income

for the period

Net profit for the year ended 31

December 2022

81,205

Other comprehensive income

for the period

Revaluation reserve of

investments in securities

(21,860)

Balance as at 31 December

2022

149,085

250,017

900,061

(15,315)

4,500

39,861

1,328,209

The statement of changes in equity is to be read in conjunction with the notes to and forming part of the

financial statements set out on pages 5 to 74.

The financial statements have been approved by the Managing Board on 30 March 2023 and signed on its

behalf by:

Nikola Bakalov

Chief Executive Officer

Chavdar Zlatev

Executive Director

Svetozar Popov

Executive Director

Ralitsa Bogoeva

Executive Director

Yanko Karakolev

Chief Financial Officer

Audited as per the auditors' report dated 30/03/2023:

Athanasios Petropoulos

procurator

Mazars OOD

Iva Slavkova

Registered auditor

responsible for the audit

George Trenchev, Manager

Registered auditor

responsible for the audit

ECOVIS AUDIT BULGARIA

OOD

Notes to the financial statements

1. Basis of preparation

(a) Statute

First Investment Bank AD (the Bank) was incorporated in 1993 in the Republic of Bulgaria and has its

registered office in Sofia, at 111P Tsarigradsko Chaussee Blvd.

The Bank has a general banking license issued by the Bulgarian National Bank (BNB) according to which

it is allowed to conduct all banking transactions permitted by Bulgarian legislation.

The Bank has foreign operations in Cyprus - a branch.

Following the successful Initial Public Offering of new shares at the Bulgarian Stock Exchange – Sofia,

on June 13th 2007 the Bank was registered as a public company in the Register of the Financial

Supervision Commission pursuant to the provisions of the Law on the Public Offering of Securities.

The Bank’s management has a dual board structure, with the Managing Board and the Supervisory Board

having the following members:

• Managing Board

o Mr Nikola Bakalov – Chief Executive Officer

o Mr Svetozar Popov – Executive Director

o Mr Chavdar Zlatev – Executive Director

o Ms Ralitsa Bogoeva – Executive Director

o Mr Ianko Karakolev – Managing Board member

o Ms Nadya Koshinska – Managing Board member

• Supervisory Board

o Mr Evgeni Lukanov – Supervisory Board chairperson

o Mr Jordan Skortchev – Supervisory Board member

o Mr Georgi Mutafchiev - Supervisory Board member (deceased on 03.07.2021, delisted as

member on 13.12.2021)

o Ms Radka Mineva – Supervisory Board member

o Ms Maya Georgieva – Supervisory Board member

o Mr Jyrki Koskelo – Supervisory Board member

At 31 December 2022 the total number of employees was 2,454 (31 December 2021: 2,466).

The Bank’s beneficial owners are disclosed in Note 31 below.

(b) Statement of compliance

The separate financial statements were drawn up in accordance with the International Financial Reporting

Standards (IFRS) endorsed by the European Commission.

The preparation of financial statements in conformity with IFRS requires the use of certain critical

accounting estimates. It also requires management to exercise its judgement in the process of applying

the Bank’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas

where assumptions and estimates are significant to the financial statements, are disclosed in Note 2 (p).

The financial statements are presented in Bulgarian Leva (BGN) rounded to the nearest thousand.

The financial statements are prepared in accordance with the fair value principle of derivative financial

instruments, financial instruments recognised at fair value in profit or loss, investment properties, as well

Notes to the financial statements

as assets recognised at fair value in other comprehensive income. Other financial assets and liabilities

and non-financial assets and liabilities are stated at amortised cost or historical cost convention.

The present financial statements of the Bank are not consolidated. These individual financial statements

form an integral part of the consolidated financial statements. Information about the basic earnings per

share is given in the consolidated financial statements.

(d) New standards, amendments and interpretations effective as of 01 January 2022

The following amendments to the existing standards issued by the International Accounting Standards

Board and adopted by the EU are effective for the current period:

• FRS 3 Business Combinations – Update on references to the Conceptual Framework with

amendments to IFRS 3 'Business Combinations' that update an outdated reference in IFRS 3

without significantly changing its requirements.

• IAS 16 Property, Plant and Equipment – „Proceeds before Intended Use“ amends the standard to

prohibit deducting from the cost of an item of property, plant and equipment any proceeds from

selling items produced while bringing that asset to the location and condition necessary for it to be

capable of operating in the manner intended by management. Instead, the Company recognises

the proceeds from selling such items, and the cost of producing those items, in profit or loss.

• IAS 37 Provisions, Contingent Liabilities and Contingent Assets - The changes in Onerous

Contracts — Cost of Fulfilling a Contract specify that the ‘cost of fulfilling’ a contract comprises the

‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be

incremental costs of fulfilling that contract or an allocation of other costs that relate directly to

fulfilling contracts.

• IFRS 1 First-time Adoption of International Financial Reporting Standards - The amendment permits

a subsidiary that applies paragraph D16(a) of IFRS 1 to measure cumulative translation differences

using the amounts reported by its parent, based on the parent’s date of transition to IFRSs.

• IFRS 9 Financial Instruments - The amendment clarifies which fees the Company includes when it

applies the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognise a

financial liability. A Company includes only fees paid or received between the Company (the

borrower) and the lender, including fees paid or received by either the Company or the lender on

the other’s behalf.

• IFRS 16 Leases – The amendment to IFRS 16 removes from the example the illustration of the

reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion

regarding the treatment of lease incentives that might arise because of how lease incentives are

illustrated in that example.

• IAS 41 Agriculture – The amendment removes the requirement in paragraph 22 of IAS 41 for entities

to exclude taxation cash flows when measuring the fair value of a biological asset using a present

value technique. This will ensure consistency with the requirements in IFRS 13.

The adoption of these amendments to the existing standards has not led to any changes in the Bank’s

accounting policies.

(e) Standards, amendments and interpretations to existing standards that are not yet effective and

have not been adopted early by the Company

The following standards, amendments and interpretations, which have also been issued but are not yet

effective, are not expected to have a material impact on the Bank’s financial

• IFRS 17 “Insurance Contracts” effective from 1 January 2023, adopted by the EU

• IFRS 17 replaces for IFRS 4 “Insurance Contracts”. It requires a current measurement model where

estimates are remeasured each reporting period. Contracts are measured using the building blocks

of: Contracts are measured using:

 discounted probability-weighted cash flows

 an explicit risk adjustment, and

 a contractual service margin (“CSM”) representing the unearned profit of the contract

which is recognised as revenue over the coverage period.

Notes to the financial statements

The standard allows a choice between recognising changes in discount rates either in the income

statement or directly in other comprehensive income. The new rules will affect the financial statements

and key performance indicators of all entities that issue insurance contracts.

• Amendments to IAS 1 Presentation of Financial Statements, IFRS Practice Statement 2: Disclosure

of Accounting Policies, effective as of 1 January 2023, adopted by the EU.

• The Bank discloses the material information related to the accounting policy instead of the main

accounting policies. The Bank discloses its material accounting policy information instead of its

significant accounting policies, the amendments clarify that accounting policy information may be

material because of its nature, even if the related amounts are immaterial. The amendments clarify

that accounting policy information is material if users of a Company’s financial statements would

need it to understand other material information in the financial statements and if the Company

discloses immaterial accounting policy information, such information shall not obscure material

accounting policy information.

• Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition

of Accounting Estimates effective from 1 January 2023, adopted by the EU.

• The amendments introduced the definition of accounting estimates and included other amendments

to IAS 8 to help entities distinguish changes in accounting estimates from changes in accounting

policies.

The amendments will help companies to improve accounting policy disclosures so that they provide

more useful information to investors and other primary users of the financial statements; and to

distinguish changes in accounting estimates from changes in accounting policies.

• Amendments to IAS 12 Income Taxes: Deferred tax related to assets and liabilities arising from a

single transaction, effective as of 1 January 2023, adopted by the EU.

• A Company applies the amendments to transactions that occur on or after the beginning of the

earliest comparative period presented. It also, at the beginning of the earliest comparative period

presented, recognizes deferred tax for all temporary differences related to leases and

decommissioning obligations and recognizes the cumulative effect of initially applying the

amendments as an adjustment to the opening balance of retained earnings (or other component of

equity, as appropriate) at that date.

• Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from

a Single Transaction effective from 1 January 2023 adopted by the EU.

• The amendment is a transition option relating to comparative information about financial assets

presented on initial application of IFRS 17. The amendment is aimed at helping entities to avoid

temporary accounting mismatches between financial assets and insurance contract liabilities, and

therefore improve the usefulness of comparative information for users of financial statements.

IFRS 17 and IFRS 9 Financial Instruments have different transition requirements. For some insurers,

these differences can cause temporary accounting mismatches between financial assets and insurance

contract liabilities in the comparative information they present in their financial statements when applying

IFRS 17 and IFRS 9 for the first time.

The amendment will help insurers to avoid these temporary accounting mismatches and, therefore, will

improve the usefulness of comparative information for investors. It does this by providing insurers with an

option for the presentation of comparative information about financial assets.

(f) Documents issued by IASB/IFRICs not yet endorsed by the European Commission

These new or revised standards, new interpretations and amendments to existing standards that at the

reporting date are already issued by the International Accounting Standards Board have not yet been

endorsed by the EU and therefore are not taken into account by the Bank in preparing these financial

statements.

• Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current

or Non-current, effective not earlier than 01 January 2024, not yet adopted by the EU.

• Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback effective not earlier than

1 January 2024 not yet adopted by the EU

Notes to the financial statements

2. Significant accounting policies

(a) Income recognition

(i) Interest income

Interest income and expense is recognised in the profit or loss as it accrues, taking into account the

effective yield of the asset (liability) or an applicable floating rate. The effective interest rate is the rate

that exactly discounts the estimated future cash payments and receipts through the expected life of the

financial asset or liability to the carrying amount of the financial asset or liability. When calculating the

effective interest rate, the Bank estimates future cash flows considering all contractual terms of the

financial instrument but not future credit losses.

The calculation of the effective interest rate includes all fees paid or received as well as discount and

premiums which are an integral part of the effective interest rate. Transaction costs include incremental

costs that are directly attributable to the acquisition or issue of a financial asset or liability.

Interest income is calculated by applying the effective interest rate on the gross value of the financial

asset, except for impaired assets for which the effective interest rate is applied to the amortised cost of

the financial asset.

(ii) Fees and Commissions

Fee and commission income arises on financial services provided by the Bank and is recognised in profit

or loss when the corresponding service is provided.

(iii) Net trading income

Net gains (losses) on financial assets and liabilities held for trading includes those gains and losses arising

from disposals and changes in the fair value of financial assets and liabilities held for trading as well as

trading income in dealing with foreign currencies and exchange differences from daily revaluation of the

net open foreign currency position of the Bank.

(iv) Dividend income

Dividend income is recognised when the right to receive income is established. Usually this is the ex-

dividend date for equity securities.

(b) Basis of consolidation of subsidiaries

Investments in subsidiaries are stated at cost, minus the accrued impairment.

(i) Functional and presentation currency

The financial statements are presented in Bulgarian leva, which is the Bank’s functional and presentation

currency.

(ii) Transactions and balances

Transactions in foreign currencies are translated into the respective functional currencies of the

operations at the spot exchange rates at the dates of the transactions. Monetary assets and liabilities

denominated in foreign currencies at the reporting date are translated into the functional currency at the

spot exchange rate at that date. Foreign currency differences arising on translation are difference between

amortised cost in functional currency in the beginning of period, adjusted with effective interest and

received payments during the period, and amortised cost in foreign currency at the spot exchange rate at

the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are

measured at fair value are retranslated into the functional currency at the spot exchange rate at the date

that the fair value was determined.

Notes to the financial statements

(iii) Foreign operations

The functional currency of the foreign operations in Cyprus is determined by the management to be the

Euro. In determining the functional currency of the foreign operations, the Bank takes into account the

fact that they are carried out as an extension of the reporting entity.

(d) Financial assets

(i) Recognition

The Bank recognizes a financial asset when it becomes a party to the contractual provisions of the

instrument. The Bank initially recognizes trade and other receivables on the date of transaction. Advances

to customers are recognised when cash is advanced to the borrowers. At initial recognition, the Bank

measures all financial assets at fair value plus, in the case of financial asset not measured at fair value

through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset.

The Bank classifies financial assets in the following categories: financial assets measured at amortized

cost, financial assets measured at fair value through other comprehensive income, or financial assets

measured at fair value through profit or loss. Management determines the classification of investments at

initial recognition according to the business model for management of the specific class of financial assets

and the contractual features of the cash flows associated with that financial asset.

(ii) Financial assets at amortised cost

Debt instruments held within the Bank’s business model whose objective is to hold assets in order to

collect contractual cash flows and where the contractual cash flows give rise only to principal and interest

payments are recognised at amortised cost. After the initial recognition assets are booked at amortised

cost.

Recognition at amortised cost requires application of the effective interest rate method. The amortised

cost of a financial asset is the value at which the financial asset was initially recognised, minus the

principal repayments plus or minus the amortisation accrued by using the effective interest rate method

for each difference between the initial value and the value at the maturity date and minus impairment.

(iii) Financial assets at fair value through other comprehensive income

Debt instruments held within the Bank’s business model whose objective is to hold assets in order to

collect contractual cash flows or to sell the asset and where the contractual cash flows give rise only to

principal and interest payments are recognised at fair value in other comprehensive income. After initial

recognition, the asset is measured at fair value with changes in fair value in revaluation reserve of

investments in securities (other comprehensive income). When the debt instrument is written off, the profit

or loss accrued and recognised in other comprehensive income is transferred to profit or loss.

(iv) Financial assets at fair value through profit or loss

The position contains two categories: financial assets held for trading and financial assets not classified

in the above two categories. A financial asset is classified in this category if it was acquired for the purpose

of short-term sale or if its contractual characteristics do not meet the requirement for generating payments

of only principal and interest. Derivatives are also categorised as held for trading unless they are

designated as hedges.

The Bank does not designate any debt instrument as at fair value through profit or loss to remove or

significantly reduce an accounting mismatch.

(v) Capital instruments at fair value through other comprehensive income

The Bank may make an irrevocable election to recognize changes in fair value of investments in equity

instruments through other comprehensive income, not through profit or loss. A gain or loss from fair value

changes will be shown in other comprehensive income and will not be reclassified subsequently to profit

or loss. When the equity instrument is written off, the profit or loss accrued and recognised in other

comprehensive income is directly transferred to other reserves and retained earnings.

Notes to the financial statements

(vi) Reclassification

If the Bank reclassifies a financial asset out of the fair value through profit or loss measurement category

and into the fair value through other comprehensive income measurement category, the financial asset

shall continue to be measured at fair value. The revaluation reserve for the instrument shall be formed

from changes to fair value after the reclassification date.

If the Bank reclassifies a financial asset out of the amortized cost measurement category and into the fair

value through profit or loss measurement category, its fair value shall be measured at the reclassification

date. Any gain or loss arising from a difference between the previous amortized cost of the financial asset

and fair value is recognized in profit or loss.

If the Bank reclassifies a financial asset out of the fair value through profit or loss measurement category

and into the amortized cost measurement category, its fair value at the reclassification date shall become

its new gross carrying amount.

If the Bank reclassifies a financial asset out of the amortized cost measurement category and into the fair

value through other comprehensive income measurement category, its fair value shall be measured at

the reclassification date. Any revaluation difference shall be recognized in other comprehensive income.

The effective interest rate and the measurement of expected credit losses shall not be adjusted as a result

of the reclassification.

If the Bank reclassifies a financial asset from the ‘measured at fair value through other comprehensive

income’ category to the ‘measured at amortized cost’ category, the entire value of the accumulated

revaluation reserve at the date of reclassification is offset against the fair value of the financial asset.

Thus, in practice, it turns out that at the date of reclassification the financial asset is measured as if it had

always been measured at amortized cost. The effective interest rate and the measurement of expected

credit losses shall not be adjusted as a result of the reclassification.

Such reclassification is only possible after a change in the business model by which financial assets are

managed.

In case of a change of the business model from “hold to collect and sell” to “hold to collect”, the Bank

reclassifies the financial assets concerned. To this end, it periodically reviews its business model

historically and analyses the extent to which the purpose of holding financial assets meets the ‘hold to

collect’ business model as opposed to the ‘hold to collect and sell’ business model. In this analysis, the

following criteria may serve as indication for change in the business model: government securities with

sufficiently long residual term that have not been traded since their acquisition; or privately placed

securities without an active market where Fibank holds a significant part of the issue. In case of a

significant predominance of the 'hold to collect' business model, the Bank needs to consider whether to

reclassify the financial assets from the 'Measured at fair value through other comprehensive income'

category to the 'Measured at amortized cost' category, continuing to manage financial assets in such a

way as to generate cash flows only from collecting contractual payments.

If the Bank reclassifies a financial asset out of the fair value through other comprehensive income

measurement category and into the fair value through profit or loss measurement category, the financial

asset shall continue to be measured at fair value. The cumulative revaluation reserve at the

reclassification date shall be reclassified to profit or loss.

The Bank shall not reclassify any financial liability.

(vii) Fair value measurement principles

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date in the principal, or in its absence, the

most advantageous market to which the Bank has access at that date. The fair value of a liability reflects

its non-performance risk.

Notes to the financial statements

When applicable, the Bank measures the fair value of an instrument using the quoted price in an active

market for that instrument. A market is regarded as active if transactions for the asset or liability take place

with sufficient frequency and volume to provide pricing information on an ongoing basis.

When there is no quoted price in an active market, the Bank uses valuation techniques that maximise the

use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation

technique incorporates all the factors that market participants would take into account in pricing a

transaction. The best evidence of the fair value of a financial instrument at initial recognition is normally

the transaction price – i.e. the fair value of the consideration given or received. If the Bank determines

that the fair value at initial recognition differs from the transaction price and the fair value is evidenced

neither by a quoted price in an active market for an identical asset or liability nor based on a valuation

technique that uses only data from observable markets, the financial instrument is initially measured at

fair value, adjusted to defer the difference between the fair value at initial recognition and the transaction

price. Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of

the instrument but no later than when the valuation is supported wholly by observable market data or the

transaction is closed out.

If an asset or a liability measured at fair value has a bid price and an ask price, the Bank measures assets

and long positions at a bid price and liabilities and short positions at an ask price. The Bank which holds

portfolios of financial assets and financial liabilities is are exposed to market risk and credit risk. If the

Bank manages these portfolios on the basis of its net exposure either to market risk or credit risk, the fair

value is measured on the basis of a price that would be received to sell a net long position or paid to

transfer a net short position for a particular risk exposure. Those portfolio-level adjustments are allocated

to the individual assets and liabilities on the basis of the relative risk adjustment of each of the individual

instruments in the portfolio.

The Bank recognises transfers between levels of the fair value hierarchy as of the end of the reporting

period during which the change has occurred.

(viii) Derecognition

The Bank derecognises a financial asset when the contractual rights to the cash flows from the financial

asset expire, or when the Bank transfers these rights in a transaction in which substantially all the risks

and rewards of ownership of the financial assets are transferred to the buyer. Any interest in transferred

financial assets that is created or retained by the Bank is recognised as a separate asset or liability.

The Bank derecognises a financial liability when its contractual obligations are discharged or cancelled

or expire.

The Bank enters into transactions whereby it transfers financial assets recognised in its statement of

financial position, but retains either all or substantially all risks and rewards of the transferred asset. If all

or substantially all risks and rewards are retained, then the transferred assets are not derecognised in the

statement of financial position (an example of such transactions are repo deals).

In transactions in which the Bank neither retains nor transfers substantially all the risks and rewards of

ownership of a financial asset, it derecognises the asset if it does not retain control over the asset. The

rights and obligations retained in the transfer are recognised separately as assets and liabilities as

appropriate. In transfers in which, control over the asset is retained, the Bank continues to recognise the

asset to the extent of its continuing involvement, determined by the extent to which it is exposed to

changes in the value of the transferred asset.

(e) Cash and cash equivalents

Cash and cash equivalents comprise cash balances on hand, cash deposited with central banks and

short-term highly liquid accounts and advances to banks with original maturity of up to three months.

(f) Investments

Investments in debt instruments held by the Bank as part of a business model for the purpose of collecting

contractual cash flows are classified as financial assets at amortised cost. Investments in debt instruments

held by the Bank as part of a business model for the purpose of collecting contractual cash flows and sale

Notes to the financial statements

are classified as financial assets at fair value in other comprehensive income. All other investments,

including those whose contractual terms do not meet the requirement for generation of only principal and

interest payments are classified as recognised at fair value in profit or loss.

(g) Securities borrowing and lending business and repurchase transactions

(i) Securities borrowing and lending

Investments lent under securities lending arrangements continue to be recognised in the statement of

financial position and are measured in accordance with the accounting policy applicable for assets at fair

value in profit or loss or at fair value in other comprehensive income. Cash collateral received in respect

of securities lent is recognised as liabilities to either banks or customers. Investments borrowed under

securities borrowing agreements are not recognised. Cash collateral placements in respect of securities

borrowed are recognised under loans and advances to either banks or customers. Income and expenses

arising from the securities borrowing and lending business are recognised on an accrual basis over the

period of the transactions and are included in interest income or expense.

(ii) Repurchase agreements

The Bank enters into purchases (sales) of investments under agreements to resell (repurchase)

substantially identical investments at a certain date in the future at a fixed price. Investments purchased

subject to commitments to resell them at future dates are not recognised. The amounts paid are

recognised in loans to either banks or customers. The receivables are shown as collateralised by the

underlying security. Investments sold under repurchase agreements continue to be recognised in the

statement of financial position and are measured in accordance with the accounting policy for either

assets held for trading or available-for-sale as appropriate. The proceeds from the sale are reported as

liabilities to either banks or other customers.

The difference between the purchase (sale) and resell (repurchase) considerations is recognised on an

accrual basis over the period of the transaction and is included in interest income (expenses).

(h) Borrowings

Borrowings are recognised initially at ‘cost’, being their issue proceeds (fair value of consideration

received) net of transaction costs incurred. Borrowings are subsequently stated at amortised cost and

any difference between net proceeds and the redemption value is recognized in profit or loss over the

period of the borrowings using the effective yield method. If the Bank purchases its own debt, it is removed

from the statement of financial position and the difference between the carrying amount of a liability and

the consideration paid is included in other operating income.

(i) Offsetting

Financial assets and liabilities are offset and the net amount is reported in the statement of financial

position when the Bank has a legally enforceable right to set off the recognised amounts and the

transactions are intended to be settled on a net basis.

(j) Impairment of financial assets

The Bank recognizes 12-month expected credit loss as loss allowance when there is no significant

increase in the credit risk since the initial recognition of the financial asset. When there is a significant

increase in credit risk since initial recognition, expected credit losses for the whole life of the financial

assets are recognized as loss allowance.

Whether credit risk is significantly increased or not is determined based on the following factors and

events for the debtor or the exposure:

• Internal behavioural scoring of natural persons, companies and institutions whose exposures are

above the threshold for significance;

• Decrease in credit rating (internal or external) by a given number of notches for companies and

institutions whose exposures are above the threshold for significance.

• Delinquencies;

• Other factors.

Notes to the financial statements

(k) Property and equipment

Land and buildings are presented in the statement of financial position at their revalued amount which is

the fair value of the asset as at the date of revaluation less any subsequent amortisation and depreciation

and accumulated impairment losses. All others classes of items of property, plant and equipment are

stated in the statement of financial position at their acquisition cost less accumulated depreciation and

allowance for impairment.

Depreciation is calculated on a straight-line basis at prescribed rates designed to decrease the cost or

valuation of fixed assets over their expected useful lives. The annual rates of amortisation are as follows:

Assets

• Buildings

3 - 4

• Equipment

10 - 50

• Fixtures and fittings

10 - 15

• Motor vehicles

• Leasehold Improvements

2 - 50

Assets are not depreciated until they are brought into use and transferred from assets in the course of

construction into the relevant asset category.

(l) Intangible assets

Intangible assets acquired by the Bank are stated at cost, less accumulated amortisation and any

impairment losses.

Amortisation is calculated on a straight-line basis over the expected useful life of the asset. The annual

rates of amortisation are as follows:

Assets

• Licenses and trademarks

10 - 14

• Software and licences

10 - 50

(m) Investment property

Investment property is property (land or a building or part of a building or both) held to earn rentals or for

capital appreciation or both. The Bank has chosen for its accounting policy to account for investment

property using the fair value model and applies this to all its investment property. Investment properties

are initially measured at cost and are subsequently measured using the fair value model, and the

revaluation income and expense is recognised in the profit for period in which they occurred.

The reclassification of repossessed assets reported as inventories into investment properties is possible

only where a contract to rent out the respective property has been signed. The fair value of assets

constituting investment property was determined by independent property assessors holding recognised

professional qualification and recent experience in assessing property with similar location and category,

using reliable techniques for determining fair values.

(n) Provisions

A provision is recognised in the statement of financial position when the Bank has a legal or constructive

obligation as a result of a past event, it is probable that an outflow of economic benefits will be required

to settle the obligation and a reliable assessment of the amount due can be made. If the effect is material,

provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects

current market assessments of the time value of money and, where appropriate, the risks specific to the

liability.

(o) Acceptances

An acceptance is created when the Bank agrees to pay, at a stipulated future date, a draft drawn on it for

a specified amount. The Bank’s acceptances primarily arise from documentary credits stipulating payment

to be made a certain number of days after receipt of required documents. The Bank negotiates most

Notes to the financial statements

acceptances to be settled at a later date following the reimbursement from the customers. Acceptances

are accounted for as liabilities evidenced by paper.

(p) Off-balance sheet commitments

In the ordinary course of its business, the Bank enters into off-statement of financial position commitments

such as guarantees and letters of credit. The Bank recognizes provision for off-statement of financial

position commitments when it has a present obligation as a result of a past event, when it is probable that

an outflow of resources embodying economic benefit will be required to settle the obligation, and when a

reliable estimate can be made of the obligation.

(q) Taxation

Tax on the profit for the year comprises current tax and the change in deferred tax. Current tax comprises

tax payable calculated on the basis of the expected taxable income for the year, using the tax rates

enacted by the statement of financial position date, and any adjustment of tax payable for previous years.

Deferred tax is provided using the balance sheet liability method on all temporary differences between

the carrying amounts for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is calculated on the basis of the tax rates that are expected to apply to the period when the

asset is realised or the liability is settled.

The effect on deferred tax of any changes in tax rates is charged to profit or loss, except to the extent that

it relates to items previously recognised either in other comprehensive income or directly in equity.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be

available against which the unused tax losses and credits can be utilised. Deferred tax assets are reduced

to the extent that it is no longer probable that the related tax benefit will be realised.

(r) Critical accounting estimates and judgements in applying accounting policies

The Bank makes estimates and assumptions that affect the reported amounts of assets and liabilities

within the next financial year. Estimates and judgements are continually evaluated and are based on

historical experience and other factors, including expectations of future events that are believed to be

reasonable under the circumstances.

The actual results may differ from the Management’s assumptions, estimates and judgements and in rare

cases correspond fully to the preliminary result estimates.

In preparing the present individual financial statements the Management’s estimates in applying the

Bank’s accounting policies and the main sources of uncertainty of the approximate accounting valuations

do not differ from those disclosed in the individual financial statement for the previous year.

Information on the valuations and the valuation uncertainty, for which there is a significant risk of change

as of 31 December 2022 are stated below and are related to the impairment of financial instruments,

income tax and the following notes related to other elements of the financial statements:

• Note 5, 18 - determining of the fair value of the financial instruments, land and buildings through

valuation techniques, in which the input data for the financial assets and liabilities are not based on

the available market information.

• The Management uses valuation techniques for the fair value of financial instruments (when there is

no quoted price in an active market) and non-financial assets. In applying the valuation techniques,

the Management uses to a maximum degree market data and assumptions which market participants

would take into account in pricing an instrument. When there is no available market data, the

Management uses its best judgement of the assumptions that market participants would make. These

judgements may differ from the actual prices that may be determined in a fair market transaction

between informed and willing parties at the end of the reporting period.

• Notes 11, 15, 17 – measuring the expected credit loss – credit losses constitute the difference

between all contractual cash flows payable to the Bank and all cash flows which the Bank expects to

receive. Expected credit loss is the probability-weighted estimate of credit losses which require the

Bank’s judgement. Expected credit loss is discounted with the initial effective interest rate (or with the

Notes to the financial statements

loan-adjusted effective interest rate for purchased or initially created financial assets with credit

impairment).

• Notes 15, 17 – debt instruments at amortised cost – the analysis and intentions of the Management

are confirmed by the business model of holding debt instruments that meet the requirements for

receiving only principal and interest payments and holding assets until collecting the contractual cash

flows from the bonds which are classified as debt instruments at amortised cost.

• Note 24 – Lease contract term – in determining the lease contract term the Management takes into

consideration all facts and circumstances that create economic incentives for exercising the option to

extend the lease, or not to exercise the option to terminate the lease. Extension options (or the periods

after termination options) are included in the lease contract term only if it is reasonably certain that

the lease contract has been extended (or has not been terminated).

• Note 30 – in accordance with IAS 37 — Provisions, Contingent Liabilities and Contingent Assets and

the internal rules for setting aside provisions for pending court cases the bank has recognised

provisions for pending court cases. The Bank is a defendant in pending cases and the outcome of

those cases may lead to liabilities in an amount different from the amount of provisions recognized in

the financial statement.

(s) Assessment of repossessed assets from collaterals

Assets accepted as collateral are recognized at the lower of the cost of acquisition and the net realizable

value. When evaluating the net realizable value of the assets the Bank prepares several models for

appraisal (e.g. discounted cash flows) and makes comparison to available market data (e.g. similar

market transactions, offers from potential buyers).

(t) Income taxes

The Bank is subject to income taxes in numerous jurisdictions. Significant estimates are required in

determining the worldwide provision for income taxes. There are many transactions and calculations for

which the ultimate tax determination is uncertain during the ordinary course of business. The Bank

recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will

be due. Where the final tax outcome of these matters is different from the amounts that were initially

recorded, such differences will impact the income tax and deferred tax provisions in the period in which

such determination is made.

(u) Employee benefits

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed

contributions into a separate entity and will have no legal or constructive obligation to pay further amounts.

The Government of Bulgaria is responsible for providing pensions in Bulgaria under a defined contribution

pension plan. The Bank’s contributions to the defined contribution pension plan are recognised as an

employee benefit expense in profit or loss in the periods during which services are rendered by

employees.

Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The

Bank’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future

benefit that employees have earned in return for their service in the current and prior periods; that benefit

is discounted to determine its present value.

The Bank has an obligation to pay certain amounts to each employee who retires with the Bank in

accordance with Art. 222, § 3 of the Labour Code.

According to these regulations in the LC, when a labour contract of a bank’s employee, who has acquired

a pension right, is ended, the Bank is obliged to pay him compensations amounted to two gross monthly

salaries. Where the employee has been with the same employer for the past 10 years, this employee is

entitled to a compensation amounting to six gross monthly salaries. As at balance sheet date, the

Notes to the financial statements

Management of the Bank estimates the approximate amount of the potential expenditures for every

employee using the projected unit credit method.

For the last two years the Bank has prepared estimates for the due provisions for pensions and has not

identified significant liabilities.

Termination benefits

Termination benefits are recognised as an expense when the Bank is committed demonstrably, without

realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the

normal retirement date, or to provide termination benefits as a result of an offer made to encourage

voluntary redundancy. Termination benefits for voluntary redundancies are recognised as an expense if

the Bank has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and

the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after

the reporting period, then they are discounted to their present value.

Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as

the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing

plans if the Bank has a present legal or constructive obligation to pay this amount as a result of past

service provided by the employee, and the obligation can be estimated reliably. The Bank recognises as

a liability the undiscounted amount of the estimated costs related to annual leave expected to be paid in

exchange for the employee’s service for the period completed.

(v) Leases

(i) The Company as lessee

For new contracts concluded on or after 1 January 2019 the Bank assess whether the contract is, or

contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of

an asset (the identified asset) for a period of time in exchange for consideration. In order to apply this

definition, the Bank assesses three key elements:

• Whether the contract refers to an identified asset which is either explicitly specified in a contract, or

implicitly specified at the time that the asset is made available for use;

• The Bank has the right to obtain substantially all of the economic benefits from use of the identified

asset throughout the period of use, within the scope of its right of use defined in the contract;

• The Bank has the right to direct the use of the identified asset throughout the period of use.

The Bank assesses whether it has the right to direct how and for what purpose the asset will be used

throughout the period of use.

Assessment and recognition of leases by the Bank as lessee

On the commencement date of the lease contract the Bank recognises the right-of-use asset and the

lease liability in the statement of financial position. The right-of-use asset is assessed at cost which

comprises the amount of the initial measurement of the lease liability, any initial direct costs incurred by

the Bank, an estimate of costs to be incurred by the lessee in dismantling and removing the underlying

asset at the end of the lease contract, and any lease payments made at or before the commencement

date (less any lease incentives received).

The Bank depreciates the right-of-use asset using the linear method from the commencement date to the

earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Bank also

reviews the right-of-use assets for impairment, where such indicators exist.

On the commencement date of the lease contract the Bank measures the lease liability at the present

value of the remaining lease payments at that date, discounted using the borrowing rate stipulated in the

lease contract, if that rate can be readily determined, or the company’s incremental borrowing rate.

Notes to the financial statements

As of 01.01.2019 the Bank applies IFRS 16 Leases. To this end, an analysis was made of the

requirements of this Standard, and the following key elements were identified:

IFRS 16 Leases introduces new rules for reporting lease agreements. First of all, the standard requires

that an analysis be made of whether and which agreements with or without the legal form of lease

constitute a lease or contain lease components in accordance with the definition of lease contained in

IFRS 16, paragraph 9. According to Paragraph 9, a contract is, or contains, a lease if:

- there is an identified asset, and

- the contract conveys the right to control the use of the identified asset for a period of time in

exchange for consideration.

In the general case, the lessee is required recognise a right-of-use asset and a lease liability at the

commencement date.

Also, instead of applying the requirements for recognition of a right-of-use asset in return for consideration

under a lease contract, the lessee may choose to report lease contracts as an expense under the linear

method for the duration of the lease in the following types of contracts:

- ending within 12 months of the date of initial application of IFRS 16

- lease of low-value assets

In the process of assessing the effects of application of this Standard, the Bank did the following:

- Full review of all agreements was made in order to establish whether it may be necessary to

consider additional agreements as lease agreements according to the new IFRS 16 definition;

- A decision was made for partial retrospective application (which means that the comparative

information will not be changed). Under the modified approach it is possible not to assess whether existing

agreements contain leases and other relief. Under the modified approach it is possible not to assess

whether existing agreements contain leases and other relief.

The Management analysed the effect of application of the Standard for contracts expected to last up to

five years because a big part of the rental agreements to which the Bank is a party as a tenant, the Bank

can terminate after a three- or six-months’ notice without owing an indemnity. Even in the other contracts

this possibility is available in accordance with the law.

This reflects on the expected actual duration of the lease because the contract term depends on the

probability that the Bank would exercise that option. With relation to this the Bank considers that a duration

of five years is indicative of the maximum duration of the lease term, irrespective of whether contracts of

longer duration exist or not.

In order to determine the incremental borrowing rate, the Bank uses an interest rate consisting of the risk-

free interest rate and a surcharge reflecting the credit risk related to the Bank and additionally adjusted

for the specific conditions of the lease contract, including term, country, currency, and collateral.

Lease payments included in measuring the lease liability comprise fixed payments (including in-substance

fixed payments), variable lease payments that depend on an index or a rate, amounts expected to be

payable by the lessee under residual value guarantees, and the exercise price of a purchase option if the

Group is reasonably certain to exercise that option.

After the commencement date, the lease liability shall be decreased with the amount of payments made

and shall be increased with the amount of the interest. The lease liability is remeasured to reflect any

reassessment or lease modifications, or to reflect revised in-substance fixed lease payments.

When the lease liability is remeasured, the amount of the remeasurement is recognised in the right-of-

use asset or in profit or loss, if the carrying amount of the right-of-use asset is already reduced to zero.

The Bank has chosen to report short-term leases and leases of low-value assets by using practical

expedients envisaged in the standard. Instead of recognising right-of-use assets and lease liabilities, the

Bank recognizes the payments related to them as an expense in profit or loss using the linear method

during the lease term.

Notes to the financial statements

In the statement of financial position, right-of-use assets are presented on a separate row “Right-of-use

assets”, and the liabilities under lease contracts are also presented on a separate row - “Lease liabilities”.

Extension options or termination options are included in a number of the Bank’s property rentals. They

are used to increase the operative flexibility in the management of assets used in its operations.

(ii) The company as lessor

The portion of IFRS 16 which concerns the Bank as lessor no significant changes were found in

comparison to the previous IAS 17. The Bank classifies a lease contract as a finance lease if it has

transferred substantially all risks and rewards related to ownership of the asset subject to the lease. All

other lease contracts are classified as operating.

In case of a finance lease, the Bank recognises as asset a receivable under the contract in an amount

equal to the net investment in the lease. During the lease term the Bank recognizes interest income on

the amount receivable at an interest rate reflecting the return rate of the net investment in the lease.

In case of operating lease, the Bank recognises lease payments as revenue on a linear basis.

As lessor, the Bank classifies each of its lease contracts as either an operating lease or a finance lease.

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to

ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer

substantially all the risks and rewards incidental to ownership of an underlying asset.

3. Risk management disclosures

A. Trading activities

The Bank maintains active trading positions in a limited number of non-derivative financial instruments.

Most of the Bank’s trading activities are customer driven. In anticipation of customer demand, the Bank

carries an inventory of money market instruments and maintains access to market liquidity by trading with

other market makers. These activities constitute the proprietary trading business and enable the Bank to

provide customers with money market products at competitive prices.

The Bank manages its trading activities by type of risk involved and on the basis of the categories of

trading instruments held.

(i) Credit risk

Credit risk is the total risk of losses from positions in financial instruments as a result of the inability of one

or more parties to the exposure to meet their obligations. Main components of credit risk:

• Default risk

The risk that issuers to financial instruments might default on their obligations.

• Counterparty credit risk

Counterparty credit risk is the risk that the counterparty to a transaction could default before the final

settlement of the transaction’s cash flows. It occurs under transactions with derivatives, repo deals,

transactions for granting/receiving a loan of securities and goods, margin lending transactions and

extended settlement transactions.

• Settlement risk

To the Bank settlement risk is the risk of unsettled transactions with securities, goods or cash. It

occurs both under transactions with settlement of services of the “delivery versus payment” (DvP)

type, and under trade without DvP (“free deliveries”). All instruments exposed to counterparty credit

risk fall within the scope of this type of risk.

Credit risk is monitored on an ongoing basis subject to Bank’s internal risk management procedures and

is controlled through minimum thresholds for the credit quality of the issuer/counterpart and setting limits

on exposure amount according to credit quality.

Notes to the financial statements

(ii) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because

of changes in market conditions. The Bank assumes market risk when taking positions in debt

instruments, equities, derivatives and foreign exchange transactions. These risks are managed by

enforcing limits on positions taken and their risk sensitivities as measured by value-at-risk, duration or

other measures appropriate for particular position in view of its sensitivity to risk factors. The major risk

factors that affect Bank’s trading activities are changes of interest rates (interest rate risk), changes of

exchange rates (foreign exchange risk) and changes of equity prices (price risk).

Exposure to market risk is formally managed in accordance with risk limits set by senior management and

the adopted risk strategy.

The Value at Risk is calculated and monitored on a daily basis as part of the Bank’s ongoing risk

management. Value at risk is calculated using one day horizon and 99 per cent confidence level, meaning

that there is 1% probability that a portfolio will incur a loss in one day greater than its VaR.

Parameters of the VaR model are estimated on the basis of exponentially weighted historical price

changes of risk factors.

The following table summarises the range of interest VaR for all positions in the Bank’s trading portfolio

carried at fair value:

31 December 2022 31 December

in thousands of

BGN 2022 average low high 2021

VaR 1.4 0.6 0.0 16.0 0.0

B. Non-trading activities

Below is a discussion of the various risks the Bank is exposed to as a result of its non-trading activities

and the approach taken to manage those risks.

(i) Liquidity risk

Liquidity risk is the risk that the Bank will encounter difficulty in meeting obligations associated with

financial liabilities. Liquidity risk arises in the general funding of the Bank’s activities and in the

management of positions. It includes both the risk of being unable to fund assets at appropriate maturity

and rates and the risk of being unable to liquidate an asset at a reasonable price and in an appropriate

time frame to meet the liability obligations.

Funds are raised using a broad range of instruments including deposits, other liabilities evidenced by

paper, subordinated debt instruments and share capital. This enhances funding flexibility, limits

dependence on any one source of funds and generally lowers the cost of funds. The Bank makes its best

efforts to maintain a balance between continuity of funding and flexibility through the use of liabilities with

a range of maturity. The Bank continually assesses liquidity risk by identifying and monitoring changes in

funding required to meet business goals and targets set in terms of the overall Bank strategy. The body

managing liquidity is the Assets, Liability and Liquidity Management Council.

In compliance with the requirements of the Law on Credit Institutions, Ordinance No 7 of BNB for the

organization and management of risks in banks and Directive 2014/59/EU of the European Parliament

and of the Council for establishing a framework for the recovery and resolution of credit institutions and

investment firms transposed in the Law on the Recovery and Restructuring of Credit Institutions and

Investment Intermediaries, First Investment Bank AD prepared a recovery plan if financial difficulties

occur. It includes qualitative and quantitative early warning signals and indicators of recovery such as

capital and liquidity indicators, income indicators, market-oriented indicators upon the occurrence of which

recovery measures are triggered. Liquidity indicators include Liquidity Coverage Ratio (LCR); net

Notes to the financial statements

withdrawal of financing; liquid assets to deposits by non-financial customers ratio; Net Stable Funding

Ratio (NSFR). Different stress test scenarios related to idiosyncratic shock, system shock and aggregate

shock have been prepared. In case of liquidity pressure, there are systems in place to ensure prompt and

adequate reaction which include obtaining additional funds from local and international markets through

issuance of appropriate financial instruments depending on the specific case as well as sale of non-liquid

assets. The levels of decision making are clearly determined. In order to adequately manage liquidity risk,

the Bank monitors cash flows on a daily basis.

As part of the liquidity risk management, the Bank keeps available liquid assets. They consist of cash,

cash equivalents and government securities, which could be sold immediately in order to provide liquidity:

Liquid assets

BGN '000

31 December

2022

31 December

2021

Balances with BNB 1,382,525 1,411,085

Current accounts and amounts with other banks 698,396 447,818

Unencumbered government securities 1,884,950 783,637

Gold 2,642 2,765

Total liquid assets 3,968,513 2,645,305

Reasonable liquidity management requires avoidance of concentration of the borrowings from large

depositors. Analysis of the significant borrowings in terms of total amount is performed on a daily basis

and the diversity of the total liabilities portfolio is supervised.

As at 31 December 2022 the thirty largest non-bank unguaranteed depositors represent 12.43% of total

deposits from other customers (31 December 2021: 7.82%).

One of the main ratios used by the Bank for managing liquidity risk is the ratio of liquid assets to total

borrowings from other clients.

31 December 2022

31 December 2021

Ratio of liquid assets to total borrowings from

other clients 36.75% 28.07%

Notes to the financial statements

The following table provides an analysis of the financial assets and liabilities of the Bank into relevant

maturity groupings based on the remaining periods to repayment.

Maturity table as at 31 December 2022

in thousands of BGN

Up to 1

Month

From 1 to

3 Months

From 3

months to

1 year

From 1

to 2

years

More than

2 years

Maturity

not

defined

Maturity

not

defined

Total

Assets

Cash and balances

with Central Banks

1,911,371

Financial assets at

fair value through

profit or loss

242,351

25,336

267,687

Financial assets at

fair value through

other comprehensive

income

468,247

Financial assets at

amortised cost

369,369

913,296

12,120

567,418

1,862,203

Loans and advances

to banks and other

financial institutions

245,693

554

287

333

18,117

264,984

Loans and advances

to customers

667,430

248,440

797,563

822,720

3,848,388

6,384,541

Other trading assets

575

1,034

1,609

Total financial

assets

3,535,667

619,397

1,711,146

835,173

4,433,923

25,336

11,160,642

Liabilities

Due to banks

45,703

Due to other

customers

7,227,207

960,016

2,071,969

334,249

205,009

10,798,450

Liabilities evidenced

by paper

3,456

21,206

91,810

116,487

Financial liabilities at

fair value through

profit and loss

3,682

893

2,860

1,053

8,488

Hybrid debt

256,861

Other financial

liabilities, net

Total financial

liabilities

7,272,910

963,713

2,076,318

358,315

297,872

256,861

11,225,989

Net liquidity gap

(3,737,243)

(344,316)

(365,172)

476,858

4,136,051

(231,525)

(65,347)

The investments in securities reported in portfolios of financial assets at fair value in profit or loss, financial

assets at fair value in other comprehensive income and financial assets at amortised cost are mostly

investments in government securities from first-class issuers which are highly liquid and with the most

favourable capital treatment.

The bank manages its investments in debt securities in line with the current market expectations and

dynamics. As at 31.12.2022 the portfolio duration is 2.2 years, while a year earlier it was 3.8 years.

Notes to the financial statements

The table shows investments at fair value through other comprehensive income and fair value through

profit or loss with a maturity of up to 1 month in order to reflect the management’s ability to sell them

within a short-term period, if needed.

The Bank does not recognize as liquidity risk the current undrawn amounts of loans extended because

the management considers that, based on the agreed conditions, the Bank can at any time terminate the

extension of funds to its borrowers in case it is expected that their credit risk will increase.

Loans and advances to customers reflect also financial lease receivables.

Maturity table as at 31 December 2021

in thousands of BGN

Up to 1

Month

From 1

to 3

Months

From 3

months to

1 year

From 1

to 2

years

than 2

years

Maturity

not

defined

Indefinite

Maturity

Total

Assets

Cash and balances with

Central Banks

1,868,853

Financial assets at fair

value through profit or loss

241,046

24,359

265,405

Financial assets at fair

value through other

comprehensive income

901,155

Financial assets at

amortised cost

52,166

97,655

1,765

164,553

316,139

Loans and advances to

banks and other financial

institutions

77,792

5,909

963

2,748

87,412

Loans and advances to

customers

750,511

158,518

1,082,893

688,285

3,635,374

6,315,581

Other trading assets

1,042

Total financial assets

3,892,565

262,082

1,085,621

691,033

3,799,927

24,359

9,755,587

Liabilities

Due to banks

29,879

Due to other customers

5,580,080

1,125,734

2,203,384

325,454

190,599

9,425,251

Liabilities evidenced by

paper

34,257

3,992

3,249

64,769

106,271

Financial assets at

amortised cost

2,164

Hybrid debt

320,733

Other financial liabilities, net

(81)

2,853

(606)

2,166

Total financial liabilities

5,609,882

1,162,844

2,206,770

330,867

255,368

320,733

9,886,464

Net liquidity gap

(1,717,317)

(900,762)

(1,121,149)

360,166

3,544,559

(296,374)

(130,877)

Notes to the financial statements

The following table provides a remaining maturities analysis of the financial assets and liabilities of the

Bank as at 31 December 2022 based on the contractual undiscounted cash flows.

In BGN '000

Up to 1

Month

From 1 to 3

Months

From 3

months to 1

year

From 1

to 2

years

than 2

years

Total

Financial assets

Cash and balances with

Central Banks

1,911,371

Financial assets at fair

value through profit or

loss

267,687

Financial assets at fair

value through other

comprehensive income

468,247

Financial assets at

amortised cost -

369,369

913,303

12,252

599,736

1,894,660

Loans and advances to

banks and other financial

institutions

245,693

554

287

333

18,117

264,984

Loans and advances to

customers

667,890

250,310

818,675

878,762

4,699,983

7,315,620

Total financial assets

3,560,888

620,233

1,732,265

891,347

5,317,836

12,122,569

Financial liabilities

Due to banks

45,703

Due to other customers

7,227,216

960,029

2,072,076

334,291

205,069

10,798,681

Liabilities evidenced by

paper

3,489

21,515

97,477

122,496

Financial liabilities at fair

value through profit and

loss

3,682

893

2,860

1,053

8,488

Hybrid debt -

141,211

69,653

92,315

303,179

Total financial liabilities

7,272,919

963,726

2,217,669

428,319

395,914

11,278,547

Derivatives held for

risk management

Outgoing cash flow

170

Incoming cash flow

758

1,021

1,779

Cash flow from

derivatives, net

588

1,021

1,609

Notes to the financial statements

The table shows investments at fair value through other comprehensive income and fair value through

profit or loss with a maturity of up to 1 month in order to reflect the management’s ability to sell them within

a short-term period, if needed.

The following table provides a remaining maturities analysis of the financial assets and liabilities of the

Bank as at 31 December 2021 based on the contractual undiscounted cash flows.

In BGN '000

Up to 1

Month

Fro

m 1 to

3 Months

From 3

months to 1

year

From 1

to 2

years

than 2

years

Total

Financial assets

Cash and balances with

Central Banks

1,868,853

Financial assets at fair

value through profit or

loss

265,405

Financial assets at fair

value through other

comprehensive income

901,155

Financial assets at

amortised cost

49,884

97,804

1,826

168,840

318,354

Loans and advances to

banks and other financial

institutions

77,792

5,909

963

2,748

87,412

Loans and advances to

customers

750,989

159,695

1,108,958

734,530

4,428,020

7,182,192

Total financial assets

3,914,078

263,408

1,111,747

737,278

4,596,860

10,623,371

Financial liabilities

Due to banks

29,879

Due to other customers

5,580,109

1,125,791

2,203,799

325,603

190,802

9,426,104

Liabilities evidenced by

paper

34,313

4,008

3,291

67,288

108,904

Financial liabilities at fair

value through profit and

loss

2,164

Hybrid debt -

227,406

8,939

129,198

365,543

Total financial liabilities

5,609,992

1,160,104

2,435,213

339,997

387,288

9,932,594

Derivatives held for risk

management

Outgoing cash flow

52,622

- -

52,622

Incoming cash flow

50,023

639

606

- -

51,268

Cash flow from

derivatives, net

(2,599)

639

606

(1,354)

Notes to the financial statements

The expected cash flows of the Bank from some financial assets and liabilities are different from the cash

flows as per the loan contract. The main differences are:

• There is an expectation that the deposits on demand and term deposits will remain stable and will

increase.

• Retail mortgages have original maturity of 18 years on average, but the expected average effective

maturity is 12 years as some clients take advantage of the early repayment possibility.

(ii) Market risk

Interest rate risk

Interest rate risk in the banking book (IRRBB)

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in market interest rates. The Bank’s operations are subject to the risk of interest rate

fluctuations to the extent that interest-earning assets and interest-bearing liabilities mature or reprice at

different times or in differing amounts. In the case of floating rate assets and liabilities the Bank is also

exposed to basis risk, which is the difference in repricing characteristics of the various floating rate indices,

such as the Bulgarian Basic Interest Rate, the LIBOR and EURIBOR, although these indices tend to move

in high correlation. In addition, the actual effect will depend on a number of other factors, including the

extent to which repayments are made earlier or later than the contracted dates and variations in interest

rate sensitivity within repricing periods and among currencies.

In order to quantify the interest rate risk of its non-trading activities, the Bank measures the impact of a

change in the market rates both on net interest income and on the Bank’s economic value defined as the

difference between fair value of assets and fair value of liabilities.

The interest rate risk on the economic value of the Bank following a standardised shock of +100bp/-100bp

as at 31 December 2022 is BGN +5 033/+15 452 thousands

The interest rate risk on the Bank's net interest income one year forward following a standardised shock

of +100bp/-100bp as at 31 December 2022 is BGN -3,003/+2,131 thousands.

Net interest income

Equity

100 bp increase

100 bp

decrease

100 bp increase

100 bp

decrease

Effect in BGN '000

2022

as at 31 December

(3,003)

2,131

5,033

15,452

Average for the period

(3,752)

2,275

12,507

23,005

Maximum for the period

(1,011)

4,874

23,492

32,457

Minimum for the period

(5,969)

(220)

5,033

15,452

2021

as at 31 December

(3,022)

1,925

16,458

33,288

Notes to the financial statements

Credit Spread Risk in the Banking Book (CSRBB)

Expresses the risk arising from changes in market perception regarding the price of credit risk, the liquidity

premium and other potential components of credit risk instruments that cause fluctuations in the price of

credit risk, the liquidity premium and other potential components, which is not explained by the interest

rate risk in the banking book (IRRBB) or by the expected credit/(jump to-) default risk. Only those

instruments in the bank’s book which are reported at market value, fall within the scope.

Similar to the interest rate risk arising from non-trading book activities, for credit spread risk the Bank

calculates the risk arising from potential changes in two aspects: how it affects net interest income and

how it affects the Bank’s economic value.

The applicable stress test scenarios were calibrated with 99% confidence level compared to the

historically observed changes. Shocks vary depending on the maturity of cash flows and the issuer’s

credit rating.

The effect on the Bank’s economic value as at 31 December 2022 amounted to BGN 9,547 thousand,

and the effect on the net interest income amounted to BGN 269 thousand.

Net interest

income

Equity

Effect in BGN '000

2022

as at 31 December 269

(9,574)

Average for the period 598

(17,408)

Maximum for the period 956

(8,545)

Minimum for the period 269

(35,836)

2021

as at 31 December 589

(35,757)

Notes to the financial statements

The following table indicates the effective interest rates at 31 December 2022 and the periods in which

financial liabilities and assets reprice.

Fixed rate instruments

in thousands of BGN

Total

Floating rate

Instruments

Less than

1 month

Between 1

month and 3

months

Between 3

months and

1 year

than 1

year

Assets

Cash and balances with

Central Banks 489,946

489,946

- - -

Financial assets at fair

value through profit or

loss 236,581

236,581 - -

Financial assets at fair

value through other

comprehensive income 468,247

468,247 - -

Financial assets at

amortised cost 1,862,203 -

- 369,369 913,296

579,538

Loans and advances to

banks and other

financial institutions

119,309

16,136

15,678

11,026

76,469

Loans and advances to

customers 5,661,401

5,288,464

1,406 18,486 86,274

266,771

Total interest-bearing

assets

8,837,687

5,794,546

721,912

398,881

1,076,039

846,309

Liabilities

Due to banks 45,703 45,703

- - -

Due to other customers

10,679,282

4,250,411

2,857,628 960,016 2,071,969

539,258

Liabilities evidenced by

paper 116,487

56,309

- - 2,833

57,345

Hybrid debt 256,861 -

- - -

256,861

Total interest-bearing

liabilities

11,098,333

4,352,423

2,857,628

960,016

2,074,802

853,464

The table shows investments at fair value through other comprehensive income and fair value through

profit or loss with a maturity of up to 1 month in order to reflect the management’s ability to sell them within

a short-term period, if needed.

Notes to the financial statements

The following table indicates the effective interest rates at 31 December 2021 and the periods in which

financial liabilities and assets reprice.

Fixed rate instruments

in thousands of BGN

Total

Floating rate

Instruments

Less than

1 month

Between 1

month and

3 months

Between 3

months

and 1 year

than 1

year

Assets

Cash and balances with

Central Banks

733,912

728,044 - - 5,868 -

Financial assets at fair value

through profit or loss

236,550

- 236,550 - - -

Financial assets at fair value

through other comprehensive

income

901,155

26,014 875,141 - - -

Financial assets at amortised

cost

316,139

- 52,166 97,655 1,765 164,553

Loans and advances to banks

and other financial institutions

24,727

13,089

11,638

- -

Loans and advances to

customers

5,560,650

5,154,011 8,831 19,868 98,702 279,238

Total interest-bearing

assets

7,773,133

5,921,158

1,184,326

117,523

106,335

443,791

Liabilities

Due to banks 29,879

29,879 - - - -

Due to other customers

9,403,584

4,250,411 1,308,002 1,125,734 2,203,384 516,053

Liabilities evidenced by paper

103,633

95,663 - - - 7,970

Hybrid debt

320,733

- - - - 320,733

Total interest-bearing

liabilities

9,857,829

4,375,953 1,308,002 1,125,734 2,203,384 844,756

Notes to the financial statements

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in foreign exchange rates. The Bank is exposed to currency risk in performing

transactions in foreign currencies and foreign-currency denominated financial instruments.

As a result of the currency Board in place in Bulgaria, the Bulgarian currency is pegged to the Euro. As

the currency in which the Bank presents it financial statements is the Bulgarian lev, the Bank’s financial

statements are affected by movements in the exchange rates between the Bulgarian lev and currencies

other than the Euro.

The Bank’s transactional exposures give rise to foreign currency gains and losses that are recognised in

profit or loss. These exposures comprise the monetary assets and monetary liabilities of the Bank that are

not denominated in the presentation currency of the Bank. These exposures were as follows:

in thousands of BGN 2022 2021

Monetary assets

Euro

5,176,973

4,257,869

US dollar

629,436

520,564

Other

162,075

154,806

Gold

2,642

2,765

Monetary liabilities

Euro

3,914,067

3,513,821

US dollar

632,495

521,197

Other

162,700

154,565

Gold

1,548

2,246

Net position

Euro

1,262,906

744,048

US dollar

(3,059)

(633)

Other

(625)

241

Gold

1,094

519

In respect of monetary assets and liabilities in foreign currencies that are not economically hedged, the

Bank manages foreign currency risk in line with policy that sets limits on currency positions and dealer

limits.

(iii) Credit risk

Credit risk is the risk that a counterparty to a financial instrument will cause a financial loss for the Bank

by failing to discharge an obligation. The Bank is subject to credit risk through its lending activities and in

cases where it acts as an intermediary on behalf of customers or other third parties or issues guarantees.

The management of the credit risk exposures to borrowers is conducted through regular analysis of the

borrowers’ credit worthiness and the assignment of a rating grade. Exposure to credit risk is also managed

in part by obtaining collateral and guarantees.

Notes to the financial statements

The table below sets out information about maximum exposure to credit risk:

thousands

of BGN

Loans and advances

to other customers

Loans and advances

to banks and balances

with central banks

Investment in debt

securities

Off balance sheet

commitments

2022

2021

2022

2021

2022

2021

2022

2021

Carrying

amount 6,384,541 6,315,581

1,927,815

1,708,813 2,567,031 1,453,794 - -

Amount

committed/

guaranteed - -

- - - 1,026,495 818,028

The Bank’s primary exposure to credit risk arises through its loans and advances. The amount of credit

exposure in this regard is represented by the carrying amounts of the assets on the balance sheet. These

exposures are as follows:

31 December 2022

in thousands of BGN

Class of exposure

Gross amount of loans

and advances to

customers

Allowance for

impairment

Carrying amount of loans and

advances to customers

Performing

Collectively impaired 5,550,250 (54,521) 5,495,729

Nonperforming

Collectively impaired 240,639 (71,944) 168,695

Individually impaired 976,420 (256,303) 720,117

Total 6,767,309 (382,768) 6,384,541

31 December 2021

in thousands of BGN

Class of exposure

Gross amount of loans

and advances to

customers

Allowance for

impairment

Carrying amount of loans and

advances to customers

Performing

Collectively impaired 5,465,509 (74,890) 5,390,619

Nonperforming

Collectively impaired 234,814 (74,763) 160,051

Individually impaired 1,078,998 (314,087) 764,911

Total 6,779,321 (463,740) 6,315,581

Notes to the financial statements

Distribution of trade receivables and impairment as adjustment for financial assets (receivables from

customers) according to the requirements of IFRS9:

31/12/2022

31/12/2021

Gross amount

of loans and

advances to

customers

Allowance for

impairment

Gross amount

of loans and

advances to

customers

Allowance

for

impairment

Exposures without increase of

credit risk after the initial recognition

(phase 1)

4,285,771

(4,227)

4,538,726

(12,689)

Exposures with significant increase

of credit risk after the initial

recognition (phase 2)

1,264,479

(50,294)

926,783

(62,201)

Non-performing (impaired)

exposures (phase 3)

1,217,059

(328,247)

1,313,812

(388,850)

Total

6,767,309

(382,768)

6,779,321

(463,740)

Exposures classification into risk classes reflects the management’s estimate regarding credit risk and

the loans recoverable amounts.

As at 31 December 2022 the gross amount of overdue loans and advances to customers measured as

exposures 90+ days overdue is BGN 804, 062 thousand (31 December 2021: BGN 931, 502 thousand)

In addition, the Bank is exposed to off-balance sheet credit risk through commitments to extend credits

and issue contingent liabilities (See Note 32).

Concentrations of credit risk (whether on or off-balance sheet) that arise from financial instruments exist

for counterparties when they have similar economic characteristics that would cause their ability to meet

contractual obligations to be similarly affected by changes in economic or other conditions.

The major concentrations of credit risk arise by location and type of customer in relation to the Bank’s

investments, loans and advances and off-balance sheet commitments.

Total economic sector credit risk concentrations in loans and advances to customers are presented in the

table below:

in thousands of BGN

2022

2021

Trade

691,864

718,868

Industry

1,263,715

1,296,309

Services

602,983

643,781

Finance

178,683

182,494

Transport, logistics

224,795

248,112

Communications

107,859

149,011

Construction

386,055

390,458

Agriculture

231,850

238,102

Tourist services

302,557

280,646

Infrastructure

366,385

443,981

Private individuals

2,395,978

2,176,590

Other

14,585

10,969

Allowance for impairment

(382,768)

(463,740)

Total

6,384,541

6,315,581

Notes to the financial statements

The amounts reflected in the tables represent the maximum accounting loss that would be recognised at

the statement of financial position date if counterparts failed completely to perform as contracted and any

collateral or security proved to be of no value. The amounts, therefore, greatly exceed expected losses,

which are included in the allowance for impairment.

The Bank has extended loans to enterprises involved in different types of activities but within the same

economic sector - industry. As such the exposures share a similar industry risk. There are three such

groups of enterprises at 31 December 2022 with total exposures outstanding amounting to BGN 188,020

thousand (2013: BGN 137,625 thousand) - ferrous and non-ferrous metallurgy, BGN 60,818 thousand

(2013: BGN 61,015 thousand) – mining industry and BGN 140,339 thousand (2013: BGN 130,036

thousand) - power engineering.

The Bank has extended loans, confirmed letters of credit and granted guarantees to 7 individual clients

or groups (2021: 7) with each individual exposure exceeding 10% of the capital base of the Bank, based

on the amortised cost of the respective loan facilities and after application of the required regulatory

exemptions and techniques for reducing credit risk. The total amount of these exposures was BGN

1,265,514 thousand, i.e. 83.08% of tier 1 capital (2021: BGN 1,245,214 thousand which represented

82.02% of tier 1 capital).

As at 31.12.2022 and as at 31.12.2021, there are no loans granted by the branch in Cyprus.

The Bank’s policy is to require suitable collateral to be provided by certain customers prior to the

disbursement of approved loans. Guarantees and letters of credit are also subject to strict credit

assessments before being provided. The agreements specify monetary limits to the Bank’s obligations.

Collateral held against different types of assets:

Type of credit

exposure

Main type of collateral

Collateral coverage ratio

2022

2021

Repurchase agreements

Tradable securities

99%

Loans and advances to

banks

None

Mortgage loans

Real estate

261%

262%

Consumer lending

Mortgage, warrant, financial

and other collateral

14%

18%

Credit cards

None

Loans to companies

Mortgage, pledge of

enterprise, pledge of long-

term tangible assets, pledge

of goods, pledge of other

short-term tangible assets,

financial and other collateral

649%

533%

The distribution of the loan portfolio is reported according to the Bank’s business segments

Notes to the financial statements

The table below shows a breakdown of total gross loans and advances (gross balance sheet value)

extended to customers by the Bank by type of collateral to the amount of the collateral, excluding credit

cards in the amount of BGN 138,855 thousand (2021: 148,037 thousand BGN).

BGN '000

2022

2021

Mortgage

1,542,191

1,652,996

Pledge of receivables

1,910,087

1,996,537

Pledge of commercial enterprise

7,299

14,395

Securities

8,168

31,060

Bank guarantees

3,750

Other guaranties

2,892,788

2,624,371

Pledge of machines

42,477

41,839

Money deposit

15,310

79,096

Unsecured

206,384

187,240

Total

6,628,454

6,631,284

The distribution of the loan portfolio is reported according to the Bank’s business segments

Other collateral includes insurance policies up to the amount of the insurance cover, future receivables,

remuneration transfers, etc.

Residential mortgage lending

The table below represents credit exposures from housing and mortgage loans to household customers

by ranges of loan-to-value (LTV) ratio. LTV is calculated as the ratio of the gross amount of the loan to

the value of the collateral. The gross amount excludes any impairment allowances. The valuation of the

collateral excludes any adjustments for obtaining and selling the collateral. The value of the collateral for

residential mortgage loans is based on the collateral value at origination updated based on changes in

house price indices.

The table below represents a separation of the gross amount of housing mortgages granted to households

according to the LTV ratio.

The distribution of the loan portfolio is reported according to the Bank’s business segments

Loans to corporate customers

The loans to corporate customers constituting individually significant exposures are subject to individual

credit appraisal and impairment testing. The general creditworthiness of a corporate customer tends to

be the most relevant indicator of credit quality of a loan. However, collateral provides additional security

and the Bank requests corporate borrowers to provide it. The Bank takes collateral in the form of a first

charge over real estate, floating charges over all corporate assets, and other liens and guarantees.

The Bank routinely analyses collateral for possible changes in value due to market conditions, legal

framework or debtor’s actions. Where such changes lead to a breach in the requirements for sufficiency

of collateral, the Bank requires provision of additional collateral within a certain timeframe.

BGN '000

2022

2021

Loan to value (LTV) ratio

Less than 50%

241,766

192,458

51% to 70%

401,108

290,833

71% to 90%

389,319

408,410

91% to 100%

12,261

19,894

More than 100%

83,962

74,509

Total

1,128,416

986,104

Notes to the financial statements

As at 31 December 2022 the net carrying amount of individually impaired loans to corporate customers

amounts to BGN 788,329 thousand (2021: BGN 825,285 thousand) and the value of collateral held

against those loans amounts to BGN 720,462 thousand (2021: BGN 790,560 thousand).

The Bank constantly monitors the risk of default on already given loans and if there is available data for

potential or actual problems, the Bank prepares an action plan and takes measures for managing the

possible unwanted results, including restructuring of the loans

For the purposes of the disclosure in these financial statements “renegotiated loans” are defined as loans,

which have been renegotiated as a result of a change in the market interest rates, repayment schedule,

upon a client request, and others

Loans renegotiated through the year

in thousands of BGN

2022

2021

Type of renegotiation

Gross amount

of loans and

advances to

customers

Allowance

for

impairment

Gross amount

of loans and

advances to

customers

Allowance

for

impairment

Loans to individuals

165,345

5,200

232,459

8,543

Change of maturity

114,425

4,026

119,847

6,133

Change in repayment instalments

Change of interest rate

13,037

6,896

Change due to customers request

25,224

47,386

171

Other reasons

12,659

1,128

58,330

2,239

Loans to companies

1,719,079

123,445

1,856,010

75,570

Change of maturity

104,789

262

229,270

2,013

Change in repayment instalments

319,997

691

45,160

240

Change of interest rate

109,282

21,809

Change due to customers request

927,801

31,895

885,746

37,708

Other reasons

257,210

90,539

674,025

35,609

Total:

1,884,424

128,645

2,088,469

84,113

The distribution of the loan portfolio is reported according to the Bank’s business segments

Structure and organization of credit risk management functions

Credit risk management as a comprehensive process is accomplished under the supervision of the

Management Board of the Bank. The Supervisory Board exercises control over the activities of the

Management Board on the credit risk management either directly or through the Risk Committee, which

supports the Supervisory Board with the extensive supervision over the risk management function in the

Bank, including over the formation of risk exposures.

There are collective bodies in the Bank the function of which is to support the activities of the Management

Board on the credit risk management- Credit Council and Restructuring Committee. The Credit Council

supports the adopted credit risk management and forms an opinion on loans as per its limits of

competence. The Restructuring Committee is a specialized body for supervision of the loan exposures

with indicators for deterioration. In addition to the collective bodies in the Bank, there are other

independent specialized bodies - the Risk Analysis and Control Department and the Credit Risk

Management, Monitoring and Provisioning Department, which fulfil the functions of identification,

evaluation and management of the credit risk, including performing additional second control over the risk

exposures. The realization, coordination and current control over the lending process is organized from

the following departments: Corporate Banking, SME financing, Retail Banking, and Loan Administration,

while the problem assets management is performed by the Impaired Assets Department.

(iv) Government debt exposures

The Bank carefully manages the credit risk associated with government debt.

Notes to the financial statements

The table below shows the carrying amount of the government debt portfolio by country issuer. The assets

are presented without any allowance for impairment. The Bank does not recognise allowance for

impairment against the government debt exposures which are measured at amortised cost as at 31

December 2022 and 31 December 2021 as well as those at fair value through other comprehensive

income.

BGN '000

31/12/2022

Country issuer

at fair value

through profit

and loss

at fair value through other

comprehensive income

at amortised

cost

Total

Bulgaria

159,178

416,480

575,672

Lithuania

38,399

Latvia

Slovakia

1,981

USA

34,553

164,319

198,872

Romania

39,947

12,203

52,232

Italy

79,482

Spain

18,460

126,133

144,593

Portugal

20,275

Hungary

15,430

Croatia

6,978

European Union

233,382

Ireland

20,006

Saudi Arabia

10,044

Belgium

213,018

France

48,497

87,114

135,611

Germany

234,162

Great Britain

11,007

21,701

32,708

Finland

125,971

Switzerland

12,120

Total

357,079

1,793,821

2,150,996

in thousands of

BGN

31/12/2021

Country issuer

at fair value through

profit and loss

at fair value through

other comprehensive

income

at amortised

cost

Total

Bulgaria

414,481

164,553

579,049

Lithuania

44,010

Latvia

Slovakia

2,158

USA

155,011

Romania

80,442

Italy

1,807

Spain

20,974

Portugal

19,891

Hungary

15,340

Croatia

7,651

Israel

3,916

52,166

56,082

European Union

561

Ireland

19,101

Saudi Arabia

10,037

Total

795,444

216,719

1,012,178

Notes to the financial statements

Maturity table of government debt securities by country issuer as at 31 December 2022

Maturity table of government debt securities by country issuer as at 31 December 2021

in thousands of

BGN

Country

issuer

Up to 1

Month

From 1 to 3

Months

From 3 months

to 1 year

From 1 to 2

years

From 2 to 5

years

Over

5 years

Total

Bulgaria

55,548

20,752

36,243

223,879

242,627

579,049

Lithuania

44,010

Latvia

Slovakia

2,158

USA

34,537

86,336

34,080

155,011

Romania

23,546

45,416

11,480

80,442

Italy

1,807

Spain

20,974

Portugal

19,891

Hungary

15,340

Croatia

7,651

Israel

52,166

3,916

56,082

European

Union

561

Ireland

19,101

Saudi Arabia

10,037

Total

86,703

141,884

48,214

36,243

376,074

323,060

1,012,178

in thousands of

BGN

Country issuer

Up to 1

Month

From 1 to 3

Months

From 3 months

to 1 year

From 1 to 2

years

From 2 to 5

years

Over

5 years

Total

Bulgaria

15,060

20,818

26,795

272,059

240,940

575,672

Lithuania

38,399

Latvia

Slovakia

1,981

USA

164,258

34,553

198,872

Romania

39,947

12,285

52,232

Italy

77,520

1,962

79,482

Spain

39,064

87,069

18,460

144,593

Portugal

20,275

Hungary

15,430

Croatia

6,978

European

Union

232,788

594

233,382

Ireland

20,006

Saudi Arabia

10,044

Belgium

39,047

173,971

213,018

France

135,611

Germany

127,000

107,162

234,162

Great Britain

11,007

21,701

32,708

Finland

125,971

Switzerland

12,120

Total

11,007

384,429

982,611

73,528

387,868

311,553

2,150,996

Notes to the financial statements

C. Capital adequacy

Since 1 January 2014, the provisions of the CRD IV package have been in force. Through Regulation

(EU) No 575/2013 on prudential requirements for credit institutions and investment firms and Directive

2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit

institutions and investment firms, CRD IV package transposes into European law the provisions of the

new capital standards for banks – Basel III.

Regulatory capital

The equity capital of the Bank for regulatory purposes consists of the following elements:

Common Equity Tier 1 capital

a) issued and paid up capital instruments (ordinary shares);

b) share premium from issuance of ordinary shares;

c) audited retained earnings;

d) accumulated other comprehensive income, including revaluation reserves;

e) other reserves;

Deductions from components of the Common Equity Tier 1 capital include intangible assets, as well as

value adjustments due to the requirements for prudential assessments and other deductions. The

increase of CET1 includes the adjustments related to the transitional treatment of the effect from the initial

application of IFRS 9.

Additional Tier 1 capital

The instruments of Additional Tier 1 capital include hybrid debt (see note 29).

Tier 2 Capital

As at 31 December 2022 the Bank has no instruments classified as Tier 2 Capital.

Total own funds

2022

2021

In thousands of BGN

Common Equity Tier 1 capital

Paid up capital instruments

149,085

(-) Indirect shareholding in Common Equity Tier 1 capital instruments

(38)

(30)

Premium reserves

250,017

Other reserves

858,717

758,634

Accumulated other comprehensive income

(10,815)

11,045

Adjustments of Common Equity Tier 1 capital

(-) Intangible assets

(14,925)

(13,831)

Transitional adjustments of Common Equity Tier 1 capital

62,273

130,113

(-) Other deductions

(25,273)

(21,024)

Common Equity Tier 1 capital

1,269,041

1,264,009

Additional Tier 1 capital instruments

Hybrid debt

254,258

Tier 1 Capital

1,523,299

1,518,267

Tier 2 Capital

Total own funds

1,523,299

1,518,267

The Bank calculates the following ratios:

Notes to the financial statements

а) the Common Equity Tier 1 capital ratio is the Common Equity Tier 1 capital of the institution expressed

as a percentage of the total risk exposure amount;

b) the Tier 1 capital ratio is the Tier 1 capital of the institution expressed as a percentage of the total risk

exposure amount;

c) the total capital ratio is the own funds of the institution expressed as a percentage of the total risk

exposure amount.

The total risk exposure is calculated as the total of the risk weighted assets for credit, market and

operational risk.

The Bank calculates the requirements for credit risk for its exposures in banking and trading portfolios

based on a standardised approach. Exposures are taken into account using their balance sheet amount.

Off-balance-sheet credit-related commitments are taken into account by applying different categories of

conversion factors designed to convert these items into balance sheet equivalents. The resulting

equivalent amounts are then weighted for risk using different percentages depending on the class of

exposure and its credit rating assessment. Various credit risk mitigation techniques are used, for example

collateralised transactions and guarantees. Forwards and options based derivative instruments are

weighted for counterparty credit risk.

The Bank calculates also capital requirements for market risk for foreign currency and commodity

instruments in trading book and banking book.

The Bank calculates capital requirements for operational risk by application of the standardized approach.

In this approach the Bank distributes the net income from banking operations (called the relevant indicator)

over the last three years for the respective business lines. Next, the distributed amount from the relevant

indicator is multiplied by its corresponding percentage (beta factor) to obtain the annual capital requirement

for each business line. The Bank calculates the capital requirement for operational risk as the average

value for the three-year period of the sum of the annual capital requirements for all business lines. The

respective risk exposure is calculated by further multiplication of the capital requirement by 12.5.

The Bank has complied with the regulatory capital requirements throughout the period.

Notes to the financial statements

Capital adequacy level is as follows:

in thousands of BGN

Balance sheet/notional amount

Risk exposures

2022

2021

2022

2021

Risk weighted exposures for credit

risk

Balance sheet assets

Exposure class

Central governments or central banks

3,636,457

2,469,808

2,009

13,224

Multilateral development banks

International organizations

624

344

Institutions

451,715

374,520

186,203

164,487

Corporates

2,435,831

2,542,742

2,046,646

2,148,344

Retail

1,531,781

1,439,002

1,024,212

939,040

Secured by mortgages on immovable

property

1,842,333

1,726,307

683,701

650,092

Exposures in default

887,513

924,620

960,277

987,927

Collective investments undertakings

4,090

2,705

4,090

2,705

Equity

65,504

71,993

73,628

91,588

Other items

1,764,711

1,736,660

1,428,197

1,490,409

Total

12,620,577

11,288,784

6,408,963

6,487,816

Off balance sheet items

Exposure class

Institutions

Corporates

545,383

340,015

40,086

42,406

Retail

459,869

447,503

4,631

4,320

Secured by mortgages on immovable

property

20,091

29,167

3,883

6,060

Other items

Total

1,025,343

816,685

48,704

52,838

Derivatives

Exposure class

Central governments or central banks

Institutions

2,618

1,309

Corporates

1,953

3,821

1,953

3,821

Other items

1,548

2,246

1,548

2,246

Total

6,119

6,111

4,810

6,089

Total risk-weighted exposures for

credit risk

6,462,477

6,546,743

Total amount of exposures to market

risk

4,350

4,713

Amount of exposures for deferred

risk

540,238

523,913

Total amount of risk exposures

7,007,065

7,075,369

Capital adequacy ratios

Equity

Capital ratios %

2022

2021

2022

2021

Common Equity Tier 1 capital

1,269,041

1,264,009

18.11%

17.86%

Tier 1 Capital

1,523,299

1,518,267

21.74%

21.46%

Total own funds

1,523,299

1,518,267

21.74%

21.46%

Notes to the financial statements

D. Other risks - war in Ukraine

On 24 February 2022 Russia began large-scale military action against Ukraine. In response to the

Russian actions against Ukraine, the EU member states and the USA imposed wide-ranging sanctions

against Russia and Belarus, including but not limited to, large Russian banks, some other companies,

members of the Russian parliament and some representatives of the Russian elite and their families, and

also banned primary/secondary trade in government bonds and other select securities. Secondary

effects, such as the increasing prices and the sufficiency of energy supply in Europe, as well as the

economic impact of various scenarios, are difficult to forecast and may have significant effects on the EU

economy. The crisis has the potential to exacerbate further the already tense situation with energy prices

in Europe, which may lead to slowing of the economy and to higher losses, including higher impairment.

The disruptions caused by the war have both direct and indirect impacts on the economy of EU countries,

leading to slower growth and higher inflation. The rapid rise in energy and food prices is feeding the global

inflation pressure and causing a swifter monetary policy response than earlier expected.

The risks to future development include the potential impacts on the business model of macroeconomic

and global geopolitical insecurity related to the Russian actions against Ukraine. Customers’ activities

may also be affected by the higher prices of energy and the disruption of supply chains.

The Bank monitors the situation closely, and carries out additional stress tests under different scenarios.

The Bank’s exposure to counterparties from Russia, Ukraine and Belarus is insignificant.

According to the Bank’s initial estimates, these events did not have direct significant impact on its

operations. In addition, the Management does not expect that as a whole the crisis would have immediate

significant impacts on the Bank’s operations.

4. Segment Reporting

Segment information is presented in respect of the Bank’s geographical segments. The primary format,

geographical segments, is based on the Bank’s management and internal reporting structure.

Reporting and measurement of segment assets and liabilities and segment revenues and results is based

on the accounting policies set out in the accounting policy notes.

Transactions between segments are conducted on an arm’s length basis.

The Bank operates principally in Bulgaria, but also has operations in Cyprus.

In presenting information on the basis of geographical segments, revenue and operating income is

allocated after interbranch eliminations based on the location of the Bank branch that generated the

revenue. Segment assets and liabilities are allocated after interbranch eliminations based on their

geographical location.

Notes to the financial statements

BGN '000

Bulgarian operations

Foreign operations

Total

2022 2021 2022 2021 2022 2021

Interest income 310,748

308,538

310,785

308,556

Interest expense (37,726) (42,114) (2,319) (3,298) (40,045) (45,412)

Net interest income

273,022

266,424

(2,282)

(3,280)

270,740

263,144

Fee and commission income 159,085

134,350

13,905

8,665

172,990

143,015

Fee and commission expense (32,087) (23,978) (1,388) (172) (33,475) (24,150)

Net fee and commission

income

126,998

110,372

12,517

8,493

139,515

118,865

Net trading income

17,373

13,466

2,344

1,914

19,717

15,380

Administrative expenses

(202,013)

(176,452)

(3,100)

(2,989)

(205,113)

(179,441)

31.12.2022

31.12.2021

31.12.2022

31.12.2021

31.12.2022

31.12.2021

Assets 12,456,007 10,809,481 258,051 459,389 12,714,058 11,268,870

Liabilities

10,655,814

9,432,473

730,035

567,533

11,385,849

10,000,006

The table below shows assets and liabilities and income and expense by business segments as at 31

December 2022.

in thousands of BGN

Business

Assets

Liabilities

Net

interest

income

Net fee and

commission

income

Net

trading

income

Other net

operating

income

Big and medium

enterprises

3,051,182

2,263,247

102,017

42,705

677

Small business

867,206

585,674

34,919

23,861

2,795

Retail Banking

2,466,153

7,998,019

169,139

73,577

2,552

Treasury 4,776,101

85,577

3,754 (2,263)

19,717 524

Other 1,553,416

453,332

(39,089) 1,635

- 7,647

Total

12,714,058

11,385,849

270,740

139,515

19,717

14,195

5. Financial assets and liabilities

Accounting classification and fair values

The Bank’s accounting policy on fair value measurements is set out in Note 2(d)(vii).

The Bank measures fair values using the following fair value hierarchy that reflects the significance of the

inputs used in making the measurements:

Level 1: inputs that are quoted market prices (unadjusted) in active markets for identical instruments.

Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as

prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted

market prices in active markets for similar instruments; quoted prices for identical or similar instruments

in markets that are considered less than active; or other valuation techniques where all significant inputs

are directly or indirectly observable from market data.

Notes to the financial statements

Level 3: inputs are observable date for a given asset or liability. This category includes all instruments

where the valuation technique includes inputs not based on observable data and the unobservable inputs

have a significant effect on the instrument’s valuation. This category includes instruments that are valued

based on quoted prices for similar instruments where significant unobservable adjustments or

assumptions are required to reflect differences between the instruments.

Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted

market prices or dealer price quotations. For all other financial instruments, the Bank determines fair

values using other valuation techniques.

Other valuation techniques include net present value and discounted cash flow models, comparison to

similar instruments for which market observable prices exist, option pricing models and other valuation

models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest

rates, credit spreads and other premia used in estimating discount rates, bond and equity prices, foreign

currency exchange rates, equity and equity index prices and expected price volatilities and correlations.

The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that

would be received to sell the asset or paid to transfer the liability in an orderly transaction between market

participants at the measurement date.

The Bank uses widely recognised valuation models for determining the fair value of common and more

simple financial instruments, like interest rate and currency swaps that use only observable market data

and require little management judgement and estimation. Observable prices and model inputs are usually

available in the market for listed debt and equity securities, exchange traded derivatives and simple over

the counter derivatives like interest rate swaps. Availability of observable market prices and model inputs

reduces the need for management judgement and estimation and also reduces the uncertainty associated

with determination of fair values. Availability of observable market prices and inputs varies depending on

the products and markets and is prone to changes based on specific events and general conditions in the

financial markets.

However, where the Bank measures portfolios of financial assets and financial liabilities on the basis of

net exposures, it applies judgement in determining appropriate portfolio level adjustments such as bid-

ask spread.

Such adjustments are derived from observable bid-ask spreads for similar instruments and adjusted for

factors specific to the portfolio.

For more complex instruments, the Bank uses proprietary valuation models, which usually are developed

from recognised valuation models. Some or all of the significant inputs into these models may not be

observable in the market, and are derived from market prices or rates or are estimated based on

assumptions. Example of instruments involving significant unobservable inputs include certain over the

counter derivatives, certain loans and securities for which there is no active market and retained interests

in securitisations. Valuation models that employ significant unobservable inputs require a higher degree

of management judgement and estimation in the determination of fair value. Management judgement and

estimation are usually required for selection of the appropriate valuation model to be used, determination

of expected future cash flows on the financial instrument being valued, determination of probability of

counterparty default and prepayments and selection of appropriate discount rates.

The Bank has an established control framework with respect to the measurement of fair values. This

framework includes a Risk Management function, which is independent of Treasury division and reports

to management, and which has overall responsibility for independently verifying the results of trading and

investment operations and all significant fair value measurements. Specific controls include:

• verification of observable pricing;

• proposal of new models and changes to existing models is made by the Risk Analysis and Control

Division and approved by the Management Board;

• calibration of models against observed market transactions;

Notes to the financial statements

• analysis and investigation of significant daily valuation movements;

• review of significant unobservable inputs, valuation adjustments and significant changes to the fair

value measurement of Level 3 instruments compared to previous month, by Risk Analysis and Control

division.

Where third-party information, such as broker quotes or pricing services, are used to measure fair value,

Risk Management division assesses and documents the evidence obtained from the third parties to

support the conclusion that such valuations meet the requirements of IFRS. This includes:

• verifying that the broker or pricing service is approved by the Bank for use in pricing the relevant type

of financial instrument;

• understanding how the fair value has been arrived at and the extent to which it represents actual

market transactions;

• when prices for similar instruments are used to measure fair value, how these prices have been

adjusted to reflect the characteristics of the instrument subject to measurement;

• where a number of quotes for the same financial instrument have been obtained, how fair value has

been determined using those quotes.

The tables below set out analysis of financial instruments measured at fair value at the end of the reporting

period classified by fair value hierarchy level framework categorising fair value measurement. The

amounts are based on the amounts in the statement of financial position.

in thousands of BGN

31 December 2022

Level 1

Level 2

Level 3

Total

Financial assets at fair value through profit or loss

5,862

261,740

267,687

Financial assets at fair value through other

comprehensive income 357,422

110,825 -

468,247

Derivatives held for risk management, net

718

891

1,609

Total

364,002

373,456

737,543

Financial liabilities at fair value through profit and loss

8,488

BGN '000

31 December 2021

Level 1

Level 2

Level 3

Total

Financial assets at fair value through profit or loss

4,507

260,884

265,405

Financial assets at fair value through other

comprehensive income

855,570

45,585

901,155

Derivatives held for risk management, net

1,042

Total

861,119

306,469

1,167,602

Financial liabilities at fair value through profit and loss

2,164

The investments in securities reported in portfolios of financial assets at fair value in profit or loss, financial

assets at fair value in other comprehensive income and financial assets at amortised cost are mostly

investments in government securities from first-class issuers which are highly liquid and with the most

favourable capital treatment.

The bank manages its investments in debt securities in line with the current market expectations and

dynamics. As at 31.12.2022 the portfolio duration is 2.2 years, while a year earlier it was 3.8 years.

Notes to the financial statements

The tables below set out analysis of the fair values of financial instruments not recognised at fair value,

classified by fair value hierarchy level framework categorising fair value measurement

in thousands of BGN

31 December 2022 Level 1 Level 2 Level 3

Total fair

values

Total balance

sheet value

Assets

Cash and balances with

Central Banks -

1,911,371

- 1,911,371

1,911,371

Financial assets at amortised

cost

1,743,044

- - 1,743,044

1,862,203

Loans and advances to banks

and other financial institutions -

264,984

- 264,984

264,984

Loans and advances to

customers

888,812

5,533,182

6,421,994

6,384,541

Total 1,743,044

3,065,167

5,533,182

10,341,393

10,423,099

Liabilities

Due to banks - 45,703

- 45,703

45,703

Due to other customers - 7,227,207

3,544,287

10,771,494

10,798,450

Liabilities evidenced by paper - 116,442

- 116,442

116,487

Hybrid debt - 256,861

- 256,861

256,861

Total -

7,646,213

3,544,287

11,190,500

11,217,501

BGN '000

31 December 2021 Level 1 Level 2 Level 3

Total fair

values

Total balance

sheet value

Assets

Cash and balances with Central

Banks - 1,868,853

- 1,868,853

1,868,853

Financial assets at amortised

cost 318,404

- - 318,404

316,139

Loans and advances to banks

and other financial institutions - 87,412

- 87,412

87,412

Loans and advances to

customers - 924,962

5,499,390

6,424,352

6,315,581

Total

318,404

2,881,227

5,499,390

8,699,021

8,587,985

Liabilities

Due to banks - 29,879

- 29,879

29,879

Due to other customers - 5,580,080

3,845,582

9,425,662

9,425,251

Liabilities evidenced by paper - 106,253

- 106,253

106,271

Hybrid debt - 320,733

- 320,733

320,733

Total

6,036,945

3,845,582

9,882,527

9,882,134

Notes to the financial statements

Where available, the fair value of loans and advances is based on observable market transactions. Where

observable market transactions are not available, fair value is estimated using valuation models, such as

discounted cash flow techniques. Input into the valuation techniques includes expected lifetime credit

losses, interest rates, prepayment rates. For collateral-dependent impaired loans, the fair value is

measured based on the value of the underlying collateral. To improve the accuracy of the valuation

estimate for retail and smaller commercial loans, homogeneous loans are grouped into portfolios with

similar characteristics such as product and borrower type, maturity, currency, collateral type.

The fair value of deposits from banks and customers is estimated using discounted cash flow techniques,

applying the rates that are offered for deposits of similar maturities and terms. The fair value of deposits

payable on demand is the amount payable at the reporting date.

6. Net interest income

in thousands of BGN 2022 2021

Interest income

Accounts with and placements to banks and financial

institutions

1,505

311

Revenue from interest on liabilities

Large enterprise

77,063

75,862

Medium enterprise

32,358

50,096

Small business

37,200

34,082

Micro enterprise

7,427

7,043

Households

129,095

123,264

Debt instruments

24,520

17,848

Other interest income

1,612

310,785

308,556

Interest expense

Deposits from banks

(135)

(2)

Deposits from other customers

(1,567)

(9,131)

Liabilities evidenced by paper

(533)

(738)

Hybrid debt

(33,488)

(27,634)

Interest on assets cost

(4,285)

(7,897)

Lease agreements and other

(37)

(10)

(40,045)

(45,412)

Net interest income

270,740

263,144

For 2022 he recognized interest income from individually impaired financial assets (loans to customers)

amounted to BGN 24,847 thousand (2021: BGN 40,830 thousand).

The distribution of the loan portfolio is reported according to the Bank’s business segments.

Notes to the financial statements

7. Net fee and commission income

in thousands of BGN

Fee and commission income

2022

2021

Letters of credit and guarantees

3,559

3,387

Payment operations

28,421

23,890

Customer accounts

48,927

36,840

Card services

46,547

36,405

Other

45,536

42,493

172,990

143,015

Fee and commission expense

Letters of credit and guarantees

(640)

(593)

Payment systems

(4,407)

(2,895)

Card services

(20,598)

(16,433)

Other

(7,830)

(4,229)

(33,475)

(24,150)

Net fee and commission income

139,515

118,865

8. Net trading income

in thousands of BGN

2022

2021

Net trading income arises from:

- Debt instruments

114

- Equities

(656)

200

- Foreign exchange rate fluctuations

20,259

15,148

Net trading income

19,717

15,380

9. Other net operating income

BGN '000

2022

2021

Other net operating income arising from:

-net income from transactions and revaluation of gold and

precious metals

2,068

1,169

Rental income

5,579

5,702

- Debt instruments

827

1,058

- Equities

(303)

- income from management of assigned receivables

5,620

3,075

- Gain on administration of loans acquired through business

combination

404

337

Other net operating income

14,195

11,368

Notes to the financial statements

10. Administrative expenses

in thousands of BGN

2022

2021

General and administrative expenses comprise:

- Personnel cost

74,545

65,440

Amortization of equipment and tangible fixed assets

12,060

11,379

Rights of use assets

40,021

33,915

- Advertising

8,455

8,176

-Telecommunication, software and other computer

maintenance

13,753

12,265

- Other expenses for external services

56,279

48,266

Administrative expenses

205,113

179,441

Personnel costs include salaries, social and health security contributions under the provisions of the local

legislation. At 31 December 2022 the total number of employees was 2,454 (31 December 2021: 2,466).

The amounts accrued in 2022 for services provided by the registered auditors for independent financial audit

amounted to BGN 1.064 thousand. The amounts accrued in 2021 for services provided by the registered

auditors for independent financial audit amounted to BGN 569 thousand. In 2022 and in 2021 no amounts

were accrued for other services unrelated to audit and provided by the registered auditors.

11. Allowance for impairment

in thousands of BGN

2022

2021

Write-downs

Loans and advances to customers

(208,469)

(152,369)

Off balance sheet commitments

(625)

(769)

Reversal of write-downs

Loans and advances to customers

72,929

30,381

Off balance sheet commitments

816

263

Impairment cost, net

(135,349)

(122,494)

The expense for impairment in 2022 and 2021 is due to additional allowances resulting from the development

of credit risk in a period of challenging economic environment and the conservative approach applied by the

Bank in recognising the risk of loss for certain individually impaired exposures.

12. Other income/(expenses), net

in thousands of BGN

2022

2021

Proceeds/loss from the sale and write-off of assets acquired as

collateral

2,608

(6,041)

Revaluation of investment property

14,769

30,340

Expense/(income) from sale of investment property

(3,221)

Dividend income

578

401

Cost of guarantee schemes

(24,534)

(22,202)

Income for provisions for pending court cases

508

Other (expenses)/income, net

(3,243)

1,732

Total

(12,960)

4,754

Notes to the financial statements

13. Income tax expense

BGN '000

2022

2021

Current taxes

(8,325)

(6,171)

Deferred taxes (See Note 20)

(1,215)

(5,322)

Income tax expense

(9,540)

(11,493)

Reconciliation between tax expense and the accounting profit is as follows:

in thousands of BGN

2022

2021

Accounting profit before taxation

90,745

111,576

Corporate tax at applicable tax rate (10% for 2022 and 10% for

2021)

9,075

11,158

Effect of tax rates of foreign subsidiaries and branches

195

110

Tax effect of permanent tax differences

270

177

Other differences

Income tax expense

9,540

11,493

Effective tax rate

10.51%

10.30%

14. Cash and balances with Central Banks

in thousands of BGN

2022

2021

Cash on hand

- in BGN

184,774

189,399

- in foreign currency

63,766

58,053

Balances with Central Banks

1,427,241

1,455,801

Current accounts and amounts with foreign banks

235,590

165,600

Total

1,911,371

1,868,853

15. Investments in securities

In thousands of BGN

2022

2021

Bonds and notes issued by:

Bulgarian Government

- denominated in BGN

446,417

367,761

- denominated in foreign currencies

129,255

211,288

Foreign governments

1,575,324

433,129

Corporates

405,558

317,559

Banks

10,477

124,057

Other issuers – equity instruments

31,106

28,905

Total

2,598,137

1,482,699

Of which financial assets:

at fair value through other comprehensive income

468,247

901,155

at amortised cost

1,862,203

316,139

at fair value through profit and loss

267,687

265,405

Total

2,598,137

1,482,699

A portion of the reported bonds of the Bulgarian and of foreign governments amounting to BGN 37,831

thousand (BGN 83,314 thousand in 2021) are subject to a Total Return Swap Agreement.

At the end of 2022, as at the end of 2021, no securities were subject to repurchase agreements.

Notes to the financial statements

The investments in securities reported in portfolios of financial assets at fair value in profit or loss, financial

assets at fair value in other comprehensive income and financial assets at amortised cost are mostly

investments in government securities from first-class issuers which are highly liquid and with the most

favourable capital treatment.

The bank manages its investments in debt securities in line with the current market expectations and

dynamics. As at 31.12.2022 the portfolio duration is 2.2 years, while a year earlier it was 3.8 years.

16. Loans and advances to banks and other financial institutions

(a) Analysis by type

in thousands of BGN

2022

2021

Placements with banks

140,685

38,727

Other

124,299

48,685

Total

264,984

87,412

(b) Geographical analysis

in thousands of BGN

2022

2021

Domestic banks and financial institutions

105,262

22,164

Foreign banks and other financial institutions

159,722

65,248

Total

264,984

87,412

17. Loans and advances to customers

in thousands of BGN

31/12/2022

Gross value

Allowance for

impairment

Amortised cost

Large enterprise

2,270,652

(119,107)

2,151,545

Medium enterprise

1,085,974

(186,337)

899,637

Small business

878,135

(10,929)

867,206

Micro enterprise

198,538

(2,019)

196,519

Retail Banking

- Consumer loans

1,063,724

(41,873)

1,021,851

- Mortgage loans

1,128,416

(11,167)

1,117,249

- Credit cards

138,855

(11,336)

127,519

- Other programmes and collateralised financing

3,015

Total

6,767,309

(382,768)

6,384,541

BGN '000

31.12.2021 г.

Gross value

Allowance for

impairment

Amortised cost

Large enterprise

2,474,806

(199,830)

2,274,976

Medium enterprise

1,123,631

(177,627)

946,004

Small business

878,125

(12,885)

865,240

Micro enterprise

182,625

(2,853)

179,772

Retail Banking

- Consumer loans

982,976

(45,624)

937,352

- Mortgage loans

986,104

(10,922)

975,182

- Credit cards

148,037

(13,999)

134,038

- Other programmes and collateralised financing

3,017

Total

6,779,321

(463,740)

6,315,581

The distribution of the loan portfolio is reported according to the Bank’s business segments.

Notes to the financial statements

(a) Movement in impairment allowances

in thousands of BGN

Balance as at 01 January 2022

463,740

Additional allowances

208,469

Amounts released

(72,929)

Write-offs

(217,974)

Other

1,462

Balance as at 31 December 2022

382,768

18. Property and equipment

in thousands of BGN

Land and

Buildings

Fixtures

and fittings

Motor

vehicles

Assets

under

Construction

Leasehold

Improvements

Total

Cost

At 01 January 2021

22,208

138,906

6,632

16,314

64,197

248,257

Additions

4,035

9,403

13,462

Disposals

(11,782)

(4,369)

(16,151)

Transfers

6,778

(8,574)

130

(1,666)

At 31 December

2021

26,243

133,926

6,632

17,143

59,958

243,902

Additions

35,517

35,523

Disposals

(6,760)

(416)

(183)

(7,359)

Transfers

9,475

(14,341)

940

(3,926)

At 31 December

2022

26,243

136,647

6,216

38,319

60,715

268,140

Amortisation

At 01 January 2021

6,085

121,094

6,434

41,672

175,285

Accrued during the

year

807

5,643

110

2,304

8,864

On disposals

(11,763)

(4,365)

(16,128)

At 31 December

2021

6,892

114,974

6,544

39,611

168,021

Accrued during the

year

969

5,636

2,566

9,228

On disposals

(6,751)

(416)

(182)

(7,349)

At 31 December

2022

7,861

113,859

6,185

41,995

169,900

Carrying amount

At 01 January 2021

16,123

17,812

198

16,314

22,525

72,972

At 31 December

2021

19,351

18,952

17,143

20,347

75,881

At 31 December

2022

18,382

22,788

38,319

18,720

98,240

Notes to the financial statements

The fair value of assets constituting land and buildings was determined by independent property assessors

holding recognised professional qualification and recent experience in assessing property with similar

location and category. The Bank's policy requires that independent assessors determine the fair value

sufficiently frequently so as to ensure that the balance sheet value does not differ significantly from the fair

value at the end of the reporting period. As at 31 December 2022 the fair value of land and buildings was

not significantly different from their balance sheet value as at that date. The fair value of land and buildings

is categorised as Level 3 fair value on the basis of incoming data on the assessment methodology used.

Assessment methodology

Significant unobservable

inputs

Connection between

key unobservable

inputs and fair value

1. Discounted cash flows: this valuation model

takes into account the present value of cash

flows generated by property, taking into

account the expected growth of rental prices,

the period required for cancellation, the level of

occupancy, premiums such as periods in which

no rent is paid and other expenses which are

not paid by tenants. The expected net cash

flows are discounted using discount rates

adjusted for risk. Among other factors, when

determining the discount rate, the quality of the

building and its location are taken into account

(first-rate or second-

rate), as well as the

creditworthiness of the tenant and the duration

of the loan agreement.

1. Expected market

growth of rent (4.5-6.8%,

weighted average 5.6%).

Period for

cancellation (3 months on

average after each rental

agreement).

3. Occupancy (90-

95%, weighted average

92.5%).

4. Periods

when no

rent is paid (1 year for new

rental agreement).

Risk adjusted

discount rate (4-9%,

weighted average 6.5%).

The fair value will increase

(decrease) where:

•

the expected market

growth of rent is higher

(lower);

•

periods for cancellation

are shorter (longer);

•

Occupancy is higher

(lower);

• the periods when no rent

is paid are shorter

(longer); or

•

the risk adjusted

discount rate is lower

(higher).

2. Market approach/Comparative approach.

This method is based on the comparison of the

property being

evaluated to other similar

properties which have been sold recently or

which are available for sale. Using this method,

the value of a given property is determined in

direct comparison to other similar properties

which have been sold in a period of time close

to the time when the valuation is made. Based

on detailed research, review and analysis of

data from the property market, the value is

formed and it is the most accurate indicator of

market value.

This method consists of using information

about actual

transactions in the real estate

market in the last six months. Successful

application of this method is only possible

where a trustworthy database is available as

regards actual transactions with properties

similar to the property being valued.

Information from real estate sites, local press

and other such refers to future investment

intentions of the seller and cannot be deemed

a trustworthy source of information. When

using such sites, the offer price for each

analogous property is discounted at the

valuator’s discretion, but by no less than 5%.

1. Expected market growth

of property (8-10%,

weighted average 9%).

2. Time required to effect

the sale (4 months on

average after the offer is

placed).

3. Transaction success

rate (90-

96%, weighted

average 95%).

4. Location (1.0-1.05,

weighted average 1.025).

5. Property status (1.0-1.1,

weighted average 1.05).

The fair value will increase

(decrease) where:

•

the expected

market growth of property

is higher (lower);

• the period of time

required for the sale is

shorter (longer);

• there is a change

in the technical condition

of the property

Notes to the financial statements

19. Intangible assets

in thousands of BGN

Software and licences

Total

Cost

At 01 January 2021

45,587

Additions

Disposals

Transfers

1,666

At 31 December 2021

47,255

Additions

Transfers

3,926

At 31 December 2022

51,181

Amortisation

At 01 January 2021

30,909

Accrued during the year

2,515

On disposals

At 31 December 2021

33,424

Accrued during the year

2,832

At 31 December 2022

36,256

Carrying amount

At 01 January 2021

14,678

At 31 December 2021

13,831

At 31 December 2022

14,925

20. Deferred Taxation

Deferred income taxes are calculated on all temporary differences under the liability method using a principal

tax rate of 10%.

Deferred income tax assets and liabilities are attributable to the following items:

BGN '000

Assets

Liabilities

Net

2022

2021

2022

2021

2022

2021

Property, equipment and intangibles

2,852

2,800

2,852

2,800

Investment Property

24,815

23,675

24,815

23,675

Other

(178)

(201)

334

156

133

Net tax (assets)/liabilities

(178)

(201)

28,001

26,809

27,823

26,608

Movements in temporary differences in 2022 at the amount of BGN 1,215 thousand are recognised in the

profit for the year.

21. Repossessed assets

in thousands of BGN

2022

2021

Land

245,557

249,612

Buildings

156,173

187,962

Machines, plant and vehicles

10,425

12,596

Fixtures and fittings

841

817

Total

412,996

450,987

Notes to the financial statements

Repossessed assets acquired as collateral are measured at the lower of cost and net realisable value. The

net realizable value of the lands and buildings is approximately equal to their fair value. The assessment

methodology for land and buildings is given in note 18.

22. Investment Property

in thousands of BGN

Balance as at 01 January 2022

732,850

Additions

10,318

Transferred from repossessed assets

Revaluation of investment property to the fair value recognised at transfer

14,769

Write-offs upon sale

(7,613)

Balance as at 31 December 2022

750,324

23. Investments in subsidiaries

Investments in subsidiaries (see Note 36) are as follows:

31/12/2022

in thousands

of BGN

Entity:

% held

Acquisition

cost

Allowance

for

impairment

Carrying

amount

First Investment Finance B.V., Netherlands

100%

3,947

Diners Club Bulgaria AD

96.51%

5,743

First Investment Bank − Albania Sh.a.

100%

23,420

Debita OOD

70%

105

(104)

Fi Health Insurance AD

59.10%

3,315

Creative Investment EOOD

100%

Lega Solutions EOOD

100%

AMC Imoti EOOD

100%

MyFin EAD

100%

2,000

Incasso Guarant EOOD

100%

100

Total

38,630

(104)

38,526

31/12/2021

in thousands

of BGN

Entity:

% held

Acquisition

cost

Allowance

for

impairment

Carrying

amount

First Investment Finance B.V., Netherlands

100%

3,947

Diners Club Bulgaria AD

94.79%

5,443

First Investment Bank − Albania Sh.a.

100%

23,420

Debita OOD

70%

105

(104)

Realtor OOD

51%

(74)

Fi Health Insurance AD

59.10%

3,315

Balkan Financial Services EAD

100%

7,743

Turnaround Management EOOD

100%

Creative Investment EOOD

100%

Lega Solutions EOOD

100%

AMC Imoti EOOD

100%

MyFin EAD

100%

2,000

Total

46,051

(178)

45,873

Notes to the financial statements

24. Rights of use assets

in thousands of BGN

At 01 January 2022

77,725

Amortisation

(40,021)

Effect of modification to lease terms and expectations on lease term

86,455

At 31 December 2022

124,159

Lease liabilities

At 01 January 2022

77,785

Lease payments

(40,001)

Effect of modification to lease terms and expectations on lease term

86,456

At 31 December 2022

124,240

Right-of-use assets recognised by the Bank are the branches and offices in various towns in Bulgaria and

Cyprus, as well as the buildings in which the Bank's headquarters are located - lines Upon completing the

initial recognition, the Bank analysed and took into account information on the expected duration of the period

in which the Bank will be using the assets. In 2022 some of these expectations changed and as a result the

Bank reviewed its initial assessment and recognized an increase in the right-of-use assets in the amount of

BGN 86,456 thousand, and in lease liabilities in the amount of BGN 86,456 thousand.

In the assessment of right-of-use assets and lease liabilities, the Bank took into consideration the current

level of financing costs in case it plans to finance the purchase of the assets in question, and included this

assumption both in the initial, and in the subsequent valuation of right-of-use assets and of lease liabilities.

The table below analyses lease liabilities according to the expected residual term of rental agreements:

In BGN '000

Maturity analysis of lease liabilities

To 1 year

From 1 to 5 years

Total

At 01 January 2022

19,527

58,258

77,785

At 31 December 2022

29,530

94,710

124,240

25. Other assets

in thousands of BGN

2022

2021

Deferred expense

11,338

14,779

Gold

2,642

2,765

Other assets

100,266

98,592

Total

114,246

116,136

26. Due to banks

in thousands of BGN

2022

2021

Term deposits

3,668

Payable on demand

42,035

29,879

Total

45,703

29,879

Notes to the financial statements

27. Due to other customers

in thousands of BGN

2022

2021

Retail customers

- current accounts

2,859,322

2,275,583

- term and savings deposits

4,401,427

4,718,411

Businesses and public institutions

- current accounts

3,157,892

1,996,496

- term deposits

379,809

434,761

Total

10,798,450

9,425,251

28. Liabilities evidenced by paper

in thousands of BGN

2022

2021

Acceptances under letters of credit

3,388

Debt related to agreements for full swap of profitability

39,874

74,018

Financing from financial institutions

36,611

26,227

Liabilities related to a structured investment product

6,884

2,638

Obligations under loan agreements

33,118

Total

116,487

106,271

Financing from financial institutions through extension of loan facilities can be analysed as follows:

in thousands of BGN

Lender

Interest rate

Maturity

Amortised cost

as at 31

December 2022

European Investment Fund – JEREMIE 2

0% - 2.79%

30/09/2025

1,506

Bulgarian Development Bank AD - program for

promotion of SMEs and micro

3.05%

15/03/2027

11,251

Bulgarian Development Bank AD - program for indirect

financing of SMEs

3.85%

30/11/2028

3,680

Fund Manager of financial instruments in Bulgaria -

microcredit program with shared risk

31/12/2033

10,636

Fund Manager of financial instruments in Bulgaria - rural

financing program

31/12/2031

9,538

Total

36,611

BGN '000

Lender

Interest rate

Maturity

Amortised cost as at 31

December 2021

European Investment Fund – JEREMIE 2

0% - 1.087%

30/09/2025

2,731

Bulgarian Development Bank AD - program

for promotion of SMEs and micro

15/03/2027

11,241

Bulgarian Development Bank AD - program

for indirect financing of SMEs

1.583%

30/11/2028

4,284

Fund Manager of financial instruments in

Bulgaria - microcredit program with shared

risk

31/12/2033

7,971

Total

26,227

Notes to the financial statements

29. Hybrid debt

in thousands of BGN

Principal

amount

Amortised cost as at 31

December 2022

Hybrid debt with principal EUR 60 mio

117,350

123,839

Hybrid debt with principal EUR 30 mio

58,675

58,829

Hybrid debt with principal EUR 30 mio

58,675

54,590

Hybrid debt with principal EUR 10 mio

19,558

19,603

Total

254,258

256,861

BGN '000

Principal

amount

Amortised cost as at 31

December 2021

Hybrid debt with principal EUR 40 mio

78,233

84,910

Hybrid debt with principal EUR 60 mio

117,350

123,840

Hybrid debt with principal EUR 30 mio

58,675

58,829

Hybrid debt with principal EUR 27.133 mio

53,068

53,154

Total

307,326

320,733

In December 2021, the Bank attracted by issuing first and second tranche of the issue ISIN code

XS2419929422 Hybrid Debt Issue total EUR 27,133

In April 2022, the Bank attracted by issuing third tranche of the issue ISIN code XS2419929422 Hybrid Debt

Issue for EUR 2, 867

In August 2022, the Bank attracted by issuing first tranche of the issue ISIN code XS2488805461 Hybrid

Debt Issue for EUR 10,000

The bonds under all instruments are registered, dematerialized, interest-bearing, perpetual, unsecured,

freely transferable, non-convertible, deeply subordinated and without incentive to redeem.

All hybrid instruments fully comply with the requirements of Regulation 575/2013 and are included in the

additional tier 1 capital.

30. Other liabilities

in thousands of BGN

2022

2021

Liabilities to personnel

1,157

1,289

Provisions for pending court cases

440

523

Impairment on off balance sheet commitments

1,152

1,343

Other payables

4,650

4,662

Total

7,399

7,817

The provisions for pending court cases were calculated on the basis of the Bank's expectations (using

internal and external experts) regarding the outcome of these court cases.

31. Capital and reserves

(a) Number and face value of registered shares as at 31 December 2022

The subscription for the public offering of shares of First Investment Bank AD was completed successfully

on 3 July 2020. Out of the 40 000 000 ordinary dematerialized shares with nominal value of BGN 1, and

issue value of BGN 5.00 each, a total of 39 084 800 shares were subscribed and paid up.

Notes to the financial statements

On 31 July 2020 First Investment Bank’s capital increase was registered in the Commercial Register and

was successfully completed on 03 July 2020 based on the prospectus confirmed by the Financial Supervision

Commission.

Thus, the Bank’s capital was increased to BGN 149 084 800 by issue of 39 084 800 new ordinary, registered,

dematerialized shares, each with one voting right in the general meeting, with nominal value of BGN 1 and

issue value of BGN 5. The amount of the capital after the increase was reflected in the By-Laws of First

Investment Bank AD after approval granted by the Bulgarian National Bank.

With relation to this issue, the Bank’s premium reserve increased by BGN 153,017 thousand, net of the issue

costs, reaching a total amount of BGN 250,017 thousand

(b) Shareholders

The table below shows those shareholders of the Bank holding shares as at 31 December 2022 together

with the number and percentage of total issued shares.

Number of

% of issued share

capital

Mr. Ivailo Dimitrov Mutafchiev

46,750,000

31.36

Mr. Tzeko Todorov Minev

46,750,000

31.36

Bulgarian Bank for Development AD

27,350,000

18.35

Valea Foundation

11,734,800

7.87

Other shareholders (shareholders holding shares subject

to free trade on the Bulgarian Stock Exchange – Sofia)

16,500,000

11.06

Total

149,084,800

100.00

Statutory reserves include amounts set aside for purposes regulated by local legislation. According to

Bulgarian legislation the Bank is obliged to set aside at least 1/10 of its annual profit as statutory reserve

until the total amount of reserves reaches 1/10 of the Bank’s share capital.

In 2022, as in the previous year, the Bank did not distribute dividends.

32. Commitments and contingent liabilities

Contingent liabilities

The Bank provides financial guarantees and letters of credit to guarantee the performance of customers to

third parties. These agreements have fixed limits and generally extend for a period of up to two years.

The contractual amounts of commitments and contingent liabilities are set out in the following table by

category. The amounts reflected in the table for contingent liabilities represent the maximum accounting loss

that would be recognised in the statement of financial position if counterparts failed completely to perform as

contracted and any collateral or security proved to be of no value.

in thousands of BGN

2022

2021

Bank guarantees

157,251

161,233

Unused credit lines

837,477

644,288

Letters of credit

31,767

12,507

Total

1,026,495

818,028

Impairment on off balance sheet commitments

1,152

1,343

These commitments and contingent liabilities have off balance-sheet credit risk and only organization fees

and accruals for probable losses are recognised in the statement of financial position until the commitments

are fulfilled or expire. Most of the contingent liabilities and commitments will expire without being advanced

in whole or in part. Therefore, the amounts do not represent expected future cash flows.

Notes to the financial statements

The contingent loan is a framework agreement for collateral management under numerous loan transactions

made with one or more clients. The contingent loan does not lead to an obligation of the Bank to extend

specific financial instruments. The conclusion of a specific loan transaction with the Bank client, e.g.

extension of a loan or overdraft, contingent liabilities, such as bank guarantees and letters of credit, is subject

to a separate decision and approval of the Bank.

As at the date of the report there are no other significant contingent liabilities and commitments requiring

additional disclosure.

33. Cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprises the following balances

with less than 90 days original maturity:

BGN '000

2022

2021

Cash and balances with Central Banks 1,911,371

1,868,853

Loans and advances to banks and financial institutions with

original maturity less than 3 months

227,006

46,787

Total 2,138,377

1,915,640

34. Average balances

The average carrying amounts of financial assets and liabilities are set out in the table below. The amounts

are calculated by using a simple average of monthly balances for all instruments.

BGN '000

2022

2021

FINANCIAL ASSETS

Cash and balances with Central Banks 2,232,611 1,866,440

Investments in securities 1,655,201 1,350,821

Loans and advances to banks and other financial

institutions

190,966 79,671

Loans and advances to customers 6,300,194 6,193,428

FINANCIAL LIABILITIES

Due to banks 18,443 15,916

Due to other customers 10,056,144 9,242,419

Liabilities evidenced by paper 97,161 104,227

Hybrid debt 327,160 272,944

35. Related party transactions

Parties are considered to be related if one party has the ability to control or exercise significant influence

over the other party on making financial or operational decisions, or both parties are under common control.

Notes to the financial statements

A number of banking transactions are entered into with related parties in the normal course of business.

These include loans, deposits and other transactions. These transactions were carried out on commercial

terms and at market rates. The volume of these transactions and outstanding balances at the end of

respective periods are as follows:

Type of related party

Parties that control or

manage the Bank

Enterprises under

common control

BGN '000

2022

2021

2022

2021

Loans

Loans outstanding at beginning of the

period

3,515

1,769

83,666

84,580

Loans issued/(repaid) during the

period

(571)

1,746

(5,350)

(914)

Loans outstanding at end of the

period

2,944

3,515

78,316

83,666

Deposits and loans received:

At beginning of the period

13,725

13,275

125,350

113,352

Received/(paid) during the period

470

450

(10,173)

11,998

At the end of the period

14,195

13,725

115,177

125,350

Deposits placed

Deposits at beginning of the period

5,868

2,955

Deposits placed/(matured) during the

year

86,278

2,913

Deposits at end of the period

92,146

5,868

Other receivables

At beginning of the period

18,037

17,565

Received/(paid) during the period

(5,570)

472

At the end of the period

12,467

18,037

Other borrowings

At beginning of the period

420

100

Received/(paid) during the period

(270)

320

At the end of the period

150

420

Off-balance sheet commitments

issued by the Bank

At beginning of the period

1,061

1,031

2,792

3,412

Issued/(expired) during the period

(38)

(763)

(620)

At the end of the period

1,023

1,061

2,029

2,792

Calculation on leasing obligations

At beginning of the period

1,513

Received/(paid) during the period

1,171

1,513

At the end of the period

2,684

1,513

Notes to the financial statements

The key management personnel received remuneration of BGN 12,068 thousand for 2022 (2021: BGN

10,863 thousand).

36. Subsidiaries

(a) First Investment Finance B.V.

In April 2003 the Bank created a special purpose entity, incorporated in the Netherlands, First Investment

Finance B.V. The company is owned by the Bank. The purpose for creating the entity is to accomplish a

narrow and well-defined objective of receiving loans from foreign financial institutions and attracting investors

by issuing bonds and other financial instruments guaranteed by the Bank. The entity’s issued and paid up

share capital is EUR 18 thousand divided into 180 issued and paid up shares, each with nominal value of

EUR 100.

(b) Diners Club Bulgaria AD

In May 2005 the Bank acquired 80% of the share capital of Diners Club Bulgaria AD. The company was

incorporated in 1996 as a franchise and processing agent of Diners Club International. As at 31 December

2022 the share capital of the company is BGN 910 thousand, and the Bank’s shareholding is 96.51%.

In April 2006 the Bank acquired 99.9998% of the capital of First Investment Bank − Albania Sh.a. upon its

incorporation. On 27 June 2007 First Investment Bank – Albania was granted a full banking licence by the

Bank of Albania, and on 1 September 2007 it effectively took over the activities of the former branch FIB –

Tirana, assuming all rights and obligations, assets and liabilities.

As at 31 December 2022 the share capital of First Investment Bank – Albania Sh.a. was EUR 11,975

thousand, fully paid up, and the Bank’s shareholding is 100%.

(d) Debita OOD

Acting jointly the Bank and First Financial Brokerage House OOD (FFBH) set up two new companies Debita

OOD and Realtor OOD, which were entered in the Commercial Registry in January 2010. The capital of the

two companies is BGN 150,000 each, distributed in shares with value of BGN 100 each, as follows: Realtor

OOD - 70%, i.e. 1.050 shares for the Bank and 30%, i.e. 450 shares for FFBH OOD.

The companies were established as servicing companies within the meaning of Article 18 of the Law on

Special Investment Purpose Companies. The main lines of business for Debita OOD include acquisition,

servicing, management and disposal of receivables and the related consultancy services; the main lines of

business for Realtor OOD include management, servicing and maintenance of real estate, construction and

refurbishment works and consultancy in the field of real estate.

(e) Realtor OOD

Acting jointly the Bank and First Financial Brokerage House OOD (FFBH) set up new company Realtor OOD,

which were entered in the Commercial Registry in January 2010. The capital of the two companies is BGN

150,000 each, distributed in shares with value of BGN 100 each, as follows: Realtor OOD - in liquidation -

Type of related party

Parties that control or manage

the Bank

Enterprises under common control

BGN '000

2022

2021

2022

2021

Interest income

3,065

3,089

Interest expense

231

547

Fee and commission income

1,769

1,082

Fee and commission expense

301

296

Notes to the financial statements

51%, i.e. 765 shares for the Bank and 49%, i.e. 735 shares for FFBH OOD

The company were established as servicing companies within the meaning of Article 18 of the Law on Special

Investment Purpose Companies. The main lines of business for Realtor OOD include management, servicing

and maintenance of real estate, construction and refurbishment works and consultancy in the field of real

estate.

By the decision of the general meeting of associates held on 14.06.2021 the operations of Realtor OOD were

terminated and winding-up proceedings were initiated, to be completed within six months. The notice to

creditors was published in the Commercial Register and Register of Non-for-Profit Legal Entities on

08.09.2021, and this is the starting date of the period for winding-up.

Realtor OOD has been deregistered from the Commercial Register and Register of Non-Profit Legal Entities

with the Registration Agency as from 20.07.2022.

(f) Fi Health Insurance AD

In the second half of 2010 the Bank acquired a majority stake capital of Health Insurance Fund FI Health AD

(formerly Health Insurance Fund Prime Health AD), a company engaged in voluntary health insurance as

well as acquisition, management and sale of investments in other companies. With a decision of the Financial

Supervision Commission issued in June 2013 the company has been granted a license to operate as an

insurer. The name was changed to FI Health Insurance AD and the principal activity is insurance – Disease

and Accident. In June 2018 the company expanded its license with one more insurance class - "Various

financial loss". As at 31 December 2022 the share capital of the company is BGN 5,000 thousand, and the

Bank’s shareholding is 59.10%.

(g) Balkan Financial Services EAD

In February 2011 the Bank acquired 100 shares representing 100% of the capital of Balkan Financial

Services EOOD. The company is engaged in consultancy services related to implementation of financial

information systems and software development. In January 2012 the company was transformed into a sole-

shareholder company. As at 31 December 2021 the share capital of the company is BGN 6,437 thousand,

and the Bank’s shareholding is 100%.

On 11.11.2021 the Management Board of First Investment Bank as the sole shareholder of Balkan Financial

Services EOOD decided to terminate the company, announce its liquidation and open winding-up

proceedings; this resolution was approved by the Supervisory Board on 22.12.2021.

Balkan Financial Services EAD has been deregistered from the Commercial Register and Register of Non-

Profit Legal Entities with the Registration Agency as from 09.12.2022.

(h) Turnaround Management EOOD - deleted trader, Creative Investment EOOD and Lega Solutions

EOOD

During the first half of 2013 the Bank established as the sole shareholder the companies Turnaround

Management EOOD, Creative Investment EOOD and Lega Solutions EOOD. Each company has the

minimum required capital of BGN 2 and their principal activities include manufacturing and trade in goods

and services in Bulgaria and abroad (Turnaround Management EOOD, Creative Investment EOOD),

acquisition, management and sale of assets, information processing, financial consultations (Lega Solutions

EOOD), etc.

After completion of winding-up proceedings for Turnaround Management EOOD, based on a resolution of

the Management Board of First Investment Bank as the sole shareholder dated 07.01.2021 and approved

by the Bank’s Supervisory Board on 20.01.2021, on 11.01.2022 the company was delisted in the Commercial

(i) AMC Imoti EOOD

AMC Imoti EOOD was registered in September 2010 and was acquired by the Bank in 2013 through the

purchase of MKB Unionbank EAD as its subsidiary. The scope of operations of the company includes

activities related to acquisition of property rights and their subsequent transfer, as well as research and

evaluation of real estate, property management, consulting and other services. As at 31 December 2022 the

Notes to the financial statements

capital of the company is BGN 500 thousand, and the Bank is the sole owner.

(j) MyFin EAD

At its meeting held on 21 March 2019 the Bank's Managing Board decided to establish the sole-shareholder

company MyFin EAD to be operating as an issuer of electronic money within the meaning of Article 34, Para.

2(2) of the Payment Services and Payment Systems Act. The Managing Board decision was approved by

the Supervisory Board on 27 March 2019. On 19 April 2019 the Bank paid up the company's capital,

amounting to BGN 1,000 thousand, as per the decisions of the competent bodies. The company holds a

license to operate as an electronic money institution, and also has the right to carry out the activities listed

in the payment services license, as stated in the company’s scope of operation by Resolution No. 71 of

27.02.2020 issued by the BNB Governor, under No. BNB-26660/02.03.2020. After the company obtained its

license, it was listed in the Commercial Register and Register of Non-Profit Legal Entities on 25.03.2020

under listing No. 20200325093135

The company’s own capital was increased from BGN 1 000 thousand to BGN 2 000 thousand through the

issue and subscription by the Bank as the sole shareholder of 1 000 000 new ordinary registered

dematerialised voting shares, each with a nominal value of BGN 1 (one), for a total value of BGN 1 000 000

(one million). The resolution for the capital increase was made by the Management Board at its meeting held

on 17.06.2021, and then approved by the Bank’s Supervisory Board on 30.06.2021. The company’s

company increase was listed in the Commercial Register and Register of Non-Profit Legal Entities on

02.09.2021 under listing No. 20210902164014.

(k) Incasso Guarant EOOD

Incasso Guarant EOOD was established by Management Board resolution of 09.08.2022 approved by the

Supervisory Board on 24.08.2022, and listed in the Commercial Register and Register of Non-for-Profit Legal

Entities on 09.09.2022; its field of operation will be: private security services, personal (professional) security

services for individuals, security of valuable shipments and cargo, security of railway transport, security of

property of both individuals and legal entities, of buildings, premises and business facilities, security with the

help of signal-notifying equipment (subject to licensing), development, design and construction of high-tech

systems for security and video surveillance, as well as any commercial activity not prohibited by law.

As at 31 December 2022 the capital of the company is BGN 100 thousand, and the Bank is the sole owner.

37. Post balance sheet events

No adjusting and significant non-adjusting events have occurred after the end of the reporting period, other

than those disclosed below:

• As disclosed in Note 29, in the period between December 2021 and August 2022 the Bank successfully

issued perpetual, non-cumulative, uncollateralized, deeply subordinated, non-convertible notes in the

amount of EUR 40 000 000 (forty million) („The New Issue“). The purpose of the New Issue was to replace

a previous issue of perpetual, non-cumulative, uncollateralized, deeply subordinated notes of the Bank of

the same amount, registered under ISIN code BG2100008114 („The Old Issue“).

• In accordance with regulatory requirements, and after obtaining approval from the Bulgarian National

Bank, on 2 February 2023 the Bank repurchased the Old Issue, and as a result, the planned replacement

of the Old Issue was completed successfully, in line with the Bank’s strategy.

This is a translation from Bulgarian of the audit report of First Investment Bank AD for the year ended 31 December 2022.

REPORT OF THE INDEPENDENT AUDITORS

To the shareholders of

First Investment Bank AD

Report on the audit of the individual financial statement

Opinion

We have audited the individual financial statements of First Investment Bank AD (the "Bank"),

which include the individual statement of financial position as at 31 December 2022 and the

individual statement of profit or loss and other comprehensive income, the individual statement

of changes in equity containing and the individual statement of cash flows for the year then

ended, as well as the explanatory notes to the financial statements and summary disclosure of

significant accounting policies.

In our opinion, the accompanying individual financial statements present fairly, in all material

respects, the financial position of the Bank as at 31 December 2022 and its financial results

from operations and cash flows for the year then ended, in accordance with International

Standards for Financial Reporting (IFRS) adopted by the European Union (EU).

Basis for expressing opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our

responsibilities under these standards are further described in the Auditor's Responsibilities for

the Audit of Financial Statements section of our report. We are independent of the Bank in

accordance with the International Code of Ethics for Professional Accountants (including the

International Standards of Independence) of the International Ethics Standards Board for

Accountants (the ISAC Code), together with the ethical requirements of the Independent

Financial Audit Act (IAFA), applicable to our audit of the financial statements in Bulgaria, and

we have also fulfilled our other ethical responsibilities in accordance with the requirements of

the FSA and the Code of SMSES. We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of greatest

significance in the audit of the financial statements for the current period. These matters were

considered as part of our audit of the financial statements as a whole and the formation of our

opinion thereon, and we do not provide a separate opinion on these matters.

This is a translation from Bulgarian of the audit report of First Investment Bank AD for the year ended 31 December 2022.

Impairment of accounts receivable

Key audit matter

Matters discussed with the audit

committee

Impairment represents a significant

management judgment regarding the

losses incurred within the Bank's credit

portfolio.

The bank assesses the need for credit

impairment on an individual and portfolio

basis.

Loans represent 50,22% of the Bank's

assets. The bank categorizes its

receivables from customers in 5 (five)

business segments: large, middle, small,

micro enterprises and households. The

share of receivables from large companies

is the largest – 33,70% of total receivables

from customers.

Due to their materiality and the uncertainty

associated with the process of identifying

impaired loans, assessing objective

evidence of impairment and determining

recoverable amount, we define them as a

key audit matter.

The process involves various assumptions

and factors, including the financial

condition of the borrower counterparty,

expected future cash flows, value of the

collateral.

As a result, the use of different modeling

techniques and assumptions may lead to

differences in the assessment of credit

loss impairment.

The exposures that give rise to the

greatest valua

tion uncertainty are those

where there is a risk of cash flow shortages

collateral insufficiency.

The issues discussed cover the positive

outcomes and good practices set

in the

impairment model. The Bank has complied

with IFRS requirements in developing the

impairment policy and rules.

Improvements in the procedures that the

bank should introduce in order to:

−

more clearly documenting

judgments about the future cash

flows of borrowers and the

expected development of credit

exposures for future periods, with

particular attention paid to lending

for working capital by the bank.

−

systematically confirming the

commitment of the owners of the

borrowers to provide continued

support to the companies.

It was discussed with the audit committee

and it was recommended that the bank's

bodies responsible for risk management

monitor changes in risk factors, the

macroeconomic framework and other data

used in the impairment models and that

significant changes be reflected in the

models in a timely manner.

How this key audit question was addressed in our audit

Procedures performed to support our conclusions and discussions:

The internal rules of the bank have been reviewed, we have gained an

understanding of the key controls in the essential business processes, and tests

This is a translation from Bulgarian of the audit report of First Investment Bank AD for the year ended 31 December 2022.

have been made for the effectiveness of the controls, according to the audit

strategy.

- A sample of borrowers was reviewed on the basis of risk analysis, for which

substantive procedures were carried out in connection with an assessment of

the adequacy of the recognized impairment.

For individually charged impairments, we tested assumptions regarding the

identification and quantification of impairments, including projections of future

cash flows and valuations of credit collateral. We reviewed a sample of credit

exposures that continue to be, have occurred or have been exposed to

impairment risk.

- For collective impairments, we reviewed the methodology used by the Bank to

determine them, the reasonableness of the underlying assumptions and the

sufficiency of the data used by management.

- For selected non-performing loans, we have evaluated management's forecast

of cash flow generation, collateral valuations and other repayment sources. In

addition, we tested a sample of serviced loans for which an

assessment of

financial indicators was performed for weaknesses and other risks that could

threaten the ability to repay the exposures.

Corresponding references in the individual financial statement

• Notes 17 and 17a

• Note 2 ( j)

• Note 3 C (iii)

Assets acquired as collateral

Key Audit Question

Matters discussed with the audit

committee

The position in the financial statement in

the amount of BGN 412,996 thousand is

disclosed by relevant subgroups.

The Buildings group contains assets of

varying degrees of completion and are in

accordance with their condition at the date

of acquisition.

Assets worth BGN 46,780 thousand were

sold during the

year. The bank has

recognized in the group of Others

revenues/ (expenses), net (Note 12) profit

in the amount of BGN 2,608 thousand.

The Bank, like any other banking

institution, is exposed to significant risk

regarding the realization of the assets

acquired as collateral.

The actions and procedures that the bank

should introduce in order to enable the

consistent tracking of changes in the

income and expenses part by groups and

subgroups until the time of realization of

the relevant assets are discussed. In

addition, we set out our recommendation

to improve the inv

entory processes of

assets acquired as collateral in order to

better and fully implement the national

financial reporting framework.

This is a translation from Bulgarian of the audit report of First Investment Bank AD for the year ended 31 December 2022.

Key Audit Question

Matters discussed with the audit

committee

How this key audit question was addressed in our audit

Procedures performed to support our conclusions and discussions

- Th

e internal rules of the bank have been reviewed, we have gained an

understanding of the key controls in the essential business processes, and tests

have been made for the effectiveness of the controls, according to the audit

strategy.

- For a sample of newly acquired collateral assets, acquisition documents were

reviewed,

- Fair value determination reports were reviewed for a sample of current collateral

assets.

The supporting documents for our sample were reviewed in relation to the

largest object - brokerage agreement, lease agreement, commission agreement,

as well as their annexes. Substantive procedures were performed to confirm the

completeness and accuracy of the reclassification between individual groups.

Corresponding references in the individual financial statement

• Note 12

• Note 21

Litigation and Provisions

Key Audit Question

Matters discussed with the audit

committee

The Bank, like any other banking

institution, is exposed to significant risk of

litigation and regulatory scrutiny. The

extent of the impact cannot always be

predicted, but may result in provisions for

contingent and other liabilities depending

on the rele

vant facts and circumstances.

The level of provisions is subject to

management and judgment based on legal

advice.

The bank has recognized provisions in the

amount of BGN 440

thousand for legal

disputes.

In connection with issued bank

guarantees, the bank has blocked funds in

the amount of BGN 43,094 thousand,

which are disclosed in note 2

5 of the

individual financial statement (included in

the Other assets subgroup).

The recognition and valuation of

provisions have been discussed with the

Audit Committee to ensure that the bank

has correctly applied its provisioning

policies.

Disputes where the bank did not recognize

provisions were discussed in order to

satisfy ourselves sufficiently that there was

no need for additional provisioning and in

particular:

the legal department of the bank reports to

the Audit Committee the current status of

legal disputes. Material changes that have

occurred are discussed, taking into

account potential changes in provisions.

Discussion is also done to identify any

material litigation.

This is a translation from Bulgarian of the audit report of First Investment Bank AD for the year ended 31 December 2022.

Key Audit Question

Matters discussed with the audit

committee

Due to the ambiguities of the emergence

and presentation of claims related to

lawsuits against the bank, there is a risk of

incomplete or untimely reflection in the

financial statement of legal claims

pertaining to the relevant reporting period.

How this key audit question was addressed in our audit

Procedures performed to support our conclusions and discussions

The internal rules of the bank have been reviewed, we have gained an

understanding of the key controls in the essential business processes, and tests

have been made for the effectiveness of the controls, according to the audit

strategy.

- A letter was received from the bank's legal department, as well as from external

legal consultants, regarding information on cases filed in foreign jurisdiction and

subsequent proceedings in Bulgaria. The pending court cases in Bulgarian and

Romanian courts, on which no final decisions have entered into force, are listed.

Corresponding references in the individual financial statement

• Note 25

• Note 30

Other matters

In determining risk-weighted assets, the management excluded аssets with the right to use

according to IFRS 16 "Leasing" in the amount of BGN 1,24,159,000.

Other information different from the financial statement and the auditor's report thereon

Management is responsible for the other information. The other information consists of an

activity report (on an individual basis), incl. corporate governance statement, remuneration

policy implementation report and non-financial statement prepared by management under

Chapter Seven of the Accounting Act, but excluding the financial statement and our auditor's

report thereon, which we received prior to the date of our auditor's report.

Our opinion on the financial statement does not extend to the other information, and we do not

express any form of assurance conclusion about it, unless and to the extent expressly stated in

our report.

In connection with our audit of the financial statements, our responsibility is to read the other

information and thereby consider whether that other information is materially inconsistent with

the financial statements or with our knowledge obtained during the audit or otherwise manner

appears to contain material misreporting.

This is a translation from Bulgarian of the audit report of First Investment Bank AD for the year ended 31 December 2022.

In the event that, based on the work we have performed, we conclude that there is a material

misstatement in that other information, we are required to report that fact.

We have nothing to report in this regard.

Responsibilities of management and individuals charged with general management of

the financial statement

Management is responsible for the preparation and fair presentation of these financial

statements in accordance with IFRS applicable in the EU and for such system of internal control

as management determines is necessary to ensure the preparation of financial statements that

are free from material misstatement, whether due to of fraud or error.

In preparing the financial statements, management is responsible for evaluating the Bank's

ability to continue as a going concern, disclosing, where applicable, matters related to the going

concern assumption and using the going concern basis of accounting, unless management does

not intend to liquidate the Bank or cease its operations, or if management has no practical

alternative but to do so.

The persons charged with general management are responsible for the supervision of the

Bank's financial reporting process.

Responsibilities of the auditors for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements taken

as a whole are free from material misstatement, whether due to fraud or error, and to issue an

auditor's report that includes our auditor's opinion. A reasonable degree of assurance is a high

degree of assurance, but it is not a guarantee that an audit performed in accordance with ISAs

will always detect a material misstatement where it exists. Misstatements may arise as a result

of fraud or error and are considered material if they could reasonably be expected, individually

or in the aggregate, to influence the economic decisions of users made on the basis of that

financial report.

As part of the ISA compliance audit, we use professional judgment and maintain professional

skepticism throughout the audit. We also:

— identify and assess the risks of material misstatement of the financial statements, whether

due to fraud or error, design and perform audit procedures responsive to those risks, and

obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion .

The risk of not detecting a material misstatement resulting from fraud is higher than the risk

of a material misstatement resulting from error because fraud may involve collusion, forgery,

intentional omissions, input statements misleading the auditor, as well as ignoring or

circumventing internal control.

— obtain an understanding of internal control relevant to the audit in order to develop audit

procedures that are appropriate in the particular circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the Bank's internal control.

This is a translation from Bulgarian of the audit report of First Investment Bank AD for the year ended 31 December 2022.

— we evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by management.

— reach a conclusion about the appropriateness of management's use of the going concern

basis of accounting and, based on the audit evidence obtained, whether a material

uncertainty exists relating to events or conditions that could give rise to significant doubts

about the Bank's ability to continue as a going concern. If we conclude that a material

uncertainty exists, we are required to draw attention in our auditor's report to the financial

statement disclosures related to that uncertainty or, if those disclosures are inadequate, to

modify our opinion. Our conclusions are based on the audit evidence obtained up to the date

of our auditor's report. However, future events or conditions may cause the Bank to cease

functioning as a going concern.

— we evaluate the overall presentation, structure and content of the financial statement,

including disclosures, and whether the financial statement presents the underlying

transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance, among other matters, the planned scope

and timing of the audit and significant audit findings, including material deficiencies in internal

control, that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with

applicable ethical requirements regarding independence and that we will communicate with

them all relationships and other matters that could reasonably be considered relevant to our

independence. and where applicable, the associated safeguards.

Among the matters communicated with those charged with governance, we identify those

matters that were of greatest significance in the audit of the current period's financial statements

and are therefore key audit matters. We describe these matters in our auditor's report, except

where law or regulation prevents the public disclosure of information about that matter or when,

in extremely rare cases, we determine that a matter should not be communicated in our report.

as it could reasonably be expected that the adverse consequences of such action would

outweigh the public interest benefits of such communication.

We are jointly and severally responsible for the performance of our audit and for the auditor's

opinion expressed by us, in accordance with the requirements of the Law on Independent

Financial Audit applicable in Bulgaria. When undertaking and implementing the engagement for

a joint audit, in connection with which we report, we were also guided by the Guidelines for the

implementation of a joint audit, issued on 13.06.2017 by the Institute of Certified Public

Accountants in Bulgaria and by the Commission for Public supervision of registered auditors in

Bulgaria.

This is a translation from Bulgarian of the audit report of First Investment Bank AD for the year ended 31 December 2022.

Report in relation to other legal and regulatory requirements

Additional reporting matters under the Law on Accounting and in the Law on the Public

Offering of Securities

In addition to our responsibilities and reporting under the IAS described above in the section

"Other information other than the financial statement and the auditor's report thereon" with

respect to the activity report, the corporate governance statement and the non-financial

statement, we have also performed the procedures, added to those required under the IAS,

according to the "Instructions on new and expanded audit reports and communication by the

auditor" of the professional organization of registered auditors in Bulgaria, the Institute of

Certified Public Accountants (ICPA). These procedures concern checks for the presence, as

well as inspections of the form and content of this other information in order to assist us in

forming an opinion on whether the other information includes the disclosures and reports

provided for in Chapter Seven of the Law on Accounting and in the Law on the Public Offering

of Securities, (art . 100n, paragraph 10 of the Law on Public Offering of Securities in connection

with Article 100n, paragraph 8, items 3 and 4 of the Law on the Public Offering of Securities),

applicable in Bulgaria.

Opinion in connection with Art. 37, para. 6 of the Law on Accounting

Based on the procedures performed, our opinion is that:

a) The information included in the activity report for the financial year for which the financial

statement was prepared corresponds to the financial statement.

b) The activity report is prepared in accordance with the requirements of Chapter Seven of the

Law on Accounting and Art. 100(n), para. 7 of the Law on the Public Offering of Securities.

c) In the declaration of corporate governance for the financial year for which the financial

statement was prepared, the required according to Chapter Seven of the Law on Accounting

and Art. 100 (n), para. 8 of the Law on the Public Offering of Securities information.

d) The non-financial statement for the financial year for which the financial statement was

prepared was provided and prepared in accordance with the requirements of Chapter Seven

of the Law on Accounting.

Opinion in connection with Art. 100(n), para. 10 in connection with Art. 100 n, para. 8, items 3

and 4 of the Law on the Public Offering of Securities

Based on the procedures performed and the knowledge and understanding of the enterprise's

activities and the environment in which it operates, in our opinion, the description of the main

characteristics of the enterprise's internal control and risk management systems in relation to

the financial reporting process, which is part of the activity report ( as an element of the content

of the corporate governance statement ) and the information under Art. 10, paragraph 1, letters

"c", "d", "f", "h" and "i" of Directive 2004/25/EC of the European Parliament and of the Council

of 21 April 2004 on takeover proposals do not contain cases of material misreporting.

Additional reporting on the audit of the financial statement in connection with Art.

100(n), para. 4, item 3 of the Law on the Public Offering of Securities

Statement in connection with Art. 100(n), para. 4, item 3, b. "b" of the Law on the Public Offering

of Securities

This is a translation from Bulgarian of the audit report of First Investment Bank AD for the year ended 31 December 2022.

Information regarding transactions with related parties is disclosed in Note 35 to the individual

financial statements. Based on the audit procedures we performed on the related party

transactions as part of our audit of the financial statements as a whole, no facts, circumstances

or other information came to our attention on the basis of which we could conclude that the

related party transactions did not are disclosed in the attached financial statements for the year

ended 31 December 2022, in all material respects, in accordance with the requirements of ISA

24 "Related Party Disclosures". The results of our audit procedures on related party transactions

have been considered by us in the context of forming our opinion on the financial statements as

a whole and not for the purpose of expressing a separate opinion on related party transactions.

Statement in connection with Art. 100(n), para. 4, item 3, b. "c" of the Law on the Public Offering

of Securities

Our responsibilities for an audit of the financial statements as a whole, described in the Auditor's

Responsibilities for the Audit of the Financial Statements section of our report, include

evaluating whether the financial statements present the material transactions and events in a

manner that achieves fair presentation. On the basis of the audit procedures carried out by us

on the material transactions underlying the financial statement for the year ending on 31

December 2022, we have not become aware of any facts, circumstances or other information

on the basis of which we can conclude that they there are cases of material misrepresentation

and disclosure in accordance with the applicable requirements of IFRS adopted by the

European Union. The results of our audit procedures on the transactions and events of the Bank

material to the financial statement have been considered by us in the context of forming our

opinion on the financial statement as a whole, and not for the purpose of expressing a separate

opinion on these material transactions.

Reporting on compliance of the electronic format of the individual financial report,

included in the annual individual financial report for the activity under Art. 100n,

paragraph 4 of the Law on the Public Offering of Securities with the requirements of the

EEEF Regulation.

In addition to our responsibilities and reporting under ISAs described above in the section

"Auditor's Responsibilities for the Audit of the Separate Financial Statements", we have

performed the procedures in accordance with the "Guidance on the expression of an auditor's

opinion in relation to the implementation of the single European electronic format ( EEEF) for

the financial statements of companies whose securities are admitted to trading on a regulated

market in the European Union (EU)" of the professional organization of registered auditors in

Bulgaria, the Institute of Certified Public Accountants". These procedures concern verification

of the form and whether the human-readable part of this electronic format corresponds to the

audited individual financial statement and expressing an opinion regarding the conformity of the

electronic format of the individual financial statement of First Investment Bank AD for the year

ending on 31 December 2022, attached in the electronic file "549300UY81ESCZJ0GR95-

20221231-BG-SEP.XHTML", with requirements of Delegated Regulation (EU) 2019/815 of the

Commission of 17 December 2018 supplementing Directive 2004/109/EC of the European

Parliament and of the Council by means of regulatory technical standards for the determination

of the single electronic reporting format ("EEEF Regulation "). Based on these requirements,

the electronic format of the individual financial report, included in the annual individual financial

This is a translation from Bulgarian of the audit report of First Investment Bank AD for the year ended 31 December 2022.

report for the activity under Art. 100n, para. 4 of the Law of the Public Offering of Securities,

must be presented in XHTML format. The management of First Investment Bank AD is

responsible for implementing the requirements of the EEEF Regulation when preparing the

electronic format of the individual financial statement in XHTML. Our opinion is only regarding

the electronic format of the individual financial report, attached in the electronic file

"549300UY81ESCZJ0GR95-20221231-BG-SEP.XHTML" and does not cover the other

information included in the annual individual financial report for the activity under Art. 100n, para.

4 of the Law of the Public Offering of Securities. Based on the procedures performed, our opinion

is that the electronic format of the individual financial report of "First Investment Bank AD for the

year ending on 31 December 2022, contained in the attached electronic file

"549300UY81ESCZJ0GR95-20221231-BG-SEP.XHTML" , has been prepared in all material

respects in accordance with the requirements of the EEEE Regulation.

Reporting according to Art. 10 of Regulation (EU) No. 537/2014 in connection with the

requirements of Art. 59 of the Law on the Independent Financial Audit

According to the requirements of the Law on the Independent Financial Audit in connection with

Art. 10 of Regulation (EU) No. 537/2014, we additionally report the information set out below.

— Mazars OOD and Ecovis Audit Bulgaria OOD were appointed as mandatory auditors of the

financial statements for the year ending on 31 December 2022 of First Investment Bank AD

("the Bank") by the General Meeting of Shareholders held on 12 May 2022, for a period of

one year.

— The audit of the financial statement for the year ending on 31 December 2022 of the Bank

represents the first full continuous commitment for a mandatory audit of this enterprise

carried out by Mazars OOD and the first continuous full commitment for a compulsory audit

of this enterprise carried out by Ecovis Audit Bulgaria Ltd.

— We confirm that the audit opinion expressed by us is in accordance with the additional report

submitted to the Bank's audit committee, in accordance with the requirements of Art. 60 of

the Law on the Independent Financial Audit.

— We confirm that we have not provided the specified in Art. 64 of the Law on the Independent

Financial Audit prohibited non-audit services.

— We confirm that in performing the audit we have maintained our independence from the

Bank.

Sofia, 30 March 2023

About Ecovis Audit Bulgaria OOD:

Georgi Trenchev

Managing

Director

Georgi Trenchev

Managing Director

Registered auditor responsible for the

audit

Sofia,

Gen. Blvd. Edward I. Totleben, 71-

About MAZARS OOD:

Athanasios Petropoulos

Procurator

Iva Slavkova

Registered auditor responsible for the

audit

City of Sofia, St. Moskovskaya No. 3A

ACTIVITY REPORT

(ON AN INDIVIDUAL BASIS)

OF FIRST INVESTMENT BANK AD

FOR 2022

MARCH 2023

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The present report is prepared on the grounds of and in compliance with the requirements of the

Accounting Act, the Law on Public Offering of Securities, Ordinance №2 of the Financial Supervision

Commission for initial and subsequent disclosure of information in public offering and admittance

for trade on a regulated market of securities, Regulation (EU) No 575/2013 of the European

Parliament and of the Council on prudential requirements for credit institutions and investment

firms, Regulation (EU) 2020/852 of the European Parliament and of the Council on the establishment

of a framework to facilitate sustainable investment, and its supplementing acts, as well as the

National Corporate Governance Code, approved by the Financial Supervision Commission.

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SELECTED INDICATORS

Return-

on-equity

(ROE)

6.34%

BGN 444m

Total income

from banking

operations

Net loans/

deposits

ratio

59.12%

Cost of Risk

2.02%

Customer

deposits

BGN 10.8b

Total assets

BGN 12.7b

BGN 81m

Net Profit

47.57%

Cost/income

ratio

10%

growth in

retail loans

2022

Total

capital

adequacy

21.74%

OPERATING INCOME

BY TYPE OF INCOME

LOANS FOR

INDIVIDUALS

PORTFOLIO BY

SECTORS

2022

2022 2022

LOANS FOR

CORPORATES

2022

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MISSION AND DEVELOPMENT PRIORITIES

First Investment Bank AD aspires to continue to be one of the best banks in

Bulgaria, recognized as a rapidly growing, innovative, customer-oriented bank,

offering outstanding products and services to its customers, ensuring excellent

careers for its employees, and contributing to the community. The Bank shall

continue to develop high-technological solutions providing its customers with

opportunities for banking from any place around the world at any time.

For more information see section „Development priorities“.

SUSTAINABLE

BUSINESS MODEL

AND STABILITY

HIGH QUALITY OF

CUSTOMER SERVICE

SHAREHOLDERS

RETURN

FOCUS ON

DIGITALIZATION AND

INNOVATION

COST OPTIMIZATION

UNIVERSAL BANK

LEADING IN KEY

SEGMENTS

RESPONSIBLE

BANKING FOR

SUSTAINABLE FUTURE

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TABLE OF CONTENTS

MACROECONOMIC DEVELOPMENT .................... 7

BANKING SYSTEM ................................................. 11

FIBANK PROFILE .................................................... 15

Corporate status ............................................ 15

Memberships ................................................. 15

Market position ............................................. 15

Market share ................................................. 15

Correspondent relations ............................... 16

Branch network ............................................. 16

Subsidiaries .................................................... 16

Awards 2022 .................................................. 17

FIBANK: DATES AND FACTS................................. 18

HIGHLIGHTS 2022 ................................................. 21

FINANCIAL REVIEW .............................................. 24

Key indicators ................................................ 24

Sustainable development ............................. 25

Credit rating ................................................... 26

Financial results ............................................. 26

Balance sheet ................................................ 29

Loan portfolio ................................................ 31

Loans ......................................................... 31

Related party transactions ........................ 33

Contigent liabilities .................................... 33

Attracted funds ............................................. 34

Capital ............................................................ 36

Regulatory capital ..................................... 36

Capital requirements ................................. 38

Capital buffers ........................................... 38

Leverage .................................................... 39

Eligible liabilities ........................................ 40

RISK MANAGEMENT ............................................ 41

Risk management strategy ............................ 41

Risk appetite framework ........................... 42

Risk map ................................................... 42

Risk culture ............................................... 43

Risk management framework ...................... 44

Lines of defence ........................................ 44

Structure and internal organisation .......... 44

Collective risk management bodies .......... 45

System of limits ......................................... 47

Recovery plan............................................ 47

Restructuring planning process ................ 48

Credit risk ...................................................... 48

Loan process ............................................. 48

Models for credit risk measurement ......... 50

Credit risk mitigation methods ................. 51

Problem exposures, repossessed assets

and reduction strategy ............................. 51

Classification, impairment and provisioning

of exposures .............................................. 52

Market risk ................................................... 54

Position risk ............................................... 54

Interest rate risk in the banking book ....... 55

Currency risk ............................................. 55

Counterparty risk and settlement risk ...... 56

Liquidity risk ................................................. 56

Internal liquidity adequacy assessment

process ...................................................... 57

Operational risk ........................................... 58

Information security ................................. 59

Personal data protection .......................... 59

Outsourcing .............................................. 60

Risk exposures .............................................. 61

Internal capital adequacy analysis ................ 61

DISTRIBUTION CHANNELS .................................. 64

Branch network ............................................ 64

Contact center .............................................. 65

Corporate website ........................................ 66

Corporate blog .............................................. 66

Sales .............................................................. 67

Digital banking .............................................. 67

My Fibank electronic banking ................... 67

CORPORATE GOVERNANCE STATEMENT ........ 70

Corporate governance framework ............... 71

Corporate governance code ......................... 72

Management structure ................................. 73

Supervisory Board ......................................... 74

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Structure and competences ....................... 74

Diversity policy and independence ............ 74

Functions and responsibilities ................... 75

Assessment of the activity ......................... 75

Committees ............................................... 75

Managing Board ............................................ 78

Structure and competences ....................... 78

Diversity policy ........................................... 79

Functions and responsibilities ................... 79

Committees and councils to MB ................ 79

General meeting of shareholders .................. 80

Control environment and processes ............. 81

Internal audit ............................................. 81

Registered auditors ................................... 81

Protection of shareholders’ rights ................. 82

Convening of GMS and information .......... 82

Main transfer rights and restrictions......... 83

Minority shareholders and institutional

investors .................................................... 83

Information disclosure .................................. 83

Investor relations director ......................... 85

Stakeholders .................................................. 85

Shareholders’ structure ................................. 85

Share price and market capitalisation ........... 86

REPORT ON THE IMPLEMENTATION OF THE

REMUNERATION POLICY ..................................... 88

Remuneration policy ................................. 89

NON-FINANCIAL DECLARATION ......................... 92

Business model .............................................. 93

Sustainable development .............................. 94

Environmental issues ................................ 95

Social issues ............................................... 98

Governance issues .................................. 100

Ethical issues ............................................... 101

Code of ethics ......................................... 101

Responsibility and compliance ............... 101

Whistleblowing ....................................... 101

HUMAN CAPITAL ............................................... 103

Policy for nomination and suitability

assessment ................................................. 105

INFORMATION TECHNOLOGY ......................... 106

BUSINESS REVIEW.............................................. 108

Retail banking ............................................. 108

Deposits .................................................. 108

Loans ....................................................... 109

Corporate banking ...................................... 110

Deposits .................................................. 110

Loans ....................................................... 111

External programs and guarantee schemes 116

Payment services ........................................ 117

Card payments ........................................ 118

International payments .......................... 118

Gold and commemorative coins ................. 119

Private banking ........................................... 120

Capital markets ........................................... 121

MEETING THE 2022 GOALS .............................. 123

SUBSEQUENT EVENTS ....................................... 126

DEVELOPMENT PRIORITIES ............................. 127

OTHER INFORMATION ...................................... 128

Members of the Supervisory Board ............ 128

Members of the Managing Board .............. 131

LIST OF ABBREVIATIONS ................................... 135

LIST OF BRANCH NETWORK ............................. 138

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MACROECONOMIC DEVELOPMENT

In 2022 the Bulgarian economy registered slow-down of investment activity, related to the unstable

macro environment dominated by external factors.

2022

2021

2020

2019

2018

Gross domestic product (BGN million)

165,041

139,012

120,553

120,396

109,964

Gross domestic product, real growth (%)

3.7

7.6

(4.0)

4.0

2.7

- Private consumption, real growth (%)

4.0

8.0

(0.4)

6.0

3.7

- Public consumption, real growth (%)

7.4

4.0

8.3

2.0

5.4

- Investments, real growth (%)

(7.4)

(11.0)

0.6

4.5

5.4

- Net exports, real growth (%)

(3.3)

(2.3)

(6.7)

(1.2)

(4.0)

Inflation, at period-end (%)

16.9

7.8

0.1

3.8

2.7

Average annual inflation (%)

15.3

3.3

1.7

3.1

2.8

Unemployment, at period-end (%)

4.7

4.8

6.7

5.9

6.1

Current account (% of GDP)

(0.3)

(0.5)

(0.0)

1.9

0.9

Trade balance (% of GDP)

(5.5)

(4.1)

(3.1)

(4.7)

(4.8)

International reserves of BNB (BGN million)

75,151

67,666

60,334

48,574

49,037

FDI in Bulgaria (% of GDP)

2.7

1.7

4.8

2.7

1.7

Gross external debt (% of GDP)

52.0

58.4

63.8

61.3

66.1

Government and government guaranteed debt

(% of GDP)

22.9

25.0

24.6

19.8

21.8

Consolidated budget balance (% of GDP)

(0.8)

(2.7)

(2.9)

(1.0)

0.1

USD exchange rate (BGN for USD 1)

1.83

1.73

1.59

1.74

1.71

Sources: NSI, BNB, MF, Employment agency

Data for nine months of 2022

Data as of November 2022

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For 2022, the growth in gross domestic product slowed down to 3.7% for the nine months of the year

(2021: 7.6%), as main positive drivers were the private consumption (9M22: 4,0%; 2021: 8.8%) and the

public consumption (9M22: 7,4%; 2021: 0,4%), as well as the change in reserves in the economy as a

result of the slower internal demand and increasing inflation. Net exports had negative contribution

to the growth (9M22: -3.3%; 2021: 0.1%), as well as the fixed capital investments (9M22: -7.4%; 2021:

-8.3%), due to disrupted supply chains and their inpoact on trade, as well as decrease in investment

activity, impacted by unstable external environment.

In the nine-month period of 2022, gross value added in the economy increased by 3.7%, slowing down

as compared to 2021 reported figures of 8.0%. Positive contribution is reported mainly in the industrial

sector, which increased by 13.8% for the period (2021: 1.7%) and more specifically in the mining and

processing industry (9M22: 18.5%), at the expense of construction which was down (9M22: -12.6%).

The services sector, which had the most significat share to value added, registered a slow increase by

0.6% (2021: 9.9%), incl. in the trade, transport and tourism sectors (9M22: 1.2%), the finance and

insurance sectors (9M22: 1.0%), telecommunications (9M22: 0.4%), public administration and

healthcare (9M22: 1.6%). A decrease was reported in the agricultural sector (9M22: 0.9%; 2021:

28.8%), mainly influenced by plant-growing sectors, incl. cereals and industrial crops.

In 2022, the labor market reported positive trend, as the unemployment rate declined to 4.7% at the

end of the year (2021: 4.8%), with more expressed trend in the summer period, reflecting the higher

seasonal employment. The total number of employed persons amounted to 3,095 thousand in the

fourth quarter of 2022, with the employment rate (for persons aged 15-64) amounting to 71.5%. As of

the end of December 2022, 64% of the workforce was employed in the services sector, 30% in industry

and 6% in agriculture.

Inflation in the country increased, as the average annual inflation in 2022 amounted to 15.3% (2021:

3.3%), and inflation at the end of the period reached 16.9% (2021: 7.8%). The influence was wide-

spread across components, with main effect of food products (2022: 26.1%) and energy products

(2022: 19.9%), registered in an environment of significant increase in the prices of basic raw materials

(natural gas, oil and other) and agricultural products on the international markets. The groups of

services and non-food sector in the consumer basket had lower expressed dynamics at 10.3% and

13.3%. Harmonized inflation, as price stability criteria in the Eurozone, was 14.3% at the end of 2022

(2021: 6.6%) and 13.0% on average for the period (2021: 2.8%).

COMPONENTS CONTRIBUTION TO GDP

SECTOR CONTRIBUTION TO GROSS VALUE

ADDED

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For 2022, foreign direct investment in the country amounted to EUR 2,245 million or 2.7% of GDP

(2021: EUR 1,205 million or 1.7% of GDP). Such dynamics mainly reflect higher revenues from debt

instruments (financial, bond and trade loans) and investments in equity, at the expense of reinvested

earnings. By country, most investments were attracted from Switzerland (EUR 483 million), followed

by Cyprus (EUR 384 million) and Austria (EUR 380 million). The accelerated increase in imports (37.0%

for 2022 y/o/y to EUR 51,086 million) compared to exports (35.1% to EUR 46,493 million) led to

increase in the trade deficit amounting to EUR -4,593 million or -5.5% of GDP at the end of 2022.

Despite, the current account deficit decreased to EUR 275 million or 0.3% of GDP (2021: BGN -351

million or -0.5% of GDP) as a result of the services, incl. transport and travel, related to the strong

tourism season.

The country's gross external debt decreased to 52.0% of GDP at end-November 2022 (2021: 58.4%),

as decrease was registered in the public sector (11M22: 15.1% of GDP), remaining among the lowest

in the EU, as well as in the private sector (11M22: 36.9% of GDP). Total government and government-

guaranteed debt, including debt issued on the domestic market, amounted to 22.9% of GDP by the

end of 2022 (2021: 25.0%).

INFLATION

UNEMPLOYEMENT RATE

2022

FDI INVESTMENTS IN THE COUNTRY GROSS EXTERNAL DEBT

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In 2022, the consolidated budget reached a deficit of BGN 1,347 million or 0.8% of GDP at the end of

the year (2021: BGN 3,794 million or 2.7% of GDP), reflecting the higher growth of costs relative to

revenues in the national budget and larger excess on EU funds. Expenditures under the consolidated

fiscal program increased by 17.5% to BGN 66,113 million (2021: BGN 56,253 million), mainly due to

the increase in capital and non-interest expenses, which included higher costs for pensions and

subsidies related to the programs for supporting non-private sonsumers due to higher electricity

prices.

Tax revenues increased by 14.5% y/o/y to BGN 46,795 million as of December 2022, as an increase was

reported in all main components, incl. personal income tax (by 10.0 % to BGN 5,321 million), corporate

tax (by 34.8% to BGN 4,593 million), VAT revenues (by 18.1% to BGN 15,331 million) and excise duties

(by 0.8% to BGN 5,707 million). Revenues from social security contributions also increased, amounting

to BGN 13,747 million as of December 2022, of which BGN 9,941 million were social security

contributions and BGN 3,806 million health insurance contributions.

During the year the credit ratings of Bulgaria were affirmed by Fitch Ratings (BBB, positive outlook),

Standard & Poor’s (BBB, stable outlook) and Moody’s Investors Service (Baa1, stable outlook). Since

2020, the Bulgarian lev is officially part of the European Exchange Rate Mechanism (ERM) II, while

maintaining the current currency board system in the country.

CONSOLIDATED BUDGET STRUCTURE OF TAX REVENUES

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BANKING SYSTEM

In 2022, the banking system in Bulgaria showed sustainability and adaptability, operating in an

unstable external environment. The key indicators, incl. for liquidity and capital adequacy exceeded

the regulatory requirements, as well as reported increased profitability. Since 2020 Bulgaria is part of

the Banking Union through participation in the Single Supervisory Mechanism (SSM) and the Single

Restructuring Mechanism (SRM), and the processes of integration with the European regulatory

framework had an impact on banking policies.

in % / change in p.p.

2022

2021

2020

22/21

21/20

CET 1 ratio

19.56

21.66

21.69

(2.10)

(0.03)

Tier 1 capital ratio

22.06

22.04

22.10

0.02

(0.06)

Capital adequacy ratio

20.47

22.62

22.74

(2.15)

(0.12)

Leverage ratio

9.69

10.52

10.74

(0.83)

(0.22)

Liquidity coverage ratio (LCR)

235.9

274.1

279.0

(38.2)

(4.90)

Loans/deposits

68.21

69.38

69.04

(1.17)

0.34

Return-on-equity (ROE)

12.01

8.53

5.31

3.48

3.22

Return-on-assets (ROA)

1.34

1.05

0.66

0.29

0.39

Non-performing loans and advances

3.55

4.60

5.65

(1.05)

Source: Bulgarian National Bank

The total capital ratio for the system amounted to 20.47% the end of September 2022 (2021: 22.62%),

while the CET 1 ratio to 19.56% (2021: 21.66%), as the indicators were significantly above the

regulatory requirements (TCR: 14.50-15.50%; CET1: 10.50-11.50% depending on the combined buffer

requirement). Contributing factor to the dynamics was the higher growth in risk-weighted assets,

compared to those in the relevant components of the own funds. The leverage ratio, comparing Tier 1

capital to the total on- and off-balance sheet exposures of banks, was 9.69% as of September 2022

compared to 10.52% as of end-2021.

With respect to the reported levels of growth in lending and the cyclical risks on the real estate market,

during the year BNB increased the level of the countercyclical capital buffer from 1.5% to 2.0% effective

from October 2023. During the year the BNB announced its annual review of the buffer for Other

Systemically Important Institutions (O-SIIs) and identified as such eight banks for which individual

levels were set in the range of 0.50% to 1% for 2023. In 2022, the systemic risk buffer remained

unchanged at 3% of banks’ risk exposures in Bulgaria.

Liquidity in the system remained high, reflecting the consistent conservative risk management and the

increased deposit base. The liquidity coverage ratio (LCR), correlating the liquidity buffers maintained

by banks against net outflows over a period of 30 calendar days increased to 235.9% (2021: 274.1 as

of September 2022 which is well above the minimum requirement of 100%. The ratio of liquidity buffer

to balance sheet assets for the system was 26.8% at the end of September 2022.

Data as of 30 September 2022.

Gross loans and advances (without central banks and credit institutions)/deposits (without credit institutions)

Non-performing loans and advances/gross loan and advances. (For comparability, a broad definition of loans

and advances has been used, including cash balances with central banks and other demand deposits).

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In the second half of 2022, the interest rate on the deposit facility of the European Central Bank was

raised twice: from -0.50% to 0% (effective 27.07.2022) and from 0% to 0.75% (effective 14.09.2022).

With that, the negative interest rate on the banks' excess reserves in the BNB according to the

methodology for its calculation, was changed from -0.70% to 0%.

In 2022 the banking system realized a net profit of BGN 2,079 million, compared to BGN 1,416 million

a year earlier. An increase was reported in all main sources of income, incl. in the net interest income

and net fee and commission income, as well as decrease in the impairment charges, which reached

BGN 586 million for the period (2021: BGN 594 million).

BGN million/ change in %

2022

2021

2020

22/21

21/20

Net interest income

3,227

2,757

2,649

17.0

4.1

Net fee and commission income

1,430

1,241

1,039

15.2

19.4

Administrative expenses

1,972

1,784

1,677

10.5

6.4

Impairment

586

594

876

(1.3)

(32.2)

Net profit

2,079

1,416

815

46.8

73.7

Source: Bulgarian National Bank

Net interest income for 2022 increased by 17.0% to BGN 3,227 million (2021: BGN 2,757 million). Net

fee and commission income reached BGN 1,430 million (2021: BGN 1,241 million), providing a solid

contribution to profit by forming 27.1% of the total operating revenues of the system (2021: 27.9%).

The achieved financial results accounted for return on assets (ROA) of 1.34% for the first nine months

of 2022 (2021: 1.05%) and return on equity (ROE) of 12.01% for the same period (2021: 8.53%).

Total balance sheet assets increased by 14.8% y/o/y to BGN 155,406 million as of end-2022 (2021: BGN

135,410 million), as loans and advances had a predominant share in the balance sheet structure at

59.6% of total assets (2021: 58.2%), followed by cash and balances with central banks at 20.9% of

assets (2021: 21.0%) and investments in securities at 15.7% (2021: 16.7%), which included mainly

government debt securities.

Lending activity in 2022 continued to increase with more pronounced dynamics in households,

compared to non-financial corporations. Residential mortgage loans increased by 16.1% to BGN 18,365

million (2021: BGN 15,815 million), while consumer loans – by 12.8% to BGN 16,138 million (2021: BGN

14,304 million) at the end of 2022. Loans to non-financial corporations retained their major share at

52.2% of total loans to customers, reaching BGN 44,908 million (2021: BGN 40,286 million).

The share of non-performing loans and advances continued to decrease, reaching 3.55% of gross loans

and advances as of December 2022 (2021: 4.60%). For comparability with previous periods it was

calculated using a broad definition of loans and advances, including cash balances with central banks

and other demand deposits. Loans to non-financial corporations accounted for the largest share in the

structure of non-performing loans (67.0%), followed by loans to households (30.7%) and other financial

corporations (2.0%).

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BGN million / change in %

2022

2021

2020

22/21

21/20

Assets

155,406

135,410

124,006

14.8

9.2

Loans to non-financial corporations

44,908

40,286

38,042

11.5

5.9

Loans to individuals, including:

33,945

29,468

25,882

15.2

13.9

- Mortgage loans

18,365

15,815

13,752

16.1

15.0

- Consumer loans

16,138

14,304

12,882

12.8

11.0

Deposits from non-financial corporations

43,169

34,374

31,701

25.6

8.4

Deposits from individuals

74,282

68,107

62,636

9.1

8.7

Source: Bulgarian National Bank

In 2022, borrowed funds in the banking system (excluding credit institutions) continued their upward

trend, growing by 15.4% to BGN 126,197 million as of December 2022 (2021: BGN 109,356 million),

reflecting the confidence in the system, the uncertainty of the environment and the decrease in

investment activity of the companies. An increase was reported mainly in deposits of non-financial

corporations (by 25.6% to BGN 43,169 million) and at a lesser extend in households (by 9.1% to BGN

74,282 milliom), which retained their dominant share of 58.9% of all attracted funds. The currency

structure of deposits remained unchanged, as the share of deposits in BGN was 63.7%, those in EUR

at 29.2%, and those in other currencies at 7.1% as of December 2022.

During the year, sygnals were registered for change in the interest rate cycle in line with the dynamics

in the EU and Eurozone countries. Interest rates on deposits (new business

) of households and non-

financial corporations increased on average for 2022 (volume weighted) up to 0.11% and to -0.13%

respectively (2021: 0.06% and -0.17%). Interest rates on loans (new business

) showed different

trends, with consumer loans increasing to 8.16% on average for the period (2021: 8.08%), at the

expense of mortgage loans, which registered a decline to 2.54% (2021: 2.70%), while those for non-

financial enterprises remained unchanged at 2.60% (2021: 2.60%).

Term deposits in BGN up to 1 year

Loans in original maturity in BGN

LOANS AND DEPOSITS (BGNm) INTEREST RATES ON DEPOSITS AND LOANS

2022

20212020

20192018

Deposits

Loans

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In the regulatory framework in 2022 priority developed were the sustainability requirements – a new

Commission Implementing Regulation (EU) 2022/2453 of 30 November 2022 was adopted, amending

the implementing technical standards as regards the disclosure of environmental, social and

governance (ESG) risks by banks according to Part Eight of Regulation (EU) 2013/575.

New EBA Guidelines were introduced on the policies and procedures related to regulatory compliance

management of the anti-money laundering and countering the financing of terrorism (AML/CFT)

(EBA/GL/2022/05). At the end of 2022, EBA Guidelines on the use of remote customer onboarding

solutions were also published.

A new Law on Covered Bonds was adopted, which regulates the terms and procedure for the issuance,

structural characteristics and public supervision of covered bonds, as well as a new Ordinance No. 42

of the BNB on the Terms and Procedure for Issuance of Covered Bonds, which further develops the

requirements regarding the calculation of the amount of covered bond liabilities and cover assets, as

well as the periodic stress tests in relation to them.

Changes were made to the Personal Income Tax Act whereby, as of April 1, 2022, the final tax was

removed on the gross interest income on bank accounts earned by local individuals.

In connection with the development of the requirements regarding recovery and resolution of credit

institutions and investment firms, two new regulations of the BNB were adopted during the year:

Ordinance No 43 on the Terms and Procedure for Determining and Paying а Maximum Daily Amount

upon Suspension of Obligations in Respect of Eligible Deposits, and Ordinance No 44 on the Terms and

Procedure for Selection of Independent Valuers under Article 55a of the Law on the Recovery and

Resolution of Credit Institutions and Investment Firms. They provide better preparedness for carrying

out potential restructuring of institutions, and for protection of stakeholders and creditors.

During the year, amendments were adopted to Ordinance No. 20 of the BNB on the Requirements to

Members of the Management and Controlling Bodies of Credit Institutions and on the Suitability

Assessment of their Members and Key Function Holders, mainly concerning the reliability and

suitability assessment questionnaires applied by significant and less significant banks.

At the end of 2022, 25 credit institutions operated in the country, out of which 7 branches of foreign

banks, as the consolidation processes in the system continued, following the global trends to search

for optimizations in the structure and efficiency of banking institutions against the background of

increased competition. The share of the group of significant banking institutions (according to ECB

criteria) in the country amounted to 66.7% of bank assets as of September 2022, those of the less

significant at 29.%, while those of the branches of foreign banks at 3.5%

The main challenges faced by banks included overcoming the uncertainties of the external

environment, both political and economic; digitizing banking services; prioritizing ESG factors;

strengthening the ability to reduce and manage risks; and developing ways to support customers

through offering advice and appropriate products and services.

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FIBANK PROFILE

CORPORATE STATUS

First Investment Bank is a joint-stock company

registered with Sofia City Court pursuant to a ruling

dated 8 October 1993. Since 28 February 2008 the

Bank has been registered in the Commercial

First Investment Bank is a public company

registered in the Commercial Register of Sofia City

Court by a decision dated 4 June 2007 and in the

by the Financial Supervision Commission by a

decision dated 13 June 2007.

The Bank owns a universal banking license for

domestic and international operations. First

Investment Bank is a licensed primary dealer in

government securities and it is a registered

investment intermediary.

MEMBERSHIPS

Association of Banks in Bulgaria

Bulgarian Stock Exchange AD

Central Depository AD

BORICA AD

MasterCard International

VISA Inc.

S.W.I.F.T.

Factors Chain International

In 2022 the head office and business address of First Investment Bank AD was changed – Sofia 1784,

111P, Tsarigradsko shose Blvd.

MARKET POSITION

Fifth in assets

Fifth in deposits

− Fifth in deposits from individuals

Sixth in lending

− Fifth in corporate lending

− Fifth in consumer loans

− Sixth in mortgage loans

MARKET SHARE

8.18% of bank assets in Bulgaria

8.59% of deposits in the country

− 9.77% of deposits from individuals

8.27% of loans in the country

− 9.24% of corporate lending

− 8.02% of consumer lending

− 6.23% of mortgage lending

Among the leading banks in the card business. Among the leading banks in payment services,

including international payments and trade transactions

Market positions are determined based on unconsolidated data from the BNB.

Market shares are determined based on unconsolidated data from the BNB.

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CORRESPONDENT RELATIONS

Fibank has a wide network built up of correspondent banks, through which it performs international

payments and trade financing operations in almost all parts of the world. The Bank executes

international transfers in foreign currency, and issues cheques and performs different documentary

operations. Fibank is a respected, reliable and fair partner, which has built over the years a good

reputation among international financial institutions and gained valuable experience and know-how

from its numerous business partners, investors, customers and counterparties.

BRANCH NETWORK

As at 31 December 2022 First

Investment Bank had a total of 126

branches and offices: 125 branches

and offices, including a Head Office,

covering the territory of Bulgaria

and a foreign branch in Cyprus

Fibank maintains diversification of

the distribution channels, which

constantly enhance in accordance

with technological development

and customer needs.

SUBSIDIARIES

As at 31 December 2022, First Investment Bank AD had ten subsidiary companies: First Investment

Bank - Albania Sh.a., Diners Club Bulgaria AD, Fi Health Insurance AD, MyFin EAD, First Investment

Finance B.V., Debita OOD, Creative Investment EOOD, Lega Solutions EOOD, AMC Imoti EAD and Inkaso

Garant EOOD.

In 2022, the capital of the subsidiary Diners Club Bulgaria AD was increased from BGN 610 thousand

to BGN 910 thousand, in order to maintain the financial capacity of the company. In September 2022,

a new subsidiary Inkaso Garant EOOD was established with a paid-in capital of BGN 100 thousand, its

main activity including private security and protection of valuable shipments and cargo.

During the year, in connection with decisions taken to terminate their activity, the subsidiaries

Turnaround Management EOOD, Realtor OOD and Balkan Financial Services EAD were deleted from

the Commercial Register of the Registry Agency.

For further information regarding subsidiary companies, see Note 36 “Subsidiaries” of the Standalone

Financial Statements for the year ended 31 December 2022.

Diverse set of

distribution

channels

Corporate

website

Digital

banking

Contact

center

Direct

sales

Corporate

website

Branch

network

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AWARDS 2022

First Investment Bank was awarded as Digital Bank of the

Year 2022 at the international competition Worldwide

Finance Awards 2022 organized by the British magazine

Acquisition International (AI), for the digital services and

innovations offered to customers.

Fibank won a successful digital transformation award in

the Bank of the Year contest, organized by the Bank of the

Year Association, based on an independent and objective

methodology prepared by Deloitte Bulgaria.

Mr. Nikola Bakalov, CEO of First Investment Bank,

received the Banker of the Year 2022 award presented by

the Banker newspaper for achieving success in

digitization and alternative service channels.

Fibank’s Debit Mastercard Platinum was awarded as

Product of the Year in the Premium Card Products

category of the international Product of the Year

competition, carried out through an independent

nationally representative survey conducted by the

NielsenIQ research agency.

For yet another year, Fibank won the Bulgarian consumer

Favorite Brand award and first place in the Financial

Institutions category of the My Love Marks consumer

ranking.

First Investment Bank won two awards at the Company of

the Year ceremony organized by Business Lady Magazine:

for Innovative Bank of the Year and for Sustainable

Development. The jury was composed of industry

organizations, entrepreneurs and marketing experts.

Fibank received the Golden Heart Award in the Youth

Support and Business Development category of the

Annual Corporate Social Responsibility Awards organized

by Business Lady Magazine. The award was given for the

activity of the Sustainable Lady Fund, part of the Bank’s

Smart Lady business program in support of women

entrepreneurs.

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FIRST INVESTMENT BANK: DATES AND FACTS

1993

First Investment Bank was established on 8 October 1993 in Sofia.

Fibank was granted a full banking license for carrying out operations in Bulgaria and abroad.

1994-95

The Bank developed and specialized in servicing corporate clients.

1996

First Investment Bank was the first in Bulgaria to offer services enabling banking from home or from the

office.

Fibank was the first bank to receive a 5-year loan from the European Bank for Reconstruction and

Development for financing small and medium-sized enterprises in Bulgaria.

1997

The Bank started issuing Cirrus/Maestro debit cards, Eurocard/Mastercard credit cards and the American

Express card. Fibank was the first Bulgarian bank to offer debit cards with international access.

Thompson Bankwatch awarded Fibank its first credit rating.

The Bank opened its first branch abroad, in Cyprus.

1998

Fibank obtained its first syndicated loan from foreign banks. The Bank negotiated financing for the import

of investment goods from a number of EU countries, guaranteed by export insurance agencies.

1999

The Bank negotiated a syndicated loan organized by EBRD to the total amount of EUR 12.5 million.

First Investment Bank received a medium-term loan for EUR 6.6 million from a German government

organization for financing of Bulgarian companies.

The Bank opened a foreign branch in Tirana, Albania offering banking services to Albanian companies and

individuals.

2000

First Investment Bank started developing its business in the field of retail banking. Deposits from private

individuals grew 2.3-fold.

2001

Fibank launched the first virtual bank branch in Bulgaria, allowing customers to bank via the Internet.

The Bank was awarded the prize “Bank of the Year” by ‘Pari’ (‘Money’) daily.

Maya Georgieva (Executive Director of First Investment Bank), received the prize “Banker of the Year” from

‘Banker’ Weekly.

2002

Fibank was named “Bank of the Client“ in the annual rating of ‘Pari’ daily.

2003

Products and services to individuals became the focus of the Bank’s activities. Loans to individuals increased

over five times during the year.

Fibank was named “Bank of the Client” for the second time in the annual rating of ‘Pari’ daily.

2004

The Bank expanded its infrastructure. The branch network expanded by 27 new branches and offices, the

ATM network more than doubled.

Fibank was awarded the prize “Financial Product of the Year” for its Mortgage Overdraft product.

2005

Fibank acquired 80% of the capital of Diners Club Bulgaria AD.

The Bank issued Eurobonds to the amount of EUR 200 million on the Luxembourg Stock Exchange. Fibank

was also the first Bulgarian bank to issue perpetual subordinated bonds.

Matthew Mateev (Deputy Chief Executive Director of First Investment Bank) was awarded the prize “Banker

of the Year” by ‘Banker’ weekly.

2006

Fibank was named “Bank of the Client” for the third time in the annual rating of ‘Pari’ daily.

First Investment Bank received a syndicated loan, to the amount of EUR 185 million, organised by

Bayerische Landesbank, in which 33 banks participated.

The Bank’s share capital was increased from BGN 20 million to BGN 100 million by transforming retained

profits into new shares.

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2007

First Investment Bank realized the biggest banking initial public offering of shares in Bulgaria and became a

public company.

„Fibank Mobile“ – the first banking mobile portal created by the Bank with useful financial information for

its customers, started functioning.

Fibank is among the first banks in Bulgaria to implement chip technology by issuing cards.

First Investment Bank – Albania Sh.a. was issued a full banking license in Albania.

2008

Fibank implemented a new centralized and integrated core banking information system FlexCube.

Fibank received a syndicated loan in the amount of EUR 65 million from 11 leading international banks.

Fibank became the first bank in Bulgaria to launch its own corporate blog.

Fibank received the OSCARDS award for innovation in the card business.

2009

Fibank started offering the sale and redemption of investment diamonds.

A new Internet service “My Fibank” was offered, providing e-statements on bank accounts and credit cards.

2010

Fibank welcomed its one millionth client.

First Investment Bank signed an agreement with IFC for cooperation in the field of trade finance.

Fibank was the first Bank in Bulgaria to offer contactless payments using the PayPass technology.

Fibank acquired a controlling interest in FI Health AD health insurance fund.

2011

First Investment Bank was recognized as the Best Bank in Bulgaria in 2011 by the financial magazine

Euromoney.

New Executive Directors of the Bank appointed – Dimitar Kostov, Vassil Christov, Svetoslav Moldovansky.

Maya Georgieva (Executive Director of First Investment Bank) received the Banker of the Year 2011 award

from “Banker” Weekly for market sustainability achieved and customer confidence earned

2012

Fibank was “Bank of the Year“ from “Bank of the Year” Association, with the best complex performance.

The Bank signed an agreement with the EIF for the financing of SME under the JEREMIE initiative.

Vassil Christov, Executive Director of First Investment Bank won the prestigious award “Banker of the Year”

of the “Banker” Weekly.

2013

First Investment Bank AD signed an agreement with the Hungarian MKB Bank Zrt. for the acquisition of

100% of the shares of MKB Unionbank EAD.

Fibank finalized the issuance of new hybrid debt (two bonds emissions) to the total amount of EUR 100

million, included in the Tier I capital.

Online sale of products of investment gold and other precious metals was started.

2014

The merger of Union Bank EAD into First Investment Bank AD was carried out, including integration of

operational systems, procedures, infrastructure, human resources, products and services

Fibank overcame the pressure on the banking system thanks to its sound liquidity, high professionalism, as

well as to the liquidity support received pursuant to EC Decision C(2014) 4554/29.06.2014.

Fibank was awarded as the best bank in the field of retail banking by the international portal Global Banking

& Finance Review.

2015

First Investment Bank realized a joint project with the IFC for upgrading Fibank’s risk management and

corporate governance systems in accordance with the principles of the Basel Committee and the recognized

international standards.

A new independent member of the Supervisory Board was elected: Mr. Jyrki Koskelo, an accomplished

professional having extensive experience with the IFC.

A new organizational structure of the Bank was adopted, further developing the control functions.

First Investment Bank was distinguished by the global organization Superbrands as the strongest brand

among financial institutions in Bulgaria.

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2016

An innovative platform was launched for electronic payments using NFC-enabled mobile devices and digital

bank cards.

The Bank repaid the liquidity support received pursuant to EC Decision C(2014) 8959/25.11.2014.

Fibank successfully passed the asset quality review and the stress test conducted in the country.

New contactless debit cards for children and teenagers were developed.

2017

Fibank created its integrated e-banking platform My Fibank, as a single customer omnichannel.

The Bank joined as direct participant the Pan-European Euro Payment System STEP2 SCT (SEPA Credit

Transfer.

Fibank updated its core banking information system by migrating to Oracle Flexcube12.

Fibank developed its online consumer credit services at www.credit.fibank.bg.

2018

First Investment Bank celebrated the 25th anniversary of its founding.

A new Smart Lady program was launched in support of women entrepreneurs, mainly targeting micro, small

and medium-sized enterprises.

A software Fibank Token was developed as a means of signature and authentication in the electronic

banking system of the Bank.

An innovative new-generation Evolve credit card was developed, combining three brands (Fibank, Diners

Club and Mastercard) into one payment instrument.

2019

Fibank was among the leading banks to join the global SWIFT gpi solution, which significantly improves the

speed and traceability of cross-border transfers.

Card services were further developed, with an emphasis on digital cards and payments using smart devices.

A centralized back office was initiated in the Bank's system, its main purpose being to optimize the

efficiency in servicing the Bank's customers.

Fibank passed the asset quality review and stress test conducted by the ECB during the year.

Initiatives were undertaken aimed at enhancing financial literacy, including among children and teens.

2020

First Investment Bank successfully increased its capital by BGN 195,424 thousand. New shareholders of the

Bank became the Bulgarian Development Bank AD with 18.35% and Valea Foundation with 7.87%.

Fibank was the first bank in Bulgaria, which allowed rescheduling of payments to borrowers experiencing

difficulties in connection with the state of emergency and the COVID-19 pandemic.

New executive directors were elected – Nikola Bakalov and Ralitsa Bogoeva, as well as new Chief Financial

Director – Ianko Karakolev.

Fibank supported the founding of a startup company in the field of payment services: MyFin EAD, licensed

as an electronic money company with a share capital of BGN 1 million.

First Investment Bank signed agreements with the Bulgarian Development Bank and Fund of Funds for

overcoming the consequences from the COVID-19 pandemic.

2021

First Investment Bank offered the innovative Gold Account product designed for keeping, purchase and

sale of dematerialized gold (XAO).

A new video consultation service was launched for customers interested in retail credit products, available

at www.fibank.bg and through My Fibank electronic banking.

A new Business Process Management (BPM) system for retail lending was implemented.

MyCard was launched: a new virtual credit card with pre-approved limit, issued entirely online through the

My Fibank mobile application.

New products for individuals and business customers were developed: Gold Portfolio and Eco Portfolio,

tied respectively to the price of gold and to bonds backed by green projects.

Debit Mastercard Platinum was launched: a new debit card for the premium segment offering a number of

benefits, including a virtual assistant app (AskPLEEZ!) and concierge services.

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HIGHLIGHTS 2022

JANUARY

First Investment Bank launched an innovative instant payment

service (up to 10 seconds) in BGN under the Blink scheme.

The Bank actively offered new credit products for business

customers: Green transport, Green energy - free market, and

Green energy - own consumption.

FEBRUARY

As part of the branch digitalization project, electronic signing of documents by e-Sign pad was

introduced in the Bank's offices.

A new silver coin commemorating the Year of the Rabbit 2023 was offered in collaboration with

the New Zealand Mint.

MARCH

Fibank's Smart Lady program in support of women

entrepreneurs and micro-enterprises celebrated four years

since its creation, with over 1,100 financed projects and total

amount of financing exceeding BGN 120 million.

The Help from a Friend service was introduced, allowing every

customer to receive assistance and information about the

features and functionalities of My Fibank electronic banking and

the mobile application.

Mr. Nikola Bakalov, CEO of Fibank, was elected as a member of

the Management Board of the Association of Banks in Bulgaria.

APRIL

The Bank successfully joined the updated STEP2-T Continuous Gross Settlement (CGS) system

operated by EBA Clearing which optimized the execution of SEPA credit transfers

A new internal bank system was implemented to automate operations and optimize the

accounting process.

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MAY

A new promotional mortgage loan was launched financing up to

90% of property's market value, with an option to apply

remotely through My Fibank electronic banking.

The new Business Process Management (BPM) system was also

implemented in business lending.

Network and information security policies were further

developed, including applicable requirements and standards for

IT service providers.

JUNE

A Regular Annual General Meeting of First Investment Bank's shareholders was held, at which a

decision was taken to capitalize the net profit for 2021.

A new mortgage loan was developed for persons receiving income from abroad, financing up to

70% of the of property market value, with a term of up to 25 years.

Mr. Nikola Bakalov, CEO of Fibank, was elected as a member of the Board of Directors of BORIKA

AD.

JULY

Debit Instant Card was launched: a new virtual debit card issued through the My Fibank mobile

application, designed for making online payments through a mobile smart device.

The credit ratings of First Investment Bank were confirmed by Fitch Ratings, with the outlook on

them upgraded to "stable".

A campaign was held for Visa credit card holders, offering them the chance to win 100% cashback

on card payments during the period up to a maximum of BGN 4,000.

AUGUST

The One Different Employer initiative was launched, presenting the

advantages of Fibank working environment through the stories of

employees.

Fibank moved its headquarters to a new and modern building,

certified Excellent under the BREEAM sustainability standard.

New functionalities were added to digital banking, including

rescheduling of credit card debt into equal monthly installments

and purchasing products online.

A new tranche under the program for the issuance of hybrid

instruments was subscribed, bringing the total amount to EUR 40

million.

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SEPTEMBER

A new Career Start consumer loan was launched, designed for university graduates up to the

age of 30, without requirements for income or minimum work experience.

A joint initiative with Mastercard was launched to develop a digital platform for early financial

education of children.

A new Sustainable Development Department was created with the aim to integrate sustainable

development requirements into the Bank's activities, taking into account the ESG factors.

The hardware and software infrastructure of the card system was upgraded, expanding its

functionality and improving security.

OCTOBER

A new Sustainable Future mortgage loan was developed for

financing real estate with high energy efficiency class (A+, A or B),

in line with sustainable and responsible banking policies.

The Perspective term product was offered: an alternative fixed

yield savings solution for businesses and individuals.

Granting of loans under the Financing in Rural Areas instrument

started, based on an agreement signed with the Fund Manager for

financial instruments in Bulgaria.

NOVEMBER

Lending to micro, small and medium-sized enterprises at more favorable terms under a loan

portfolio guarantee agreement with the National Guarantee Fund.

Super Loan: a new high-amount consumer loan up to BGN 80,000, with a term of up to 7 years.

Express Overdraft: fast overdraft for pre-approved customers, provided through electronic

banking and My Fibank mobile application.

DECEMBER

Fibank started replacing its plastic debit and credit cards with new

ones made of fully recyclable material and featuring a new design,

associated with sustainable development ideas.

Preparation began for launching the innovative Blink P2P service

for instant payments through the mobile banking app.

The Bank successfully introduced voice menus in some of its ATMs

to assist their access by blind people.

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FINANCIAL REVIEW

KEY INDICATORS

2022

2021

2020

2019

2018

Financial indicators (BGN thousand)

Net interest income

270,740

263,144

232,649

230,696

250,885

Net fee and commission income

139,515

118,865

95,849

103,230

93,546

Net trading income

19,717

15,380

11,991

14,929

12,279

Total income from banking operations

444,167

408,757

350,833

420,785

372,363

Administrative expenses

(205,113)

(179,441)

(181,842)

(209,157)

(202,315)

Impairment

(135,349)

(122,494)

(93,660)

(117,490)

(82,500)

Net profit

81,205

100,083

38,881

129,221

164,138

Balance-sheet indicators (BGN thousand)

Assets

12,714,058

11,268,870

10,832,829

10,200,031

9,237,837

Loans and advances to customers

6,384,541

6,315,581

6,038,889

5,776,915

5,525,957

Loans and advances to banks and fin. inst.

264,984

87,412

106,085

79,576

125,472

Due to other customers

10,798,450

9,425,251

9,100,155

8,684,001

8,021,439

Other borrowed funds

116,487

106,271

104,151

109,723

118,156

Hybrid debt

256,861

320,733

267,579

267,615

208,786

Shareholders’ equity

1,328,209

1,268,864

1,177,749

943,065

812,913

Key ratios (in %)

Capital adequacy ratio

21.74

21.46

21.78

18.80

16.31

Tier 1 capital ratio

21.74

21.46

21.78

18.80

16.31

CET 1 ratio

18.11

17.86

18.18

15.00

13.37

Leverage ratio

11.84

13.26

13.79

12.13

11.26

Liquid assets/deposits from customers

36.75

28.07

29.84

27.43

27.09

Liquidity coverage ratio (LCR)

225.36

230.36

236.84

198.25

251.43

Net stable financing ratio (NSFR)

145.47

137.42

132.35

130.38

134.23

Net loans/deposits ratio

59.12

67.01

66.36

66.52

68.89

Cost of risk

2.02

1.82

1.40

1.86

1.59

Net interest income/total income from

banking operations

60.95

64.38

66.31

54.83

67.38

Cost/income ratio

47.57

43.39

56.99

44.43

46.28

Resources (in numbers)

Branches and offices

126

127

134

144

155

Staff

2,454

2,466

2,524

2,572

2,651

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FIRST INVESTMENT BANK

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SUSTAINABLE DEVELOPMENT

In 2022, amid macroeconomical and political uncertainty, First Investment Bank's efforts were

focused on:

Maintaining high quality of customer service by improving processes and increasing

servicing capacity. Providing advice and support to customers to allow them better

overcome the challenges of external environment;

Active risk management in accordance with the approved risk strategy and risk appetite.

Further improving the protective mechanisms against risks inherent in the activity, while

maintaining a solid capital position and liquid buffers;

Digitization and automation of processes, development of innovative products and

services, and introduction of new technological solutions;

Development and implementation of sustainable development requirements taking into

account the environmental, social and governance (ESG) factors in the overall activity;

Strengthening the image of the Bank as a preferred employer.

BALANCE-SHEET INDICATORS

FINANCIAL INDICATORS

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CREDIT RATING

First Investment Bank has public ratings issued by the international rating agency Fitch Ratings. In July

2022, Fitch Ratings affirmed the credit ratings of First Investment Bank raising its outlook to 'stable' as

follows: long-term rating “B” with a stable outlook, short-term rating “B”, viability rating “b“,

government support rating “ns” (no support).

FINANCIAL RESULTS

In 2022, First Investment Bank reported good financial results achieved in the conditions of an unstable

external environment. Net profit amounted to BGN 81,205 thousand (2021: BGN 100,083 thousand),

and the profit before impairment – BGN 226,094 thousand compared to BGN 234,070 thousand a year

earlier. The results were influenced by the higher operating income on one side, and the policies to

reduce non-performing exposures and repossessed assets, on the other. Total income from banking

operations increased to BGN 444,167 thousand (2021: BGN 408,757 thousand) with an increase in all

main sources of income. The return on equity (after tax) was 6.34% and the return on assets (after tax)

was 0.68%.

In 2022, net interest income increased to BGN 270,740 thousand (2021: BGN 263,144 thousand),

remaining the main source of income for the Bank and accounting for 61.0% of total operating income

(2021: 64.4 %). For the reporting period, interest income increased to BGN 310,785 thousand (2021:

BGN 308,556 thousand), as a result of an increase in the main business segments, including of retail

banking (2022: BGN 129,095 thousand; 2021: BGN 123,264 thousand) and enterprises

, incl. large

enterprises (2022: BGN 77,063 thousand; 2021: BGN 75,862 thousand), small enterprises (2022: BGN

37,200 thousand; 2021: BGN 34,082 thousand) and micro-enterprises (2022: BGN 7,427 thousand;

2021: BGN 7,043 thousand), at the expense of medium-sized enterprises (2022: BGN 32,358 thousand;

2021: BGN 50,096 thousand). An increase was also recorded in investments in the debt instruments

According to business segments of the Bank, incl. criteria for annual turnover, as well as: microenterprises –

up to BGN 3.9 million; small enterprises – up to BGN 19.5 million; medium-sized enterprises – up to BGN 97.5

million.

NET PROFIT

TOTAL INCOME FROM

BANKING OPERATIONS

13%

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(2022: BGN 24,520 thousand; 2021: BGN 17,848 thousand), used as an additional source of interest

income.

In interest expenses the trend from the previous years was preserved, as a decrease continued to be

reported in the expenses on customer deposits, which reached BGN 1,567 thousand, compared to BGN

9,131 thousand a year earlier. An increase was recorded in the interest expenses on hybrid debt (2022:

BGN 33,488 thousand. 2021: BGN 27,634 thousand) as a result of new tranches issued under the Bank's

program for issuing hybrid instruments. Interest expenses on assets decreased (2022: BGN 4,285

thousand; 2021: BGN 7,897 thousand), which was influenced by the cancellation of negative interest

rates on banks' excess reserves in the BNB. The net interest margin of the Bank amounted to 3.02%

for the period.

Net fee and commission income for 2022 increased by 17.4% to BGN 139,515 thousand (2021: BGN

118,865 thousand), forming 31.4% (27.1% average for the banking system ) of total income from

banking operations (2021: 29.1%), providing a solid contribution to operating profit. An increase was

recorded in all major sources of income, incl. payment operations (2022: BGN 28,421 thousand; 2021:

BGN 23,890 thousand), customer accounts (2022: BGN 48,927 thousand; 2021: BGN 36,840 thousand),

card services (2022: BGN 46,547 thousand; 2021: BGN 36,405 thousand), letters of credit and

guarantees (2022: BGN 3,559 thousand; 2021: BGN 3,387 thousand), as well as other services (2022:

BGN 45,536 thousand; 2021: BGN 42,493 thousand), including such related to credit activity. The

increase was influenced by the consistent policy and actions of the Bank for development in the field

of cross-selling and stimulating the commission income, as well as the expanded customer base and

increased collection of fees.

For 2022, net trading income reached BGN 19,717 thousand (2021: BGN 15,380 thousand), the

increase mainly due to higher income from foreign currency transactions, which amounted to BGN

20,259 thousand, compared to BGN 15,148 thousand a year earlier. Net expenses were reported for

debt and equity instrument transactions, which totaling BGN 542 thousand for the period, compared

to net income of BGN 232 thousand for the previous year. The relative share of net trading income

remained insignificant at 4.4% of total income from banking operations (2021: 3.8%).

The other net operating revenues amount to BGN 14,195 thousand, compared to BGN 11,368

thousand a year earlier, as the increase was mainly due to higher income from management of

assigned receivables (2022: BGN 5,620 thousand ; 2021: BGN 3,075 thousand), as well as higher income

from transactions and revaluations of gold and precious metals (2022: BGN 2,068 thousand; 2021: BGN

1,169 thousand).

INTEREST INCOME FEE AND COMMISSION INCOME

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For the period, administrative expenses increased to BGN 205,113 thousand compared to BGN

179,441 thousand a year earlier, influenced mainly by the inflationary processes in the country and

the related increase in the costs of external services (2022: BGN 56,279 thousand ; 2021: BGN 48,266

thousand), as well as in the personnel costs (2022: BGN 74,545 thousand; 2021: BGN 65,440 thousand).

An increase was also recorded in the costs of depreciation of right-of-use assets (2022: BGN 40,021

thousand; 2021: BGN 33,915 thousand), as well as in those related to telecommunications, software

and other computer maintainance (2022: BGN 13,753 thousand; 2021: BGN 12,265 thousand), which

reflected the development of information technologies. At levels close to the previous year remained

the costs for advertising (2022: BGN 8,455 thousand; 2021: BGN 8,176 thousand), as well as for

depreciation of property, plant and equipment (2022: BGN 12,060 thousand; 2021: BGN 11,379

thousand). For the period, cost/income ratio amounted to 47.57% on an individual basis (2021:

43.39%), which is within the target value of below 50%, set as a quantitative indicator in the

development strategy.

During the year additional write-downs were made on loans, off-balance sheet commitments

amounting to BGN 209,094 thousand, while BGN 73,745 thousand impairment losses were reversed.

As a result, net impairment for 2022 amounted to BGN 135,349 thousand (2021: BGN 122,494

thousand). For more information see the “

Risk Management” section.

For the reporting period, First Investment Bank reported other net expenses in the amount of BGN

12,960 thousand, compared to net income of BGN 4,754 thousand a year earlier, which was mainly

influenced by lower income in connection with the revaluation of investment property (2022: BGN

14,769 thousand; 2021: BGN 30,340 thousand). This position included also contributions made by the

Bank to guarantee schemes, including deposit insurance funds, for restructuring and investor

compensation (2022: BGN 24,534 thousand; 2021: BGN 22,202 thousand).

For more information, see the Individual Financial Statements for the year ending 31 December 2022.

ADMINISTRATIVE EXPENSES STRUCTURE OF ADMINISTRATIVE EXPENSES

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BALANCE SHEET

In 2022, the total assets of First Investment Bank increased by 12.8% to BGN 12,714,058 thousand,

compared to BGN 11,268,870 thousand a year earlier. The dynamics reflected the increase of

borrowed funds, the development of lending services and the management of investments in

securities. Fibank maintained its leading position among banks in the country, ranking fifth in terms of

assets (2021: fifth) by the end of 2022, with a market share of 8.18% on an individual basis (2021:

8.32%).

In the structure of Bank's assets, loans and advances to customers retained structure-determining at

50.2% of total assets (2021: 56.0%), followed by investments in securities – 20.4% (2021: 13.2%) and

cash and receivables from central banks – 15.0% (2021: 16.6%). The share of repossessed assets were

down to 3.2% (2021: 4.0%), and investment propertiy to 5.9% (2021: 6.5%), as part of actions aimed

at reducing non-interest-bearing assets and their effective realization. The net loans/deposits ratio

amounted to 59.1% compared to 67.0% for the previous year in accordance with the conservative risk

management policy.

Cash and receivables from central banks increased to BGN 1,911,371 thousand, compared to previous

year levels – BGN 1,868,853 thousand, mainly as a result of an increase in current accounts in foreign

banks (2022: BGN 235,590 thousand; 2021: BGN 165,600 thousand). Receivables from central banks

remain almost unchanged (2022: BGN 1,427,241 thousand; 2021: BGN 1,455,801 thousand),

maintained in accordance with the requirements for minimum mandatory reserves and generating

optimal profitability. As of the end of 2022, cash on hand amounted to BGN 248,540 compared to BGN

247,452 a year earlier, being managed according to customer needs and efficiency in terms of liquidity.

Loans and advances to banks and financial institutions increased to BGN 264,984 thousand at the end

of the period (2021: BGN 87,412 thousand), as an increase was reported in receivables from local banks

and financial institutions (2022: BGN 105,262 thousand; 2021: BGN 22,164 thousand), as well as in

those from foreign banks and institutions (2022: BGN 159,722 thousand; 2021: BGN 65,248 thousand).

The securities investment portfolio increased to BGN 2,598,137 thousand at the end of the year (2021:

BGN 1,482,699 thousand), managed according to market conditions and with a view to generating

additional income while maintaining proper balance between risk and return. The increase is due to

an increase in government securities (2022: BGN 2,150,996 thousand; 2021: BGN 1,012,178 thousand),

which mainly contain government debt of European Union member states. Bonds and other securities

ASSETS STRUCTURE OF ASSETS

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issued by enterprises increased (2022: BGN 405,558 thousand; 2021: BGN 317,559 thousand) at the

expense of those issued by banks (2022: BGN 10,477 thousand; 2021: BGN 124,057 thousand).

In accordance with the requirements regarding business models and the IFRS 9 criteria for classification

and valuation of financial assets in the Bank's portfolios BGN 468,247 thousand of the securities

portfolio were measured at fair value through other comprehensive income (2021: BGN 901,155

thousand), BGN 267,687 thousand – at fair value through profit or loss (2021: BGN 265,405 thousand)

and BGN 1,862,203 thousand – at amortized cost (2021: BGN 316,139 thousand). Investments in

subsidiaries decreased to BGN 38,526 thousand at the end of the period, compared to BGN 45,873

thousand a year earlier, as a result of terminated subsidiaries during the year – Turnaround

Management EOOD, Realtor OOD and Balkan Financial Services EAD.

As of December 31, 2022, Fibank's operations abroad (Cyprus branch) formed 2.0% (2021: 4.1%) of the

Bank's assets and 6.4% (2021: 5.7%) of the liabilities, as the Cyprus branch’s activities were focused on

the micro and small business segments, as well as on retail banking.

Repossessed assets decreased to BGN 412,996 thousand (2021: BGN 450,987 thousand) while

investment properties were BGN 750,324 thousand (2021: BGN 732,850 thousand). During the year,

such properties were acquired in the amount of BGN 10,318 thousand, as well as a revaluation made

in the amount of BGN 14,769 thousand. For the period, properties sold amounting to BGN 7,613

thousand were written off.

Other assets of the Bank amounted to BGN 114,246 thousand (2021: BGN 116,136 thousand), including

deferred expenses, gold and other receivables. The right-of-use assets amounted to BGN 124,159

thousand at the end of the year (2021: BGN 77,725 thousand), growing in connection with the reported

effects of changes in lease conditions and expectations for the lease term.

For more information see the Individual Financial Statements for the year ended December 31, 2022.

PORTFOLIO OF

FINANCIAL INSTRUMENTS

PORTFOLIO OF GOVERNMENT DEBT

BY COUNTRIES

2022

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LOAN PORTFOLIO

LOANS

In 2022 the net loan portfolio of First Investment Bank increased by 1.1% to BGN 6,384,541 thousand

(2021: BGN 6,315,581 thousand), in line with the objectives for business development placing a priority

on the retail, micro and SME segments. As of December 31, 2022, Fibank ranked sixth in terms of loans

among banks in the country, reporting a market share of 8.27% (2021: 9.34%).

In BGN thousand / % of total

2022

2021

Retail banking

2,334,010

34.5

2,120,134

31.3

Micro enterprises

198,538

2.9

182,625

2.7

Small enterprises

878,135

13.0

878,125

13.0

Medium-sized enterprises

1,085,974

16.0

1,123,631

16.6

Large enterprises

2,270,652

33.6

2,474,806

36.5

Gross loan portfolio

6,767,309

100

6,779,321

100

Impairment

(382,768)

(463,740)

Net loan portfolio

6,384,541

6,315,581

Growth was recorded mainly in retail banking loans, which increased their share to 34.5% of the gross

portfolio (2021: 31.3%), as well as in micro enterprises – to 2.9% (2021: 2.7%). Small and medium-sized

enterprises

, structured according to the Law on Small and Medium-sized Enterprises, formed 13.0%

(2021: 13.0%) and 16.0% (2021: 16.6%) respectively or a total of 29% (2021: 29.6%) of total loans at

the end of the year. A decrease was recorded in loans in the segment of large enterprises, with their

share being 33.6% of the gross portfolio (2021: 36.5%).

In BGN thousand / % of total

2022

2021

Loans in BGN

4,233,941

62.6

4,048,836

59.7

Loans in EUR

2,326,562

34.4

2,481,510

36.6

Loans in other currency

206,805

3.0

248,975

3.7

Gross loan portfolio

6,767,309

100

6,779,321

100

Impairment

(382,768)

(463,740)

Net loan portfolio

6,384,541

6,315,581

In the currency structure of the loan portfolio, loans in BGN increased to BGN 4,233,941 thousand

(2021: BGN 4,048,836 thousand) or 62.6% of the total portfolio (2021: 59.7%). A decrease was

reported in loans in euro to BGN 2,326,562 thousand at the end of the period (2021: BGN 2,481,510

thousand), or a share of 34.4% (2021: 36.6%) in total loans. The country has a currency board system

in place which minimizes the BGN/EUR currency risk. Since 2020, Bulgaria is part of the European

According to business segments of the Bank, incl. criteria for annual turnover, as well as: microenterprises –

up to BGN 3.9 million; small enterprises – up to BGN 19.5 million; medium-sized enterprises – up to BGN 97.5

million.

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Exchange Rate Mechanism (ERM) II and the Single Supervisory Mechanism (SSM), which was a step

towards the country's accession to the Eurozone. Loans in other currencies amounted to BGN 206,805

thousand (2021: BGN 248,975 thousand), forming 3.0% of total loans (2021: 3.7%).

At the end of the period, impairment charges for potential losses on the loan portfolio amounted to

BGN 382,768 thousand compared to BGN 463,740 thousand a year earlier. In 2022, additional

impairment was recognized in the amount of BGN 208,469 thousand, impairment losses in the amount

BGN 72,929 thousand were reversed, and BGN 217,974 thousand were written off.

It is the policy of the Bank to require adequate collateral upon granting loans. All legally permissible

types of collateral are accepted, and a discount rate is applied depending on their expected realizable

value.

LOAN PORTFOLIO AND IMPAIRMENT

COST OF RISK

LOAN PORTFOLIO

BY TYPE OF COLLATERAL

COVERAGE OF THE PORTFOLIO

WITH COLLATERAL

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As of the end of 2022, the type of collateral having the largest share in the Bank's portfolio were

sureties and other guarantees - 43.6%, followed by pledges of receivables - 28.8% and mortgages -

23.3%.

For more information on credit risk, see Note 3 “Risk Management” of the Individual Financial

Statements for the year ended December 31, 2022.

RELATED PARTY TRANSACTIONS

In the course of its ordinary activities, the Bank also enters into transactions with related parties. These

transactions are carried out under market criteria and in accordance with applicable law.

Type of related party

Parties that control or

manage the Bank

Enterprises under

common control

In BGN thousand

2022

2021

2020

2022

2021

2020

Loans

2,944

3,515

1,769

78,316

83,666

84,580

Deposits and loans received

14,195

13,725

13,275

115,177

125,350

113,352

Deposits placed

92,146

5,868

2,955

Other receivables

12,467

18,037

17,565

Other borrowings

150

420

100

Off-balance sheet commitments

1,023

1,061

1,031

2,029

2,792

3,412

Leasing liabilities

2,684

1,513

Type of related party

Parties that control or

manage the Bank

Enterprises under

common control

In BGN thousand

2022

2021

2020

2022

2021

2020

Interest income

3,065

3,089

3,325

Interest expense

231

547

Fee and commission income

1,769

1,082

368

Fee and commission expense

301

296

295

For more information regarding related party transactions, see Note 35 “Related party transactions”

of the Individual Financial Statements for the year ended December 31, 2022.

CONTIGENT LIABILITIES

Contingent liabilities of First Investment Bank include bank guarantees, letters of credit, unused credit

lines, promissory notes and others. These are provided in accordance with the general credit policy on

risk assessment and collateral value. With regard to documentary transactions performed, the Bank is

also guided by the unified international rules in the area, protecting the interests of parties to such

transactions.

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At the end of the reporting period, the total amount of off-balance sheet commitments amounted to

BGN 1,026,495 thousand compared to BGN 818,028 thousand a year earlier. The increase was mainly

in the unused credit lines – up to BGN 837,477 thousand (2021: BGN 644,288 thousand) and in the

letters of credit – up to BGN 31,767 thousand (2021: BGN 12,507 thousand), at the expense of bank

guarantees, which reported a decrease to BGN 157,251 thousand (2021: BGN 161,233 thousand).

For more information on off-balance sheet commitments, see Note 32 "Contingent liabilities" of the

Individual Financial Statements for the year ended December 31, 2022.

ATTRACTED FUNDS

In 2022, attracted funds from customers increased by 14.6% and reached BGN 10,798,450 thousand

(2021: BGN 9,425,251 thousand), remaining the main source of funding for the Bank and forming

94.8% of total liabilities (2021: 94.3%). First Investment Bank offers savings products and package

programs tailored to market conditions and customer needs. As at December 31, 2022, the Bank

ranked fifth by deposit size among banks in Bulgaria (2021: fifth) with a market share of 8.59% on

individual basis (2021: 8.69%).

Deposits of individuals increased by 3.8% to BGN 7,260,749 thousand at the end of the period

compared to BGN 6,993,994 thousand a year earlier. They retained a major share of total borrowings

at 67.2% (2021: 74.2%). The currency structure of retail deposits was dominated by funds in BGN

accounting for 42.2% of all borrowings (2021: 46.2%), followed by funds in euros at 20.2% (2021:

22.6%) and in other currencies at 4.9% (2021: 5.4%).

In BGN thousand / % of total

2022

2021

2020

Attracted funds from individuals

7,260,749

67.2

6,993,994

74.2

6,875,257

75.6

In BGN

4,552,829

42.2

4,352,688

46.2

4,127,979

45.4

In EUR

2,182,818

20.2

2,131,028

22.6

2,255,006

24.8

In other currency

525,102

4.9

510,278

5.4

492,272

5.4

Attracted funds from corporate,

state-owned and public

institutions

3,537,701

32.8

2,431,257

25.8

2,224,898

24.4

In BGN

2,018,602

18.7

1,400,350

14.9

1,346,566

14.8

In EUR

1,272,193

11.8

883,292

9.4

681,256

7.5

In other currency

246,906

2.3

147,615

1.6

197,076

2.2

Total attracted funds from

customers

10,798,450

100

9,425,251

100

9,100,155

100

In accordance with the regulatory requirements, First Investment Bank allocates annual contributions

to the Deposit Insurance Fund. As provided by law, the Fund guarantees amounts up to BGN 196,000

kept in a customer’s accounts with the Bank.

Attracted funds from corporates and institutions increased by 45.5% to BGN 3,537,701 thousand

(2021: BGN 2,431,257 thousand) as a result of the Bank’s consistent policy on cross-selling,

development of the transaction business, building lasting customer relationships and weakening of

investment activity. By the end of 2022 their relative share increased to 32.8% of total borrowings from

customers (2021: 25.8%). As regards the currency structure, funds in BGN attracted from corporates

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and public institutions formed 18.7% of all borrowings (2021: 14.9%), followed by those in euros at

11.8% (2021: 9.4%) and in other currencies at 2.3% (2021: 1.6%).

Other borrowings increased to BGN 116,487 thousand as of December 31, 2022 compared to BGN

106,271 thousand a year earlier, as a result mainly of the received financings (2022: BGN 36,611

thousand; 2021: BGN 26,227 thousand), of the liabilities related to structured investment products

(2022: BGN 6,884 thousand; 2021: BGN 2,638 thousand), as well as of the obligations under loan

agreements, which the Bank started to offer during the period, in order to prepare for the fulfillment

of the requirements for eligible liabilities (MREL) according to Regulation (EU) № 575/2013 and the

Law on Recovery and Restructuring of Credit Institutions and Investment Intermediaries. For more

information, see the „

Capital“ section.

The received financing included mainly financing from the Fund Manager of Financial Instruments in

Bulgaria (Fund of Funds) – BGN 20,174 thousand (2021: BGN 7,971 thousand), from the Bulgarian

Development Bank AD – BGN 14,931 thousand (2021: BGN 15,525 thousand), as well as from the

European Investment Fund under the JEREMIE 2 initiative – BGN 1,506 thousand (2021: BGN 2,731

thousand). For more information, see the „External programs and guarantee schemes“ section. At the

end of the year, the amortized value of the debt related to to total return swap agreements decreased

to BGN 39,874 thousand (2021: BGN 74,018 thousand).

For 2022, liabilities due to banks in the form of current and term accounts amounted to BGN 45,703

thousand, compared to BGN 29,879 thousand a year earlier.

Leasing liabilities amounted to BGN 124,240 thousand at the end of the year (2021: BGN 77,785

thousand), increasing in connection with the reported effect of changes in leasing conditions and the

lease term.

For more information on borrowings, see the Individual Financial Statements for the year ending 31

December 2022.

CUSTOMER DEPOSITS OTHER BORROWED FUNDS

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CAPITAL

As of December 31, 2022 the share capital of First Investment Bank amounted to BGN 149,085

thousand, divided into 149,084,800 ordinary, registered, dematerialized shares with voting rights in

the Total General Meeting of Shareholders and a nominal value of BGN 1 each. The share capital has

been paid in full. The share premium amounted to BGN 250,017 thousand.

The balance sheet equity of First Investment Bank increased by 4.7% to BGN 1,328,209 thousand

(2021: BGN 1,268,864 thousand), influenced by the increase in other reserves and retained earnings,

which reached BGN 900,061 thousand at the end of the period (2021: BGN 818,856 thousand).

REGULATORY CAPITAL

First Investment Bank maintains own funds for the purpose of capital adequacy in the form of Common

Equity Tier 1 and Additional Tier 1 capital, following the requirements of Regulation (EU) No575/2013

and the EC implementing regulations, as well as Ordinance No7 of the BNB on the Organization and

Management of Risks in Banks.

By the end of the reporting period the CET1 capital amounted to BGN 1,269,041 thousand, compared

to BGN 1,264,009 thousand a year earlier, after applying the corrections related to the transitional

treatment according to Regulation (EU) 2017/2395 on mitigating the impact of the introduction of

IFRS9. With these a five-year term is being defined for gradual introduction during which banks can

add a specific amount to the common equity tier 1, calculated in accordance with the approach chosen

(the so-called static approach or static approach with dynamic part included) and in accordance with

the coeficients for transitional arrangements in the amount of 0.85 for 2019, 0.70 for 2020, 0.50 for

2021 and 0.25 for 2022. In this regard, it was decided during the transitional period until 2022, First

Investment Bank to apply the measures under Article 473a of Regulation (EU) No 575/2013, including

the additional relief provided for in paragraph 4 – the so-called dynamic part of the transitional

treatment.

In December 2022, First Investment Bank extended its one-year program to issue hybrid instruments

(perpetual, non-cumulative, unsecured, deeply subordinated, freely transferable, non-convertible

bonds) meeting Additional Tier 1 capital requirements, to replace existing issues of hybrid instruments

issued by the Bank. The program envisages separate issues, the coupon interest rate for each being

determined individually according to market conditions. The minimum nominal value per bond is EUR

BALANCE-SHEET EQUITY STRUCTURE OF EQUITY

2022

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100,000, with an option for additional investment above that amount at an increment of EUR 1,000 or

a multiple of EUR 1,000.. The bonds are issued in global form, clearing through Clearstream Banking

S.A., with the aim of subsequent admission to trading on the regulated market of the Luxembourg

Stock Exchange (LuxSE).

In May 2022, the Bank successfully issued as private placement the third tranche of the first series of

hybrid instruments (ISIN: XS2419929422), whereby its amount reached EUR 30 million. In August 2022

the first tranche of the second series of hybrid instruments (ISIN: XS2488805461) in the amount of EUR

10 million was issued, the total amount of bonds issued under the program reaching EUR 40 million.

For the new bonds, permission was obtained from the BNB for inclusion in the additional Tier 1 capital

of the Bank. In connection with this, at the end of the year a replacement was made of the existing

bond issue with original principal amount of EUR 40 million (ISIN: BG2100008114). Thus the amount

of Additional Tier 1 capital (AT1) as at 31.12.2022 remained unchanged, at BGN 254,258 thousand (EUR

130 million). For more information, see the

Subsequent Events section. Tier 1 capital at the end of the

period amounted to BGN 1,523,299 thousand (2021: BGN 1,518,267 thousand), and total regulatory

capital to BGN 1,523,299 thousand (2021: BGN 1,518,267 thousand).

As of 31 December 2022, First Investment Bank had also two other hybrid instruments (bond issues)

with an original principal amount of EUR 60 million (ISIN: BG2100022123) and EUR 30 million (ISIN:

BG2100023196), included in the additional Tier 1 capital of the Bank. The issues are admitted to trading

on a regulated market on the Luxembourg Stock Exchange (LuxSE). At the end of the reporting period,

the amortized cost of hybrid debt amounted to BGN 256,861 thousand (2021: BGN 320,733 thousand).

For more information, see Note 29 "Hybrid Debt" of the Individual Financial Statements for the year

ending 31 December 2022.

For the purpose of reporting qualifying holdings outside the financial sector, First Investment Bank

applies the definition of eligible capital, which includes tier 1 capital and tier 2 capital, which cannot

exceed 1/3 of tier 1 capital. As at 31 December 2022, the eligible capital of First Investment Bank,

calculated in accordance with Regulation (EU) No 575/2013 and Ordinance No7 of BNB for the

organization and management of risks in banks amounted to BGN 1,523,299 thousand.

REGULATORY CAPITAL CAPITAL ADEQUACY IN 2022

-1%

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CAPITAL REQUIREMENTS

В края на 2022 г. Първа инвестиционна банка отчита стабилни капиталови показатели, както

следва: съотношение на базовия собствен капитал от първи ред – 18,11%, съотношение на

капитала от първи ред – 21,74% и съотношение на обща капиталова адекватност – 21,74%, като

превишава минималните регулаторни капиталови изисквания, изразени чрез съвкупното

капиталово изискване, включващо и комбинираното изискване за буфер.

At the end of 2022, First Investment Bank reported stable capital ratios, as follows: Common Equity

Tier 1 (CET1) ratio at 18.11%, Tier 1 capital ratio at 21.74% and Total Capital Adequacy ratio at 21.74%,

exceeding the minimum regulatory capital requirements, expressed by the overall capital requirement,

including the combined buffer requirement.

In BGN thousand / % of risk

exposures

2022

2021

2020

CET 1 capital

1,269,041

18.11

1,264,009

17.86

1,285,945

18.18

Tier 1 capital

1,523,299

21.74

1,518,267

21.46

1,540,203

21.78

Own funds

1,523,299

21.74

1,518,267

21.46

1,540,203

21.78

Total risk exposures

7,007,065

7,075,369

7,071,866

The reported capital ratios resulted from the application of comprehensive and targeted measures

regarding the implementation of capital levers in key areas, including successful subscription of a new

public issue of shares, retention of profit, inclusion of the issued debt-capital (hybrid) instrument in

the Additional Tier 1 capital, as well as maintaining high discipline in risk management.

CAPITAL BUFFERS

In addition to the capital requirements set out in Regulation (EU) № 575/2013 and LCI, First Investment

Bank maintains four capital buffers in accordance with the requirements of Ordinance №8 of the BNB

on Capital Buffers, the Combined Buffer Requirement, Restrictions on Distributions and the Guidance

on Additional Own Funds.

First Investment Bank maintains a capital conservation buffer, comprised of common equity tier 1

capital, equal to 2.5% of the total risk exposure of the Bank, as well as buffer for systemic risk covered

by common equity tier 1 capital with the aim for decreasing the effect of potential long-term non-

cyclical system or macroprudential risks in the banking system in the country. In 2022 the level of the

capital buffer for systemic risk applicable to all banks in Bulgaria remained unchanged at 3% of the

total risk exposures in the country.

With the aim for protection of the banking system against potential losses arising from accumulated

cyclical systemic risk in periods of excessive credit growth, the banks in Bulgaria, incl. Fibank maintains

countercyclical capital buffer, applicable to credit risk exposures in the Republic of Bulgaria. Its level is

determined by the Bulgarian National Bank each quarter and by the end of 2022 it amounted to 1.0%,

and according to the decisions of the BNB, it was increased to 1.5% effective from 01.01.2023. and to

2.0% effective from 01.10.2023.

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In addition, the determined by BNB other systematically important institutions (O-SII) in the country

among which First Investment Bank AD should maintain a buffer for O-SII with a view on their

significance for the national economy and financial system. The applicable for Fibank buffer for O-SII

on an individual and consolidated basis, determined as a share of the total value of the risk exposures,

was in the amount of 1.0% for 2022 and 0.75% as of 01.01.2023.

LEVERAGE

The leverage ratio is an additional regulatory and supervisory tool, which measures the required capital

maintained by banks that is not risk-sensitive or risk-weighted, thereby complementing and building

on the risk-based capital ratios applicable under the existing regulatory framework. In terms of the

leverage ratio, on EU level, banks should report and disclose the indicator in order to maintain the

minimum required amount of 3% under Regulation (EU) № 575/2013.

Capital

buffer for

O-SII

Decision of MB

of BNB from

28.10.2022

Decisions of MB

of BNB from

16.12.2021 and

from 29.09.2022

Counter-

Cyclical capital

buffer

CAPITAL BUFFERS

LEVERAGE RATIO EQUITY/ ASSETS RATIO

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First Investment Bank calculates the leverage ratio by matching its Tier 1 capital to the total exposure

of the Bank (assets, off-balance sheet items, and other exposures to derivatives and securities

financing transactions), subject to the requirements of Delegated Regulation (EU) 2015/62 of the

Commission concerning the leverage ratios and the other applicable regulations. As at 31 December

2022, the leverage ratio amounted to 11.84% on an standalone basis compared to 13.79% for the

previous period, impacted by the increase in the total exposure measure.

First Investment Bank has written rules in place to identify, manage and monitor the risk of excessive

leverage resulting from potential vulnerability of the Bank related to the maintained levels of leverage.

The risk of excessive leverage is currently monitored based on specific indicators, which include the

leverage ratio, calculated in accordance with applicable regulatory requirements, as well as the

mismatches between assets and liabilities. The Bank manages this type of risk using various scenarios,

including such that take into account its possible increase due to a decrease in the Tier 1 capital

resulting from potential losses. The leverage ratio is also part of the capital indicators of the system

for ongoing monitoring and early warning, and is incorporated in the framework for risk management

at the Bank, including in the management processes in case of potential financial risks.

ELIGIBLE LIABILITIES

In compliance with the requirements of the Law on Recovery and Resolution of Credit Institutions and

Investment Firms and Regulation (EU) No 575/2013, banks need to meet minimum requirements for

own funds and eligible liabilities (MREL), as well as subordination requirements in relation to them,

determined individually for each institution by the restructuring authority and calculated as a

percentage of the total risk exposure amount (TREA) and the leverage ratio exposure measure (LRE).

The deadline for meeting the minimum requirements is 1 January 2024. In order to ensure gradual

accumulation of equity and eligible liabilities, intermediate target levels have been set (as at 1 January

2022 and 1 January 2023) to be reached by institutions.

In 2022, First Investment Bank continued to develop its products in fulfillment of the minimum

requirements for eligible obligations (MREL), including with respect to borrowings. In this connection,

the terms of the Perspective product were optimized. This is a senior unsecured debt product with a

fixed yield, intended for individuals and business customers. It is structured in such a way as to comply

with the requirements for maturity, security, subordination, loss sharing, acceleration, and others

under the Law on the Recovery and Resolution of Credit Institutions and Investment Firms and

Regulation (EU) No 575/2013.

For more information on capital and eligible liabilities see the Individual Financial Statements as at 31

December 2022.

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RISK MANAGEMENT

First Investment Bank has built, maintained, and developed a risk management system which ensures

the identification, assessment and management of risks inherent to its activity.

In 2022, the Bank operated in accordance with its Risk Management Strategy and Risk Appetite

Framework, aiming to maintain a moderately low level of risk and further increasing the protection

mechanisms against risks inherent in banking, taking into account the challenges of the external

environment and the regulatory requirements. The Bank continued to pursue its objectives for

reduction and management of non-performing exposures and its long-term priorities for reduction

and effective realization of non-interest-bearing assets in accordance with the Strategy for Reduction

of Non-performing Exposures and Repossessed Assets and the Operational Plan for its

implementation, taking into account the investor demand and their effective realization.

First Investment Bank appreciates the importance of sustainable development. In this regard, during

the year a new department and director “Sustainable development” was appointed, aiming to

implementing the requirements, taking into account the environmental, social, and governance (ESG)

factors in the overall activity of the Bank, including support and consulting on strategic planning, risk

management framework and internal governance.

RISK MANAGEMENT STRATEGY

The risk management strategy of First Investment Bank is an integral part of its business strategy. The

main objective in managing the overall risk profile of the Bank is to achieve a balance between risk,

return and capital. The risk profile is relevant to the product policy of the Bank and is determined in

accordance with the economic factors in the country and the Bank’s internal characteristics and

requirements.

The Bank determines its risk propensity and risk tolerance levels so that they correspond to its strategic

objectives and stable functioning, as well as to the required level of equity capital and an effective

management process. Fibank maintains financial resources that are commensurate with the volume

and type of operations performed and with its risk profile, by developing internal control systems and

RISK

STRATEGY

Risk

management

framework

Three lines

of defense

model

Risk

map

Strategic

goals

Risk

appetite

TARGET RISK PROFILE

Risk

culture

A system

of limits

Assessment,

monitoring

and reporting

of risks

KEY ELEMENTS OF RISK STRATEGY

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mechanisms for risk management in accordance with regulatory requirements and best practices. The

main goals on the basis of which the risk strategy is structured, are defined, as follows:

achieving a sustainable level of capital to ensure good risk-taking capacity, as well as capacity

to cover risks in the long term;

maintaining good asset quality while providing for an efficient decision-making process;

achieving a balanced risk/return ratio for all business activities of the Bank through defining a

risk tolerance for achieving the targeted business goals and tasks.

In 2022, as part of the annual review, the Risk Strategy was updated in accordance with the Risk

Appetite Framework and the Business Plan of the Bank. With regard to the risk profile, the Strategy

continues to focus on the development of retail and SME segments, as well as on the digitization of

processes, cyber security and data protection. Constant emphasis is placed on ensuring effective

control environment in relation to existing business processes, active management of credit and

operational risk, maintaining an adequate level of unencumbered liquid assets, and keeping assumed

market risk within current limits.

RISK APPETITE FRAMEWORK

In 2022, as a part of annual review, First Investment Bank updated the Risk appetite framework, which

is an integrated instrument for defining and limiting the overall risk level, which the Bank is willing and

able to take to achieve its strategic and business goals. For 2022, a medium-low level of risk appetite

is set to be maintained.

Defining and applying a risk appetite framework is based on assessment of the risk profile of the Bank

on the basis of the material risks identified in the risk map, as the overall risk profile is expressed into

a rating aggregated from the scores assigned to each of the specific risks throughout a 5-level scale

with quantitative values and risk levels.

Within the risk appetite framework, the risk capacity of the Bank is defined, which represents the

maximum level of risk the Bank can operate without breaking regulatory requirements and other limits

with respect to capital and funding needs and liabilities to counterparties. The risk tolerance is defined,

as a precautionary measure within maintaining the risk appetite, which as set on a strategic level is

defined as a percentage lower than 100% of the overall risk capacity of the Bank. For calculating the

risk appetite are the specific risk indicators and limits (for example the total capital ratio, the common

equity Tier 1 ratio, MREL ratio, leverage ratio, loan to deposit ratio, liuidity coverage ratio, net stable

funding ratio, return on equity, non-performing exposure ratio, provisioning ratio, operating

losses/regulatory capital, etc.), as well as early warning indicators in accordance with the type of risk.

The risk appetite framework is subject to review by the Managing Board and approval from the

Supervisory Board once a year or more often, if needed, in accordance with the business environment

dynamics. It is part of the annual process for defining the strategy and planning within the Bank.

RISK MAP

First Investment Bank develops a risk map, which classifies risks into different types and identifies

those the Bank is exposed to or may be exposed to in its activity. It is updated once a year or more

often if needed, aiming at defining all material risks and their adequate integration within the risk

management framework of the Bank.

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The types of risks are differentiated into groups (Pillar 1 and Pillar 2) as well as the methods for their

measurement in accordance with the applicable regulatory framework.

RISK CULTURE

Prudent and consistent risk culture is one of the key elements of effective risk management. In

compliance with the best standards, the Fibank seeks to develop a risk culture that will further enhance

visibility and prevention in terms of individual risk types, their identification, evaluation and

monitoring, including by applying appropriate forms of training among the employees and senior

management involved in risk management.

The Bank aims at applying the following principles for ensuring high risk culture:

risk taking within the approved risk appetite;

approval of every risk in accordance with the effective approval levels and the internal risk

management framework;

current/ongoing monitoring and risk management, incl. taking into consideration the

ecological, social and governance (ESG) factors;

responsibility of employees at all levels to the management and escalation of risks, while

applying a conservative and future-oriented approach in their assessment;

effective communication and constructive criticism aimed at making rational and informed

decisions, as well as creating conditions for open and positive engagement throughout the

organization;

applying appropriate incentives to contribute to sound and efficient management,

discouraging risk-taking in excess of the level acceptable to the Bank.

TYPES OF RISKS

PILLAR I

PILLAR II

▪ CREDIT RISK ▪ OPERATIONAL RISK

External factors

Internal factors

СТЪЛБ I

▪ MARKET RISK

СТЪЛБ I

▪ LIQUIDITY RISK

▪ Strategic risk

▪ Reputational risk

▪ Risk from the usage of

statistical models

▪ Risk of non-compliance

▪ Risk of excessive

leverage

▪ Interest rate risk in

the banking book

▪ Concentration risk

▪ Residual risk

▪ Securitization risk

▪ Currency risk to hedged

borrowers

Външни фактори

▪ Political

▪ Macro-economical

▪ Social

▪ Technological

▪ Environment

▪ Regulations

▪ Employees

▪ Processes

▪ Systems

▪ Products

▪ Clients

▪ Reputation

RISK PROFILE AND RISK MAP

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RISK MANAGEMENT FRAMEWORK

The risk management framework of First Investment Bank includes automated systems, written

policies, rules and procedures, mechanisms for the identification, assessment, monitoring and control

of risks, and measures to reduce them. Its main underlying principles are: objectivity, dual control of

any operation, centralized management, separation of duties, independence, clearly defined levels of

competencies and authority, adequacy of the intrabank requirements to the nature and volume of

activity, effective mechanisms for internal audit and control.

The Bank meets the requirements of

current legislation to credit institutions for the preparation and maintenance of current recovery plans

in case of potential occurrence of financial difficulties and for the continuity of processes and activities,

including with regard to recovery of all critical functions and resources.

LINES OF DEFENCE

The risk management framework of First Investment Bank is structured in accordance with the

principle and model of the three lines of defense which is in compliance with the Basel Committee for

Banking Supervision principles for corporate governance in banks:

First line of defence: the business units which take the risk and are responsible for managing

it, including through identification, assessment, reporting in accordance with current limits,

procedures and controls implemented in the Bank;

Second line of defence: the Risk Management and Compliance functions which are

independent of the first line of defence. The Risk Management function monitors, assesses

and reports risks, while the Compliance function monitors and controls the maintaining of

internal regulations in compliance with the applicable regulatory provisions and standards;

Third line of defence: Internal Audit which is independent of the first and the second lines of

defence. It provides an independent review of the quality and effectiveness of risk

management, business processes and banking activity, as well as of the business planning and

internal policies and procedures.

The Bank’s policies on internal governance with respect to the internal control framework and the

independent risk management, compliance and audit functions are in accordance with the applicable

requirements in this sphere, including Ordinance No 10 of the BNB on the Organisation, Governance

and Internal Control of Banks, Ordinance No 7 of the BNB on Organisation and Risk Management of

Banks and the EBA Guidelines on internal governance pursuant to Directive 2013/36/EU

(EBA/GL/2021/05).

STRUCTURE AND INTERNAL ORGANISATION

First Investment Bank has a developed risk management and control function, organized in line with

recognized international practices and standards, under the management of a Chief Risk Officer (a

member of the Managing Board) with appropriate experience and qualifications and directly reporting

to the Risk Committee of the Supervisory Board.

The Chief Risk Officer organizes the overall risk management framework of the Bank, manages the

process of its implementation, coordinates the activities of the risk committees of the Bank, and

controls the credit process in its entirety, including the process of collection of problem loans. He

ensures the effective monitoring, measuring, controlling and reporting of all types of risk to which the

Bank is exposed.

First Investment Bank has also developed a compliance function, whose main objective is to identify,

assess, monitor and report the risk of non-compliance. The function ensures the compliance of

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activities with regulatory requirements and recognized standards, and supports the Managing Board

and senior staff in the management and control of this risk. The function is organized under the

subordination to the Chief Executive Officer, with direct reporting to the Risk Committee and/or the

Supervisory Board. The Chief Executive Officer ensures the organization for applying the compliance

function within the Bank, as well as its integration in the established risk management framework

across the Bank, by all business units and at all levels.

First Investment Bank maintains an information system allowing for the measurement and control of

risks through the use of internal rating models for assessment of the quality of the borrower, assigning

of credit rating to exposure, and obtaining quantitative assessment of risk. The information system

ensures maintenance of a database and subsequent processing of data for the purposes of risk

management, including for preparation of the regular reports necessary for monitoring the risk profile

of the Bank.

COLLECTIVE RISK MANAGEMENT BODIES

The overall process of risk management is carried out under the guidance of the Managing Board of

First Investment Bank. The Supervisory Board exercises control over the activities of the Managing

Board on risk management, liquidity and capital adequacy, directly and/or through the Risk Committee

which functions as an auxiliary body to the Supervisory Board in accordance with existing internal bank

rules and procedures.

Risk committee advises the Supervisory Board and the Managing Board in relation to the overall

current and future strategy on ensuring compliance of the risk policy and risk limits, risk-taking

propensity and control on its execution by the senior management. During the year there were no

changes in the composition of the Risk Committee. As at 31 December 2022, it consisted of three

members of the Supervisory Board of First Investment Bank AD. The Chairman of the Risk Committee

is Mr. Jyrki Koskelo, independent member of the Supervisory Board.

For supporting the activity of the Managing Board in managing the various types of risks, the following

collective management bodies operate at the Head Office of First Investment Bank: a Credit Council,

an Asset, liability and Liquidity management Council (ALCO), a Restructuring Committee and an

Operational Risk Committee, which carry out their activities on the basis of written structure, scope of

activities and functions.

The Credit Council supports the management of the credit risk undertaken by the Bank by issuing

opinions on loan transactions in accordance with the authority level assigned thereto, including with

regards to proposals from the operational/business units in the Head Office, as well as from the

branches of the Bank in the country and abroad. During the year there were no changes in the

composition of the Credit Council. The Chairman of the Credit Council is the Chief Risk Officer (CRO),

while the other members include the Chief Corporate Banking Officer (CCBO), the Director and

Member of the Managing Board regarding Small Enterprises Banking, as well as the Director of the

Credit Risk Management, Monitoring and Provisioning department.

The Asset, liability and Liquidity management Council (ALCO) is a specialized collective body which

advises the Managing Board on matters relating to implementing the policy for asset and liability

management, and maintaining adequate liquidity in the Bank. It carries out systematic analysis of the

interest-rate structure of assets and liabilities, of the maturity ladder and of liquidity indicators, with a

view to possible early warning and taking actions for their optimization. During the year there were no

changes in the composition of ALCO. The Chairperson of ALCO is the Chief Executive Officer (CEO), and

other members include, the Chief Financial Officer (CFO), and the directors of the Treasury, Risk

Analysis and Control, Retail Banking and Large Enterprises Banking departments.

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The Restructuring Committee is a specialized internal bank body responsible for the monitoring,

evaluation, classification, impairment and provisioning of risk exposures and commitments. It also

gives motivated written proposals to the Managing Board, and decides on restructuring of exposures

according to the current authority levels in the Bank. During the year there were no changes in the

composition of the Restructuring Committee, as employees were regulated for substituting members

in case of absence. The Chairman of the Restructuring Committee is the Chief Executive Officer (CEO),

while the other members include: the Chief Risk Officer (CRO) and the directors of the Impaired assets,

the Intensive Loan Management; and a representative from the Legal department.

The Operational Risk Committee is an advisory body to the MB, designed to help the adequate

management of operational risk by monitoring and analyzing operating events. The Committee

proposes measures to minimize operational risks, as well as prevention measures. During the year

there were no changes in the composition of the Operational Risk Committee The Chairman of the

Operational Risk Committee is the director of Risk Analysis and Control department and the other

members are the directors of the following departments: Card Payments; Compliance – Regulations

and Standards; Accounting, Information Technology and Branch Network.

Apart from the collective management bodies, the risk function in First Investment Bank is executed

by the Risk Analysis and Control department, the Credit Risk Management, Monitoring and

Provisioning department and the specialized unit for Strategic Risk Management (Risk Management

Directorate), as well as the Compliance function – by departments Compliance – Regulations and

Standards and Compliance – Specialized Monitoring and Control (Compliance Directorate), which are

independent (separate from the business of the Bank) structural units in the organizational structure

of the Bank.

The Risk Analysis and Control department performs functions for the identification, measurement and

management of the various types of risks inherent in the Bank’s activity. The department monitors the

determined levels of risk appetite and risk tolerance, is responsible for the implementation of new

requirements relating to risk assessment and capital adequacy, and assists other departments in

carrying out their functions related to risk management and control.

The Credit Risk Management, Monitoring and Provisioning department performs the functions of

management and monitoring of credit risk, and exercises secondary control over risk exposures

according to the current authority levels on loan transactions in the Bank. The department manages

the process of categorization of credit exposures, including the assessment of potential losses.

The specialized unit for Strategic Risk Management aims at identifying and assessing the strategic risk,

including the main risks in the Bank’s strategic projects, as well as analyzing the realistics of the

assumptions embedded in the strategies of the Bank with respect to changes in the external

environment and the markets it operates in.

The Compliance – Regulations and Standards department carries out the activities of identifying,

assessing and managing the risk of non-compliance, ensures adequate and legitimate internal

regulatory framework in the structure of the Bank, and monitors for compliance of the Bank's products

and services with existing regulations. It also manages and analyses the customer satisfaction in the

Bank in relation to customer complaints. As part of it a Compliance – investment services and activities

unit functions, which executes ongoing control over the execution of the regulatory requirements with

respect to the Bank’s activity as an investment intermediary and on the market abuse with financial

instruments, as well as a Data protection officer, who has a leading role in ensuring the lawful

processing of personal data in the Bank's structure – for further information see section „

Personal Data

Protection“.

The Compliance – Specialized Monitoring and Control department carries out the Bank's activities

related to the prevention of money laundering and financing of terrorism as a specialized office under

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Art. 106 of the Law on Measures against Money Laundering (LMAML), and exercises control over the

application of requirements for combating and preventing fraud.

SYSTEM OF LIMITS

First Investment Bank applies a system of internal limits for different types of risks, in line with the

regulatory requirements and the Bank's risk management strategy, including limits by

client/counterparty, type of instrument and portfolio, sector, market, etc. The limits applied are

monitored on a regular basis and are subject to periodic review and update in line with the risk

appetite, market conditions and current regulatory framework.

For more information on the internal limits for different types of risk, see the subsections on credit risk,

market risk, liquidity risk, operational risk, as well as the Individual Financial Statements for the year

ended 31 December 2022.

RECOVERY PLAN

In pursuance of the Law on Recovery and Resolution of Credit Institutions and Investment Firms, banks

in the country are required to prepare and maintain recovery plans in case of potential occurrence of

financial difficulties.

In 2022 First Investment Bank updated its recovery plan, including recovery indicators. Those were

calibrated in line with the regulatory requirements and current macroeconomic environment, so as to

provide for accountability and efficiency in the management of risks and financial resources of Bank.

In connection with the minimum requirement for own funds and eligible liabilities (MREL), new

subordination indicators were added, structured as a percentage of the total risk exposure amount

(TREA) and the leverage ratio exposure measure (LRE). Information regarding the main lines of

business and the criteria for identifying critical functions was further elaborated, as well as aggregated

information regarding the overall recovery capacity and the effects of measures on capital and

liquidity. A more conservative approach and rigorous risk parameters were applied in the assumptions

for preparation of different of stress scenarios, including in view of the challenges of the external

environment and the economic consequences resulting from the events in Ukraine.

The Recovery plan includes the detailed process of escalation and decision-making, as well as the units

and bodies within the Bank responsible for its updating and implementation. It includes quantitative

and qualitative early warning and recovery indicators, based on a wide range of capital & MREL,

liquidity, profitability, asset quality, market-based and macroeconomic indicators, upon the

occurrence of which a phased process is initiated, involving analysis and identification of the best way

to overcome the crisis situation, as well as taking decisions to trigger the appropriate actions according

to the procedures for reporting and escalation.

For the purposes of the plan, the key business lines and the critical functions of the Bank have been

identified that are necessary for its smooth operation. According to the applicable requirements and

in order to determine the range of hypothetical events, different stress scenarios of idiosyncratic,

systemic and combined shock have been defined, against which effective recovery measures have

been identified.

In connection with the implementation of the plan, an effective process of communication and

disclosure has been structured in First Investment Bank, including internal communication (to internal

bank bodies and employees) and external communication (to supervisors, shareholders and investors,

customers and counterparties, and other stakeholders), as well as measures for the management of

potential negative market reactions.

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RESTRUCTURING PLANNING PROCESS

Pursuant to the Law on the Recovery and Resolution of Credit Institutions and Investment Firms, banks

in the country are obliged to assist the resolution authority with a view to operational preparedness

for carrying out potential restructuring of the institution should such a situation arise.

In this regard, in 2022 First Investment Bank launched the development of an internal Bail-in Playbook

to document the operational process related to a potential bail-in event, including the operational

steps related to write-off mechanisms and conversion of instruments and liabilities.

CREDIT RISK

Credit risk is the risk arising from the debtor’s inability to meet the requirements of a contract with the

bank or inability to act in accordance with the agreed terms. The different types of credit risk include

concentration risk, residual risk, dilution risk, counterparty risk, and settlement risk. Credit risk is the

major source of risk to the banking business and its effective assessment and management are crucial

for the long-term success of credit institutions.

First Investment Bank manages credit risk by applying internal limits on exposures, on

customers/counterparties, types of instruments, industry sectors, markets, by written rules and

procedures, by internal rating and scoring models, as well as by procedural requirements in the

originating and managing of loan exposures (administration).

The internal bank regulations regarding credit risk are structured in accordance with the business

model and organization of the activity, as well as in compliance with the regulatory requirements and

recognized banking practices and standards, which include internal rules for lending and managing

problem exposures, rules for classification, impairment and the provisioning of exposures, approval

levels in the origination of loan exposures, as well as the methodology for conducting of credit analysis

and internal credit ratings (scoring models) regarding the creditworthiness of customers. Internal rules

and procedures are updated regularly with the aim of identifying, analyzing and minimizing potential

and existing risks. The applied limits on credit risk exposures are monitored on an ongoing basis and in

compliance with the market conditions and regulatory framework.

LOAN PROCESS

The credit process at First Investment Bank is automated through the Business Process Management

(BPM) system, developed on the IBM Business Automation Workflow platform. It is integrated in the

core information system of the Bank and includes control mechanisms and levels of authority in the

review and approval of credit transactions. Approved transactions are administered centrally, at the

Credit Administration Department, applying the "four eyes" principle.

At the end of 2021, the Bank implemented a new and advanced BPM system for processing retail loans

(New Workflow). From the middle of 2022, it was also extended to business customers. The system

covers the activities of accepting loan applications, preparing opinions, approval and disbursement of

new loans, as well as renegotiating existing ones. The applicable limits and authority levels for

approval/renegotiating of individual types of credit exposures are integrated in the system.

Automating the credit process aims to increase the quality of customer service, as well as to reduce

the time for processing credit applications.

In 2022, changes were made to the levels of authority for approval of credit transactions. The main

objective was to optimize the internal decision-making process with a view of the Restructuring

Committee’s role as a collective management body involved in the process. In this connection, the

rules for substituting committee members in their absence were further developed. During the year,

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changes were also made to the internal rules and guidelines regarding credit administration, mainly in

connection with the implemented new automated BPM system for processing credit transactions. The

procedures were improved related to collecting, providing and receiving information from the Central

Credit Register of the BNB, including in terms of control mechanisms, levels of access to systems, and

generation of reports from the Register.

During the year, a reorganization of the business units engaged in credit activity was carried out in

view of the customer segmentation applied by the Bank. It corresponds to the European requirements

for defining micro, small and medium-sized enterprises, which were transposed by the Law on Small

and Medium-sized Enterprises.

Credit product are priced so that income generated by them covers the cost of funds, the assumed

risk/expected loss, the administrative costs, as well as the return on equity allocated to the respective

product. In this connection, changes were made in the methodology for pricing credit products during

the period, aiming to address the minimum requirement for own funds and eligible liabilities (MREL).

First Investment Bank maintains systems for the ongoing administering and monitoring of different

portfolios and exposures to credit risk, including aiming at recognizing and managing exposures in

default and performing adequate value adjustments for credit risk. Considering the impact of the

economic cycle, Fibank manages exposures in default with a view to their timely diagnosis and taking

measures consistent with the repayment capacity of the clients and the Bank’s policy on risk-taking.

The monitoring system of the Bank as well as the internal procedures for monitoring of credit

exposures are subject to regular review and update, including with respect to the early warning signals.

During the period the procedures for review of individually significant loan exposures were updated,

incl. signals for probabiitiy of delay/overdue in order to creditworthiness assessment and to indicate

the probability of non-payment.

In the Bank a department functions for Intensive loan management, which manages the exposures of

customers transferred from the business units with increased credit risk compared to the initial

disbursement of the loan, as well as from the impaired assets unit, when there are indicators for

recovery of the exposure and objective possibility for future regular servicing. The processes are

organized in accordance with the Rules for transfer of credit exposues and the different phases of the

life-cycle of the loan.

ANALYSIS AND APPROVAL

RESTRUCTURING AND

RECOVERY

MONITORING AND

MANAGEMENT

LOAN QUALITY

Regulator

monitoring

Restructuring and

recovery

Business and loan analysis

Approval according to

competence levels

Signing contract and

utilization

Increased

risk

Client in default

Increased

risk

Intensive

care

Recovery of

receivables

LOAN-LIFE CYCLE

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MODELS FOR CREDIT RISK MEASUREMENT

First Investment Bank applies internal credit risk models to assess the probability of default (PD), loss

given default (LGD), and exposure at default (EAD) which allows the calculation of risk-adjusted

returns. All credit risk exposures are controlled on an ongoing basis.

The framework, defined in accordance with the Basel standards, sets minimum regulatory capital

requirements to cover financial risks. In addition to regulatory capital, First Investment Bank also

calculates economic capital which is included in the internal measurement and management of risk.

Economic capital is maintained for the purpose of protection and covering of unexpected losses arising

from market conditions or events.

For further information regarding economic capital see subsection „

Internal Capital Adequacy

Analysis

“.

The Bank uses internal models for credit assessment of business and retail customers. Assessment

models are based on quantitative and qualitative parameters, weights of individual parameters being

defined on the basis of historical experience. Business clients are assigned a credit rating, while

individuals are based on scoring. An additional assessment for business clients is made based on a

behavioral scoring model. The credit risk assessment derived from the rating models is further

examined by a credit specialist/risk manager.

The Bank has project finance evaluation models (including for real estate, industrial projects and

financing of individual fixed assets), applying quantitative analysis (based on estimated cash flows) and

qualitative evaluation of the project and investor management, market environment and credit

structuring, as well as a separate evaluation of the assets being funded.

All risk assessment models are adopted by the Managing Board, proposed for their review after prior

approval from the Chief Risk Officer.

There is a structured process within the Bank for assessment and validation of the risk management

models to ensure their reliability, accuracy and effective implementation. It envisages the preparation

of regular validation reports in the Bank: brief/monitoring quarterly reports and extended annual

validation reports, covering both quantitative analysis (statistical, econometric and other quantitative

approaches) and analysis of the qualitative (non-statistical) characteristics, in compliance with the

current regulatory requirements and good banking practices in the area. In 2022 the terms for their

preparation were refined, aiming at timely reporting of the results to the competent bodies within the

Bank.

Exposures

at default

(EAD)

Probability

of default

(PD)

Loss given

default

(LGD)

Maturity

Correlation

factor

EXPECTED LOSS (%)

EXPECTED LOSS (AMOUNT)

PARAMETERS FOR ASSESSING ECONOMIC CAPITAL

RISK PARAMETERS FOR ASSESSING EXPECTED AND

UNEXPECTED LOSSES

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CREDIT RISK MITIGATION METHODS

Credit risk is managed also by acceptance of guarantees and collateral of types and in amounts

according to the current regulations and the Bank’s internal rules and requirements. First Investment

Bank requires collateral for credit risk exposures, including for contingent liabilities which bear credit

risk. For reduction of the credit risk the Bank applies established techniques, procedures and rules,

ensuring effective credit protection, including through the monitoring and control of residual risk.

Secured protection is ensured by assets which are liquid enough and have relatively unchanging value

in time. The Bank applies internal written rules regulating eligible collaterals by type and amount, in

compliance with the regulatory requirements for their recognition, as well as the legal requirements

for supporting documentation. For reduction of credit risk, First Investment Bank applies the financial

collateral simple method under the requirements of Regulation (EU) No 575/2013.

First Investment Bank currently monitors the relative regulations, as well as the acknowledged

standards and good practices in this area, aiming constantly at further development and enhancement

of the rules and processes existing in the Bank with respect to the acceptance, evaluation and

management of collaterals, including with regards to the methods for evaluation. In the processes of

managing collaterals requirements for appraisers rotation are applied after certain number of

successive valuations of the same asset, in accordance with Guidelines on loan origination and

monitoring (EBA/GL/2020/06).

PROBLEM EXPOSURES, REPOSSESSED ASSETS AND STRATEGY FOR THEIR

REDUCTION

First Investment Bank has internal rules and written procedures for managing problem credit

exposures, which include all main actions related to the management of problem loans, including

analysis and assessment of risk exposures, restructuring and recovering, enforced collection, sale and

writing off of problem exposures. Fibank uses a specialized system for the integrated management of

problem assets, which includes all stages for monitoring and recovery of receivables.

The Bank has structured processes and internal organization regarding the management and sale of

repossessed assets, as well as for debt-to-asset/debt-to-equity conversion. There is an Asset

Management and Sale Committee acting as an auxiliary body to the Management Board. It performs

functions related to the management, administration and sale of acquired assets in accordance with

the levels of authority operating in the Bank. During the year, changes were made in the powers of the

Asset Management and Sale Committee aiming at more effective management of acquired assets,

including in cases of leasing.

Among the strategic priorities of the Bank regarding its risk profile is reducing the portfolio of

nonperforming exposures and repossessed assets, as in this regard a Strategy for reduction of

nonperforming exposures and repossessed assets for 3-year period is in place, as well as an operating

plan for its implementation, in which measures adequate to the business model and risk profile were

identified aligned with the EBA Guidelines on management of nonperforming and forborn exposures

(EBA/GL/2018/06). In 2022, the strategy and operational plan were updated. An annual self-

assessment was carried out, covering assessment of the operating environment, of the internal

capacity, as well as of the external conditions for effective management and reduction of non-

performing exposures and acquired assets. Additional indicators were added to the quantitative

targets for reducing non-performing exposures. The Bank continued to pursue the goals and priorities

set therein, including:

Regular write-off of fully impaired and uncollectible credit exposures and sale of portfolios of

non-performing exposures, in such volume and time horizon as the market dynamics allow

and the prices offered;

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Achieving stable recovery, covering the entire life cycle of credit exposures and perfecting the

practices and processes in order to achieve higher recovery rates;

Improving the ways and methods for restructuring, aimed at increasing collections from non-

performing exposures;

Reduction of the risk profile of the loan portfolio and applying a conservative approach in

collateral valuation;

Reduction of the relative weight of the portfolio of foreclosed assets in the Bank's balance

sheet in order to free up cash resources and reduce risk.

During the year, as a result of the consistent actions and measures for improving collection, write-offs

and reduction of problem exposures, net non-performing exposures decreased by 7.4% or by BGN

96,753 thousand y/o/y. As at 31 December 2022, the nonperforming loan (NPL) ratio calculated in

accordance with the requirements of the European Banking Authority decreased by 1.5 percentage

points to 14.0% of gross loans and advances under the FinREP financial reporting framework, and

under the broader definition of nonperforming exposure (NPE) ratio it decreased by 2.4 percentage

points to 10.8% of gross loans and advances and debt instruments other than held for trading.

CLASSIFICATION, IMPAIRMENT AND PROVISIONING OF EXPOSURES

First Investment Bank applies a consistent exposure classification process, structured in accordance

with the requirements of Regulation (EU) No. 575/2013 and its implementing regulations, Ordinance

No. 7 of the BNB on the organization and management of risks in banks, as well as the EBA Guidelines

on the application of the definition of default under Article 178 of Regulation (EU) No 575/2013

(EBA/GL/2016/07). Internal processes cover the definition of default, including indications of default

and unlikeliness to pay, materiality thresholds for past due credit obligations, implementation of

forbearance measures and reclassification, as well as units and internal banking bodies responsible for

the process.

With respect to impairment and provisioning of risk exposures, the Bank applies written rules, which

are structured based on the principles of individual and portfolio evaluation of risk exposures,

depending on the classification and amount of exposure. For exposures reported as non-performing

specific impairment is determined, calculated on the basis of individual cash flows for individually

significant exposures, or on portfolio basis for the others. Regarding exposures reported as performing,

the Bank applies impairment on a portfolio basis (taking into account potential losses), grouping

GENERAL TARGETS

QUANTITATIVE TARGETS

STRATEGIC TARGETS

Improving the processes for management of risk and

of non-performing exposures, including portfolio

segmentation

Recovery and restructuring measures

Collection through contact center campaigns

Collection through direct (on-site) contact with

borrowers

Measures involving litigation

Sale and write- off of non-performing exposures

MEASURES/OPTIONS REDUCE NON-PERFORMING EXPOSURE

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exposures with similar credit risk characteristics. According to IFRS9 an allowance for impairment loss

is calculated equal to the expected credit losses over the life of the instrument, if the credit risk of the

financial instrument has increased significantly since the original recognition. Otherwise, an allowance

for impairment losses is calculated equal to the expected credit losses over a 12-month horizon.

The Bank has written parameters for defining the increased credit risk, which includes days past due,

as well as other indicators i.e. presence of forborne measures, deterioration in the rating/scoring of

the client and others, as well as defining the parameters for meeting the cash flow test for solely

payments of principal and interest (SPPI test), including defining new or changed credit products.

In 2022, the Bank updated its internal rules for classification, provisioning and impairment, further

enhancing its internal processes.

For more information on credit risk, see note 3 “Risk Management” from the Individual Financial

Statements for the year ended 31 December 2022.

Impairment for

expected credit

losses over the

entire life of the

exposure

Impairment for

already incurred

credit losses over

the entire life of

the exposure

Impairment for

expected credit

losses over a

12-month horizon

Increased

credit risk

Presence of an event

leading to loss

IMPAIRMENT OF RISK EXPOSURES

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MARKET RISK

Market risk is the risk of losses due to changes in the price of financial instruments resulting from

general risk factors inherent in the markets and not related to the specific characteristics of individual

instruments, such as changes in interest rates, exchange rates and/or specific risk factors relating to

the issuer.

The management of market risk is based on applying internal limits and written rules and procedures

with respect to the processes and control environment. For the purpose of assessing and minimizing

market risk the Bank applies internal models for assessment, which are based on the “Value at Risk”

(VaR) concept, and in addition other duration analyses, calculation of stressed VaR, stress tests and

scenarios are used.

The limits applied by the Bank for debt and capital instruments are structured with the aim of

minimizing the risk and applying a wide and risk-based framework of limits, which are directly

connected with the risk profile of the investments, as well as with the dynamics of the risk profile in

time. The Bank applies a uniform framework regarding its limits on investments in debt securities to

governments and financial institutions in accordance with the development of market conditions and

opportunities to generate returns and returns. In 2022, the rules for managing market risks were

updated, incl. with respect to the limits for general position risk, related to the open position of equity

instruments, held for trading.

POSITION RISK

Position risk is the risk of changes in the prices of debt and equity instruments as a result of

circumstances related to the issuer and / or changes in market conditions. Position risk includes general

and specific position / price risk.

It is the policy of the Bank to maintain an insignificant trading portfolio in accordance with the criteria

of Regulation (EU) № 575/2013. Therefore, it does not calculate capital requirements for interest rate

and pricing risk in this portfolio.

For quantifying measurement of the interest rate and position risk in the trading portfolio, the Bank

applies VaR analysis with a 1-day horizon and 99% confidence level, which means that there is 1%

probability for the trading portfolio to depreciate within a 1-day interval more than its calculated VaR.

The model is calculated and monitored on a daily basis by estimating the maximum loss that could

INTEREST RATE VAR FOR THE PORTFOLIO OF

DEBT INSTRUMENTS

INTEREST RATE VAR FOR THE PORTFOLIO OF

DEBT INSTRUMENTS DURING 2022

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occur over a specified horizon under normal market conditions, due to the adverse changes in the

market rates, if the positions remained unchanged for the specified time interval.

In compliance with the European Banking Authority guidelines, the Bank measures stressed value at

risk (sVaR) of the debt securities portfolio, where model inputs are calibrated so as to reflect an

extended period of significant stress in the international financial markets.

INTEREST RATE RISK IN THE BANKING BOOK

Interest rate risk in the banking book os the risk from negative effect on the economic value of the

capital and the net interest income of the Bank due to change in the market interest rate levels.

First Investment Bank manages this type of risk though written rules, limits and procedures aimed at

reducing the mismatch between the interest rate sensitivity of assets and liabilities in compliance with

the EBA Guidelines on the management of interest rate risk arising from non-trading book activities

(EBA/GL/2018/02) and the requirements of Ordinance No 7 of the BNB on Organisation and Risk

Management of Banks. Interest rate risk in the banking book is measured using models that assess the

impact of interest rate scenarios on the economic value of the Bank and on net interest income. The

interest rate risk assessment framework in the banking book (IRRBB) takes into account various

sources of the IRRBB, incl. the risk of mismatch, underlying and option risk, and the risk of change in

the credit spreads of financial instruments (CSRBB). The set of stress scenarios applied by the Bank

includes those related to non-parallel changes in the interest rate curve, as well as taking into account

a number of behavioral features in cash flows, in the context of different stress scenarios.

As at 31 December 2022 the interest rate risk on the economic value of the Bank (IRRBB) following a

standardized shock of +100/-100 bp was BGN +5.0/+15.5 million, while on the net interest income one

year forward was BGN -3.0/+2.1 million.

CURRENCY RISK

Currency risk is the risk of loss resulting from an adverse change in exchange rates. Fibank’s exposure

to currency risk arising from positions in the banking and trading book is limited by the application of

regulatory-required and internal limits.

The Bank actively manages the amount of its overall open foreign exchange exposure, and seeks to

maintain negligible levels of currency mismatches in its entire activity. In addition, First Investment

EFFECT ON THE INTEREST INCOME EFFECT ON THE EQUITY

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Bank calculates and applies limits, based on an internal VaR model, regarding the maximum loss that

could be incurred within 1 day at a confidence level of 99.0%.

The Bank is also exposed to currency risk as a result of proprietary trading transactions. The volume of

such transactions is very limited and controlled through limits on open foreign currency positions, and

stop-loss limits on open positions.

COUNTERPARTY RISK AND SETTLEMENT RISK

Counterparty risk (counterparty credit risk) is the risk that a counterparty in a particular transaction

will default before the final settlement of the cash flows of the transaction. It arises mainly from

transactions in derivative instruments, repo transactions, securities and commodities

lending/borrowing transactions, margin lending transactions and extended settlement transactions.

The Bank manages and controls this type of risk by applying limits and minimum credit quality

requirements to counterparties /issuers.

Settlement risk for the Bank is the risk of outstanding transactions in securities, commodities or

currency. It arises both in transactions with settlement services on the principle of "delivery versus

payment" (delivery versus payment - DvP) and in trade without DvP ("free deliveries"). For DvP

transactions, the Bank assesses the risk that the price difference between the agreed settlement price

for the respective instrument and its current market value will lead to a loss for the Bank. For those

related to "free deliveries", the risk is controlled by applying internal credit quality limits to

counterparties / issuers.

For further information regarding market risk see note 3 “Risk management” of the Individual Financial

Statements as at 31 December 2022.

LIQUIDITY RISK

Liquidity risk originates from the funding of the banking business and in positions management. It

includes the risk of failure to meet a payment when due, or failure to sell certain assets at a fair price

and in the short term to meet an obligation.

First Investment Bank manages liquidity risk through an internal system for monitoring and daily

liquidity management, maintenance of a sufficient amount of cash consistent with the currency

structure of assets and liabilities and maturity ladder, regular gap analysis of inflows and outflows,

maintaining a low risk portfolio of assets to meet current liabilities, and operations on the interbank

market.

In order to maintain a medium-low risk profile, Fibank has established an adequate framework for

liquidity risk management. The Bank's policy on liquidity management is designed so as to ensure

meeting all obligations even under stress originating from the external environment or from the

specifics of banking activity, as well as to maintain an adequate level and structure of liquid buffers

and apply appropriate mechanisms for the distribution of costs, profits and risks related to liquidity.

The Bank applies a combination of methods, financial models and instruments for assessment and

management of liquidity, including the requirements for reporting and monitoring of the liquidity

coverage ratio (LCR) and net stable funding ratio (NSFR) in compliance with Regulation (EU) No

575/2013 and the applicable delegated regulations of the European Commission. In order to reduce

the liquidity risk, preventive measures have been taken aimed to extend the maturity of borrowings

from customers, to encourage long-term relationships with clients and to increase customer

satisfaction. In order to adequately manage liquidity risk, the Bank monitors cash flows on a daily basis,

and also maintains a maturity ladder, which is part of the additional liquidity monitoring indicators and

a tool for detailed monitoring of cash inflows and outflows by maturity interval.

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As regards asset/liability and liquidity management policies, First Investment Bank applies the business

model requirements and the criteria for classification and valuation of financial assets in the Bank's

portfolios in accordance with IFRS 9. Based on the purpose for managing the financial assets, the

business models applied by the Bank include: 1) a business model whose purpose is the assets to be

held to collect contractual cash flows (hold to collect); 2) a business model whose purpose is both to

collect contractual cash flows as well as sale of financial assets (hold to collect and sell); 3) another

business model when the purpose is different from the previous two business models, and which

includes assets held for trading.

During the reporting year Fibank maintained an adequate volume of liquid assets, as at 31 December

2022 the ratio of liquid assets covering the attracted funds due to other customers amounted to

36.75% (2021: 28.07%), which was significantly above the BNB recommended level of 20%. According

to the regulatory requirements the Bank should maintain a buffer of liquid assets to ensure liquidity

coverage of net liquidity outflows over a 30-calendar day stress period with a minimum amount of

100%. At the end of the reporting period, the liquidity coverage ratio (LCR) amounted to 225.36% on

an individual basis (2021: 230.36%).

First Investment Bank also calculates a net stable funding ratio (NSFR), which is an instrument

introduced to ensure that long-term liabilities are adequately covered by stable financing tools both

under normal circumstances and in stress conditions.

At year-end, the net stable funding ratio amounted to 145.47% on an individual basis (2021: 137.42%)

and was above the reference value of 100% in accordance with Regulation (EU) No 575/2013.

INTERNAL LIQUIDITY ADEQUACY ASSESSMENT PROCESS

First Investment Bank prepares a regular report on the internal liquidity adequacy assessment process

(ILAAP), aimed at performing a comprehensive internal assessment of the liquidity management and

funding framework of the Bank in the context of its strategy and risk appetite in terms of liquidity.

In 2022, as part of its annual review process, the Bank updated its ILAAP report, including with regard

to information on liquidity generation capacity, liquidity buffer strategy, survival periods, as well as the

results of stress scenarios and stress tests used and the quantitative information on funding plans and

sources of funding. Liquidity position monitoring limits and early warning indicators regarding liquidity

risk were further developed. Internal liquidity indicators were structured in compliance with the

requirements for consistency with Recovery Plan levels, the latter being part of the monitoring and

LIQUID ASSETS LCR AND NSFR

21%

NSFR & LCR

Minimum

requirements

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early warning system incorporated in the Bank’s risk management framework. During the period, the

ILAAP Methodology was also updated, refined and improved. It describes the approaches to preparing

and updating the ILAAP report, including with regard to the key components under the EBA Guidelines

on ICAAP and ILAAP information collected for SREP purposes.

With respect to the internal processes and organization on ILAAP the CFO has general responsibility

for controlling the process for updating, for making proposals for amendments on the document, as

well as ensuring control before presenting for approval from the competent bodies within the Bank.

The assessment takes into consideration the systems and processes existing in the Bank for

management of risks related to liquidity and funding, including information on the daily management

of liquidity risk and on the allocation of costs and benefits related to liquidity, which are determined

based on a methodology for internal transfer prices (ITP) introduced in the Bank. The ILAAP also takes

into account the funding strategy of the Bank, including the funding plans within a three-year horizon,

as well as the strategy on maintaining liquidity buffers and monitoring of encumbered assets. The

quantitative measurements of the readiness of the Bank to deal with a sudden and significant outflow

of borrowings (liquidity crisis) are established through stress tests and scenario analyses. For the

purposes of ILAAP, First Investment Bank applies a combination of three stress scenarios: of

idiosyncratic, market and combined shock, with a horizon of one week and one month, which take into

account the stability of the deposit base and the sensitivity of the customers.

To ensure adequate capacity of the Bank to meet all its obligations and commitments, even in the

context of a liquidity crisis, First Investment Bank has developed an action plan in case of contingency/

liquidity crisis which is an integral part of the overall system for liquidity management.

For further information regarding liquidity risk see note 3 “Risk management” of the Individual

Financial Statements as at 31 December 2022.

OPERATIONAL RISK

Operational risk is the risk of loss resulting from inadequate or failed processes, people or systems, or

from external events. In order to mitigate the risks arising from operational events, First Investment

Bank applies written policies, rules and procedures that are based on the requirements laid down in

Bulgarian and EU legislation and good banking practices. With respect to capital requirements for

operational risk, the Bank applies the standardized approach as per requirements of Regulation (EU)

575/2013, incl. methodology for allocation of the indicators as per group activities.

First Investment Bank maintains a system for registration, tracking and control of operational incidents

and near-misses that complies with the effective regulatory requirements. Operational risk

management at Fibank is based on the principles of not assuming unsound risk, strict compliance with

the authority levels and applicable laws, and active management of operational risk. The Bank applies

reliable methods for avoiding, transferring, and limiting the impact of operational risks, including

through separation of functions and responsibilities, double control, approval levels, internal control,

insurance contracts, and information security.

With the aim of developing and enhancing its processes for operational risk management key risk

indicators are defined within the Bank, which are applied both at Bank level, and specifically for each

business unit and process in the Bank. They are used for the purpose of effective signaling of changes

that may be relevant to the active management of operational risk, as well as for implementing better

monitoring and control of the risk tolerance and of the thresholds and limits on individual types of risk.

The Risk Analysis and Control department defines and categorizes operational events across event

types and business lines inherent in banking, as well as the obligations and responsibilities of the Bank's

employees in connection with their registration and reporting. The Operational Risk Committee

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regularly reviews and analyzes operating events and suggests to the Managing Board measures for

prompt correction of their causes, as well as for strengthening the controls in the management of

processes, activities, products and services at all levels of the Bank's system.

In order to assess the exposure and reduce operational risk, as well as to enhance and improve the

control procedures, First Investment Bank conducts regular Risk Control Self-Assessment (RCSA) in the

form of questionnaires and analyzing of processes. According to good banking practices the self-

assessment is an important tool for additional evaluation of the Bank’s exposure to operational risk,

as well as a tool contributing to the analysis of the effectiveness of existing controls for its mitigation.

In this regard, in 2022, First Investment Bank further developed its internal rules for registering and

reporting of operational events and assessment of their impact, incl. with regards to indicators, related

to payment operations and services, as well as to security of IT systems and networks and the

procedures for incident reporting.

INFORMATION SECURITY

Information security and cyber security play an increasingly important role in banking, given the

growing digitization of services and automation of processes. It is as integral part of the Bank's

priorities to maintain reliable databases, networks and systems, ensuring continuity of service and key

banking processes.

The Bank's information security policy sets out principles and rules for protecting the confidentiality,

integrity and availability of data and information of Fibank and its customers, and of related services.

The Bank applies internal rules covering the organizational and managerial framework and employee

responsibilities for ensuring the security of data, systems and relevant infrastructure. Measures have

been put in place to guarantee proper logical and physical security, information asset management,

access control and risk management.

An “Information security” department functions within the Bank under the supervision of the Chief

Risk Officer, which coordinates the activities related to information security, defines the requirements

towards controls and security of data, as well as organizes the execution of the Management Board’s

decisions in this respect.

In 2022, the Bank further developed its internal information security policies and rules, including

network and information security measures;

monitoring, evaluating and testing the

reliability of ICT systems; as well as

requirements and standards applicable to IT

service providers of First Investment Bank.

PERSONAL DATA PROTECTION

As part of its internal organization as a data

controller, the Bank further structured and

developed the principles and grounds for

processing personal data, including with

regard to their transparency, legitimacy,

rights of data subjects, as well as technical

and organizational measures to protect such

data.

In compliance with the requirements of the

General Data Protection Regulation (GDPR),

the Bank has a Data Protection Officer (DPO)

Dimitar Hristov,

Data Protection Officer

With responsibility and care

for the personal data

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– e-mail: dpo@fibank.bg. The DPO has a leading role in ensuring the lawful processing of personal data

in the Bank's structure, conducts awareness-raising training and contributes to building a data

protection culture. The DPO is a contact person with the Commission for the Protection of Personal

Data and on issues related to the exercise of the rights of the data subjects. The Data Protection Officer

coordinates and organizes balancing tests and impact assessments, as well as regular monitoring of

data processing registers under the GDPR.

As a personal data administrator, First Investment Bank provides privacy notices to customers.

Information regarding the processing of personal data is provided depending on the services used (e.g.

payment services, bank cards, loans, investment services and activities, etc.). Where necessary, the

Bank enters into agreements with counterparties involving exchange of personal data in compliance

with current regulations and GDPR requirements.

In order to secure and protect personal data, the Bank carries out daily monitoring of personal data

exchanged with external recipients through a specialized Data Loss Prevention (DLP) system which it

constantly develops and improves.

BUSINESS CONTINUITY MANAGEMENT

In order to ensure the effective management of business continuity, First Investment Bank maintains

contingency and business continuity plans, as well as plans for the recovery of all its critical functions

and resources, which are regularly tested. Business continuity management ensures sustainability at

all organizational levels within the Bank, as well as the opportunity for effective actions and reactions

in crisis situations. The organization of processes ensured within the Bank aims at protecting the

interests of all stakeholders, its reputation, brand and the value-adding activities.

Building an appropriate corporate culture with regard to business continuity management is an

important part of the overall risk culture of the Bank. To further integrate information and apply a

centralized approach, the internal rules on business continuity were structured into a single document

with main content and separate action plans for specific incidents and crisis situations. The

organization thus established aims to ensure rapid and effective action for addressing potential crisis

situations, as well as the timely elimination of any negative consequences.

In 2022, as part of the annual review, an update of the Business Continuity Plan was carried out,

including in connection with relocation of the Bank's headquarters to a new building. The scope of

application of the Plan was further developed with respect to the branch network. Changes were also

made related to criticality codes in crisis situations.

OUTSOURCING

First Investment Bank has an Outsourcing Policy in place which is consistent with the requirements for

outsourcing activities as defined by the Law on Credit Institutions and the EBA Guidelines on

outsourcing arrangements (EBA/GL/2019/02). It regulates the main phases of outsourcing, including

definition of business requirements for outsourcing arrangements; identification of critical and

important functions; identification, assessment and management of outsourcing risks; selection and

due diligence procedures for external providers; monitoring and management of outsourcing

agreements; keeping of documentation and registers; as well as business continuity planning.

The Bank maintains centralized and systematized information on outsourcing arrangements, and

conducts regular reporting to competent internal Bank bodies on risks associated with outsourcing.

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RISK EXPOSURES

As at 31 December 2022 First Investment Bank applied the standardized approach for the calculation

of risk exposures for credit risk, in accordance with Regulation (EU) No 575/2013. Due to the limited

volume of financial instruments in the trading book (bonds and other securities) capital requirements

are calculated in accordance with the requirements of Regulation (EU) No 575/2013 as applied to the

banking portfolio. With respect to capital requirements for operational risk, the Bank applies the

standardized approach as per requirements of Regulation (EU) 575/2013, incl. methodology for

allocation of the indicators as per group activities.

In BGN thousand/ % of total

2022

2021

2020

For credit risk

6,462,477

92.2

6,546,743

92.5

6,518,978

92.2

For market risk

4,350

0.1

4,713

0.1

5,525

0.1

For operational risk

540,238

7.7

523,913

7.4

547,363

7.7

Total risk exposures

7,007,065

100

7,075,369

100

7,071,866

100

In 2022 the structure of risk-weighted assets comprised predominantly of those to credit risk at 92.2%

of total exposures (2021: 92.5%), following by those for operational risk at 7.7% (2021: 7.4%) and to

market risk at 0.1% (2021: 0.1%) The Bank continued to maintain a conservative approach in the risk

assessment and risk management.

Apart from Supervisory purposes, Fibank also calculates the economic capital that will ensure its

solvency and business continuity in adverse market conditions. For that purpose, an internal capital

adequacy analysis (ICAAP) is carried out.

INTERNAL CAPITAL ADEQUACY ANALYSIS

First Investment Bank AD performs regular internal capital adequacy analysis (ICAAP) in the context of

its business strategy, risk profile and risk appetite. The assessment of the required economic capital of

the Bank reflects the risk profile of its activity, as well as its risk appetite, as the main indicators of the

quantitative evaluation methods used take into account unfavorable external environment scenarios.

In 2022, the ICAAP report was updated in accordance with Fibank’s Risk Strategy and business

development goals, as well as in line with the operational environment and external conditions. The

quantitative information and the integrated stress test results assessing the Bank's resilience under

the baseline macroeconomic scenario and the adverse scenario (negative shock) were updated. The

framework for collateral issuer concentration and for operational event reporting was further

developed and refined, as part of economic capital analysis and operational risk stress testing. As

concerns risk aggregation, information on credit risk and concentration risk was elaborated, including

by distribution at the level of groups of related customers and at the economic sector level. During the

year, the ICAAP Methodology was also improved, mainly by introducing a dynamic approach in

integrated stress test assumptions.

When preparing the ICAAP report, a business model assessment is made, as well as internal control

framework, incl. independent risk, compliance and internal audit functions are taken into

consideration. The internal system for assessing the required internal capital is based on VaR

forecasting models for credit and market risk, stress tests for credit, market, liquidity, reputational,

and interest rate risk in the banking book, using the standardised approach and stress tests regarding

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operational risk, the Earnings-at-Risk approach for strategic risk, and on analytical tools and techniques

that allow more detailed assessment of capital adequacy in accordance with the risk profile of the Bank

and the current operating environment. For aggregating the various types of risks the Bank uses a

correlation matrix, which takes into account the connection between the separate risk categories,

aiming at a more realistic and more enhanced approach for measuring the risk the Bank is exposed to,

at the same time as sufficiently conservative estimates.

For calculation of capital adequacy regarding the exposure to credit risk, First Investment Bank

uses internal valuation models, except in particular cases, e.g. in exposure classes with

negligible impact on the risk profile. For exposure classes of substantial importance, which constitute

the main credit activity of Fibank, economic capital is determined based on a single-factor portfolio

credit-VaR model which determines the probable distribution of losses that may be incurred within a

one-year horizon, at confidence interval corresponding to the risk appetite of the Bank. To quantify

the risk of occurrence of extraordinary, unlikely but possible events, stress scenarios are applied. The

stress scenario results are compared with the capital requirements for credit risk, calculated according

to the portfolio VaR model.

As part of the overall assessment of the exposure to credit risk, for the purposes of ICAAP, First

Investment Bank assesses the concentration risk which is due to the uneven distribution of credit

exposures by client, or by a group of related persons, as well as by economic sectors, from the

perspective of its financial stability and ability to carry out its core business. For the quantitative

evaluation of the needed economic capital for this risk, the Bank matches the results of the portfolio

VaR model between the real and a hypothetical portfolio, in which the amount of exposures is one and

the same at all customers at equally all other conditions. For calculating the concentration risk as per

economic sectors, a Herfindahl-Hirschman Index (HHI) is used.

The Bank’s exposure to market risk is limited and involves the assessment of capital adequacy

in relation to position risk, foreign exchange risk, and commodity risk. For calculation of the

economic capital for market risk, internal value-at-risk (VaR) models are used, with a time

horizon of 1 year and a confidence level corresponding to the risk appetite of the Bank, as well as stress

tests for position risk of the equity portfolio.

For the purposes of the internal analysis of capital adequacy, Fibank manages the interest rate risk in

its banking book (IRRBB) by managing the structure of investments, controlling the costs and terms of

financial liabilities, as well as controlling the interest rate structure of the loan portfolio and the other

interest-bearing assets. Two aspects are being measured for the interest rate in the banking book –

the effect of interest rates on the net interest income at a one-year horizon, and the effect on the

economic value of the Bank. For calculating the sufficiency of the economic capital with respect to

interest rate risk in the banking book the largest decrease in the economic value of the Bank or the net

interest income is defined resulting in a shift of the yield curves in the following scenarios: Parallel

shock – parallel increase/decrease of interest rate levels; Short rates shock – increase/decrease in the

interest rate levels in the short part of the curve; Steepener – the short part of the yield curve registers

decrease, while the long part – increase; Flattener – the short part of the yield curve registers increase,

while the long part – decrease. In addition to the non-risk interest rate component, reported are also

the stress scenarios for change in the credit spread (CSRBB).

For the purposes of ICAAP, First Investment Bank calculates the required economic capital for

operational risk on the basis of the results from the applied stress tests and the annual self-

assessment exercise on risk and controls, which units in the Bank go through, and on

identifying potential scenarios for rare but plausible operational events. The used by the Bank stress

tests are for extraordinary but probable events, including different scenarios based on their financial

impact and probability of occurrence. The economic capital for operational risk, incl. legal risk, is

calculated as the overall financial effect in a one-year horizon based on all analyzed stress scenarios.

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To assess liquidity risk, the Bank differentiates the analysis in two directions regarding the risk

of insolvency and the risk of providing liquidity. The risk of insolvency is managed and covered

by maintaining an appropriate buffer of unencumbered, highly liquid assets, while the risk of

providing liquidity is covered and mitigated by economic capital. The Bank calculates economic capital

for liquidity risk by assessing the amount of loss that would be incurred as a result of a liquidity crisis,

(idiosyncratic, market and combined shock), taking into account the cost of repo transactions or

liquidating assets to meet the cash outflow, as well as the expected increase in interest expense on

borrowings.

For the purpose of ICAAP, the Bank assesses and other risks, including strategic risk and reputational

risk. For the quantification of strategic risk, the Earnings-at-Risk approach is used, measuring the

historical deviations between the budgeted and generated net profit of the Bank. The capital for

strategic risk is determined by applying a percentage of deviation corresponding to the accepted

confidence level to the budgeted net profit for the next year.

The reputational risk reflects the risk that the Bank's reputation may differ negatively from the

expected standard in terms of its expertise, integrity and reliability. Reputational risk may materialize

mainly in loss of business, increased cost of funding, or liquidity crisis the effects of which are measured

in the assessment of strategic risk and liquidity risk.

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DISTRIBUTION CHANNELS

First Investment Bank maintains diversification of the channels for distribution of the products and

services offered, including a well-developed branch network, wide network of ATM and POS terminals,

e-banking, mobile banking, direct sales, contact center, corporate website and a corporate blog. All

channels are constantly improved in line with the current trends in banking, market conditions,

technological development and customer needs.

BRANCH NETWORK

First Investment Bank strives to maintain an adequate balance between a well-developed network of

physical locations and the provision of modern remote banking techniques, including in the context of

the digital transformation in the banking sector.

In 2022 the Bank continued to optimize its branch network, taking into account the external

environment and market conditions, the workload of individual locations and the volumes of activity,

as well as the processes related to activity digitalisation. During the year, two offices in the city of Sofia

were closed and one new office was opened in the city of Belitsa. As at 31 December 2022 the branch

network of First Investment Bank comprised a total of 126 branches and offices on an individual basis

(2021: 127), located in over 60 cities in Bulgaria: 42 locations in the city of Sofia (2021: 44), 83 branches

and offices in the rest of the country (2021: 82), and one foreign branch in Nicosia, Cyprus.

WIDE RANGE OF DISTRIBUTION CHANNELS FOR PRODUCTS AND SERVICES

Branch

network

Contact

center

Corporate

blog

Digital

banking

Direct

sales

Corporate

website

The pleasure and security of feeling at home

Mihaela Georgieva, Branch Manager „Sofia South“

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The branch network both in Sofia and in other places in the country is structured according to a unified

organizational model with a view to efficient allocation of budgetary targets, focusing on attracting

new customers and cross-selling. There are 27 branches in the country, while in the capital 5 functional

branches have been established: Central, East, West, North and South, to each of which offices are

allocated based on territorial location and business indicators.

As part of the ongoing improvement and optimization of processes, the branch digitization project was

developed, aimed at introducing electronic document and electronic signatures in offices, as well as

reducing the use of paper documents in a sustainable way, in order to introduce a new model of

customer servicing, developing digitalization in everyday operations. In 2022, the Bank introduced

electronic signing of documents in its branch network (e-Sign pad). When registering for the service, a

sample of the customer's signature (electronic specimen) is taken and used for comparison in

subsequent signing. The use of e-signing in basic banking transactions speeds up payment processing,

improves customer service and contributes to the Bank's consistent efforts to reduce CO2 emissions

by digitizing banking services.

The Bank has centralized back office, which

contributes to better customer service . It performs

activities related to routing, distribution, processing

and archiving of documents signed by customers, as

well as to the generation of new documents, are

carried out through a specially developed back-office

platform connected to the core banking information

system.

Fibank branches and offices in the country offer the

full range of banking products and services to both

individuals and business customers. In an effort to

better satisfy customer demand, part of the branch

network operates with extended working hours, while

some offices are also open on weekends.

The branch of First Investment Bank in Nicosia, the

Republic of Cyprus, has been operating since 1997,

initially mainly in the area of corporate lending. Over the years, it has systematically and consistently

expanded the range of products and services. At present, the branch offers standard credit and savings

products, payment services and e-banking, with a focus on SME customers and retail banking.

CONTACT CENTER – *bank (*2265), 0800 11 011

In 2022, Fibank’s Contact Center functioned as an effective channel for communication and targeted

selling of products and services. It also contributed to the attraction of new and retention of current

customers through the provision of services in accordance

with the Bank's established standards and business objectives.

Throughout the year 18 outgoing campaigns of different

nature and topics were conducted through the Contact

Center, including information campaigns, direct marketing of

products and services, as well as consumer opinion surveys.

Over 71 outgoing calls were made, with a high response rate

achieved, as well as an increase in the success rate of direct

sales on the conducted commercial campaigns.

DEPOSIT AND SAVINGS PRODUCTS

PAYMENT SERVICES

PACKAGE PROGRAMS

DEBIT AND CREDIT CARDS

DINERS CLUB CARDS

MORTGAGE LOANS

CONSUMER LOANS

LOANS TO BUSINESS CUSTOMERS

TRADE FINANCING

PROJECT FINANCING

FACTORING

EUROPROGRAMS FINANCING

DIGITAL BANKING

INVESTMENT SERVICES

INVESTMENT GOLD AND PRODUCTS

OF PRECIOUS METALS

RETAIL

CLIENTS

BUSINESS

CLIENTS

FULL SCOPE OF PRODUCTS AND SERVICES

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For the reporting period, the Contact Center received over 79 thousand incoming calls, emails and chat

conversations in relation to various inquiries and requests by existing or potential customers, including

on general banking information, card services, contact and reference information, product requests,

etc.

Through the Contact Center, customers may also apply for debit card overdrafts or apply for consumer

loans. They may receive up-to-date and timely information on products and services, the Tariff and

interest rates of the Bank, the location of branches and their working hours, as well as adequate and

professional assistance by employees in case of questions or problems. Customers may communicate

remotely with the Bank by phone, email or online chat in real time through the corporate website of

the Bank.

CORPORATE WEBSITE – www.fibank.bg

The corporate website of First Investment Bank is maintained and developed, with the aim of

transforming it into an active channel for product communication and cross-selling. In response to

remote banking needs, www.fibank.bg operates a video

consultation service regarding credit products, as well as

opportunities to communicate (chat) directly with an expert

from the Bank. Through it, customers can submit online

applications for credit cards, overdrafts and consumer loans.

The corporate website has a number of features, including

visualization elements in line with current digital trends and

features for intuitive design and personalized content. They

provide an easy way to compare products and services offered

by the Bank, allowing customers to quickly select the ones that

best meet their needs.

During the year, the content of the corporate website was further developed, including in relation to

disclosure of additional information on sustainable development and environmental, social and

governance (ESG) factors influencing the activity.

CORPORATE BLOG

The corporate blog of First Investment Bank was created in 2008, which makes it the first corporate

and banking blog in Bulgaria. On the verge of its 15th-anniversary in 2023, the corporate blog

continued to be one of the most used by customers and useful online communication channels, along

with the Bank's social networks. It contains an important part of the key news, initiatives, as well as

financial analyzes and studies related to the market of banking products and services in the country.

Thanks to the AskFibank platform, part of the corporate blog, the Bank's customers can ask their

questions and get an expert opinion.

First Investment Bank continued to maintain active online communication in real time with clients, in

addition to its blog, and through the leading social networks - Facebook, Instagram, LinkedIn, Twitter,

Youtube. In 2022, all of these channels featured some of Fibank's faces with their stories on their work

and the relationships within the teams.

In 2023, the corporate blog and social networks will continue to maintain a constant and positive

relationship with the Bank's customers, providing them with timely, accurate and useful information

about Fibank's products and services.

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SALES

First Investment Bank uses direct sales as an additional opportunity for distribution of products and

services, including for comprehensive bank servicing of institutional and corporate clients This

approach helps to build long-term relationships with key customers, as well as to obtain direct

feedback on the Bank's products and services.

The Corporate Sales and Public Procurement Department in the system of First Investment Bank has

considerable experience in preparing the Bank's participation in public procurement, as well as in

servicing corporate and institutional clients, budget spending units, state and municipal enterprises.

In 2022 Fibank continued its participation in public procurement and tenders in order to attract new

business clients and maintain relations with existing ones.

DIGITAL BANKING

MY FIBANK ELECTRONIC BANKING

The My Fibank electronic banking platform of First Investment Bank has been designed as a single

customer service channel and is constantly developed by upgrading and adding new functionalities.

The platform is integrated with the core banking IT environment, providing a high level of system

security, optimization and greater workflow efficiency, as well as increased productivity.

Through the My Fibank electronic banking, customers use both active and passive banking according

to their needs and depending on their access rights to the system. As part of the active banking,

customers can open and close current, deposit and other accounts, carry out payments in national and

foreign currency (including mass payments), make utility payments, apply for and enter into

agreements for credit products (including credit cards), request the issuance of debit cards, as well as

buy or sell foreign currency. Passive banking allows customers to check transactions and balances on

bank accounts and/or payment cards. It also provides information on locations of branches and ATMs,

as well as exchange rates, news and current promotions.

As part of expanding the range of services offered, in 2022 the innovative Blink functionality was added

which allows making instant payments in BGN to other payment service providers. Blink payments are

executed by the Bank 24/7/365. They are money transfers with instant or near-instant processing,

whereby the recipient's account is credited with the transferred amount within seconds of acceptance

To develop as a professional among friends

Gabriel Yanov, Head of Department „Digital Banking“

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of the payment order by the Bank. In this way, the Bank provides its customers with a highly innovative

and fast solution for making online transfers.

During the year, a new feature for purchasing route passes was added to the existing one for

purchasing electronic vignettes using the customer's current account, payment card, My Fibank

electronic banking, or the mobile application. Another new functionality allows to apply for

rescheduling credit card debt from POS payments, including virtual POS payments, to equal monthly

installments. A number of technical innovations were made to My Fibank electronic banking, including

a refurbished design, a new alternative method for customer profile management, new forms for

applying for mortgage loans, overdrafts, credit and debit cards, as well as remote card activation for

cards delivered by courier. Online opening of accounts and signing agreements was further developed

through

www.smetka.fibank.bg.

In compliance with the regulatory requirements arising from Regulation (EU) 1230/2021, First

Investment Bank introduced a new functionality in its electronic banking allowing prior visualization of

fees due when ordering a transfer. In line with the requirements for strong customer authentication

(SCA), in 2022 a new embedded software token was introduced as a method of authentication in

electronic banking. Two-factor authentication includes code generation technology, whereby a static

code (PINt) or biometric characteristics (fingerprint/face ID) are added when confirming a transaction.

In accordance with current EU regulations and trends in the development of digital banking, First

Investment Bank has provided Third Party Providers (TPPs) with access to customer accounts kept at

the Bank and available online, for payment initiation and account information services: the so-called

"Open Banking". In addition, with the aim of expanding and integrating customer service, First

Investment Bank offers its customers payment initiation and account information services through My

Fibank mobile banking. For more information on Open Banking, see the Payment Services section.

In 2022, the integrated My Fibank electronic banking platform established itself as a channel

generating the predominant share (over 86%) of the Bank's outgoing transfers. A growth of 13% in

transactions and 9% in the number of customers using the platform was reported. There was also an

increase in average number of transactions per customer, both in transfers and in utility payments.

A testimony of the results achieved during the period

were the two awards received: Digital Bank of the Year

2022 at the international competition Worldwide

Finance Awards 2022 organized by the British

magazine Acquisition International (AI), and the

successful digital transformation award in the Bank of

the Year contest organized by the Bank of the Year

Association, based on an independent and objective

methodology prepared by Deloitte Bulgaria.

MY FIBANK MOBILE APPLICATION

The Bank’s mobile application is part of My Fibank electronic banking, providing remote access to the

integrated platform by using a mobile device. The application is available for installation by customers

from the app marketplaces for the respective operating systems (e.g. AppStore, Google Play, Huawei

AppGallery).

With the mobile application, customers may use active or passive banking subject to limits set by the

Bank or by the customer. In addition, the innovative Digital Payments service developed by Fibank

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allows customers to use digital bank cards through the mobile application and thus make digital

payments with their NFC enabled mobile devices at POS terminals supporting contactless payments.

In 2022, Fibank continued to develop its mobile application. The immediate issuance of Debit Instant

Card was offered: a new type of virtual debit card without plastic, intended for making payments online

or through other remote methods, including smart mobile devices. An option was provided to digitize

payment cards, including in third party apps (e.g. Google Pay, Apple Pay, Garmin, Fitbit). For more

information on digitizing cards in third party apps, see the

Card Payments section.

During the year, the innovative Blink P2P instant transfer service was introduced. It allows execution

of instant money transfers using a secondary identifier: a mobile phone number, instead of indicating

an account IBAN.

During the year, push notifications were further

developed to provide a variety of information to

customers regarding their transfers (including

Blink instant transfers), account transactions,

card authorizations, credit card obligations, utility

payments, or changes to the Tariff of the General

Terms of the Bank. The functionalities for strong

customer authentication were improved through

a built-in software token used in confirming

online transactions.

The Help from a Friend service was introduced, allowing every customer to receive assistance and

information about the features and functionalities of My Fibank electronic banking and the mobile

application.

In 2023, the Bank will continue its efforts to provide first-class service while focusing on digital methods

and solutions, providing self-service options and developing sustainable banking.

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CORPORATE GOVERNANCE STATEMENT

pursuant to Art. 100m of the Public Offering of Securities

Act and Art. 40 of the Accountancy Act

As a public company and public interest entity, First Investment Bank discloses information

about its corporate governance practices, as this section of the Annual Report represents a

Corporate Governance Statement pursuant to Art. 100m of the Public Offering of Securities

Act and Art. 40 of the Accountancy Act.

CORPORATE GOVERNANCE FRAMEWORK .................................................................................... 71

CORPORATE GOVERNANCE CODE ................................................................................................. 72

MANAGEMENT STRUCTURE .......................................................................................................... 73

SUPERVISORY BOARD .................................................................................................................... 74

MANAGING BOARD ....................................................................................................................... 78

GENERAL MEETING OF SHAREHOLDERS ....................................................................................... 80

CONTROL ENVIRONMENT AND PROCESSES .................................................................................. 81

PROTECTION OF SHAREHOLDERS’ RIGHTS .................................................................................... 82

INFORMATION DISCLOSURE .......................................................................................................... 83

STAKEHOLDERS .............................................................................................................................. 85

SHAREHOLDERS’ STRUCTURE ........................................................................................................ 85

SHARE PRICE AND MARKET CAPITALISATION ............................................................................. 867

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CORPORATE GOVERNANCE FRAMEWORK

For First Investment Bank AD good corporate governance is a key element for ensuring long-term and

sustainable development, and successful business model. The corporate policy of the Bank is based on

professional and transparent governance in accordance with internationally recognized standards and

principles of good corporate governance, taking into account changes in the regulatory and economic

environment as well as the financial markets in the country and abroad.

The corporate governance of First Investment Bank is a system of policies, rules, procedures and

practices by which the Bank is managed and controlled, with clearly defined functions, rights and

responsibilities at all levels: General Meeting of Shareholders, Supervisory Board and committees to

it, Managing Board and committees and councils to it, Internal Audit, and structures at the

headquarters, branches and offices. First Investment Bank has a two-tier governance system consisting

of a Supervisory Board and Managing Board.

First Investment Bank applies written policies for corporate governance on group level, which defines

the main principles on internal governance and control over the subsidiaries, as well as the procedures

and mechanisms facilitating the consistent and integrated development of the companies in line with

group strategy and in compliance with regulatory and supervisory bodies‘ requirements.

In 2022, the Bank further improved its corporate governance policies, including the assessment of

suitability of members of management and supervisory bodies and key function holders, ethical

standards and code of conduct, customer segmentation, as well as the disclosure practices related to

sustainable development and environmental, social, and governance (ESG) factors.

The head office and business address of First Investment Bank AD was changed, due to moving in new

building at Sofia 1784, 111P, Tsarigradsko shose Blvd.

CORPORATE

GOVERNANCE

CODE

MANAGEMENT STRUCTURE

Managing

Board

General

meeting of

shareholders

Supervisory

Board

INTERNATIONAL STANDARDS AND GOOD PRACTICES

Remuneration

policy

Protection of

shareholder’s

rights

Interested

parties

Ethical standards

and values

Disclosure

of information

and transparency

Control

environment and

processes

Sustainable

development

(ESG factors)

KEY ELEMENTS IN THE CORPORATE GOVERNANCE FRAMEWORK

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CORPORATE GOVERNANCE CODE

First Investment Bank AD functions in accordance with the Corporate Governance Code adopted by

the Managing Board and approved by the Supervisory Board. It outlines and structures the main

components, functions and responsibilities constituting the system of corporate governance of First

Investment Bank. In addition to the requirements of applicable law in the Republic of Bulgaria, the

Code is structured by applying the principles of the Basel Committee on Banking supervision, the

guidelines of the European Banking Authority (EBA), as well as the applicable standards of the

Organization for Economic Cooperation and Development (OECD) in this field, and the

recommendations of the National Corporate Governance Code, approved by the Financial Supervision

Commission.

The Code sets out the basic principles and requirements for maintaining and improving the

organization and methods of governance at the Bank, aimed at:

honest and responsible governance based on adding value;

effective practices of management oversight and control;

executive management and senior staff acting in the best interest of the Bank and towards

increasing the value of shareholders' equity;

timely information disclosure and transparency;

effective system of risk management and control based on the principle of three lines of

defense.

In 2022 the Bank updated its Corporate Governance Code in compliance with the amendments of the

National Corporate Governance Code related mainly to sustainable development requirements and

environmental, social, and governance (ESG) factors, as well as to introductory and training programs

for new members of the governance bodies and shareholder communication.

In compliance with the requirements of the applicable legislation, First Investment Bank annually

discloses information on the corporate governance practices and meeting the requirements set in the

Corporate Governance Code of First Investment Bank applying the “comply or explain” principle. Along

with its annual report and financial statements, the Bank discloses to the public also a corporate

governance assessment scorecard in compliance with the National Corporate Governance Code.

In addition to the Corporate Governance Code, First Investment Bank applies a Disclosure Policy. Both

documents are publicly available at the corporate website of the Bank (https://www.fibank.bg/bg/za-

nas/korporativno-upravlenie/kodeks-na-korporativno upravlenie).

In 2022, the requirements specified in these were met, including the requirements for disclosure of

regulated information and information under the financial calendar of the Bank for 2022.

CODE OF CONDUCT AND WHISTLEBLOWING POLICY

For the purpose of establishing the professional and ethical standards required and applicable to the

Bank as a business company, work environment and a credit institution, Fibank has a Code of Conduct

that determines the basic principles, ethical norms and corporate values which underlie the policies

and business plans, rules, procedures and daily operational activities of the Bank.

In 2022 the Bank updated its Code of Conduct with regards to application and adherence to internal

requirements for information security and risk appetite framework.

The Bank, led by the understanding that following a lawful and ethical conduct in relations between

managerial staff, employees, customers and partners of the Bank is an important aspect underlying its

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overall activity, has in place a whistleblowing policy. The Policy aims to systematize the means and

procedures for sharing of information where there are suspicions of unlawful actions, or problems

related to the work process, thereby ensuring their transparent and fair consideration and resolution.

MANAGEMENT STRUCTURE

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SUPERVISORY BOARD

STRUCTURE AND COMPETENCES

In 2022 there were no changes in the composition of the Supervisory Board of First Investment Bank.

As at 31.12.2021 the Supervisory Board consisted of five members, as follows:

Name

Position

Term of office

Evgeni Krastev Lukanov

Chairman of the Supervisory Board

24.01.2027

Maya Lubenova Georgieva

Deputy Chair of the Supervisory Board

24.01.2027

Radka Vesselinova Mineva

Member of the Supervisory Board

24.01.2027

Jordan Velichkov Skortchev

Member of the Supervisory Board

24.01.2027

Jyrki Ilmari Koskelo

Member of the Supervisory Board

27.07.2025

The business address of all Supervisory Board members is 111P, Tsarigradsko shose Blvd, 1784 Sofia.

Each member of the Supervisory Board has professional experience, knowledge, qualifications and

abilities, in compliance with the fit and proper requirements, contributing for the collective suitability

in accordance with the activities carried out by the Bank, the main risks and long-term goals.

In 2022 there was no changes in the number of shares of First Investment Bank, held by members of

the Supervisory Board. As at 31 December 2022 the members of the Supervisory Board held a total of

367,652 shares of First Investment Bank, as follows: Mr. Evgeni Lukanov (337,139 shares), Ms. Maya

Georgieva (11,388 shares), Mr. Jordan Skortchev (19,125 shares), as none of them owned more than

1% of the issued share capital.

DIVERSITY POLICY AND INDEPENDENCE

First Investment Bank complies its activity and maintains policies and practices for ensuring diversity

in the composition of its governing bodies, including various aspects such as work experience,

educational qualifications, gender.

The Bank seeks to maintain a target level of 30% of the members of the Supervisory Board to be from

the underrepresented gender (rounding down to an integer if necessary). As of 31 December 2022,

the Bank fulfilled the set target level as two (40%) of the Supervisory Board members were women.

The reported levels exceeded the average levels in EU related to management board in its supervisory

function (24%) according to latest reported data in research for diversity practices of the European

Banking Authority (EBA Report on the benchmarking of diversity practices at European Union level

under Article 91(11) of Directive 2013/36/EU (2018 data), EBA/REP/2020/05, published at

https://eba.europa.eu/regulation-and-policy/internal-governance).

For further information regarding the professional experience and competences of the Supervisory

Board members see section „

Other information“.

The composition of the Supervisory Board is structured so as to ensure conscientious, professional and

independent fulfillment of the obligations of its members. First investment bank complies with the

requirements applicable for significant banks and public companies, for 1/3 of the members of the

Supervisory Board to be independent.

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FUNCTIONS AND RESPONSIBILITIES

The Supervisory Board of First Investment Bank supervises and, where necessary, advises the

Managing Board and monitors the overall activities of the Bank. It adopts and oversees the

implementation of the strategic objectives, the corporate governance framework, and the corporate

culture of the Bank. When exercising supervision over the Managing Board, the Supervisory Board

takes into account the achievement of objectives, the strategy and risks in the activity of the Bank, as

well as the structure and operation of the internal systems for risk management and control.

The Supervisory Board ensures supervision of the risk management framework, including risk appetite,

internal governance and the control system of all types of risks, i.e. ESG risks, by requiring high risk

culture among employees. It carries out its activity effectively exchanging information with the

Managing Board subject to specifics, and by implementation of high ethical standards and the

corporate values of business conduct sets the tone for high corporate culture and business ethics for

sustainable development: "Tone of the Top".

The meetings of the Supervisory Board are determined in advance, in accordance with an annual work

plan. In 2022, the Supervisory Board held 18 meetings

to consider issues within its competence.

Emphasis was placed on exercising ongoing supervision in the implementation of the updated Risk

Strategy, the Risk Appetite Framework and the Strategy for Reduction of Non-performing Exposures

and Acquired Assets, where the Risk Committee provided active support. Issues were also discussed

concerning the branch network, the digitization of operations, the Bank's market shares and

competitive positions, and the implementation of strategic development goals. Regular reviews were

carried out of financial results and reporting and of the internal control framework, where the Audit

Committee provided assistance. Supervisory Board members were constantly informed on the

developments in the Bank’s activity and of its compliance with new regulatory requirements. During

the year, the Supervisory Board approved changes to the Bank's Corporate Governance Code and Code

of Ethics in line with sustainable development and ESG factors, as well as with the network and

information security policies.

The activity of the Supervisory Board is supported organizationally by a Secretary. In addition to

organizing the meetings of the Supervisory Board and the minutes, the secretary has the responsibility

to follow the application of the procedures, as well as to ensure the information to be provided and

exchanged between the members of the Supervisory Board, members of the committees and the

Managing Board.

ASSESSMENT OF THE ACTIVITY

Once a year, the Supervisory Board performs an assessment of the effectiveness of its own activities

as a collective body and individually, assessment of the governance practices and procedures,

suitability, as well as of the functioning of the Managing Board and the committees to the Supervisory

Board. Such assessment for 2022 was accomplished at the end of the fourth quarter of the year.

COMMITTEES

The Supervisory Board is supported in its activity by a Presiding Committee, a Risk Committee, a

Remuneration Committee, and a Nomination Committee which function according to written

competencies, rights and responsibilities in compliance with the applicable regulatory requirements.

The Presiding Committee is responsible for overseeing the activities of the Managing Board on

important strategic decisions, including the issue of new shares, bonds, hybrid instruments, the

adoption of programs and budgets relating to the activity of the Bank, the line responsibilities of the

members of the Managing Board, as well as the function for overview and control over the activity of

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the subsidiary companies of the Bank. In 2022, there were no changes in the composition of the

Presiding Committee. Chair of the Presiding Committee is Ms. Maya Georgieva.

In 2022, the Presiding Committee held 5 meetings to consider issues within its competence, including

allocation of responsibilities among members of the Management Board, as well as making

recommendations and coordination of the business strategy for the period 2023-2025 and the budget

of the Bank.

The Risk Committee advises the Supervisory Board and the Managing Board in relation to the overall

current and future strategy on ensuring compliance of the risk policy and risk limits, risk-taking

propensity and control of its execution by senior management. In 2022, there were no changes in the

composition of the Risk Committee. Chairman of the Committee is Mr. Jyrki Koskelo.

The Risk Committee held 9 meetings during the reporting period, discussing issues of its competence.

It reviewed updated plans and current risk reports, including the Recovery Plan, for the purpose of

coordination and subsequent application. During the year, the Committee reviewed and made

recommendations on the updated Risk Management Strategy, Risk Appetite Framework and Strategy

for the Reduction of Non-performing Exposures and Repossessed Assets, as was regularly informed

and monitored their implementation, as well as the effectiveness of the internal risk management and

control systems, i.e. the compliance function. During the year, the Risk Committee held discussions on

the quality of the loan portfolio, including in view of the consequences of the situation in Ukraine, as

well as on the assumptions for the integrated stress test for credit risk, held for the purpose of ICAAP.

The Remuneration Committee assists the Supervisory Board in the implementation of the

Remuneration policy of the Bank and its subsequent amendments, as well as in any other matters

concerning remuneration, in accordance with the regulatory requirements and best practices in the

area. In 2022, there were no changes in the composition of the Remuneration Committee. Chair of the

Remuneration Committee is Mr. Evgeni Lukanov.

In 2022, the Remuneration Committee held 3 meetings discussing issues of its competence related to

the Remuneration Policy. It also reviewed proposals in connection with the regular assessment process

and updating the categories of identified staff.

The Nomination Committee assists the Supervisory Board in assessing the individual and collective

suitability of members of the Supervisory Board and Managing Board, as well as assessing the

suitability of the key function holders in compliance with applicable regulations and the Policy of First

Investment Bank for nomination and assessment of the suitability of members of the managing and

supervisory bodies and persons holding other positions. In 2022, there were no changes in the

composition of the Nomination Committee. Chair of the Nomination Committee is Mr. Jordan

Skortchev.

During the year the Nomination Committee held 7 meetings considering issues within its competence,

including on the selection and suitability of persons holding senior management positions in the Bank's

subsidiaries, as well as periodic follow-up assessments of the individual and collective suitability of

members of the Supervisory Board, the Management Board and key position holders. The Nomination

Committee also discussed topics related to planning of trainings within the institution, as well as

coordinated the updated Policy of First Investment Bank for nomination and assessment of the

suitability of members of the managing and supervisory bodies and persons holding other positions.

As a company of public interest and according with the Law on the Independent Financial Audit (LIFA),

the Bank has a functioning Audit Committee which is responsible for supervising the financial reporting

and the independent financial audit, as well as for the effectiveness of the systems for internal control

and risk management in the Bank. The Committee also makes a recommendation in the selection and

remuneration of the registered auditors to perform the independent financial audit of the Bank and

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monitors their independence in accordance with the applicable European and national regulations, as

well as with the Code of Ethics for Professional Accountants. The activity of the Audit Committee is

structured based on written defined competencies, rights and responsibilities, included in its rules of

procedure (stature under the meaning of Art. 107 of LIFA) in compliance with the requirements of the

Law on the Independent Financial Audit and Regulation 537/2014 of the European Parliament and of

the Council on specific requirements regarding statutory audit of public-interest entities.

First investment Bank fulfills the requirement the majority of the members, incl. the chairman of the

Audit Committee to be external and independent from the Bank. In 2022, there were no changes in

the composition of the Аudit Committee. Chair of the Audit Committee is Mr. Dimitar Dimitrov, who

possesses financial competencies as well as the knowledge, professional experience and qualifications

in the field of accounting and financial audit necessary for the effective performance of his duties.

During the year, the Audit Committee held 12 meetings, addressing various matters of its competence,

including recommendations on the selection of statutory auditors, as well as ongoing monitoring of

financial reporting and independent financial audit, monitoring the effectiveness of the internal audit

function and control systems, including through regular meetings held with the Chief Financial Officer,

the Director of Internal Audit, as well as with representatives of the statutory auditors of the Bank.

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MANAGING BOARD

In 2022 no changes were made to the composition of the Managing Board of First Investment Bank. In

January 2022 was registered the re-election of the current member Mr. Chavdar Zlatev for a new 5-

year term as member of the Managing Board of the Bank.

STRUCTURE AND COMPETENCES

At the end of 2022 the Managing Board of First Investment Bank AD consisted of six members elected

by the Supervisory Board on the recommendation of the Nomination Committee, in accordance with

the requirements of applicable law, the Statute of the Bank, and the Policy of First Investment Bank

for nomination and assessment of the suitability of members of the managing and supervisory bodies

and persons holding other positions.

Name

Position

Term of Office

Nikola Hristov Bakalov

Chief Executive Officer (CEO), Chairman of the

Managing Board

16.01.2025

Svetozar Alexandrov Popov

Chief Risk Officer (CRO), Member of the

Managing Board and Executive Director

21.04.2024

Ralitsa Ivanova Bogoeva

Chief Retail Banking Officer (CRBO), Member of

the Managing Board and Executive Director

28.04.2023

Chavdar Georgiev Zlatev

Chief Corporate Banking Officer (CCBO),

Member of the Managing Board and Executive

Director

25.01.2027

Ianko Angelov Karakolev

Chief Financial Officer (CFO) and Member of the

Managing Board

21.05.2023

Nadia Vasileva Koshinska

Member of the Managing Board and Director of

Small Enterprises Banking Department

30.06.2025

The business address of all Managing Board members is 111P, Tsarigradsko shose Blvd, 1784 Sofia.

The Management Board members are elected for period of up to 5 years and can be re-elected for

further mandates without limitation.

The members of the Managing Board are established professionals with high reputation and proven

leadership qualities and capacity to translate their knowledge, skills and experience into well-

argumented solutions that can be applied to the practices in the Bank, aiming to achieve the objectives

and the development strategy and stable management of the institution.

As at 31 December 2022 the members of the Managing Board held a total of 35,791 shares of First

Investment Bank, as follows: Mr. Nikola Bakalov (2516 shares), Mr. Svetozar Popov (5856 shares), Mr.

Chavdar Zlatev (27,173 shares), Mr. Ianko Karakolev (12 shares), Ms. Nadia Koshinska (234 shares), as

none of them owned more than 1% of the issued share capital.

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DIVERSITY POLICY

In accordance with the policies and practices for maintaining and ensuring diversity in the composition

of the management bodies, the Bank seeks to maintain a target level of 30% of the members of the

Managing Board to be from the underrepresented gender, if necessary rounding down to an integer.

As of 31 December 2022, the Bank fulfilled the set target level as two (33%) of the Managing Board

members were women. The reported levels exceeded the average levels in EU related to management

board in its management function (15%) according to reported data in research for diversity practices

of the European Banking Authority (EBA Report on the benchmarking of diversity practices at European

Union level under Article 91(11) of Directive 2013/36/EU (2018 data), EBA/REP/2020/05, published at

https://eba.europa.eu/regulation-and-policy/internal-governance). For further information regarding

the professional experience and competences of the Supervisory Board members see section „

Other

information

“.

The composition of the Managing Board is structured so as to ensure effective management of

operations, subject to the generally accepted principles of managerial and professional competence

and clear separation of duties and responsibilities. The Bank is represented together with each two of

the executive members of the Board (executive directors).

FUNCTIONS AND RESPONSIBILITIES

The Managing Board of First Investment Bank is the body which manages the Bank independently and

responsibly, in accordance with the established mission, objectives and strategies. The Managing

Board operates under rules of procedure approved by the Supervisory Board. Its main functions are to

manage and represent the Bank by resolving all matters affecting the Bank within its scope of activities,

except those of the exclusive competence of the General Meeting of Shareholders or the Supervisory

Board according to the law and the Statute of the Bank. The Managing Board organizes the

implementation of decisions of the General Meeting of Shareholders and the Supervisory Board, and

performs any other functions assigned to it by those bodies or the law. According to the statutes and

internal regulations, certain decisions of the Managing Board are subject to approval by the

Supervisory Board, while others require coordination with a committee to the SB.

In accordance with the principles of good corporate governance, an open dialogue is maintained

between the Supervisory Board and the Managing Board of First Investment Bank. Besides the regular

reports on implementation of objectives and activities, joint meetings are also conducted. The

Managing Board immediately notifies the Chairman of the Supervisory Board or his deputy of any

circumstances that are of material importance to the Bank and provides timely information regarding

implementation of the business strategy, risk appetite, achievement of objectives, risk limits or rules

relating to regulatory compliance, the system of internal control, or the compliance of the Bank's

activity with the regulatory requirements and the external environment.

The Managing Board of First Investment Bank holds meetings every week. The meeting agenda is

prepared in advance. For the meetings of the Managing Board minutes are prepared which are signed

by all members that were present at the meeting.

The activity of the Managing Board is supported organizationally by a Secretary, who is employed on

a full-time basis and possesses the necessary qualifications and skills to ensure that the governing

bodies follow internal rules and external regulations, as well as facilitating communication between

them.

COMMITTEES AND COUNCILS TO THE MANAGING BOARD

The activity of the Managing Board is supported by collective bodies, including the Credit Council,

Assets, Liabilities and Liquidity management Council (ALCO), Restructuring Committee, and the

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Operational Risk Committee, which function according to written structure, scope of activities and

functions – for more information see section „

Risk Management“.

Other internal collective bodies also operate in the Bank, e.g. an IT Committee, which as an auxiliary

body to the MB, is responsible for monitoring the implementation of the Bank's IT strategic program,

and to manage and control the IT project portfolio, the targeted use of resources and the approved

budget in this area – for more information see section „

Information technology“.

In line with the long-term priorities aimed at reducing non-interest-bearing assets and ensuring their

effective realization, a Commission for the management and sale of assets functions within the Bank.

Its role is to assist the Management Board in relation to the management, administration and sale of

acquired assets, in accordance with the Levels of authority established in the Bank. During the year

changes were made to the competences of the Commission aiming at more effective management of

repossessed assets, incl. in cases of rental. The Commission is chaired by a member of the Management

Board, while the other members include the directors of the Impaired Assets, Asset Management and

Administrative departments, as well as the Head of the Asset Valuation division to the Finance

department.

As an auxiliary body in the Bank functions also Commission on cash operations, chaired by the Chief

Retail Banking Officer, while the rest of the members include directors of the following departments:

Vault, Accounting, Branch Network, Analysis and Control of Risk and Security department.

GENERAL MEETING OF SHAREHOLDERS

The General Meeting of Shareholders of First Investment Bank is the most senior management body,

allowing shareholders to decide on fundamental issues concerning the existence and activities of the

Bank. In particular, the General Meeting of Shareholders decides on amendments and supplements to

the Statute of the Bank, on increasing or reducing the capital, as well as on transformation or

dissolution of the Bank. The General Meeting of Shareholders has powers to appoint or dismiss

members of the Supervisory Board, the Audit Committee and the Head of the Internal Audit of the

Bank, decide on the distribution of profit, on the issuance of bonds, as well as on any other matters

under the Statute of the Bank and the applicable law.

In June 2022, an Annual General Meeting of Shareholders was held, which represented 90.50% of the

share capital and voting rights, at which a decision was taken that the entire net profit of the Bank for

2021 shall be capitalized and set in other reserves with general purpose. Amendments were made to

the By-laws of First Investment Bank related to changing the headquarters and the business address

of the Bank, as well as such for authorizing the Management Board within a period of 5 years as from

02.08.2022, with the prior approval of the Supervisory Board, to adopt resolution for increase, through

issuance of new shares, of the Bank’s capital until it reaches an aggregate nominal amount of BGN

210,000,000.

The General Meeting of Shareholders elected registered auditors for performing independent financial

audit of the Bank for 2022 – Mazars OOD and Ecovis Audit Bulgaria OOD. The companies were elected

after prior approval of the Bulgarian National Bank and recommendation from the Audit Committee

of the Bank based on criteria for coordination of the selection, approved by the BNB together with the

Commission for Public Oversight of Statutory Auditors.

With a view to greater efficiency and facilitating the implementation of certain decisions, the General

Meeting of Shareholders with its previous decisions of 19.06.2019 and 23.06.2021 authorized the

Management Board, with the prior approval of the Supervisory Board, to adopt resolutions for:

issuance of mortgage bonds under the Law on mortgage bonds with a general nominal amount of BGN

400,000,000 with maturity up to 10 years from date of issuance and other conditions, defined by the

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Managing Board (within a period of 5 years as from 23.07.2019); for the issuance of debt instruments,

including subordinated term debt and debt/equity (hybrid) instruments, up to the aggregate amount

of BGN 2 billion or its equivalence in another currency (within a period of 5 years as from 11.08.2021).

CONTROL ENVIRONMENT AND PROCESSES

The Bank has established and constantly improves a reliable and comprehensive internal control

framework which includes control functions with the necessary powers and rights of access, enabling

independent performance of duties by the structural and auxiliary units exercising monitoring and

control.

The risk management processes, procedures and requirements are structured according to the "three

lines of defense" principle, which include the business units, risk management and compliance

functions, as well as internal audit. The control functions are independent of the operational business

units which they monitor and control, and are also organizationally independent of one another as

they perform different functions. For more information on risk management and compliance functions

see section „

Risk Management“.

The internal control framework is in compliance with the applicable requirements in this sphere,

including Ordinance No 10 of the BNB on the Organisation, Governance and Internal Control of Banks

and EBA Guidelines on internal governance under Directive 2013/36/EU (EBA/GL/2021/05). During the

period, the Compliance policy, as well as the Compliance charter with respect to reflecting structural

changes related to the unit for control of investment services and activities and the data protection

officer. With regards to anti-money laundering and terrorism financing measures, the Procedure for

pre-approval of Bank clients and monitoring of established business relations was updated.

First Investment Bank applies written policies and rules regarding the disclosure of conflicts of interest,

in accordance with the adopted Policy for managing of conflict of interest, which consolidates the

requirements in the applicable internal banking documents and further develops the necessary

organization for timely identification, management, avoidance and minimizing present and potential

conflicts of interest.

INTERNAL AUDIT

The internal audit function established in First Investment Bank has broad powers, independence,

resource availability and access to the competent management and supervisory bodies. It contributes

to the effective management of the Bank, giving reasonable assurance that legal regulations, rules and

procedures are adhered to, and appropriate and timely corrective actions are taken, thereby helping

to reduce the risk of losses and to achieve the business objectives of the Bank.

The internal audit carries out periodic inspections to ensure the achievement of goals and objectives,

the economical and efficient use of resources, adequate control of various risks, protection of assets,

reliability and integrity of financial and management information, and compliance of activity with

current legislation and the existing policies, plans, internal rules and procedures.

In 2022 the General Meeting of Shareholders of First Investment Bank approved the 2021 annual

report of the Internal Audit which informs shareholders of the main results of the control activities of

internal auditors, the measures taken, and their implementation.

REGISTERED AUDITORS

The annual financial statements of First Investment Bank are subject to independent financial audit

jointly by two audit companies, which are registered auditors pursuant to the Law on Independent

Financial Audit and in compliance with the applicable legislation. In order to ensure transparency and

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to disclose the results of the Bank to all stakeholders, the audited financial statements are published

in Bulgarian and English on its corporate website at www.fibank.bg.

The registered auditors are elected by the General Meeting of Shareholders on a proposal by the

Supervisory Board and following a recommendation by the Audit Committee of the Bank. The

registered auditors are audit companies independent from the Bank, and their selection is also agreed

in advance with the Bulgarian National Bank based on criteria for coordination of the selection,

approved by the BNB together with the Commission for Public Oversight of Statutory Auditors.

The registered auditors selected to perform independent financial audit of the annual financial

statements of the Bank for 2022 are:

Mazars OOD, UIC: 204638408, entered in the register of registered auditors – auditing

companies, maintained by the Commission for Public Oversight of Statutory Auditors under

registration № 169; and

Ecovis Audit Bulgaria OOD, UIC: 131039504, entered in the register of registered auditors –

auditing companies, maintained by the Commission for Public Oversight of Statutory Auditors

under registration № 114.

In its capacity of a company of public interest in accordance with the Law on the Independent Financial

Audit, an Audit Committee functions within the Bank. For further information on its functions and

responsibilities see section „

Supervisory Board“.

PROTECTION OF SHAREHOLDERS’ RIGHTS

The corporate governance of First Investment Bank protects the rights of shareholders, depositors and

other customers of the Bank, treating all shareholders of the Bank equally, including minority and

foreign shareholders. The governing bodies of First Investment Bank provide shareholders and

investors with regular and timely disclosure of information about major corporate events related to

the operation and condition of the Bank, ensuring informed exercising of shareholders’ rights, and

informed investment decision-making by investors.

CONVENING OF GMS AND INFORMATION

The convening of the General Meeting of Shareholders is made by written notice to shareholders in

accordance with the Statute of the Bank in order to encourage their participation in the General

Meeting, and in such a way as not to impede the voting or make it unnecessarily expensive. The Bank

provides shareholders with timely and adequate information for decision-making, taking into account

the scope of competence of the General Meeting. The invitation, together with the written materials

related to the agenda of the General Meeting, are announced in the Commercial Register to the

Registry Agency, submitted to the Financial Supervision Commission, and made available to the public

through www.x3news.com at least 30 days before holding the General Meeting. They are also

published on the website of the Bank in Bulgarian and English from the time of the announcement

until the conclusion of the General Meeting. Upon request, the materials are provided to each

shareholder free of charge. As part of the invitation written rules for voting with proxy are included,

also requirements related to documents prepared in a foreign language, as well as information on

receiving and accepting notifications, warrants of attorney and other documents through electronic

means of communication were also laid down.

In cases where the Bank employees are also its shareholders, the same requirements regarding voting

rights that are currently applicable to the other shareholders are applied.

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MAIN TRANSFER RIGHTS AND RESTRICTIONS

All shares issued by First Investment Bank AD are ordinary, dematerialized, registered, and each share

entitles its holder to one vote at the General Meeting of shareholders, and to a dividend and liquidation

share in proportion with its nominal value. The Bank may not issue shares with different nominal

values.

The Bank's shares are freely transferable, subject to the requirements of applicable law. Under the

regulatory framework, natural or legal persons, or persons acting in concert, may not, without prior

approval of the BNB, acquire directly or indirectly shares or voting rights in the Bank if, as a result of

such acquisition, their holding becomes qualifying, or if such holding reaches or exceeds the thresholds

of 20, 33 or 50 percent of the shares or voting rights, or when the Bank becomes a subsidiary.

No restriction on the rights of individual shareholders holding shares of the same class is allowed, and

there are no shareholders of First Investment Bank with special voting rights. The Bank has no

knowledge of agreements between shareholders that could lead to restrictions on the transfer of

shares, or voting rights.

First Investment Bank maintains a special section on the rights of shareholders on its corporate website

at (https://www.fibank.bg/bg/investitori/korporativno-upravlenie/prava-na-akcionerite).

MINORITY SHAREHOLDERS AND INSTITUTIONAL INVESTORS

In accordance with good corporate governance practices, the Bank develops initiatives to engage

minority shareholders and institutional investors.

In an effort to maintain an open line of communication with shareholders and investors, First

Investment Bank maintains an Investors Club, by registering in which all stakeholders can receive e-

mail notifications of any investor information disclosed by the Bank to the public.

The Bank aims to organize and hold meetings with minority shareholders, with a view to furthering

transparency and creating an opportunity for open dialogue and feedback between them and the

senior management of the Bank, as well as their opportunity to contribute and work actively for the

successful development of First Investment Bank AD. In accordance with good corporate governance

practices, aiming at equal treatment of respondents, the notice for the regular meetings with minority

shareholders, as well as the results from their holding, were publicly disclosed through

www.x3news.com, as well as on the Bank’s website.

INFORMATION DISCLOSURE

Transparency and timely disclosure of information is a key principle in corporate governance. First

Investment Bank maintains a system of disclosure in accordance with current regulations, which is

aimed at providing timely, accurate and understandable information about significant events, allows

for objective and informed decisions, ensures equal access to information and prevents abuse of

insider information.

First Investment Bank has Disclosure policy adopted by the Managing Board and approved by the

Supervisory Board that outlines the framework for provision of information to stakeholders,

shareholders and investors in accordance with modern practices of good corporate governance and

provides an opportunity for making objective and informed decisions and assessments. In disclosing

information, the Bank is guided by the principles of accuracy, accessibility, equality, timeliness,

integrity and regularity.

In its capacity as a public company and issuer, Fibank discloses to the public (through

www.x3news.com) periodic information, including annual financial reports audited jointly by two

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registered auditors, as well as interim financial and activity reports. The scope of periodic information

disclosed by First Investment Bank exceeds the requirements of national legislation, as the Bank has

decided to publicly disclose quarterly financial activity reports in compliance with Art. 100n

, par.7 of

LPOS and Art.15, par.2 of Ordinance №2 of the FSC, which have more detailed content than that of its

half-year reports, instead of the more concise public notifications for financial condition for the first,

third and fourth quarter.

First Investment Bank prepares its Annual Report in Bulgarian and English. It contains detailed

information on the development and competitive position of the Bank and its financial results,

implementation of objectives and review of business by type of activity, as well as information on the

management structure, the corporate governance framework (Corporate Governance Statement

pursuant to the Public Offering of Securities Act and the Accountancy Act), risk management, non-

financial information, incl. related to sustainable development (Non-financial statement within the

meaning of the Accountancy Act) and remuneration policy and its implementation (Report on the

implementation of the remuneration policy under the meaning of the Public Offering of Securities Act).

With respect to the report the registered auditors shall gave their opinion whether it corresponds to

the financial statements and is prepared in compliance with the applicable regulatory requirements.

In 2022, the Bank applied the regulatory technical standards on the specification of a single electronic

reporting format as set out in Delegated Regulation (EU) 2019/815, according to which annual financial

reports and activity reports are disclosed in XHTML format, while specific parts of the consolidated

financial statements are marked by using the in-line XBRL format, which is a machine readable format.

As a large institution within the meaning of Regulation (EU) No. 575/2013, registered on the stock

exchange, the Bank discloses information in accordance with regulatory requirements on a quarterly,

semi-annual and annual basis, applying the uniform disclosure formats under Commission

Implementing Regulation (EU) 2021/637 laying down implementing technical standards with regard to

public disclosures by institutions of the information referred to in Titles II and III of Part Eight of

Regulation (EU) No 575/2013.

The Bank also immediately discloses ad hoc information on important events related to its activity.

Information is also published on the website of Fibank: www.fibank.bg, Investors section.

First Investment Bank maintains a corporate website, including an English-language version, with

established content and scope of the information disclosed therein. It provides information about the

products and services of the Bank, as well as essential trading and corporate information about the

Bank, including on shareholder structure, management and supervisory bodies and their committees,

financial reporting and activity reports, sustainable development and environmental, social and

governance (ESG) factors, as well as the other information required under the regulatory requirements

and the National Corporate Governance Code. A special, easily accessible Investors section is

maintained on the website, featuring detailed and updated corporate governance information, stock

information, financial information, news for investors, general meetings of shareholders, etc.

In addition, Fibank publishes information on the Bank in the form of presentations and interviews with

senior management, press releases, journals (e.g. Fibank News), discloses detailed information on the

products and services of the Bank, the applicable terms and conditions and the Tariff and any

amendments thereto, as well as non-financial information on events and initiatives conducted as part

of its sustainability policy.

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INVESTOR RELATIONS DIRECTOR

With a view to establishing an effective relationship between First Investment Bank and its

shareholders and persons that have interest in investing in financial instruments issued by the Bank,

an Investor Relation Director is appointed within First Investment Bank – Mrs. Vassilka Momchilova

Stamatova.

The Investor Relations Director of First Investment Bank has the necessary qualifications and

professional experience for performing her obligations and responsibilities. The director is responsible

for the timely disclosure of all needed reports, notifications and information the Bank is required to

disclose to the Financial Supervision Commission, the Bulgarian Stock Exchange, the Central Depositary

and the public, as well as to keep a register of all sent materials.

In execution of the applicable regulatory requirements, in June 2022 the Investor Relations director of

the Bank reported her activity during 2021 at the Annual General Shareholders’ Meeting and her report

was adopted by the shareholders unanimously.

The business address of the Investor Relations Director is 111P, Tsarigradsko Shose Blvd., 1784 Sofia,

tel. +359 2 / 81 71 430, email:

vasilka.stamatova@fibank.bg / ir@fibank.bg.

First Investment Bank has a mobile investor relations application providing quick access to financial

information, the financial calendar of the Bank, as well as other data and news of interest to investors.

STAKEHOLDERS

First Investment Bank applies a policy of providing information to stakeholders about its activity. Those

include persons who are not shareholders but are interested in the economic development of the

company, such as creditors, bondholders, customers, employees, the general public, and others.

Periodically, in accordance with legal requirements and best practices, First Investment Bank discloses

information of a non-financial nature, including on sustainable development taking into consideration

ecological, social and government (ESG) factors. The Bank supports ecological initiatives, aimed for

reducing the carbon footprint, as well as socially significant projects, provides sponsorship and

develops donation programs directed primarily towards disadvantaged people, talented children,

supporting Bulgarian sport, culture and education. For more information, see section „

Sustainable

development

“.

First Investment Bank has maintained and developed a corporate blog which functions as a channel of

communication aimed at open dialogue in accessible language with customers, partners and other

stakeholders.

SHAREHOLDERS’ STRUCTURE

As at 31 December 2022 the shareholder structure of First Investment Bank included the following

shareholders: Mr. Tzeko Minev (31.36%), Mr. Ivailo Mutafchiev (31.36%), Bulgarian Development Bank

AD (18.35%) and Valea Foundation (7.87%).

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The remaining 11.06% of the Bank’s issued share capital (BGN 16.5 million) was owned by other

shareholders, holding shares subject to free trade on the Bulgarian Stock Exchange (free-float). At the

end of the year the total number of shareholders was over 2,000 which include both individuals and

legal entities, including institutional investors.

During the reporting period First Investment Bank did not acquire or transfer own shares, and at the

end of the reporting period the Bank did not have own shares.

SHARE PRICE AND MARKET CAPITALISATION

In 2022, the share price of the Bank fluctuated in the range between BGN 1.60 to BGN 2.87. The last

price of the shares of First Investment Bank for the reporting period was BGN 1,99 (2021: BGN 1,60)

and the market capitalization of the Bank, calculated on this basis, amounted to BGN 296,679

thousand. (2021: BGN 238,536 thousand). A total of 2,915 transactions were concluded with the shares

of the Bank on the regulated market BSE, amounting to a turnover of BGN 4,615 thousand, compared

to 2,368 transactions and BGN 3,597 thousand turnover a year earlier.

SHAREHOLDERS’ STRUCTURE AT END-2022 ISSUED SHARE CAPITAL AT END- 2022 г.

Shareholders’

structure, %

2022

PRICE OF THE BANK'S SHARES FOR 2022

MAIN STOCK-EXCHANGE INDICES ON

BULGARIAN STOCK EXCHANGE

Q1’22 Q2’22 Q3’22 Q4’22

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As at 31 December 2022, the shares of the Bank were traded on the Main Market BSE, Premium

Equities Segment of the Bulgarian Stock Exchange and were included in three stock exchange indices

– SOFIX, BGBX40 and BGTR30, which bring together the largest, most traded and most liquid

companies on the stock exchange in Bulgaria.

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REPORT ON THE IMPLEMENTATION OF THE

REMUNERATION POLICY

within the meaning of Art. 100n of the Public Offering of

Securities Act

In its capacity as a credit institution and a public company, First Investment Bank discloses

information regarding the remuneration policy and its implementation.

MAIN PRINCIPLES AND OBJECTIVES ............................................................................................... 89

ENFORCEMENT AND CONTROL AUTHORITIES ............................................................................... 89

IDENTIFIED STAFF ........................................................................................................................... 89

FIXED REMUNERATION .................................................................................................................. 90

RATIO BETWEEN FIXED AND VARIABLE REMUNERATION ............................................................. 90

CRITERIA FOR EVALUATION AND IMPLEMENTATION OF THE ACTIVITY ........................................ 90

SPECIFIC REQUIREMENTS FOR DEFERRATION, PAYMENT IN INSTRUMENTS AND RETENTION OF

VARIABLE REMUNERATION ............................................................................................................ 90

LEAVE BENEFITS ............................................................................................................................. 91

SUMMARY OF QUANTITATIVE INFORMATION .............................................................................. 91

INTEGRATION OF SUSTAINABILITY RISKS ....................................................................................... 91

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REMUNERATION POLICY

In its capacity as a credit institution and a public company, First Investment Bank discloses information

regarding the remuneration policy and its implementation, and this section of this activity report

represent Report on the implementation of the Remuneration Policy within the meaning of Art. 100n

of the Public Offering of Securities Act.

MAIN PRINCIPLES AND OBJECTIVES

The remuneration principles of First Investment Bank are structured in such a way as to contribute to

sound corporate governance and risk management. The Bank implements a Remuneration Policy in

accordance with the regulatory requirements, which is consistent with the business and risk strategy,

goals, values and long-term interests of the Bank, promoting reliable and effective risk management

and does not stimulate risk-taking beyond the level acceptable to the Bank.

The main goal of the Policy is to attract and retain highly qualified staff, motivate them to achieve high

results at a moderate level of risk and in accordance with the long-term interests of the Bank and its

shareholders. It is based on the principles of avoiding conflicts of interest and equal treatment of all

employees, gender neutrality, documentation, objectivity, reliable risk management.

ENFORCEMENT AND CONTROL AUTHORITIES

The Managing Board of the Bank is responsible for the organization of the implementation and

application of the Remuneration Policy in First Investment Bank AD.

The Supervisory Board shall approve the Remuneration Policy on the proposal of the Managing Board

and after coordination with the Remuneration Committee, which as a body functioning within the

Supervisory Board, supports its activities in this area. For more information on the Remuneration

Committee, see the section "

Supervisory Board".

The Remuneration Policy is a subject to regular review and update as necessary.

IDENTIFIED STAFF

The Remuneration Policy determines the categories of staff, incl. the identified staff, whose

professional activities have a significant impact on the risk profile of the Bank, incl. members of the

Supervisory Board and senior management staff, including members of the Managing and executive

directors; employees with managerial responsibility for independent control functions and those

whose activities involve risk-taking.

For 2022 the number of identified staff of First Investment Bank on an individual basis amounts to 36

employees, which include members of the Supervisory Board and the Managing Board, as well as other

persons, whose activities are related to risk-taking, incl. in the field of lending and the main business

lines, as well as those related to independent control and other corporate functions. They are defined

in accordance with the internal methodology for evaluation and determination of the categories of

employees by the identified staff, developed according to the qualitative and quantitative criteria of

Commission Delegated Regulation (EU) 2021/923 of 25 March 2021 supplementing Directive

2013/36/EU of the European Parliament and of the Council with regard to regulatory technical

standards setting out the criteria to define managerial responsibility, control functions, material

business units and a significant impact on a material business unit’s risk profile, and setting out criteria

for identifying staff members or categories of staff whose professional activities have an impact on the

institution’s risk profile.

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FIXED REMUNERATION

Individual permanent remuneration of identified staff is determined and developed by defining

remuneration levels for the specific position. A starting level is determined at which employees are

generally appointed, taking into account their expertise and relevant and proven managerial

experience, as well as a remuneration level after successfully passing the probationary period, defined

as a percentage increase over the starting level.

Permanent remuneration of employees within the category of identified staff is subject to annual

review, which is carried out as part of the process of planning and budgeting staff numbers and staff

expenses for the next year. The review of permanent remuneration and change decisions are based

on assessment of employees’ performance using a number of elements. They include performance

against specific pre-defined key indicators/targets reflecting the specific contribution of the position

and consistent with the targets and key priorities of the unit; indicators measuring the personal

productivity and efficiency of employees; current priorities of the Bank by individual business line;

general trends in the development of the labor market and/or data on current remuneration levels for

similar positions; approved levels for the specific position and levels and individual remuneration of

employees at similarly graduated positions; staff costs budgeted for the period.

RATIO BETWEEN FIXED AND VARIABLE REMUNERATION

The Remuneration Policy establishes the basic principles in determining of remuneration - fixed and

variable, and the aim is to provide an opportunity for an optimal ratio between fixed and variable

remuneration in accordance with the applicable provisions.

The amount of the variable remuneration may not exceed the amount of the permanent

remuneration, except in the cases when by a decision of the General Meeting of Shareholders of the

Bank a higher amount is determined, but not more than twice the amount of the permanent

remuneration.

CRITERIA FOR EVALUATION AND IMPLEMENTATION OF THE ACTIVITY

The variable remuneration shall be based on the results of the activity and the achieved goals, taking

into account the level and time horizon of the assumed risks, the price of the capital and the necessary

liquidity. The assessment shall be based on an appropriate combination of financial (quantitative) and

non-financial (qualitative) criteria, including a combination of the assessments of the employee's

performance, the structural unit in which the employee works and the Bank as a whole.

The quantitative criteria shall include indicators such as budget execution, achievement of target levels

of earning, capital adequacy and effectiveness, as well as other risk-adjusted indicators (e.g. economic/

internal capital), through which ex ante risk adjustment.

The quality criteria shall include achieving strategic goals, adherence to the Bank's policies and strategy

for risk management, customer satisfaction, compliance with internal rules, ethical norms and

corporate values, initiative, motivation, leadership, teamwork, cooperation with the other structural

units, etc.

SPECIFIC REQUIREMENTS FOR DEFERRATION, PAYMENT IN INSTRUMENTS AND

RETENTION OF VARIABLE REMUNERATION

In accordance with the current legislation and the Remuneration policy at least 50% of the variable

remuneration of the employees from identified staff, shall comprise of shares and other instruments

related to shares or equivalent non-cash instruments, as well as instruments within the meaning of

Art. 52 or Art. 63 of Regulation (EU) № 575/2013 or other instruments which can be fully converted

into Common Equity Tier 1 instruments or written down, as far as such instruments adequately reflect

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the credit quality of the Bank as a going concern and are appropriate to be used for the purpose of the

variable remuneration in line with Delegated Regulation (EU) № 527/2014.

The requirements regarding the instruments to determine an appropriate retention period are

included in order to comply with the incentives with the long-term interests of the Bank.

The remuneration policy shall provide a mechanism for a deferred payment of at least 40% of the

variable remuneration of the identified staff for a period of at least four to five years, depending on

the economic cycle, the nature of the activity and the associated risks, as well as by the position of the

respective employee. The deferral mechanism shall involve proportionate allocation of the deferred

variable remuneration or its gradual increase over the period of deferral.

LEAVE BENEFITS

According to the concluded contracts for management and control in case of unilateral termination by

the Bank, without notice, the members of the Managing Board are entitled to compensation in the

amount of up to 6 monthly remunerations under the contract, and the branch managers - 2 months.

According to the concluded agreements between the Bank and the members of the Supervisory Board,

upon termination of the contract the members of the Supervisory Board are due compensation up to

12 monthly remunerations, and in special cases the compensation is up to 24 monthly remunerations.

The employment contracts of the Bank's employees comply with the applicable provisions of the Labor

Code and do not contain clauses that differ from the provisions of the law and the usual practice.

In 2022, no severance pay was paid to the identified staff.

SUMMARY OF QUANTITATIVE INFORMATION

In 2022, the remuneration paid to senior management amounted to BGN 12,068 thousand (2021: BGN

10,863 thousand). During the year, no variable remuneration was paid under the meaning of

Ordinance No4 of the BNB for the requirements towards remunerations in banks.

The credit exposure of the persons controlling or managing the Bank at the end of the period amounts

to BGN 2944 thousand (2021: BGN 3515 thousand) on an individual basis.

For more information on Related party transactions and remuneration paid, see Note 35 “Related Party

Transactions” of the Unconsolidated Financial Statements for the year ended 31 December 2022.

INTEGRATION OF SUSTAINABILITY RISKS

Pursuant to Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November

2019 on sustainability‐related disclosures in the financial services sector (Regulation (EU) 2019/2088),

First Investment Bank, as an investment firm managing individual customer portfolios and providing

investment advice, falls under the scope of harmonized requirements for transparency of

remuneration policies in relation to the integration of sustainability risks in the process of taking

investment decisions when providing services to customers.

In this regard, the Bank publishes the required information on its corporate website at

(https://www.fibank.bg/bg/chastni-lica/spestjavanija-i-investicii/investicionni-uslugi-i-dejnosti).

Remunerations received by employees of the Bank for providing portfolio management services and

investment advice are not directly tied to investment performance. In addition, permissible risk

exposures are predetermined, thus avoiding the possibility of additional risks being taken at the

expense of sustainability, such risks having already been indirectly taken into account.

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NON-FINANCIAL DECLARATION

within the meaning of Art. 48 of the Accountancy Act

In accordance with legal regulations and good practices, First Investment Bank discloses in

its Annual Reports non-financial information that represents a Non-financial statement

within the meaning of Art. 48 of the Accountancy Act.

BUSINESS MODEL .......................................................................................................................... 93

SUSTAINABLE DEVELOPMENT ....................................................................................................... 94

ENVIRONMENTAL ISSUES .......................................................................................................... 95

SOCIAL ISSUES ........................................................................................................................... 98

GOVERNANCE ISSUES .............................................................................................................. 100

DISCLOSURES REGARDING CUSTOMER PORTFOLIO MANAGEMENT AND PROVISION OF

INVESTMENT ADVICE .............................................................................................................. 100

ETHICAL ISSUES ........................................................................................................................... 101

CODE OF ETHICS ...................................................................................................................... 101

RESPONSIBILITY AND COMPLIANCE ........................................................................................ 101

WHISTLEBLOWING .................................................................................................................. 101

HUMAN CAPITAL ........................................................................................................................ 103

POLICY FOR NOMINATION AND SUITABILITY ASSESSMENT ................................................... 105

INFORMATION TECHNOLOGY ..................................................................................................... 106

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BUSINESS MODEL

First Investment Bank offers a universal business mix of products and services to individuals,

as well as to business clients, incl. strategic focus for development in the spheres of retail,

small and medium-sized enterprises.

BUSINESS PRINCIPLES

We believe that trust is the basis of long-term

relations.

We strive not only for the best practices and results,

but we have the goodwill and discipline to achieve

them.

We appreciate and respect our business partners.

We strive for development and proactive solutions.

We are engaged in social issues and we make our

contribution to their solution.

We bear responsibility for our decisions and actions.

COMPETITIVE ADVANTAGES

First-class customer service.

Well-recognised brand.

Deep knowledge of the market.

Wide branch network.

Innovative digital services.

Solid market positions.

Flexibility in decision-taking.

High professional standards.

Fibank successfully adapts its business model and business development to the current challenges of

the external environment, including the processes of digitalization and the sustainable development

trends. Contributing to this are its customer-oriented strategy, conservative risk policy, experienced

management, as well as high corporate governance standards applied in practice.

▪ Limited presence

▪ Traditional banking products and services

▪ Focus on Retail banking and SMEs

BUSINESS

MIX

CORPORATE

BANKING

FOREIGN

OPERATIONS

CYPRUS

branch

Consumer lending

Mortgage lending

Deposit and saving products

Private banking

Gold and Bullion coins

Investment services and activities

Factoring

Middle

business

banking

Large

business

banking

Small

business

banking

Trade financing

Project financing

European programs

Payment services

RETAIL

BANKING

UNIVERSAL BUSINESS MIX OF PRODUCTS AND SERVICES

Digital banking

Card business

Microlending

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SUSTAINABLE DEVELOPMENT

The factors related to climate change and sustainable development (ecologica, social and governance

- ESG), has increasing reflection on business activities and lead to changes in business models. Their

implementation in all processes is fundamental for the long-term development of the Bank. It is

extremely important also for adequate response to market expectations, support of clients and the

community as a whole.

In 2022, a specialized structure was created with the

aim of ensuring the integration of environmental,

social and governance factors in the Bank's overall

activity. This includes support and advice in relation

to strategic planning, risk management framework

and internal governance.

The development of a 10-year sustainable development strategy began, taking into account the

existing environmental, social and governance factors and risks, including sustainability transition risks

and physical risks. A special ESG rating was developed for corporate customers of the Bank, based

primarily on taxonomy requirements and applicable environmental and social risk assessment

standards.

In connection with sustainable development and ESG factors, in 2022 the Bank updated its internal

corporate rules and prepared changes in policies and frameworks for managing the main types of

financial risks.

The Bank has adopted a comprehensive approach to the introduction of sustainability requirements.

It has integrated them into its business operations, risk management framework, corporate

governance, credit process, decision-making, assessment of borrowers' creditworthiness and

investment activity.

Vesela Gladnikova, Director of Sustainable development Department

The sustainable development of our society is the responsibility we

owe to our children and to all future generations.

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ENVIRONMENTAL ISSUES

The Bank's updated business strategy for the period 2023-2025 sets out target volumes for exposures

in the main business segments, meeting the "green" lending requirements of Regulation (EU) 2020/852

of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework

to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (the Taxonomy

Regulation), including requirements for climate change mitigation and climate change adaptation.

Emphasis is placed on lending programs enabling decarbonization in sectors carrying risks to the

transition to a circular economy, as well as on programs to reduce the carbon footprint from the Bank’s

own activity.

During the year, the Bank initiated processes to bring its Business Process Management (BPM) system

for processing credit transactions in line with the requirements of the Taxonomy Regulation and the

disclosure requirements, including with respect to sectoral affiliation and Classification of Economic

Activities (CEA-2008/NACE Rev.2), to inclusion of information on potential physical and transition risk

related to climate change, to exposures excluded under Delegated Regulation (EU) 2020/1818 as

having high carbon intensity, as well as to the energy efficiency of collateral.

As of 31.12.2021 the exposures towards taxonomy eligible and non-eligible economic activities,

calculated in line with the requirements of Delegated Regulation (EU) 2021/2178 on the disclosures

with respect to ecologically sustainable economic activities (Delegated Regulation (EU) 2021/2178)

were, as follows:

Environmental factors

Social factors

business

strategy and

strategic

development

goals

Sustainable

product

development

management

INTEGRATION OF SUSTAINABLE DEVELOPMENT IN THE ACTIVITY OF THE BANK

Governance factors

Risk strategy

and Risk

Appetite

Framework

Management

and monitoring

of ESG risks

Credit process

and decision

making

Assessment of

customer

creditworthine

Investment

services and

activities

Valuation of

collateral for

credit

transactions

Commitment of

management

staff on ESG

factors

Developing a

culture of

sustainability

among

employees

Disclosure and

reporting

Remuneration

policy

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% of total assets

% of covered assets

Exposures as of 31.12.2021

2022

2021

2022

2021

Taxonomy eligible economic activities

13%

12%

Taxonomy non-eligible economic

activities

50%

56%

70%

72%

Total financial and non-financial

corporations

59%

65%

83%

84%

At the end of the year, the Bank's securities investment portfolio included bonds backed by “green”

projects or by loans for mitigation of greenhouse gas emissions totaling over EUR 25 million (BGN

49,207 thousand).

In addition, in compliance with applicable regulations, First Investment Bank discloses information for

its exposures to financial and non-financial corporations, which are/are not obliged to publish non-

financial declaration, as well as the exposures to central governments, central banks and supranational

issuers, derivatives and other as a share of the total assets of the Bank, as follows:

% of total assets

Exposures as of 31.12.2021

2022

2021

Financial and non-financial corporations, which are obliged to

publish non-financial declaration/information

Financial and non-financial corporations, which are not obliged to

publish non-financial declaration/information

55%

61%

Total financial and non-financial corporations

59%

65%

Central governments, central banks and supranational issuers

29%

22%

Derivatives

Other

12%

13%

Total assests

100%

Covered assets – total assets excluding exposures to central governments, central banks and supranational

issuers, and derivatives.

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In line with the adopted policies for reducing the carbon footprint and investing in sustainable

development, in 2022 the Bank actively offered new products in the field of sustainable financing: the

Green Transport loan intended for purchase of new electric vehicles by business customers; the Green

Energy - Free Market loan for companies wishing to invest in the construction of photovoltaic systems

for production of electricity for free market sale; and the Green Energy - Own Use loan for construction

of photovoltaic systems generating electricity for own

consumption or for sale. A new Sustainable Future mortgage

loan for businesses and individuals was also launched during

the year. It is intended for purchase of real estate with high

energy efficiency class (A+, A or B) which contributes to

lowering household expenses and encourages environmental

protection and sustainability.

For 2022, financing provided under these products

amounted to BGN 51,202 thousand.

As part of the initiatives to protect the environment and

reduce harmful emissions, the offering continued of the

structured Eco Portfolio product. It is linked to a portfolio of

bonds backed by “green” projects and/or by loans for

reducing greenhouse gas emissions.

As at 31.12.2022, the funds raised under this structured product amounted to BGN 6,868 thousand.

In 2022, the Sustainable Lady Fund started a new partnership with the Good Examples in Business

foundation, providing support for a National Mentoring Program for women entrepreneurs. The Fund

was created in 2021 to support innovative green projects of female entrepreneurs. It is part of Fibank's

Smart Lady program and is implemented as joint initiative with Mastercard for equal start, innovation

and circular economy, within the framework of the institution’s global and local sustainability projects.

In 2022, the Fund provided stipends for 3 ladies-customers of the Smart Lady business program, as

well as a financial Sustainable Business grant for the finalists in the competition. A testimony for

the successful development of the Fund was the Golden Heart Award in the Youth Support and

Business Development category, received at the Annual Corporate Social Responsibility Awards

organized by Business Lady Magazine.

From 1 December 2022, First Investment Bank began replacing all

its plastic debit and credit cards with new ones made from a

recyclable material. This will allow cards to be fully recycled upon

their expiration. In addition to the eco-friendly material they are

made of, cards also have a completely new design inspired by the

idea of supporting scientific efforts to preserve Bulgarian varieties

of fruit and vegetables. The initiative is in line with the 2030

Agenda for Sustainable Development of the United Nations,

aimed at geographical biodiversity and reduction of the carbon

footprint and damage to nature from the use of pesticides.

By 31.12.2022, over 8,000 cards were replaced under the

initiative. For each new card issued from 1 to 31 December

2022, Fibank donates BGN 1 or a total of BGN 8,000 to the

Agricultural Academy, in support of its efforts for to preserve

and develop Bulgarian varieties of fruit and vegetables.

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During the period, the Green Finance & Energy Centre, a think-tank on sustainable finance in which

First Investment Bank participates, produced ESG reporting guidelines encouraging companies to

periodically disclose ESG information, including in their non-financial statements. The project, which is

a joint initiative of the Bulgarian Stock Exchange and the Bulgarian Independent Energy Exchange, aims

to promote policies in the field of sustainable finance and energy, as well as to generate ideas for

development of methodologies, stock indices and financial instruments based on sustainability factors.

In 2022, Fibank moved its headquarters to a new and modern building, certified Excellent under the

BREEAM sustainability standard. The building is equipped with a new generation microclimate

management system providing individual settings for rooms and offices which helps reduce carbon

(CO2) emissions in the atmosphere.

In addition, as part of initiatives to reduce carbon emissions from own activities, fluorescent lighting

in the branch network is gradually being replaced with diode lighting. Air conditioning is also being

modernized with efficient and environmentally friendly systems using R32 refrigerant which has 4

times less carbon footprint.

In 2022, the Bank's electricity consumption decreased by 17% and by 7% on average for the period

2020-22. Paper consumption decreased by 3% and 6%, respectively, driven by the implemented

initiatives for sustainability and digitization of the activity.

By prioritizing the development of digital services, First Investment Bank confirms its long-term

commitment and responsibility towards reducing the carbon footprint and the negative impact on the

environment. In 2022, as part of its Branch digitalization project, the Bank introduced electronic signing

of documents (e-Sign pad). The project focuses on electronic documents and electronic signing in

offices, as well as at reducing the use of paper documents in a sustainable way, thus setting a new

customer service model with increased digitalization in daily operations.

SOCIAL ISSUES

First Investment Bank continued to strengthen its image as a socially responsible institution by

implementing various projects in the fields of corporate donation, education, culture and sports as

part of its corporate social responsibility program.

In 2022, Fibank's Smart Lady program celebrated its fourth anniversary. It supports women

entrepreneurs, mainly targeting micro enterprises run or owned by women, as well as businesses

whose products and/or services are aimed at women. Over 1,100 projects worth over BGN 120 million

were financed during the period, enabling women entrepreneurs to create new or develop existing

businesses in areas such as education, advertising, production, agriculture and services. Over 1,000

ladies attended various training programs, seminars or mentoring classes, including through the

program's web-based platform. Specially tailored topics covered digital marketing, presentation skills,

overcoming objections, negotiation skills, etc., helping participants to upgrade their skills for successful

business management. In January 2023, after the reporting period, Fibank joined the National

Mentoring Program for Women Entrepreneurs. It provided a special 5-month mentoring program for

women entrepreneurs, customers of the Smart Lady program, aimed at micro enterprises in the areas

of health nutrition, brokerage services and aesthetic cosmetics.

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During the period, Fibank launched an

innovative joint project with Mastercard: the

Ninjiro digital platform for early financial

education of children over 7 years old. It is

structured through interactive communication

and play, developing financial literacy and

promoting social responsibility. The application

involves online communication between

parents and children, sets tasks and

performance goals, provides achievement

reports and rewards children with payment

points that can be used to purchase vouchers or invested in various sustainable causes such as planting

trees or maintaining beehives.

In the field of education, support was provided to students from the First English Language High School,

Sofia (1 ELS) for participation in the Regional Session of the Model European Parliament held in the

city of Szeged, Hungary.

During the year, First Investment Bank successfully implemented voice menus in some of its ATMs to

help blind people withdraw money from them. The service is available on 60 devices of the Bank

located in key locations in major cities. The innovation is in line with the best global banking practices

to facilitate the use of everyday banking by the visually impaired. ATMs provide audio instructions so

that people who cannot read the menus can operate the machine without assistance, by only using

the numeric keypad below the screen. Information is provided via a headset (customer owned) which

is plugged into a socket on the front of the device. Fibank's long-term goal is that every new ATM has

this functionality.

During the year, the partnership between First Investment Bank and the national organization Little

People of Bulgaria continued, with the Bank providing support to the organization through corporate

donations. Fibank was the first Bulgarian bank to build ATM terminals specially adapted for people of

short stature six years ago. It continues to increase the number of such ATMs, encouraging their wider

use.

Development of Bulgarian sports and support for young talents are among the important causes

underlying the social responsibility program of First Investment Bank. During the year, the Bank

continued to champion initiatives in its capacity as general sponsor of the Bulgarian Olympic

Committee (BOC) and sponsor of the Bulgarian Athletics Federation (BAF), the Bulgarian Rhythmic

Gymnastics Federation (BRGF) and others. A number of activities and events were supported during

the year in partnership with the Sofia European Capital of Sports Foundation, aimed at promoting

sports among the general public. Sponsorship was also provided to the Bulgarian Sports Federation for

Children and Youth at Risk, and to the Sports in the Free Time Association.

At the end of the year, Fibank was given an

honorary award by the Bulgarian Rhythmic

Gymnastics Federation (BRGF) for its long-

term contribution to the development of

sports in Bulgaria. The partnership between

Fibank and BRGF has an almost ten-year

history, during which both have actively

worked for the promotion and development

of Bulgarian rhythmic gymnastics,

supporting a number of social causes.

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As a bank dedicated to supporting the country’s culture, during the reporting period Fibank

contributed to initiatives in the fields of music, theater and fine arts, including the International Jazz

Festival in Bansko, the Sofia Summer Fest, as well as Summer Classics: the summer Bulgarian tour of

violinist Vasko Vassilev.

Fibank continued its support to the social program of the Union of Bulgarian Actors and the fund

specially created by UBA through annual donations and social initiatives aimed at raising funds, as well

as granting scholarships to talented disadvantaged students in the field of theater. In March 2022, at

the IKAR National Performing Arts Awards organized by UBA, the Bank awarded deserving actors.

For yet another year, First Investment Bank awarded the most successful Bulgarian companies in the

Best Bulgarian Company of the Year competition. The initiative is carried out thanks to Fibank, its aim

being to raise public awareness of good business examples in the country and promote successful

business models, thus motivating Bulgarian companies towards competitiveness and innovation.

In 2022, the total value of funds donated by Fibank for various social initiatives and sponsorships

exceeded BGN 840 thousand.

A testimony to Fibank's achievements during the year were the two awards received: the Golden Heart

Award in the Youth Support and Business Development category, and the Sustainable Development

award of the Business Lady Magazine for consistent policy in the field of corporate social responsibility.

Both are given to distinguish the efforts of companies and their contribution of time and money in

support of sustainable causes.

GOVERNANCE ISSUES

For First Investment Bank AD good corporate governance is a key element for ensuring long-term and

sustainable development, and successful business model. The corporate policy of the Bank is based on

professional and transparent governance in accordance with internationally recognized standards and

principles of good corporate governance, taking into account changes in the regulatory and economic

environment as well as the financial markets in the country and abroad. For more information see

„

Corporate Governance Declaration“.

DISCLOSURES REGARDING CUSTOMER PORTFOLIO MANAGEMENT AND PROVISION

OF INVESTMENT ADVICE

Pursuant to Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November

2019 on sustainability-related disclosures in the financial services sector (Regulation (EU) 2019/2088 –

SFDR), First Investment Bank, as an investment firm managing individual customer portfolios and

providing investment advice, falls under the scope of harmonized requirements for public disclosure

of information regarding the integration of sustainability risks into its investment decision-making.

The Bank publishes the required information on its corporate website at:

https://www.fibank.bg/bg/chastni-lica/spestjavanija-i-investicii/investicionni-uslugi-i-dejnosti.

Information includes the Bank's policy for integrating sustainability risks, the consideration of adverse

sustainability impacts, the sustainable investment objectives, and the environmental and social

incentives in investment decision-making. The information is subject to periodic review and

compliance assessment, taking into account the nature and scope of the activity, as well as the type of

financial products offered by the Bank.

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ETHICAL ISSUES

CODE OF ETHICS

In order to establish the professional and ethical standards required and applicable to the Bank as a

business entity, place of work and credit institution, First Investment Bank has a Code of Ethics which

defines the basic principles, ethical norms and corporate values on which the policies and business

plans, rules, procedures and daily operations are built.

The activity of the Bank is based on the following principles:

Knowledge and observance of current legislation, moral norms and customs, respect for human

rights;

Loyalty and commitment to the mission and values of the Bank;

Responsible attitude towards work obligations, good faith, transparency and impartiality;

Correctness, high ethics, care and respect in customer relations;

Observance of office hierarchy, proper execution of management orders, mutual respect and

tolerance in relations with peers and subordinates, teamwork;

Avoidance of personal or political biases in the performance of official duties.

RESPONSIBILITY AND COMPLIANCE

First Investment Bank operates in accordance with the current national and European regulations and

other regulatory requirements, according to the established standards of practice and in accordance

with the internal regulations. The Bank takes all necessary measures to ensure that in the performance

of their duties the members of the management and supervisory bodies of the Bank and all employees

act in accordance with the applicable regulatory requirements and the adopted moral and ethical

standards of behavior so as to minimize risks associated with the activities of the institution.

In accordance with the effective legislation the banks in the Republic of Bulgaria implement measures

to prevent the use of the financial system for the purposes of money laundering and terrorist financing.

The measures applied by First Investment Bank aimed at ensuring reliable prevention in accordance

with the regulatory requirements in cooperation with other organizations and government bodies. In

addition, the principle "Know your client" is a condition for offering appropriate service tailored to the

individual needs of each client, as well as contributes to managing risks from illegality operations.

First Investment Bank applies written rules and policies to identify, assess, manage and mitigate

current and potential conflicts of interest. The organization of working process in the Bank is meant to

minimize the possibility of situations relating to conflicts of interest, as in line with the Code of Conduct

of Fibank the employees are obliged to put the interests of the Bank and its clients above their own

interests, while keeping confidentiality of information and protection of personal data. Measures and

actions are also structured for preventing frauds and corruption practices.

WHISTLEBLOWING

The Bank, led by the understanding that following a lawful and ethical conduct in relations between

managerial staff, employees, customers and partners of the Bank is an important aspect underlying its

overall activity, has in place a whistleblowing policy.

The Policy aims to systematize the means and procedures for internal sharing of information where

there are suspicions of unlawful actions, or problems related to the work process, thereby ensuring

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their transparent and fair consideration and resolution, while securing needed care and protection of

the rights of the persons submitting the signals.

The creation of conditions for reporting in an environment of trust and respect, as well as for carrying

out consistent and impartial actions to verify the received reports, is a key element in preserving the

Bank's high corporate spirit and reputation.

In accordance with legal regulations and good practices, First Investment Bank discloses in its Annual

Reports non-financial information that represents a Non-financial statement within the meaning of

Art. 48 of the Accountancy Act, including with regard to sustainable development and the related

ecological, social and government issues, the human capital and the diversity policies in place,

description of business development and products, corporate governance practices and ethical issues,

as well as information on business model, products and development priorities – for more information

see also sections „Mission and development priorities“, „Fibank profile“, „Highlights 2022“,

„Distribituion channels“, „Information technology“, „Human capital“, „Corporate governance“,

„Business review“, „Development priorities“.

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HUMAN CAPITAL

In 2022, Fibank's human capital management processes and activities developed intensively and

effectively, in response to the growing business requirements and the dynamic labor market

environment. An emphasis was placed on operational efficiency, optimization of key internal people

management processes, implementation of innovative approaches and initiatives for enhancing work

performance, and motivation of employees and teams to achieve high results.

During the year, goals and priorities in human resource management were mainly related to proactive

support of business. HR procedures and practices were optimized in the selection, training and

structural development, in determining and developing of remuneration, and in other operational

aspects with a view to achieving higher efficiency and added value for business.

In 2022, projects and initiatives were launched also in other important areas of human capital

management at Fibank. Activities were carried out within the framework of an Employer Branding

project. It is part of the long-term strategy for positive positioning of the Bank among different

audiences through a large-scale communication and advertising media campaigns.

Another project during the year involved the implementation of a new labor performance

management module in the personnel management information system. It aims at achieving higher

operational efficiency in the process of performance assessment and development, at providing

timely, objective and useful feedback to employees, as well as at facilitating and assisting the Bank's

managers in exercising one of their primary administrative responsibilities.

Implementation of measures to ensure and maintain a safe and secure working environment, to

adequately and successfully respond to challenges related to the epidemic situation with the aim of

protecting the health of the Bank's employees and customers, continued to be among the priorities

in human resource management.

During the period, significant training initiatives and projects were carried out having long-term

impact on the motivation and performance of employees and teams in the Bank, including:

Training in development of customer interaction skills: advice, sales and customer service.

Practically oriented training for front office employees and loan officers which began in 2021 and

was successfully completed in 2022. The main emphasis was on development of skills for successful

and proactive customer-oriented communication when offering and selling products, with the aim

of maximizing benefits for both the customers and the Bank. The program relied on interactive

approach when presenting information such as role-playing games, use of video aids, involvement

of employees in discussions and sharing successful experiences. The training project proved

Fibank's aspiration to remain a leader in customer service, as well as its readiness to support and

motivate employees using practical and benefit-oriented models and methods for training and

development.

Training in Fibank investment products. Developing the skills of front office employees and loan

officers at the Bank's branches to offer and sell useful product solutions to Fibank customers, in

line with current trends and challenges in the banking sector.

Training in effective team interaction. An innovative training project using interactive business

simulation methodology, with the participation of Fibank senior managers/key staff.

Introductory trainings for new employees have proven their importance and continue to be held.

They cover all the main areas and topics necessary for introduction to the work specifics and the

Bank's operations, including corporate governance, ethical requirements and code of conduct,

internal control functions (risk management, compliance and internal audit), measures against

money laundering and terrorist financing, systems, business activities, etc.

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The successful practice continued of conducting multiple electronic distance learning courses.

During the year, over 1,200 employees received distance training in various areas including credit

products for small and medium-sized enterprises, new system for electronic signing by customers,

financial instruments and investment brokerage, operational risk, introductory training for new

employees, and information security.

The Bank continued to invest in the professional development of its staff by financing the

participation of 10 employees in the master’s program in Banking Management and Investment

Activity carried out jointly with the Higher School of Insurance and Finance (HSIF), with a focus on

building partnerships and integrating business with education.

In 2022, over 67% of Fibank's employees enrolled for various forms of training in one or more areas.

During the year, the consistent efforts continued

to encourage and motivate employees for higher

achievements, to recognize personal

contribution, as well as to confirm work behaviors

important for the success of the Bank. For the

seventh consecutive year, the Together We Can

Do More program was held. The number of employees awarded for the entire existence of the

program reached 139.

The Fibank & Cook Academy was carried out: a project created especially for the employees of the

Bank as a unique monthly live culinary online show with the participation of special guests such as

famous chefs, popular personalities, singers and actors. The objective was to create a positive and

motivating experience and strengthen the bonds between employees in a close-knit community of

colleagues, associates and friends.

As at 31.12.2022, the number of staff of First Investment Bank on an individual basis amounted to

2,454 employees compared to 2,466 a year earlier. At the end of the year, 25% of the Bank's employees

were under the age of 35, and 60% were under the age of 45.

The predominant part (73%) of the Bank's employees were women. The share of women with

managerial functions (department directors, branch managers, unit leaders) amounted to 46%.

NUMBER OF STAFF STRUCTURE OF STAFF

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POLICY FOR NOMINATION AND SUITABILITY ASSESSMENT

In 2022, the Policy for nomination and assessment of the suitability of members of the managing and

supervisory bodies and persons holding other positions was updated, mainly in terms of the internal

tools related to its implementation (questionnaires and matrices for individual and collective suitability

assessment for the purpose of initial and subsequent suitability assessment). The internal framework

in this sphere is in line with the requirements and good practices, incl. the Law on Credit Institutions,

Ordinance No 20 of the BNB on Issuance of Approvals to Members of the Management Board (Board

of Directors) and Supervisory Board of a Credit Institution and Performance Requirements for Their

Duties and the joint EBA and ESMA Guidelines on the assessment of the suitability of members of the

management body and key function holders (EBA/GL/2021/06).

The Policy sets out the basic requirements, principles, guidelines and criteria for selection and

assessing the individual and collective suitability of members of the bodies of First Investment Bank

who have management and supervisory functions, as well as with regards to the key function holders

within the Bank. The Policy structures and identifies the essential fit and proper requirements and

criteria (incl. with respect to needed knowledge, skills and experience; reputation, honesty and

integrity; independence and allocation of enough time for performing of duties; as well as the practices

for encouraging diversity, succession planning and training), so that they to a maximum extent meet

the high standards applied by the Bank with a view to making an adequate contribution to the

realization of its objectives and strategy.

The Bank applies a policy for encouraging diversity with respect to Supervisory Board and Managing

Board in order to maintain a diverse group of board members and to provide diverse views and

experience to facilitate independent opinions/decisions and sound governance, which includes various

aspects such as work experience, educational qualifications, gender, age, geographical diversity. With

respect to the composition of the bodies, the Bank seeks to maintain a target level of 30% of the

members of the Supervisory Board and of the Managing Board to be from the underrepresented

gender, as if necessary rounding off (down) to an integer. As of 31 December 2022, the Bank fulfilled

the set target in the policy. For further information regarding diversity, see sections

Supervisory Board

and Managing Board.

In 2022, Fibank representatives took part in the Women On Boards forum organized by the Women's

Forum Association. At it, various legal and financial aspects of gender equality and balance in corporate

governance bodies in Bulgaria and the European Union were discussed. Valuable experience was

shared by participants in the event which included ambassadors, delegates and business

representatives from the fields of law, banking, information technology, marketing, etc.

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INFORMATION TECHNOLOGY

Developing information technology and maintaining a modern infrastructure, information and

technology environment is among First Investment Bank’s strategic priorities. Over the years, the Bank

has systematically and consistently invested in technologies in line with the latest trends in banking,

enabling it to offer innovative products and multifunctional solutions to customers. In 2022, Fibank

continued to develop in this direction, strengthening its position among the most technological and

innovative institutions in the Bulgarian banking market.

A number of projects were implemented during the year, including:

instant payments (up to 10 seconds) in BGN under the Blink scheme;

electronic signing of documents using e-Sign pad in the branch network;

optimizing the daily processing of transfers in the BISERA6 system;

joining the updated STEP2-T Continuous Gross Settlement (CGS) system operated by EBA Clearing,;

implementing a new Business Process Management (BPM) system in business lending;

updating the hardware and software infrastructure of the card system;

introducing a new internal bank system to optimize the accounting process.

Fibank was among the pilot banks to launch instant payments (up to 10 seconds) in BGN under the

Blink scheme. They are made through the Bank’s electronic banking channels 24/7, 365 days a year. In

implementation of the consistent policy for development of digital services, the option for electronic

signing of documents using e-Sign pads was provided in the Bank's offices which speeds up payment

processing and helps improve customer service.

Fibank joined the BORICA project for modernization and optimization of the integrated system for

electronic payments (BISERA6) by switching to XML format according to the ISO20022 standard, with

the aim of improving the daily processing of transfers in BGN. The project for real-time gross

settlement of credit transfers in euro under STEP2-T Continuous Gross Settlement (CGS) system

operated by EBA Clearing was also successfully completed.

With the implementation in 2022 of the IBM software solution Business Automation Workflow, the

process of lending to individuals and legal entities was optimized through the new Business Process

Management (BPM) system. It covers the steps of accepting loan applications, preparing opinions,

approval and disbursement of new loans, as well as renegotiation of existing loans. The applicable

A smile at the beginning of every working day

Boryana Petkova, Head of SU „Project Management”

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limits and authority levels for approval/renegotiation of various types of credit exposures are

integrated in the system.

The hardware and software infrastructure of the card system was upgraded and a number of new

features were introduced, including immediate issuance of virtual credit and debit cards and improved

security of card payments.

In 2022, a new internal banking system was implemented to automate operations, reduce processing

time and optimize the accounting process. During the year, a new communication infrastructure was

built in connection with the relocation of the Bank's headquarters to a new state-of-the-art building.

The core banking information system Oracle Flexcube version 12 features universal modules for retail

banking, corporate and investment banking, and an integrated BPM module used for processing and

approval of loan applications, acceptance and registration of currency transfers and authorization of

other payment transactions. The system is built in compliance with all risk control principles, including

the four eyes principle applied in day-to-day operations. Through its centralized and integrated IT

infrastructure, the Bank aims to provide first-class service and high level of security in the execution of

banking transactions, as well as to maintain reliable databases, networks and systems ensuring

continuity of services and key processes.

Taking into consideration the importance attached by the Bank to information technology, the activity

is managed by Chief Information Technology and Operations Officer. In addition, there is an IT

committee functioning as an auxiliary body to the Management Board. It monitors the IT strategic

program implementation, the IT project portfolio, the targeted use of resources and the spending of

the approved budget. The committee is chaired by the Chief Executive Officer, the remaining members

including the Chief Retail Banking Officer, the Chief Information Technology and Operations Officer, as

well as the directors of the Information Technology, Information Security, Digital Banking, Small

Enterprises Banking, and Finance departments.

Tellers

Mobile

App

Web

ATMs

Kiosks

Security / routing

Reporting

Other services

Third party providers

General

Ledger

Lending

Retail banking

Teller

FX operations, letters

of credit and others

BPM Payment services

FLEXCUBE

Issuing Acquiring

Risk

management

Dispute

management

CARD SYSTEM

CORE BANKING INFORMATION SYSTEM

SYSTEMS MAP

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BUSINESS REVIEW

RETAIL BANKING

DEPOSITS

In 2022, attracted funds from individuals increased and reached BGN 7,260,749 thousand compared

to BGN 6,993,994 thousand a year earlier, mainly driven by the 25.1% increase in current accounts

which reached BGN 2,859,322 thousand (2021: BGN 2,275,583 thousand). Such results were

determined by the consistent policy of the Bank for establishing long-term customer relationships,

while developing cross-selling and transaction business. At the end of the 2022 they increase their

shares and formed 39.4% of the of attracted funds from individuals (2021: 32.5%)

Fibank offers a wide range of current accounts, including the IQ current account, as well as accounts

tailored to the specific needs of certain customer groups such as condominiums, notaries, insurance

brokers and agents, private enforcement agents, etc. The Bank offers banking packets and programs,

inlc. My Choice, My Choice Online, Digital Me, Digital Me+. Among the saving accounts is also the Gold

Account , an innovative product for purchase, sale and keeping of dematerialized gold (XAO).

The Bank's policy is aimed at building a stable deposit base by offering a variety of flexible deposit

products, while maintaining high standards of customer service. Fibank maintained the interest rates

on its savings products in line with the market conditions and the competitive environment, as well as

the high liquidity levels.

By the end of the 2022, term deposits and savings accounts were in the amount of BGN 4,401,427

thousand (2021: BGN 4,718,411 thousand), with borrowings from individuals retaining a major share

at 60.6% (2021: 67.5%). With a view to diversifying its sources of funds, the Bank participates in the

international platform WeltSparen by Raisin aimed at attracting deposits from foreign persons.

In terms of attracted funds from individuals First Investment Bank was placed fifth among banks in the

country as at the end of December 2022 (2021: fifth). As at the same date the market share of the

Bank amounted to 9.77% on an individual basis (2021: 10.27%), influenced by the policy for limiting

the growth of attracted funds and optimization of the liability structure.

DEPOSITS TO INDIVIDUALS

BY CURRENCY

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As an alternative to deposit products, the terms of the Perspective term product were optimized

during the year. This is a senior unsecured debt product with a fixed yield, intended for individuals and

business customers. Other alternative products with different maturities were also offered during the

period: the Gold Portfolio and the Eco Portfolio, tied respectively to the price of gold and to bonds

backed by green projects.

LOANS

The gross loan portfolio of retail banking increased by 10.1% to BGN 2,334,010 thousand compared to

BGN 2,120,134 thousand for the previous year, as a result of an increase in mortgage and consumer

loans.

BGN th / % of total

2022

2021

Mortgage loans

1,128,416

48.4

986,104

46.5

Consumer loans

1,063,724

45.6

982,976

46.4

Credit cards

138,855

5.9

148,037

7.0

Other programs and secured financings

3,015

0.1

3,017

0.1

Total loans to individuals

2,334,010

100

2,120,134

100

MORTGAGE LOANS

As at the end of December 2022, mortgage loans increased by 14.4% to BGN 1,128,416 thousand

compared to BGN 986,104 thousand a year earlier, increasing their share to 48.4% of the retail loan

portoflio (2021: 46.5%). As at 31 December 2022, the market share of the Bank in this segment was

6.23% (2021: 6.37%), as Fibank was placed sixth among banks in the country on an individual basis

(2021: sixth).

During the year, promotional campaigns were organized with

the aim of stimulating sales in the retail banking segment. In May

2022, a promotional mortgage loan was launched financing up

to 90% of the market value of the property. The option for online

loan application through My Fibank electronic banking was

provided, as well as the Video Consultation service.

During the period, a new mortgage loan was developed for local

individuals with income from abroad (EU, EEA, Switzerland,

Great Britain, USA and Canada), financing up to 70% of the

property's market value, with a term of up to 25 years.

A new Sustainable Future mortgage loan for businesses and individuals was also launched during the

year. It is intended for purchase of real estate with high energy efficiency class (A+, A or B) which

contributes to lowering household expenses and encourages environmental protection and

sustainability.

Fibank will put efforts for additional development of its distributional channels for its credit products

and will continue to develop and offer flexible credit products for individuals with the aim at attracting

new clients and offering supplementary products and services

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CONSUMER LOANS

Consumer loans increased by 8.2% to BGN 1,063,724 thousand (2021: BGN 982,976 thousand),

contributors being the competitive terms offered by the Bank, the easy loan application procedures,

incl. via the digital channels and the development of new products and programs in line with customer

needs and market necessities. They formed 45.6% of the gross retail banking portfolio (2021: 46.4%).

A new Career Start consumer loan was launched during the year,

designed for university graduates up to the age of 30, without

requirements for income or minimum work experience.

A new consumer Super Loan was also offered, with loan amount

up to BGN 80,000 and a term of up to 7 years.

As part of the strategy for development and digitization of

services, aimed at additional convenience for customers and

contributing to a sustainable future, online offering of consumer

loans continued with the option for remote signing documents via

electronic signature, including through mobile apps of third-party authentication service providers.

In 2022, a new Overdraft Express was developed for pre-approved customers via the electronic

banking and the My Fibank mobile application. At the end of the year, offering of a new Comfort

Overdraft started at the Bank's offices. This is a current account overdraft with a fixed amount of BGN

1,000, without a requirement for salary transfer at the Bank.

First Investment Bank’s market share in this segment amounted to 8.02% (2021: 8.56%) at the end of

December 2022, and Fibank was fifth (2021: fifth) in terms of consumer loans among banks in the

country on an individual basis.

CREDIT CARDS

The utilized limits on credit cards were in the amount of BGN138,855 thousand at the end of the period

(2021: BGN 148,037 thousand). Fibank develops various and innovative card products and services,

including thematic campaigns to promote and attract new customers, which were organized in

implementation of the Bank’s consistent and long-term policy for stimulating these non-cash

payments. The relative share of loans utilized through credit cards in the total retail loan portfolio

amounted to 5.9% (2021: 7.0%).

There were new card products and promotional offers started during the year, including a new

opportunity for deferral of payments with credit cards via the digital channels of the Bank.

In pursuance of its strategic plans, the Bank continued to develop its operations with a view to more

effective management of the customer portfolio and targeting individual customer groups, as well as

identifying additional cross-selling opportunities. For further information see section „

Card payments“.

CORPORATE BANKING

DEPOSITS

Attracted funds from corporates and institutions in 2022 increased by 45.5% to BGN 3,537,701

thousand (2021: BGN 2,431,257 thousand). The increase in volume reflected mainly in the current

accounts reaching BGN 3,157,892 thousand at the end of 2022 (2021: BGN 1,996,496 thousand) and

forming 89.3% of the attracted funds from business customers and institutions (2021: 82.1%). The

uncertain external environment and the related descrease in the investment activity of companies

contibuted to the increase, as well as the optimized conditions for maintainance of business customers

accounts.

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Term accounts reached BGN 379,809 thousand (2021: 434,761 thousand) at the end of the period,

forming 10.7% of the attracted funds from corporates and institutions (2021: 17.9%). First Investment

Bank offers a variety of savings products for business customers which constantly adapts to market

conditions and specific company requirements. Fibank offers also package programs and services,

giving opportunities for optimization of costs and procedures in using different banking services.

In 2022 in order to expand possibilities to business customers, the Bank continued to offer alternative

saving products such as product “Perspective”, as well as products tied to the price of gold or to a

portfolio of green bonds.

As at 31 December 2022, funds attracted by the thirty biggest non-banking clients represented 12.43%

of the total amount due to other customers (2021: 7.82%).

LOANS

The portfolio of loans to enterpises decreased by 4.8% to BGN 4,433,299 thousand at the end of 2022,

compared to BGN 4,659,187 thousand a year earlier, as result mainly of decreasing the loans to large

enterpises, pursuant to business goals and diversification strategy through priority development in the

micro, small and medium-sized segments.

Loans to micro enterprises increased their share up to 4.5% (2021: 3.9%) of all business loans, loans to

small enterprises – to 19.8% (2021: 18.9%), loans to medium-sized enterprises – to 24.5% (2021:

24.1%), at the expense of large enterprises, which decreased to 51.2% (2021: 53.1%) of all business

loans.

BGN th / % of total

2022

2021

Micro enterprises

198,538

4.5

182,625

3.9

Small enterprises

878,135

19.8

878,125

18.9

Medium-sized enterprises

1,085,974

24.5

1,123,631

24.1

Large enterprises

2,270,652

51.2

2,474,806

53.1

Total loans to enterprises

4,433,299

100

4,659,187

100

DEPOSITS FROM BUSINESS CUSTOMERS

BY CURRENCY

26%

34%

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During the year, a reorganization of the business units engaged in credit activity was carried out in

view of the customer segmentation applied by the Bank. It corresponds to the European requirements

for defining micro, small and medium-sized enterprises, which were transposed by the Law on Small

and Medium-sized Enterprises. Criteria for annual sales revenue

and/or assets, number of staff and

maximum exposure to the customer are applied.

As at 31.12.2022, a leading share in the portfolio structure had the loans to manufacturing sector

(2022: BGN 1,263,715 thousand, 2021: BGN 1,296,309 thousand), the trade sector (2022: BGN 691,864

thousand, 2021: BGN 718,868 thousand,) and the services sector (2022: BGN 602,983 thousand; 2021:

BGN 643,781 thousand), forming respectively 18.7%, 10.2% and 8.9% of total loans (2021: 19.1%,

10.6% and 9.5%). Such dynamics reflected the economic activity in the country, as well as the

development goals and diversification of the activity.

Loans in tourism increased to BGN 302,557 thousand (2021: BGN 280,646 thousand) contributed by

the successful tourism season and recovery in the sector after the COVID-19 pandemic. Loans in

agriculture (2022: BGN 231,850 thousand; 2021: 238,102 thousand), construction (2022: BGN 386,055

thousand; 2021: BGN 390,458 thousand) and finance (2022: BGN 178,683 thousand; 2021: BGN

182,494 thousand), remained similar to levels from the previous year, while decrease was registered

in transport (2022: BGN 224,795 thousand; 2021: BGN 248,112 thousand), infrastructure (2022: BGN

366,385 thousand; 2021: BGN 443,981 thousand) and communication (2022: BGN 107,859 thousand;

2021: BGN 149,011 thousand).

As at the end of December 2022 the market share of Fibank amounted to 9.24% of loans to enterprises

in the banking system (2021: 10.84%), taking fifth place, (2021: forfth) among banks in the country on

an individual basis.

After the Bank implemented an advanced BPM (New Workflow) system for processing retail loans at

the end of 2021, it was also implemented for business loans from mid-2022. The system covers all

steps of accepting loan applications, preparing opinions, approval and disbursement of new loans, as

well as renegotiation of existing loans. The applicable limits and authority levels for approval/

renegotiation of various types of credit exposures are integrated in the system. Automating the lending

Annual sales revenue as follows: micro-enterprises up to BGN 3.9 million; small enterprises up to BGN 19.5

million; medium enterprises up to BGN 97.5 million.

BUSINESS LOAN PORTFOLIO PORTFOLIO BREAKDOWN BY SECTOR

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process aims to increase the quality of customer service, as well as reduce the time for processing

credit applications.

LARGE ENTERPRISES BANKING

In 2022, loans to large enterprises amounted to BGN 2,270,652 thousand compared to BGN 2,474,806

thousand a year earlier, forming 51.2% of the total loans to enterprises and 33.6% of the gross portfolio

(2021: 53.1% and 36.5%).

First Investment Bank provides various financing for large enterprises under the form of working

capital loans, investment loans, guarantees, financing under the programs and funds of the EU, under

the National Guaranteed Fund, factoring services and others.

The Bank offers factoring services to existing and potential business customers, including companies

delivering of goods or providing services with deferred payment in the country or abroad. First

Investment Bank is a member of Factors Chain International (FCI), a global network of leading

commercial finance companies and can provide export factoring without recourse, as well as import

factoring. The Bank maintains cooperation with leading financial institutions in factgoring insurance.

In the area of commercial finance, First Investment Bank has a framework agreement in place with the

Taiwan export insurance agency Eximbank Taiwan for financing deliveries of goods from Taiwanese

suppliers to customers of First Investment Bank in Bulgaria or abroad.

The Bank maintains cooperation with the Bulgarian Export Insurance Agency (BEIA), with which it has

agreement for portfolio insurance, used as part of the techniques for mitigating credit risk.

SMALL AND MEDIUM-SIZED ENTERPRISES BANKING

In 2022, loans to small and medium enterprises

amounted to BGN 1,964,109 thousand (2021: BGN

2,001,756 thousand) or 44.3% of the business loans, from which to small enterprises were BGN

878,135 thousand (2021: BGN 878,125 thousand), and loans to medium-sized enterprises – at BGN

According to business segments of the Bank, incl. criteria for annual turnover, as well as: microenterprises –

up to BGN 3.9 million; small enterprises – up to BGN 19.5 million; medium-sized enterprises – up to BGN 97.5

million.

LARGE ENTERPRISES BANKING

SHARE OF LOANS TO LARGE ENTERPRISES IN

THE GROSS LOAN PORTFOLIO IN 2022

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1,123,631 thousand (2021: BGN 1,085,974 thousand). For the bank’s policy on this segment

contributed the developed loan products and competitive terms offered in the products for SME

clients, as well as the various solutions related to the programs and funds of the EU and the other

guarantee schemes and financing.

During the year Fibank actively offered new products in the field of sustainable financing: the Green

Transport loan intended for purchase of new electric vehicles by business customers (financing up to

90% of the vehicle price and term of up to 7 years); the Green Energy - Free Market loan for companies

wishing to invest in the construction of photovoltaic systems for production of electricity for free

market sale (investment loan with a long term: up to 15 years and a grace period until commissioning

of the photovoltaic installation); and the Green Energy - Own Use loan for construction of photovoltaic

systems generating electricity for own consumption or for sale (financing up to 100% of construction

costs and term of up to 10 years). The new credit products are in fulfillment of the policy undertaken

by the Bank to reduce the carbon footprint and invest in sustainable development. For more

information see the

Sustainable Development section.

In 2022, First Investment Bank started granting loans under the Financing in Rural Areas instrument

based on an agreement with the Fund Manager of Financial Instruments in Bulgaria under the Program

for the Development of Rural Areas 2014-2020, financed through the European Agricultural Fund for

Rural Development. The program is intended for farmers, agro-processors, as well as micro, small and

medium-sized enterprises from all sectors operating in rural areas, the application deadline being 31

December 2023. Loans cover both new private investments and co-financing of projects supported by

grants. The instrument offers investment loans (with term up to 10 years), as well as and working

capital loans (up to 5 years) that complement the investment and are related to it. Investment loan

amount is up to BGN 2 million, while the maximum amount of supplementary working capital loans is

30% of the total investment or BGN 391,166, subject to compliance with requirements and restrictions

for state aid.

At the end of the year, Fibank offered SME lending at more favorable terms regarding loan collateral,

under a portfolio guarantee agreement with the National Guarantee Fund. The agreement covers both

investment and working capital loans. For more information see the

External Programs and Guarantee

Schemes section.

LOANS TO SME ENTERPRISES

SHARE OF LOANS TO SMEs

IN THE LOAN PORTFOLIO IN 2022

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For SME financing, First Investment Bank maintains cooperation with other institutions, including the

National Agricultural Fund and the Bulgarian Export Insurance Agency. Throughout the year, the Bank

increased its efforts in offering factoring services to Bulgarian companies as an alternative to working

capital loans.

MICROLENDING

In 2022, the microlending portfolio grew up to BGN 198,538 thousand compared to BGN 182,625

thousand a year earlier. The Bank continued its targeted efforts for development with priority in this

segment.

The Microlending Program

of First Investment Bank covers a wide range of retailers, manufacturers,

farmers, freelancers, including start-ups and companies with less market experience. The Bank offers

specialized products for micro enterprises including investment loans, working capital loans, business

credit cards and overdraft facilities at competitive terms.

In 2022, Fibank's Smart Lady program celebrated its fourth anniversary. It supports women

entrepreneurs, mainly targeting micro enterprises run or owned by women, as well as businesses

whose products and/or services are aimed at women. Over 1,100 projects worth over BGN 120 million

were financed during the period, enabling women entrepreneurs to create new or develop existing

businesses in areas such as education, advertising, production, agriculture and services. As part of the

program, the Sustainable Lady fund was created jointly with Mastercard in support of innovative green

projects of female entrepreneurs. For more information see the

Sustainable Development section.

During the period continued the provisioning of investment and working capital loans at more

favorable terms under the Microcredit with Shared Risk program funded by the Human Resource

Development Operational Program and co-financed by the European Social Fund and the Youth

Employment Initiative. The instrument is in support of start-ups and businesses that develop social

activities or offer services generating positive social impact.

According to business segments of the Bank, incl. criteria for annual turnover, as well as: microenterprises –

up to BGN 3.9 million; small enterprises – up to BGN 19.5 million; medium-sized enterprises – up to BGN 97.5

million.

MICROLENDING

SHARE OF MICROLENDING

IN THE LOAN PORTFOLIO IN 2022

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The Bank has policy for supporting agricultural producers, as well as tailored financing solutions

towards individual sectors or business areas with high development potential, incl., IT companies,

medical and dental practices.

EXTERNAL PROGRAMS AND GUARANTEE SCHEMES

First Investment Bank offers a wide range of products and services related to participation in external

programs and guarantee schemes, including ones financed under EU operational programs.

In 2022, Fibank began to provide loans according to

agreements signed with the Fund of Funds under

three separate positions of the Financing in Rural

Areas instrument, funded under the Program for the

Development of Rural Areas 2014-2020. First

Investment Bank is the sole contractor under the

instrument with a total loan amount of over BGN 70

million, aiming to increase investment in rural areas.

Loans are provided for agricultural and non-

agricultural activities in rural areas to increase the

competitiveness of the agricultural sector, as well as

to promote social inclusion and support for

sustainable development of agricultural holdings.

In October 2022, First Investment Bank signed a new portfolio guarantee agreement with the National

Guarantee Fund for financing of micro, small and medium-sized enterprises in Bulgaria through a risk

sharing mechanism. The guarantee covers both investment and working capital loans and allows for

more favorable terms regarding loan collateral, making it easier for borrowers to receive the desired

financing in full. The maximum guaranteed portfolio amount is BGN 20 million.

During the year, the implementation continued of the program in support of start-ups, social

enterprises and entrepreneurship among vulnerable groups under the Microcredit with Shared Risk

instrument of the Fund Manager of Financial Instruments in Bulgaria, funded by the Human Resource

Development Operational Program 2014-2020.

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PAYMENT SERVICES

In 2022 First Investment Bank was a member and participant in payment systems and agent of other

payment service providers, as follows:

Bank Integrated System for Electronic Transactions (BISERA);

Real-Time Gross Settlement System (RINGS);

System for Servicing of Clients Transfers in Euro (BISERA7-EUR);

Trans-European Automated Real-Time Gross Settlement Express Transfer system (TARGET2);

Pan-European system for payments in Euro (STEP2 SEPA Credit Transfer), as a direct participant

through EBA Clearing;

Bank Organisation for Payments Initiated by Cards (BORICA);

Agent of Western Union;

Agent of Easypay.

In accordance with digitalization trends the usage of e-payments continued to grow in 2022, as the

shares of transfers via the digital channels (e-banking and mobile banking) increased to over 86% of all

outgoing transfers of the Bank (2021: 80%; 2020: 75%; 2019: 67%).

During the period, Fibank joined the project for modernization and optimization of the integrated

system for electronic payments in BGN (BISERA) by switching to XML format according to the ISO20022

standard.

At the beginning of the year, First Investment Bank offered an innovative service for instant payments

(up to 10 seconds) in BGN under the Blink scheme. It is available in My Fibank electronic banking, and

from June 2022 – also in the Bank's branch network. The service allows transfer of amounts up to BGN

30,000. During the year, the implementation was prepared of the Blink P2P instant transfer service

which allows instant money transfers using a mobile phone number. The service was launched after

the reporting period, in January 2023, in the My Fibank mobile application. For more information, see

the

Subsequent Events section.

OPEN BANKING

First Investment Bank has constantly developed its “Open Banking” related services deriving from the

Law on Payment Services and Payment Systems (LPSPS) and Ordinance No 3 of BNB, implementing the

requirements of Directive (EU) 2015/2366 for the payment services within the internal market (PSD2).

The Bank maintains test and production environment, providing opportunity for testing the access to

the special interface (API), as well as providing by the Third Party Providers (TPPs) of the Payment

Initiation and Account Access Information services. Aiming on providing wider awareness for the

customers an actual Terms for Access and Use of First Investment Bank’s API Portal are being

maintained, as well as General Terms and Conditions for securing access for Third Party Providers to

accounts of customers held in Fibank.

Aiming to expand and integrate the services offered to clients, First Investment Bank provides the

usage of this type of services through the Mobile Application My Fibank. This option secures quickness

and convenience for clients when accessing consolidated information for their account serviced at

another payment service provider or when initiating payment from such accounts.

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CARD PAYMENTS

In 2022, First Investment Bank developed its card business in line with customer needs, modern

technologies and digitization processes, as well as in compliance with the regulatory requirements,

aiming to increase the security of card transactions.

During the year, the card system was updated, including the hardware and software infrastructure,

with the aim of implementing new functionalities and increasing security by using modern

technologies, such as the EMV 3DS2 protocol for ensuring

secure card payments over the Internet.

As regards the requirements for strong customer

authentication (SCA), Fibank applies different payment

confirmation methods depending on the individual preferences

of customers, provided they meet regulatory requirements and

mandatory elements. They include the new embedded

software token solution launched in My Fibank application

during the year, a combination of dynamic password sent via

SMS and a static password, as well as biometric authentication

(fingerprint/face recognition) performed on a registered mobile

device.

During the period, a new virtual debit card was developed: the Debit Instant Card which is issued

immediately, completely online, through the My Fibank mobile application. The card is intended for

making payments online or through other remote methods, including smart mobile devices. An option

was provided to digitize payment cards, including in third party apps, e.g. payments using smart

watches, Garmin Pay and Fitbit Pay services, as well as Google Pay and Apple Pay digital wallets.

A new functionality was developed allowing to apply for rescheduling credit card debt from POS

payments, including virtual POS payments, to equal monthly installments. A lottery was held for Visa

credit card holders, offering them the chance to win 100% cashback on card payments during the

period up to a maximum of BGN 4,000.

The Bank continued to develop the functionalities and quality of its ATM network. During the year,

voice menus were successfully added to some ATMs located in major cities across the country to

facilitate their use by visually impaired people. The Bank’s ATM network consisted of 604 devices the

at the end of the year (2021: 621), and the POS network of 9,082 devices (2021: 8,973).

As part of its sustainable banking policies, at the end of the year First Investment Bank began replacing

all its plastic debit and credit cards with new ones made from a recyclable material and featuring a

new design, associated with sustainable development ideas. For more information see the

Sustainable

Development section.

As recognition for the achievements in the field of card payments, Fibank’s Debit Mastercard Platinum

was awarded as Product of the Year in the Premium Card Products category of the international

Product of the Year competition, carried out through an independent nationally representative survey

conducted by the NielsenIQ research agency.

INTERNATIONAL PAYMENTS

First Investment Bank is among the leading banks in Bulgaria in the sphere of international payments

and trade financing. Fibank is a popular, reliable and fair business partner which has built a good

reputation over the years among international financial institutions and has gained valuable

experience and know-how from its numerous international business partners, investors, customers,

and counterparties.

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In 2022, the Bank reported an increase of 5% in incoming and 16% in outgoing foreign currency

transfers due to the conditions of the environment and the competitive conditions offered by the Bank,

as well as the high quality of customer service.

First Investment Bank has a wide network of correspondent banks, through which it carries out

international payments and trade financing operations in almost all parts of the world. The Bank

executes cross-border currency transfers through SWIFT, and since September 2019 also through the

platform SWIFT gpi (Global payment initiative) which improves the speed and the traceability of the

cross-border transfers. Fibank executes transfers through the following payment systems: TARGET2

and BISERA7-EUR and since April 2017 the Bank executes credit transfers as a direct participant in the

system STEP2 operated by EBA Clearing. Fibank operates in receiving and issuing of checks and

performing various documentary transactions.

In June 2022, First Investment Bank joined the updated STEP2-T Continuous Gross Settlement (CGS)

system operated by EBA Clearing which optimized the execution of SEPA credit transfers. The Bank

continued work along the Trans-European Automated Real-time Gross settlement Express Transfer

system (TARGET), a new generation system built through the consolidation and optimization of

TARGET2 and TARGET2-Securities. It applies modern approaches and technological innovations,

allowing for reduction of combined operating costs and improvement of liquidity management across

services.

The Bank has framework agreement with the Taiwan export insurance agency Eximbank Taiwan for

financing deliveries of goods to clients of First Investment Bank in Bulgaria or other countries where

the Bank has branches or subsidiaries. Under the agreement, Fibank can provide financing under

amount of every individual credit - up to 100% of the value of the contract but not exceeding USD 2

million, with a period of utilization up to 6 months after the first shipment and a repayment term of 6

months to 5 years irrespective of the type of the goods (consumer or non-consumer) upon retaining

the current interest index (6m USD Libor) up to 30.06.2023 and replasing it with 6m SOFR afterwards.

In support of its clients with international business First Investment Bank continued to cooperate in

issuing internationally acknowledged guarantees and letters of credit, incl. through a wide network of

partner banks and institutions. During the reporting period, the letters of credit and bank guarantees

in foreign currency issued by the Bank to guarantee the performance of its customers to third parties

amounted to BGN 86,758 thousand (2021: BGN 71,626 thousand), forming 8,5% of the off-balance

sheet commitments of the Bank (2021: 8.8%).

GOLD AND COMMEMORATIVE COINS

In 2022, First Investment Bank confirmed its leading position in Bulgaria in terms of transactions and

investment advice in the area of precious metals. Interest in the bars and coins offered at the Bank's

offices and in the online Gold & Silver store continued to grow due to the uncertainties of the external

environment.

Revenues from the sale of investment gold and other precious metal

products amounted to BGN 2,070 thousand for 2022, compared to BGN

1,349 thousand a year earlier. The reported increase in the number of

transactions and volume of sales mainly came from stronger investor

interest, the change in gold price dynamics on the international markets

being insignificant.

First Investment Bank offers its customers products of investment gold

and other precious metals since 2001. Over the years, it has built

successful cooperation with a number of leading financial institutions

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from around the world: the renowned Swiss refinery PAMP (Produits Artistiques de Métaux Précieux),

the banks UBS and Credit Suisse, the New Zealand Mint, the National Bank of Mexico, the Austrian

Mint, the British Royal Mint, and others.

Jointly with the New Zealand Mint, a new Year of the Rabbit 2023 silver coin was designed, exclusively

available at Fibank offices. As part of the same collaboration, a limited edition coin dedicated to the

30th anniversary of First Investment Bank was created. During the period, new gold and silver bars of

the Swiss refinery PAMP were offered celebrating the Lunar New Year.

In continuation of its long-standing policy of supporting Bulgarian production, Fibank, by agreement

with the BNB, successfully distributes all Bulgarian commemorative coins and coin sets issued by the

National Bank. Interest in them increased in 2022, with the Bank attracting a number of new collectors

and investors as customers.

In carrying out transactions in gold and precious metals, First Investment Bank invariably complies with

all quality criteria of the London Metal Exchange and international ethical trading standards.

PRIVATE BANKING

First Investment Bank has offered private banking to individuals

since 2003, and to corporate customers since 2005. Private

banking features servicing by a designated personal officer, who

is responsible for the overall banking solutions provided to a

customer.

In 2022 the Bank developed its private banking activity with a view to increasing the number of

customers served in the segment, as well as to stimulating the growth of their investment portfolios

and hence the fee and commission income generated. For the reporting period, the number of legal

entities served by the Private Banking Department grew by more than 11%, while the monthly income

from membership fees increased by 14% YoY.

The Personal Banking service, aimed at a subsegment of customers that meet certain minimum

financial criteria, continued to be among the highlights in private banking during the year. It is

implemented through the branch network of First Investment Bank, enabling customers to benefit

Asen Stoychev, Director „Private Banking“ Department

High personal contribution for high results

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from a number of products and personalized services. Those include the Premium and Premium Plus

package offers, featuring preferential terms for traditional banking products and services. In addition,

at certain locations customers may use dedicated Personal Banking officers that provide fast and

competent assistance in all banking transactions. Over the year, Fibank reported a 75% growth in the

number of customers served in the Personal Banking segment.

Private banking customers may also benefit from Fibank’s trusted financial asset management service.

It offers personalized financial strategies structured by professional portfolio managers with

experience in international financial markets and proven skills that may be adapted to customers’

financial condition and personal preferences. In 2022, notwithstanding the market dynamics and

volatility, assets under management grew by 115%, while conservative and balanced management

strategies brought positive results.

CAPITAL MARKETS

In 2022 net trading income amounted to BGN 19,717 thousand (2021: BGN 15,380 thousand), mainly

as a result of the higher income from trade operations related to exchange rates. Other net operating

incomes, arising from debt and capital instruments, amounted to BGN 524 thousand compared to BGN

1,085 thousand a year earlier.

The securities portfolio at the end of the year amounted to BGN 2,598,137 thousand, compared to

BGN 1,482,699 thousand a year earlier, of which BGN 468,247 thousand measured at fair value

through other comprehensive income (2021: BGN 901,155), BGN 267,687 thousand measured at fair

value through profit or loss (2021: BGN 265,405 thousand) and BGN 1,862,203 thousand measured at

amortized cost (2021: BGN 316,139 thousand).

First Investment Bank applies the business model requirements and criteria for classifying financial

assets in the Bank's portfolios according to IFRS 9. Depending on the purpose of financial asset

management, those include: 1) a business model whose objective is to hold assets in order to collect

the contractual cash flows (hold to collect); 2) a business model whose objective is to both collect

contractual cash flows and sell of financial assets (hold to collect and sell); 3) another business model,

where the purpose is different from the two above business models (other business model), where

assets held for trading are also included.

NET TRADING INCOME

OTHER OPERATING INCOME FROM DEBT AND

EQUITY INSTRUMENTS

28%

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The Bank's activity is organized in accordance with the regulatory requirements arising from the

European legal framework in the field of financial markets: Regulation (EU) No 600/2014 of the

European Parliament and of the Council on markets in financial instruments (MiFIR), Commission

Delegated Regulation (EU) 2017/565 supplementing Directive 2014/65/EU of the European Parliament

and of the Council as regards organizational requirements and operating conditions for investment

firms, and Regulation (EU) No 1286/2014 of the European Parliament and of the Council on key

information documents for packaged retail and insurance-based investment products (PRIIPS), as well

as in compliance with the requirements of the Markets in Financial Instruments Act and its

implementing regulations, the regulations in the field of measures against market abuse of financial

instruments, and other applicable legislation.

In pursuance of the requirements arising from Regulation (ЕС) № 648/2012 of the European

Parliament and of the Counsel on OTC derivatives, central counterparties and trade repositories

(EMIR), the Bank has a Legal Entity Identifier (LEI) code 549300UY81ESCZJ0GR95, issued by the Global

Markets Entity Identifier (GMEI) Utility.

In its capacity as an investment intermediary and a primary dealer of government securities, First

Investment Bank carries out transactions with financial instruments in the country and abroad

including transactions in government securities, shares, corporate and municipal bonds, compensatory

instruments as well as money market instruments. The Bank also offers trust portfolio management,

investment consultation, as well as depositary and custodian services to private individuals and

corporates, including maintaining registers of investment intermediaries, of accounts of securities,

income payments and servicing payments under transactions in financial instruments, as well as

registration services. As part of the Compliance function, the Bank has a specialized unit “Compliance

– Investment Services and Activities” which controls and ensures observance of the requirements

related to Fibank’s activity as an investment intermediary.

Orders for the subscription/redemption of units in four mutual funds (FIB Garant Mutual Fund, FIB

Classic Mutual Fund, FIB Avangard Mutual Fund and FFBH Vostok Mutual Fund, managed by the

Management company FFBH Asset Management AD) can be accepted in Fibank’s offices which are

registered with the Financial Supervision Commission. At these locations, distribution is also carried

out of four mutual funds managed by Erste Asset Management (ERSTE-SPARINVEST

Kapitalanlagegesellschaft m.b.H), as well as of E.I. STURDZA STRATEGIC MANAGEMENT LIMITED.

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MEETING THE 2022 GOALS

Goals

Fulfilment

UNIVERSAL BULGARIAN BANK, LEADING IN

KEY SEGMENTS

Setting a priority on the development of

retail and SME segments.

Offering new and creative products,

providing customers with convenience

and security.

Upgrading the cross-selling and

transactional business models.

In 2022, the retail, micro, and SME loan portfolios registered an

increase, their combined share reaching 66.4% of the total loan

portfolio (2021: 63.5%). This was mainly driven by retail loans

which grew by 10% during the period.

Fibank retained its leading position among banks in the country:

fifth in deposits, fifth in corporate loans, fifth in consumer loans,

and sixth in mortgage loans.

New mortgage loans were developed: Sustainable Future for

financing real estate with high energy efficiency class, and a loan

for persons receiving income from abroad.

The new Career Start consumer loan was launched, designed for

university graduates up to the age of 30, without requirements

for income or minimum work experience.

Lending to micro, small and medium-sized enterprises started

under two instruments: Financing in Rural Areas through the

Fund Manager of Funds, and a portfolio guarantee agreement

with the National Guarantee Fund.

For more information see the Business Review and 2022 Highlights

sections.

HIGH QUALITY CUSTOMER SERVICE

Maintaining highest quality of customer

service by developing motivational

programs and training for employees.

Speed in customer service by improving IT

systems and applying customer-oriented

approaches.

Development of personalized services.

The deposit base grew to BGN 10,798,450 thousand at the end

of the period (2021: BGN 9,425,251 thousand), and the total loan

portfolio to BGN 6,384,541 thousand (2021: BGN 6,315,581

thousand).

The Help from a Friend service was introduced, allowing every

customer to receive assistance and information about the

features and functionalities of My Fibank electronic banking and

the mobile application.

Fibank joined the updated STEP2-T Continuous Gross Settlement

(CGS) system operated by EBA Clearing which optimized the

execution of SEPA credit transfers.

Overdraft Express was developed: a fast overdraft for pre-

approved customers via the electronic banking and the My

Fibank mobile application.

Proof of Fibank’s accomplishments during the year were the

awards received: the Bulgarian consumer Favorite Brand award

at My Love Marks consumer ranking, and the Product of the Year

award for Debit Mastercard Platinum in the Premium Card

Products category of the international Product of the Year

competition carried out via the NielsenIQ research agency.

For more information see the

Business Review and Awards 2022

sections.

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FOCUS ON DIGITIZATION AND INNOVATION

Implementation of technological

innovations.

Development of digital services, mobile

applications and e-banking.

Optimization of IT and business processes

in line with innovation in banking.

First Investment Bank offered an innovative service for instant

payments (up to 10 seconds) in BGN under the Blink scheme.

Preparation began for launching the innovative Blink P2P service

for instant payments through the mobile banking app.

As part of the Branch digitalization project, the Bank introduced

electronic signing of documents (e-Sign pad) in its offices.

A new virtual debit card was developed: the Debit Instant Card.

It is issued through the My Fibank mobile application and is

intended for making online payments.

New digital banking functionalities were added, including

rescheduling of credit card debt into equal monthly installments

and purchasing products online.

The hardware and software infrastructure of the card system

was upgraded, expanding its functionality and improving

security.

Fibank was distinguished with three awards: for Digital Bank of

the Year 2022 at the Worldwide Finance Awards 2022

international competition, for successful digital transformation

at the Bank of the Year contest, and for Innovative Bank of the

Year by Business Lady Magazine.

For more information see the

Business Review, Distribution

Channels and Awards 2022 sections.

STABLE AND SUSTAINABLE BUSINESS MODEL

Ensure sound capital position and effective

liquidity management.

Maintain optimal asset structure and

reduce loan portfolio risk.

Offer products and finance projects aimed

at sustainability and supporting the green

idea, as well as implement

environmentally friendly internal

processes.

At the end of 2022, the Bank reported stable capital ratios as

follows: common equity Tier 1 (CET1) ratio 18.11%, Tier 1 capital

ratio 21.74% and total capital adequacy ratio 21.74%, exceeding

the minimum regulatory capital requirements.

Fibank maintained high liquidity, with liquidity coverage ratio

(LCR) and net stable funding ratio (NSFR) of 225.36% and

145.47% respectively at the end of the period.

Risk-weighted credit exposures decreased to BGN 6,462,477

thousand (2021: BGN 6,546,743 thousand), as part of the

strategy to maintain a moderate-low level of risk.

A net decrease of 7.4% was reported in non-performing

exposures, in implementation of the strategy for reduction of

such exposures and the measures implemented for improving

collections and write-offs.

The Bank offered new products for business customers: Green

Transport, Green Energy - Free Market, and Green Energy - Own

Use, as well as the new Sustainable Future mortgage loan was

for financing real estate with high energy efficiency class.

Fibank started replacing its plastic debit and credit cards with

new ones made of fully recyclable material.

For more information see the Financial Review, Risk Management

and Sustainable Development sections.

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RETURN FOR SHAREHOLDERS AND COST

OPTIMISATION

Achieve return on equity of over 8% by

end-2023.

Achieve a sustainable cost-to-income ratio

below 50%.

Invest in profitable securities and revenue

diversification.

In a challenging external environment, the reported return on

equity (after taxes) of 6.34% for 2022 was in line with budgeted

levels, with potential to achieve the long-term targets of above

8%.

For 2022, the cost/income ratio was 47.57% on an individual

basis (2021: 43.39%), which was within the target level of below

50% set in the development strategy.

Net fee and commission income for 2022 increased by 17.4% to

BGN 139,515 thousand, forming 31.4% of total operating income

(2021: 29.1%). It provided a significant share of operating profit

and contributed to income diversification.

The investment securities portfolio increased to BGN 2,598,137

thousand at the end of the year (2021: BGN 1,482,699

thousand). It was managed according to market conditions, with

the aim of generating additional profit while maintaining a

balance between risk and return. Net interest income from debt

instruments increased by 37.4% to BGN 24,520 thousand (2021:

BGN 17,848 thousand), and net trading income in such

instruments reached BGN 114 thousand, compared to BGN 32

thousand a year earlier.

For more information see the

Financial Review and Risk

Management sections.

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SUBSEQUENT EVENTS

In January 2023, Fibank was the first among banks in the country to offer the innovative Blink P2P

instant transfer service. It allows execution of instant money transfers (up to 10 seconds) in BGN

using a secondary identifier: a mobile phone number, instead of indicating an account IBAN. The

service is available through the My Fibank mobile application, subject to the general and

transaction limits set.

In February 2023, the Bank successfully redeemed the perpetual hybrid bond issue with an original

principal amount of EUR 40 million (ISIN: BG2100008114) replacing it with the newly issued hybrid

bonds (ISIN: XS2419929422 and ISIN: XS2488805461) in the same amount.

For further information, see the Individual Financial Statements for the year ended December 31, 2022.

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DEVELOPMENT PRIORITIES

UNIVERSAL BULGARIAN BANK, LEADING IN KEY SEGMENTS

Priority focus on the development of retail and SME segments.

Offering new and creative products, providing customers with convenience and security.

Upgrading the cross-selling and transactional business models.

HIGH QUALITY CUSTOMER SERVICE

Maintaining highest quality of customer service by developing motivational programs and training

for employees.

Speed in customer service by improving IT systems and applying customer-oriented approaches.

Development of personalized services and loyalty programs.

FOCUS ON DIGITIZATION AND INNOVATION

Implementation of technological innovations and branch digitalisation.

Development of digital services, mobile applications and e-banking.

Optimization of IT and business processes in line with innovation in banking and automation of

activities.

STABLE AND SUSTAINABLE BUSINESS MODEL

Ensure sound capital position and MREL.

Effective management of liquidity and financing risks.

Maintain optimal asset structure and reduce loan portfolio risk.

RESPONSIBLE BANKING FOR SUSTAINABLE FUTURE

Offer products and finance projects aimed at sustainability and supporting the green idea.

Implement environmentally friendly internal processes.

Support responsible projects and initiatives with social impact.

RETURN FOR SHAREHOLDERS AND COST OPTIMISATION

Achieve high return on equity.

Maintain maximum efficient cost-to-income ratio.

Invest in profitable securities and revenue diversification.

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OTHER INFORMATION

MEMBERS OF THE SUPERVISORY BOARD

Evgeni Lukanov - Chairman of the Supervisory Board

Mr. Lukanov joined First Investment Bank AD in 1998 as Deputy Director, and later as Director and

General Manager of the Tirana Branch, Albania. From 2001 to 2003 he was Director of the Bank’s

Vitosha Branch (Sofia).

Mr. Lukanov has occupied a number of senior positions with First Investment Bank AD. From 2003 to

2007 he was Director of the Risk Management Department and Member of the Managing Board. From

2004 to 2012 - Executive Director and Member of the Managing Board of First Investment Bank AD.

During his years of work in First Investment Bank AD, Mr. Lukanov has been Chairman of the Credit

Council and the Liquidity Council of the Bank. He has been in charge of the following departments: Risk

Management, Impaired Assets and Provisioning, Loan Administration, Specialized Monitoring and

Control, Retail Banking, Methodology, and Liquidity.

Mr. Lukanov has also been member of the Managing Board of First Investment Bank – Albania Sh.a.

At the beginning of February 2012, Mr. Lukanov was elected as Chairman of the Supervisory Board of

First Investment Bank AD. For the period 2012-2019 he was Chairman of the Risk Committee to the

Supervisory Board of the Bank and since May 2019 was elected as Chairman of the Remuneration

Committee to the Supervisory Board of the Bank.

Mr. Lukanov holds a Master’s Degree in Economics from the University of National and World

Economy, Sofia. Prior to joining First Investment Bank AD, Mr. Evgeni Lukanov worked as currency

broker with First Financial Brokerage House OOD.

Besides his position on the Supervisory Board of the Bank, Mr. Lukanov is also Chairman of the Board

of Directors of Fi Health Insurance AD. He is owner of ET Imeksa-Evgeni Lukanov.

Maya Georgieva - Deputy Chair of the Supervisory Board

Prior to joining First Investment Bank, Ms. Maya Georgieva worked with the Bulgarian National Bank

for 19 years where she gained considerable experience in international banking relationships and

payments, banking statistics and firm crediting. Her last appointment with BNB was as Head of the

Balance of Payments Division.

Ms. Maya Georgieva joined First Investment Bank AD in 1995 as Director of the International

Department. From 1998 to 2012 she served as Executive Director of First Investment Bank and

Member of the Managing Board. During her years of work in the Bank she has been responsible of the

following departments: International Payments, Letters of Credit and Guarantees, SME Lending,

Human Capital Management, Administrative Department, Sales Department, Retail Banking,

Marketing, Advertising and PR, Branch Network, Private Banking and the Vault.

Alongside her responsibilities at the Bank, Ms. Georgieva has also occupied a number of other senior

executive positions. From 2003 to 2011 she chaired the Supervisory Board of CaSys International - a

Northern Macedonia-based card processing company servicing card payments in Bulgaria, Northern

Macedonia and Albania.

From 2009 to 2011 she was Chair of the Board of Directors of Diners Club Bulgaria AD - a franchise

company of Diners Club International, owned by First Investment Bank. In this capacity, she inspired

the launch of a number of products, including the first female-oriented credit card. From 2006 to 2011

she was also member of the Managing Board of First Investment Bank - Albania Sh.a., a subsidiary of

First Investment Bank.

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In the beginning of February 2012, Ms. Georgieva was elected as Deputy Chair of the Supervisory Board

of First Investment Bank AD and Chair of the Presiding Committee to the Supervisory Board of First

Investment Bank AD.

Ms. Georgieva holds a Masters Degree in Macroeconomics from the University of National and World

Economy in Sofia and has post-graduate specializations in International Payments and Balance of

Payments with the International Monetary Fund and Banking from Specialized postgraduate course of

BNB joint with the Bulgarian Union of Science and Technology.

She was granted several times with the "Banker of the Year" award of the Bulgarian financial weekly

"Banker" - in 2001 and 2011, as well as in 2018 for overall contribution to the development of the

banking system.

Radka Mineva - Member of the Supervisory Board

Prior to joining First Investment Bank AD, Ms. Mineva worked as a capital markets dealer at the

Bulgarian National Bank where she gained considerable experience in banking. During the time spent

with the Central Bank, she specialized at the Frankfurt Stock Exchange and the London Stock Exchange

as a capital markets dealer.

Ms. Mineva started her career with the foreign trade enterprise Main Engineering Office, where she

worked for 9 years; she also spent three years as an expert at RVM Trading Company.

Since 2000, Ms. Mineva has been a Member of the Supervisory Board of First Investment Bank AD.

Since May 2019, she was elected as Member of the Presiding Committee to the Supervisory Board of

First Investment Bank.

She is a graduate of the University of National and World Economy in Sofia, with a degree in Trade and

Tourism.

Besides her position on the Supervisory Board of the Bank, Ms. Mineva is Manager of Balkan Holidays

Services EOOD - a company with activities in the sphere of tourism, transportation, hotel business,

tour operation, and tour agency services. Ms. Mineva is also Manager of Balkan Holidays Partners OOD

- a company engaged in international and domestic tourism services, foreign economic transactions,

and financial management. Ms. Mineva owns more than 25% of the capital of Balkan Holidays Partners

OOD. She is also Member of the Managing Board of the non-profit organization “National Board of

Turism” and of the non-profit organization “Union of investors in tourism”.

Jordan Skortchev - Member of the Supervisory Board

Before joining First Investment Bank AD, Mr. Jordan Skortchev worked for two years with the Central

and Latin America Department of the foreign trade organization Intercommerce, followed by five years

with First Private Bank, Sofia as an FX Dealer and Head of the Dealing Division.

Mr. Skortchev joined First Investment Bank in 1996 as Chief Dealer, FX Markets. From 2001 to 2012

Mr. Skortchev was Member of the Managing Board and Executive Director of the Bank. During his

years of work in the Bank, Mr. Skortchev has been responsible for the following departments: Card

Payments, Operations, Gold and Numismatics, Internet Banking, Dealing, Security and Office Network-

Sofia.

Alongside his responsibilities at the Bank, Mr. Skortchev has also occupied other senior executive

positions. Mr. Skortchev has been Chairman of the Supervisory Board of UNIBank AD, Republic of

Northern Macedonia, member of the Supervisory Board of CaSys International, Republic of Macedonia,

member of the Board of Directors of Diners Club Bulgaria AD, member of the Board of Directors of

Bankservice AD, member of the Board of Directors of Medical center FiHealth AD, and Manager of

FiHealth OOD.

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In the beginning of February 2012, Mr. Skortchev was elected as a Member of the Supervisory Board

of the Bank. For the period 2012-2019, he was Chairman of the Remuneration Committee to the

Supervisory Board of First Investment Bank AD. Since May 2019, Mr. Skortchev was elected as

Chairman of the Nomination Committee to the Supervisory Board of First Investment Bank AD.

Mr. Skortchev holds a Masters Degree in International Economic Relations from the Higher Institute of

Economics (now the University of National and World Economy) in Sofia. He has specialized in banking

in Luxembourg, in swap deals at Euromoney, and in futures and options at the Chicago Stock Exchange.

Mr. Skortchev holds more than 10% of the capital of Investment intermediary Delta Stock AD.

Jyrki Koskelo – Member of the Supervisory Board

Mr. Jyrki Koskelo was elected as member of the Supervisory Board of First Investment Bank AD in June

2015. In his capacity as an independent member Mr. Koskelo supports the Supervisory Board in setting

up the business objectives and the strategy of the Bank, the corporate culture and values, as well as in

overseeing good corporate governance practices and effective risk management. Since the end of

2019, he has been Chairman of the Risk Committee to the Supervisory Board of First Investment Bank

AD. Mr. Koskelo has long-term experience in banking and global financial markets, as well as wide

professional practice in different geographical regions.

Mr. Koskelo worked in the International Finance Corporation (IFC - a member of the World Bank Group)

for 24 years, from 1987 to late 2011. The first 13 years he worked as an Investment Officer covering

the Central and Eastern Europe and Africa regions. In 2000, he was appointed as Director Work-out

Loans and in 2004 he became Director Global Financial Markets. In 2007, he was appointed as Vice

President (reporting to the CEO) and a member of the IFC’s Management Committee. Mr. Koskelo led

the formulation and implementation of the IFC’s investment strategy, policies, and practices across

industries and regions, including in Central and Eastern Europe, Latin America and Africa. His major

legacies include IFC’s entry to Global Trade Finance Programs, decentralization of the organization with

significant staffing across emerging markets, IFC’s leading role in private sector side of Vienna Initiative

to support Central Europe banks after Lehman Crisis and establishment of IFC’s Asset Management

subsidiary’s first $3 billion fund for capitalization of weak banks in poor countries.

Prior to joining the IFC, he spent close to 10 years in senior management positions in the private sector

in the Middle East and in USA.

Mr. Koskelo currently holds a number of senior and advisory positions in European and African

organizations and financial institutions including:

• AATIF (a KfW & EU sponsored Africa Agriculture and Trade Investment Fund), Luxemburg –

Member of the Board of Directors, Chairman of the Investment Committee;

• Gulf Marine Services PLC (GMS International), UK – Member of the Board of Directors.

• Serengeti Energy Ltd, Mauritius – Member of the Board of Directors.

During the period 2012 – up to 2021 Mr. Koskelo acted in multiple Supervisory Board and advisory

positions including in the Africa Development Corporation, Germany; African Banking Corporation,

Botswana; RSwitch, Rwanda; EXPO Bank, Latvia, AtlasMara Co-Nvest LLC, UK, Al Jaber Group, UAE and

in EXPO Bank, Czech Republic.

Mr. Koskelo holds a Master of Science (M.Sc.) degree in Civil Engineering from the Technical University

of Helsinki, Finland and a Master of Business Administration (MBA) in International Finance from the

Massachusetts Institute of Technology (MIT), Sloan School of Management in Boston, USA.

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MEMBERS OF THE MANAGING BOARD

Nikola Bakalov – Chief Executive Officer (CEO) and

Chairman of the Managing Board

Mr. Nikola Bakalov has extensive experience in the banking and insurance sector in Bulgaria, combined

with proven professional and managerial skills. From December 2000 to September 2011, he worked

at First Investment Bank AD, taking increasing responsibilities from Card Services Specialist to Director

of the Card Payments Department, which position he held for almost 6 years. During this period he

was also elected as member of the executive committees of Mastercard Bulgaria and VISA Bulgaria.

In the period December 2011 - August 2012, Mr. Bakalov was member of the Managing Board of Allianz

Bank Bulgaria AD, where he served as Executive Director, and subsequently as Chief Executive Officer.

From 2013 to August 2020, Mr. Bakalov was Executive Director of FiHealth Insurance AD, where he

expanded significantly the activity of the company and transformed it in a leading company in the

sphere of health insurance.

At the beginning of 2020, he was elected as Chief Retail Banking Officer (CRBO), Member of the

Managing Board and Executive Director of First Investment Bank AD, responsible for the retail banking

business lines within the Bank.

Since April 2020 Mr. Bakalov has been elected as Chief Executive Officer (CEO) and Chairman of the

Managing Board of First Investment Bank AD.

Responsibilities in the Bank – Compliance function, Legal Department, Corporate Communications

Department, Marketing and Advertising Department, Human Capital Management Department,

Administrative Department, Asset Management Department, Information Technologies Department,

Sustainable Development Department, Protocol and Secretariat Department and Specialised Unit

Project Management.

Mr. Bakalov holds a Master’s degree in International Economic Relations from the University of

National and World Economy in Sofia, and has additional specializations in card payments, finance

retail services and corporate governance.

Apart from his position at the Bank, Mr. Bakalov is Deputy chairman of the Board of Directors of

FiHealth Insurance AD, Member of the Board of Directors of BORICA AD and Member of the

Management Board of Association of Banks in Bulgaria.

Svetozar Popov – Chief Risk Officer (CRO), Member of the Managing Board

and Executive Director

Mr. Svetozar Popov joined First Investment Bank AD in 2004 as part of the Risk Management

Department, and was shortly thereafter promoted to Head of the Credit Risk Division. From 2006 to

2008 he was Deputy Director of Risk Management, during which period he also chaired the Bank's

Credit Council. From 2016 to 2017, Mr. Popov held the office of Chief Compliance Officer (CCO), and

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in May 2017 he was appointed as Chief Risk Officer (CRO), Member of the Management Board and

Executive Director of First Investment Bank AD.

From 2008 to 2015, Mr. Popov was member of the Managing Board and Executive Director of UNIBank

AD, Northern Macedonia, where he gained significant management experience and was responsible

for the areas of risk management, credit administration, and finance. Prior to joining First Investment

Bank AD, Mr. Popov worked at Raiffeisenbank (Bulgaria) EAD as an SME loan officer.

Mr. Popov holds a Masters degree in Finance from the University of National and World Economy in

Sofia, and has obtained additional qualifications in the field of financial analysis from the European

Bank for Reconstruction and Development (EBRD) and other internationally recognized institutions, as

well as practical experience in foreign banks.

In the Bank he is responsible for the Risk Analysis and Control Department, the Credit Risk

Management, Monitoring and Provisioning Department, the Impaired Assets Department, the Loan

Administration Department, Security Department, Information Security Department and the

specialized unit Strategic Risk Management.

Besides his position in the Bank, Mr. Popov is a Chairman of the Supervisory Board of UNIBank,

Republic of Northern Macedonia, Chairman of the Board of Directors of MyFin EAD and a Manager of

Debita OOD.

Chavdar Zlatev - Chief Corporate Banking Officer (CCBO), Member of the

Managing Board and Executive Director

Mr. Chavdar Zlatev joined the team of First Investment Bank AD in 2004 as Chief specialist in the SME

Lending Department. Soon afterwards he was promoted to Deputy Director of the Department. From

2006 to 2009 he was manager of the Vitosha branch of First Investment Bank AD. He was subsequently

appointed Deputy Director of the Branch Network Department, and in 2010 promoted to Director of

the Department. In early 2011, he was appointed Director of the Corporate Banking Department, and

has participated in the development and implementation of a number of banking products. In

November 2014 Mr. Zlatev was elected member of the Managing Board of First Investment Bank AD,

and from February 2018 was appointed as Chief Corporate Banking Officer (CCBO), Member of the

Managing Board and Executive Director.

Alongside his responsibilities in the Bank for the period during 2011-August 2020 he was member of

the Board of Directors of FiHealth Insurance AD.

Prior to joining First Investment Bank AD, Mr. Zlatev worked in CB Unionbank AD as a senior bank

officer, Corporate clients. He holds a Master‘s degree in Macroeconomics from the University of

National and World Economy in Sofia. He has specialized loan products and practices in Bank of Ireland,

as well as contemporary banking practices in Banco Popolare di Verona.

Responsibilities in the Bank – Large Enterprises Banking Department, Medium-sized Enterprises

Banking Department, Corporate Sales and Public Procurements Department, Financial Analysis unit,

Loan Facility Management unit, Trade Financing unit and Factoring and Leasing unit.

Besides his position with the Bank, Mr. Zlatev is a member of the Management Board of First

Investment Bank – Albania Sh.a.

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Ralitsa Bogoeva – Chief Retail Banking Officer (CRBO),

Member of the Managing Board and Executive Director

Ms. Ralitsa Bogoeva has been Chief Retail Banking Officer, Member of the Managing Board and

Executive Director of First Investment Bank AD since May 2020. She has extensive professional

experience in various fields of banking.

Ms. Ralitsa Bogoeva joined the team of First Investment Bank AD in 2002 as a Retail Loan Officer and

a year later was promoted to Deputy Director of the Retail Banking Department, a position she held

for eight years. From 2011 to 2018 she was Director, Internal Audit of Fibank. From June 2018 to 2020,

Ms. Bogoeva held the position of Chief IT and Operations Officer at the Bank. During her professional

career, Ms. Bogoeva has managed various projects in the fields of finance, the development and

administration of products for individuals and businesses, as well as innovative projects in the field of

information technology and digitalization of banking.

Ms. Bogoeva has a Master's degree in Accounting and Control from the University of National and

World Economy in Sofia, as well as a number of additional qualifications in the areas of banking,

international auditing standards, planning and project management.

Responsibilities in the Bank – Retail Banking Department, Private Banking Department, Digital Banking

Department, Card Payments Department, Branch Network Department, Organisation and Control of

Customer Service Department, Gold and Commemorative Coins Department, the Vault.

In addition to her position in the Bank, Ms. Bogoeva is a member of the Board of Directors of Diners

Club Bulgaria AD, a member of the Board of Directors of MyFin EAD and a member of the Supervisory

Board of UNIBanka AD, Northern Macedonia. She owns 25% of the capital of Raya Homes OOD.

Ianko Karakolev – Chief Financial Officer (CFO) and

Member of the Managing Board

Mr. Ianko Karakolev was elected Chief Financial Officer (CFO) and Member of the Managing Board of

First Investment Bank AD in June 2020. He is a longtime financial analyst and staff member of First

Investment Bank AD.

Mr. Karakolev joined the Bank's team in 1999 as an accountant-controller in the Financial and

Accounting Department and soon became Director of the Internet Branch. In the period 2002-2007 he

was promoted from Head of the Financial Statements, Analyzes and Budgeting unit to Deputy Chief

Accountant. After that, until 2011, he held the position of Deputy Director of the Finance and

Accounting Department. From 2011 to 2014 he was Chief Financial Officer and Director of the Finance

and Accounting Department, and in the period 2014-2020 was Director of the Finance Department.

During his professional career, Mr. Karakolev has participated in the management of many innovative

projects contributing to the implementation of international standards and the development of

banking, as well as in corporate actions such as the acquisition of MKB Unionbank and its subsequent

merger with First Investment Bank AD.

Prior to joining the team of First Investment Bank AD, Mr. Karakolev worked at Bulgarian Commercial

and Industrial Bank AD as an accountant. He holds a Master's degree in Finance from the University of

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National and World Economy in Sofia and has professional certificates and qualifications in the fields

of international financial and accounting standards, the European regulatory framework on banking

and reporting, management and business planning.

Responsibilities in the Bank – Finance Department, Accounting Department, Treasury Department,

Investor Relations Department, Financial Institutions and Corresponding Banking Department and

Intensive Loan Management Department.

In addition to his position in the Bank, Mr. Karakolev is a member of the Steering Council and of the

Audit Committee of First Investment Bank - Albania Sh.a. and member of the Supervisory Board of

UNIBanka AD, Northern Macedonia.

Nadia Koshinska – Member of the Managing Board and Director of Small

Enterprises Banking Department

Ms. Nadia Koshinska joined Fibank in 1997 as a corporate loan expert. In 2002, she was appointed

Deputy Director Loan Administration and held this position until 2004. In 2004 Nadia Koshinska was

appointed Director SME Lending Department responsible for increasing the market share of the Bank

through implementing special programs and dedicated products for SMEs. Also in 2004, she was

appointed as a member of the Credit Council. At the end of 2015, Ms. Koshinska was elected as Chief

Retail Banking Officer (CRBO) and Member of the Managing Board, while since September 2017 is a

Member of the Managing Board and Director of SME Banking Department.

Prior to joining First Investment Bank AD she worked in the balance of payments and foreign debt

division in Bulgarian National Bank.

Ms. Nadia Koshinska holds a Masters degree in Accounting and Control from the University of National

and World Economy in Sofia.

In the Bank she is responsible for the Small Enterprises Banking Department.

Ms. Koshinska does not hold outside professional positions.

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LIST OF ABBREVIATIONS

Joint Stock Company

ALCO

Asset, liability and Liquidity management Council

AML

Anti Money Laundering

ATM

Automated Teller Machine

BAF

Bulgarian Athletics Federation

Bank/Fibank

First Investment Bank AD

BEIA

Bulgarian Export Insurance Agency

BISERA

Bank integrated system for electronic payments

BISERA 7-EUR

System for servicing customer transfers in euros

BNB

Bulgarian National Bank

BOC

Bulgarian Olympic Committee

BORICA

Banking organization for payments using cards

BRGF

Bulgarian Rhythmic Gymnastics Federation

BPM

Business Process Management

BRRD II

Bank Recovery and Resolution Directive II (Directive (EU) 2019/879 of the

European Parliament and of the Council of 20 May 2019 amending Directive

2014/59/EU as regards the loss-absorbing and recapitalisation capacity of

credit institutions and investment firms and Directive 98/26/EC)

CAGR

Compound Annual Growth Rate

CEO

Chief Executive Officer

СЕТ1

Common Equity Tier 1

CCBO

Chief Corporate Banking Officer

CFO

Chief Financial Officer

CGS

Continuous Gross Settlement

CO2

Carbon footprint

CRBO

Chief Retail Banking Officer

CRO

Chief Risk Officer

CSRBB

Credit Spread Risk in the Banking Book

DvP

Delivery versus Payment (Доставка срещу плащане)

DPO

Data Protection Officer

EAD

Еxposure at Default

EAD

Sole-owned joint stock company

EBA

European Banking Authority

EEA

European Economic Area

European Commission

ECB

European Central Bank

EOOD

Sole-owned limited liability company

ЕP

European Parliament

ERM

Exchange Rate Mechanism

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ЕSG

Environmental, Social, Governance

ESMA

European Securities and Markets Authority

ЕU

European Union

FDI

Foreign Direct Investments

FSC

Financial Supervision Commission

GDP

Gross domestic product

GDPR

General Data Protection Regulation

GVA

Gross value added

HIC

Health insurance company

HHI

Herfindahl-Hirschman Index

ICAAP

Internal Capital Adequacy Assessment Process

IFRS

International Financial Reporting Standards

ILAAP

Internal Liquidity Adequacy Assessment Process

IFC

International Finance Corporation

IRRBB

Interest Rate Risk in the Banking Book

Information Technology

ITP

Internal-transfer prices

LCR

Liquidity Coverage Ratio

LIFO

Law on independent financial audit

LGD

Loss Given Default

LPOSA

Law on public offering of securities

Leverage Ratio

LRE

Leverage Risk Exposure

Managing Board

MiFIR

Markets in Financial Instruments Regulation (Regulation (EU) No 600/2014 of

the European Parliament and of the Council of 15 May 2014 on markets in

financial instruments and amending Regulation (EU) No 648/2012)

MREL

Minimum requirements for own funds and eligible liabilities

MRR

Minimum Required Reserved

NАТО

North Atlantic Treaty Organization

NFC

Near Field Communication

NPE

Non-performing exposures

NPL

Non-performing loans

NSFR

Net Stable Funding Ratio

OECD

Organization for Economic Cooperation and Development

OOD

Limitied liability company

OSII

Other Systemically Important Institution

PAMP

Produits Artistiques de Métaux Précieux

Probability of Default

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PRIIPS

Packaged Retail Investment and Insurance Products (Regulation (EU) No

1286/2014 of the European Parliament and of the Council of 26 November

2014 on key information documents for packaged retail and insurance-based

investment products)

RCSA

Risk Control Self Assessment

RINGS

Real-time Interbank Gross Settlement System

ROA

Return-on-assets

ROE

Return-on-equity

Supervisory Board

SCA

Strong Customer Authentication

SEPA

Single Euro Payments Area

SME

Small and medium-sized enterprises

Sole proprietor

SPPI

Solely Payments of Principal and Interest

SRM

Single Resolution Mechanism

SSM

Single Supervisory Mechanism

ТСR

Тotal Capital Ratio

TPPs

Third party providers

TREA

Total Risk Exposure Amount

UAB

Union of Artists in Bulgaria

United Nations

VaR

Value-at- Risk

Activity Report 2022

on an individual basis

FIRST INVESTMENT BANK

138/145

LIST OF BRANCH NETWORK

HEAD OFFICE

Sofia 1784, 111P, Tsarigradsko shose Blvd.

Phone: 02/817 1100, fax: 02/817 1101

SWIFT CODE: FINVBGSF

REUTERS DEALING CODE: BFIB

e‐mail: fib@fibank.bg, www.fibank.bg

Contact centre: 0800 11 011

BRANCHES IN SOFIA

Aleksandar Stamboliyski

Sofia 1301, 20, Aleksandar Stamboliyski Blvd.

phone: (+359 2) 817 1493

Bulgaria

Sofia 1404, 81G Bulgaria Blvd.

phone: (+359 2) 800 2501, fax: (+359 2) 800

2500

Business Park Sofia

Sofia 1712, 1, Business Park Sofia St.

phone: (+359 2) 800 2535

Diners Club Bulgaria

Sofia 1142, 35, Vasil Levski Blvd.

phone: (+359 2) 800 2921

Dragalevtsi

Sofia 1415, Zh.k. (Quarter) Dragalevtsi

20A, Krushova gradina St.

phone: (+359 2) 800 2601

Dragan Tsankov

Sofia 1797, 37, Dragan Tsankov Blvd.

phone: (+359 2) 800 2020, fax: (+359 2) 970

9597

Evropa

Sofia 1528, 7, Iskarsko shose Blvd.

phone: (+359 2) 817 1454

Flavia

Sofia 1303, 125, Aleksandar Stamboliyski Blvd.

phone: (+359 2) 800 2864

Generali

Sofia 1000, 79‐81, Dondukov Blvd.

phone: (+359 2) 817 1437

Hadzhi Dimitar

Sofia 1510, 28‐30, Doncho Vatah St.

phone: (+359 2) 817 1576

Hristo Botev

Sofia 1000, 28 Hristo Botev Blvd.

phone: (+359 2) 800 2645

Iliyantsi

Sofia 1268, 31, Rozhen Blvd.

phone: (+359 2) 800 2973

Ivan Vazov

Sofia 1408, 184, Vitosha Blvd.

phone: (+359 2) 817 1553

Journalist

Sofia 1164, 44, Hristo Smirnenski Blvd.

phone: (+359 2) 800 2939

Krasna Polyana

Sofia 1330, Nikola Mushanov Blvd., bl. 31A,

floor 1

phone: (+359 2) 800 2665

Krasno selo

Sofia 1612, 107 A, Tsar Boris III Blvd.

phone: (+359 2) 800 25 84

Lyulin

Sofia 1324, 70, Tsaritsa Yoanna Blvd.

phone: (+359 2) 817 1483

Mall – Sofia

Sofia 1303, 101, Aleksandar Stamboliyski Blvd.

phone: (+359 2) 817 1672

Maria Luisa

Sofia 1202, 67, Maria Luisa Blvd.

phone: (+359 2) 817 1463

Mladost

Sofia 1784, 11, Andrey Saharov Blvd.

phone: (+359 2) 817 1641

Mall – Serdika

Sofia 1505, 48, Sitnyakovo Blvd.

phone: (+359 2) 800 2550

Nadezhda 2

Sofia 1220, 7, Strazhitsa St., 1st floor

phone: (+359 2) 800 2521

Activity Report 2022

on an individual basis

FIRST INVESTMENT BANK

139/145

Narodno sabranie 1

Sofia 1000, 12, Narodno sabranie Sq.

phone: (+359 2) 817 1559

Narodno sabranie 2

Sofia 1000, 3, Narodno sabranie Sq.

phone: (+359 2) 817 1359

National Theatre

Sofia 1000, 7, Dyakon Ignatiy St.

phone: (+359 2) 817 1421

NDK (National Palace of Culture)

Sofia 1000, 110, Vitosha Blvd.

phone/fax: (+359 2) 800 2641

Nevski

Sofia 1504, 1, Yanko Sakazov Blvd

phone: (+359 2) 800 2542

Obelya

Sofia 1387, 58A, Akademik Dimitri Lihachov Blvd.

phone: (+359 2) 800 2091

Ovcha kupel

Sofia 1632, 51, Montevideo St.

phone: (+359 2) 800 2525

Paradise Center

Sofia 1407, 100, Cherni vrah Blvd.

phone: (+359 2) 800 2545

Park Center

Sofia 1421, 2, Arsenalski Blvd.

phone: (+359 2) 817 1666

Patriarch Evtimiy

Sofia 1000, 36, Patriarch Evtimiy Blvd.

phone: (+359 2) 800 2622

Shipchenski prohod

Sofia 1111, 49, Shipchenski prohod Blvd.

phone: (+359 2) 800 2958

Slatina

Sofia 1574, Satinska St., bl. 20

phone: (+359 2) 800 2839

Sofia Mega Mall

Sofia 1324, 15, Tzaritza Yoanna Blvd.

phone: (+359 2) 800 2510

Sofia Ring Mall

1434 Sofia, 214, Okolovrasten pat St.

Phone: (+359 2) 800 2583

Sofia Theatre

Sofia 1527, Yanko Sakazov Blvd.

phone: (+359 2) 800 2825

The Mall

Sofia 1784, 115, Tsarigradsko Chaussee Blvd. „Z“

phone/fax: (+359 2) 800 2538

Vitosha

Sofia 1408, 4, Mayor Parvan Toshev St.

phone: (+359 2) 942 6666

Yuzhen park (South Park)

Sofia 1404, Gotse Delchev Blvd., bl. 1

phone: (+359 2) 800 2975

Zaharna Fabrika

Sofia 1309, 127, Slivnitsa Blvd.

phone: (+359 2) 817 1586

BRANCHES IN THE COUNTRY

Asenovgrad

Asenovgrad 4230, 3, Nikolay Haytov Sq.

phone: (+359 331) 20 092

Bansko

Bansko 2770, 68, Tsar Simeon St.

phone: (+359 749) 86 183, fax: (+359 749)

88 112

Bansko Municipality

Bansko 2770, 12, Demokratsia Sq.

phone: (+359 749) 86 189

Strazhite – Bansko

Bansko 2770, 7, Glazne St.

phone: (+359 749) 86 986

Belene

Belene 5930, 2, Ivan Vazov St.

phone: (+359 658) 38 411

Belitsa

Belitsa 2780, 12 Georgi Andreichin str.

Phone: (+359 749) 86 199

Activity Report 2022

on an individual basis

FIRST INVESTMENT BANK

140/145

Blagoevgrad

Blagoevgrad 2700, 11, St.St. Kiril i Metodiy Blvd.

phone: (+359 73) 827 709

GUM – Blagoevgrad

Blagoevgrad 2700, 6, Trakia St.

phone: (+359 73) 827 756

Rila Hotel – Borovets

Borovets 2010, Rila Hotel

phone: (+359 2) 800 2549

Botevgrad

Botevgrad 2140, 5, Osvobozhdenie Sq.

phone: (+359 723) 69 046

Burgas

Burgas 8000, 58, Aleksandrovska St.

phone: (+359 56) 800 138

Bratya Miladinovi – Burgas

Burgas 8000

Zh. k. (Quarter) Bratya Miladinovi, bl. 117, entr. 5

phone: (+359 56) 804 463

Kiril i Metodiy – Burgas

Burgas 8000, 71, Slavyanska St.

phone: (+359 56) 804 482

Meden rudnik – Burgas

Burgas 8011

Zh. k. (Quarter) Meden rudnik, zone B, bl. 192

phone: (+359 56) 804 442

Slaveykov – Burgas

Burgas 8005

Zh. k. (Quarter) Slaveykov, bl. 107, entr. 2

phone: (+359 56) 804 472

IRM PZ Devnya

9160 Devnya, Industrial Zone South

phone: (+359 52) 662 755

Dimitrovgrad

Dimitrovgrad 6400, 6, Tsar Simeon St.

phone/fax: (+359 391) 67 008

Dobrich

Dobrich 9300, 1, Nezavisimost Sq.

phone: (+359 58) 838 590

Dulovo

Dulovo 7650, 6, Vasil Levski St.

phone: (+359 864) 21 180

Dupnitsa

Dupnitsa 2600, 19, Hristo Botev St.

phone: (+359 701) 59 153

Gabrovo

Gabrovo 5300, 5, Vazrazhdane Sq.

phone: (+359 66) 819 444

Gorna Oryahovitsa

Gorna Oryahovitsa 5100, 1, St. Knyaz Boris I St.

phone: (+359 618) 61 766

Gotse Delchev

Gotse Delchev 2900, 41, Targovska St.

phone: (+359 751) 69 642

FC Harmanli

Harmanli 6450, 1, Vazrazhdane Sq.

phone: (+359 373) 88 684

Haskovo

Haskovo 6304, 7, San Stefano Blvd.

phone: (+359 38) 661 848

Kardzhali

Kardzhali 6600, 52, Bulgaria Blvd.

phone: (+359 361) 21 629

Karlovo

Karlovo 4300, 6, General Kartsov St.

phone: (+359 335) 90 799

Kazanlak

Kazanlak 6100, 11, Sevtopolis Sq.

phone: (+359 431) 67 078

AER – Kozloduy

Kozloduy 3321, Nuclear Power Station,

phone: (+359 973) 89 320

Kozloduy

Kozloduy 3320, 1V, Vasil Vodenicharski St.

phone: (+359 973) 85 020

Kyustendil

Kyustendil 2500, 147, Tsar Osvoboditel Blvd.

phone: (+359 78) 558 144

Activity Report 2022

on an individual basis

FIRST INVESTMENT BANK

141/145

Levski

Levski 5900, 40, Aleksandar Stamboliyski St.

phone: (+359 650) 88 909

Lovech

Lovech 5500, 12, Targovska St.

phone: (+359 68) 689 612

Montana

Montana 3400, 74, 3‐ti Mart Blvd.

phone: (+359 96) 399 516

Nesebar

Nesebar 8230, 9, Ivan Vazov St.

phone: (+359 554) 46 055

Novi pazar

Novi pazar 9900, 4, Rakovski Sq.

phone/fax: (+359 537) 25 222

FC Omurtag

Omurtag 7900, 1, 28 January St.

phone: (+359 605) 61 043

Pazardzhik

Pazardzhik 4400, 11, Bulgaria Blvd.

phone: (+359 34) 403 644

Trakia Papir – Pazardzhik

Pazardzhik 4400, Trakia Papir EAD

phone: (+359 34) 401 217

Pernik

Pernik 2300, 1, Rayko Daskalov St.

phone: (+359 76) 688 613

FC Peshtera

Peshtera 4550, 13, 3rd March St.

phone: (+359 350) 60 702

Petrich

Petrich 2850, 11A, Tsar Boris III St.

phone: (+359 745) 69 577

Pleven

Pleven 5800, 138, Doyran St.

phone: (+359 64) 893 101

Vasil Levski – Pleven

Pleven 5800, 126, Vasil Levski St.

phone: (+359 64) 893 141

6th september – Plovdiv

4002 Plovdiv, 35, 6th september Blvd.

Phone: (+359 32) 270 783

Mall – Plovdiv

Plovdiv 4002, 8, Perushtitsa St.

phone: (+359 32) 270 630

Mall Trakia – Plovdiv

Plovdiv 4023, 41, Saedinenie Blvd.

phone: (+359 32) 270 580

Plovdiv

Plovdiv 4000, 95, Maritsa Blvd.

phone: (+359 32) 270 510

Skopie – Plovdiv

Plovdiv 4004, Skopie St., bl. 1519

phone: (+359 32) 270 590

Sveti Mina – Plovdiv

Plovdiv 4000, 56, Kapitan Raycho St.

phone: (+359 32) 270 560

Primorsko

Primorsko 8180, 82A, Treti mart St.

phone: (+359 550) 31 000

Radnevo

Radnevo 6260, 3, Georgi Dimitrov St.

phone: (+359 426) 98 764

Razgrad

Razgrad 7200, 3, Vasil Levski St.

phone: (+359 84) 631 065

FC Razlog

Razlog 2760, 6, Sheynovo St.

phone: (+359 747) 80 177

Aleksandrovska – Ruse

Ruse 7000, 10, Aleksandrovska St.

phone: (+359 82) 889 534

Ruse

Ruse 7000, 11, Rayko Daskalov St.

phone: (+359 82) 889 541

Activity Report 2022

on an individual basis

FIRST INVESTMENT BANK

142/145

Tezhko mashinostroene – Ruse

Ruse 7000, 100, Tutrakan Blvd.

phone: (+359 82) 889 551

Tsar Osvoboditel – Ruse

Ruse 7000, 1, Tsar Osvoboditel Blvd.

phone: (+359 82) 889 498

Sevlievo

Sevlievo 5400, Svoboda Sq.

phone: (+359 675) 31 053

Shumen

Shumen 9700, 67, Simeon Veliki Blvd.

phone: (+359 54) 856 611

Silistra

Silistra 7500, 3, Geno Cholakov St.

phone: (+359 86) 871 320

Simitli

Simitli 2730, 27, Hristo Botev St.

phone: (+359 747) 89 051

Slanchev bryag (Sunny Beach)

Slanchev bryag (Sunny Beach) 8240, Central Alley

phone: (+359 554) 23 335

Central – Sliven

Sliven 8800, 2, Hadzhi Dimitar Blvd.

phone: (+359 44) 610 954

Sliven

Sliven 8800, 50, Tsar Osvoboditel Blvd.

phone: (+359 44) 610 708

Smolyan

Smolyan 4700, 80V, Bulgaria Blvd.

phone: (+359 301) 67 020

Sozopol

Sozopol 8130, 7, Republikanska St.

phone: (+359 550) 25 191

FC Stara Zagora 2

74, Tsar Simeon Veliki Blvd.

phone: (+359 42) 611 964

Stara Zagora

Stara Zagora 6000, 104, Tsar Simeon Veliki Blvd.

phone: (+359 42) 698 813

Trayana – Stara Zagora

Stara Zagora 6000, 69, Tsar Simeon Veliki Blvd.

phone: (+359 42) 698 771

Tsar Simeon – Stara Zagora

Stara Zagora 6000, 141, Tsar Simeon Veliki Blvd.

phone: (+359 42) 698 752 ,

fax: (+359 42) 266 021

Svilengrad

Svilengrad 6500, 58, Bulgaria Blvd.

phone: (+359 379) 74 440

Svishtov

Svishtov 5250, 1, Nikola Petkov St.

phone: (+359 631) 61 171

Targovishte

Targovishte 7700, 46, Hristo Botev St.

phone: (+359 601) 69 530

FC Troyan

14, Vasil Levski St.

phone: (+359 670)60 443

Troyan

Troyan 5600, 108, Vasil Levski St.

phone: (+359 670) 60 040

8‐mi Primorski polk – Varna

Varna 9000, 128, 8‐mi Primorski polk Blvd.

phone: (+359 52) 662 624

Breeze – Varna

Varna 9000, 80‐82, 8‐mi Primorski polk Blvd.

phone: (+359 52) 662 731

FC Mall Varna

Varna 9009, 186 Vladislav Varnenchik Blvd.

phone: (+359 52) 662 699

Rayonen sad (Regional Court) – Varna

Varna 9000, 57, Vladislav Varnenchik Blvd.

phone: (+359 52) 662 666

Tsaribrod – Varna

Varna 9000, 2, Dunav St.

phone: (+359 52) 662 721

Activity Report 2022

on an individual basis

FIRST INVESTMENT BANK

143/145

Varna

Varna 9000, 113, General Kolev Blvd.

phone:(+359 52) 662 600

Bacho Kiro – Veliko Tarnovo

Veliko Tarnovo 5000, 5, Bacho Kiro St.

phone: (+359 62) 682 436

Veliko Tarnovo

Veliko Tarnovo 5005, 18, Oborishte St.

phone: (+359 62) 614 464

Vidin

Vidin 3700, 17, Gradinska St.

phone: (+359 94) 605 522

Vratsa

Vratsa 3000, 1, Nikola Voyvodov St.

phone: (+359 92) 669 310

Yambol

Yambol 8600, 10, Osvobozhdenie Sq.

phone: (+359 46) 682 363

Zlatitsa

Zlatitsa 2080, 2, Medet St.

phone: (+359 728) 68 046

BRANCHES OUTSIDE BULGARIA

Cyprus International Banking Unit

130 Limassol Ave., CY‐2015 Nicosia, Cyprus

P.O.Box 16023, CY‐2085 Nicosia, Cyprus

phone: (+357 22) 376 454

fax: (+357 22) 376 560

SWIFT CODE: FINVCY2N

Activity Report 2022

on an individual basis

FIRST INVESTMENT BANK

144/145

The present Individual Activity report for 2022 was approved by the Managing Board of First

Investment Bank AD in accordance with the Bank’s internal regulations at a meeting dated

30 March 2023.

Signed Signed

Nikola Bakalov

Chief Executive Officer,

Chairman of the Managing Board

Signed

Svetozar Popov

Executive Director,

Chief Risk Officer,

Member of the Managing Board

Signed

Chavdar Zlatev

Executive Director,

Chief Corporate Banking Officer,

Member of the Managing Board

Ralitsa Bogoeva

Executive Director,

Chief Retail Banking Officer,

Member of the Managing Board

Signed

Ianko Karakolev

Chief Financial Officer,

Member of the Managing Board

Activity Report 2022

on an individual basis

FIRST INVESTMENT BANK

145/145

DECLARATION

under Art. 100о, para. 4(4) of the Public Offering of Securities Act (POSA)

The undersigned Nikola Hristov Bakalov, Chief Executive Officer and Chairman of the

Managing Board of First Investment Bank AD, Svetozar Alexandrov Popov, Executive Director

and Member of the Managing Board of First Investment Bank

AD, Chavdar Georgiev Zlatev,

Executive Director and Member of the Managing Board of First Investment Bank AD, Ralitsa

Ivanova Bogoeva, Executive Director and Member of the Managing Board of First Investment

Bank

AD and Ianko Angelov Karakolev, Chief Financial Officer and Member of the Managing

Board at First Investment Bank AD, hereby declare that to the best of our knowledge:

• The financial statements of First Investment Bank AD as at 31 December 2022, prepared

in accordance with the applicable accounting standards, give a true and fair view of the

assets and liabilities, financial position and profit of First Investment Bank AD.

• The annual report of First Investment Bank AD as at 31 December 2022 contains a fair

review of the development and results from the activities of First Investment Bank AD.

Signed Signed

_____________________ _____________________

Nikola Bakalov Svetozar Popov

Chief Executive Officer Executive Director

Chairman of MB Member of MB

Signed Signed

_____________________ _____________________

Chavdar Zlatev Ralitsa Bogoeva

Executive Director Executive Director

Member of MB Member of MB

Signed

_____________________

Ianko Karakolev

Chief Financial Officer

Member of MB

30 March 2023

Sofia

INFORMATION

FIRST INVESTMENT BANK AD

FOR 2022

The present information is prepared pursuant to Art.10, p.2 from Ordinance No.2 of the Financial

Supervision Commission from 09.11.2021 on the initial and subsequent disclosure of information

when securities are offered to the public or admitted to trading on a regulated market.

Information on

FIRST INVESTMENT BANK AD

for 2022

Page 2 of 3

1. Information on the securities, which are not admitted to trade on a

regulated market in the Republic of Bulgaria or another Member State.

In December 2022, First Investment Bank prolonged its one-year program for the issuance of hybrid

instruments (perpetual, non-cumulative, unsecured, deeply subordinated, freely transferable, non-

convertible bonds) meeting the requirements for additional Tier 1 capital to replace existing issues of

hybrid instruments issued by the Bank. The program envisages separate issues, the coupon interest

rate for each being determined individually according to market conditions. The minimum nominal

value per bond is EUR 100,000, with an option for additional investment above that amount at an

increment of EUR 1,000 or a multiple of EUR 1,000. The global bonds have been accepted for

clearance through Clearstream Banking S.A,

In August 2022, the Bank successfully issued as private placement the first tranche of its second issue

hybrid instruments (ISIN: XS2488805461) in the amount of EUR 10 million, thus bonds issued under

the program totaled EUR 40 million. As at 31.12.2022 the amortised cost of the issued hybrid

instrument amounted to BGN 19,603 thousand.

2. Information on the direct and indirect holding of 5 per cent or more of the

voting rights in the general meeting of the company, including information

on the shareholders and the number of shares held.

The shareholders holding 5% or more of the share capital of First Investment Bank as at 31 December

2022 are, as follows:

number / % of total

Number of

% held

Mr. Ivailo Dimitrov Mutafchiev

46,750,000

31.36%

Mr. Tzeko Todorov Minev

46,750,000

31.36%

Bulgarian Development Bank AD

27,350,000

18.35%

Valea Foundation

11,734,800

7.87%

At 31 December 2022 16,500,000 shares (11.06% of share capital) are traded freely at the Bulgarian

Stock Exchange AD (free-float).

3. Information on shareholders with special controlling rights and description

of such rights.

No shareholders have special controlling rights.

4. Agreements between shareholders which are known to the company and

may lead to restrictions in the transfer of shares or voting rights.

No such agreements are known to the company.

Information on

FIRST INVESTMENT BANK AD

for 2022

Page 3 of 3

5. Significant contracts signed by the company which require action or which

are amended or terminated due to a change in control of the company when

carrying out a mandatory tender offer, and the consequences thereof,

except where the disclosure of such information may cause serious damage

to the company; this exception shall not apply where the company is

obliged to disclose such information by law.

No such contracts exist.

Scorecard / Evaluation form for Corporate governance in Bulgaria

Evaluation's method for the companies with two tier governance structure

Based on the Methodology, developed by Christian Strenger

Notes about the methodology

Based on the National code for corporate governance in its' version from April 2016

The detached criterias refer to the corresponding chapters of the code

The execution's degree of every point is determined by marking in the field column (1)

Weight of the questions: Standart evaluation is checked in column (2)

The summarized results are described as a value of different criteria with common result in (3)

In case of need the source of information should be noticed in column "Source of information"

The astonishings before every criteria disappear, when it is marked the corresponding field in column (1)

The card has to be signed by personality with representing authority in the company

Name of the issuer: First investment bank AD

Date of completion 30 March 2023

Chose the governance system of the company

One tier system

Two tier system

The card is developed in 2 types depending on the governance system, as the company fulfills the type, which corresponds to its governance system

Scorecard / Evaluation form for Corporate governance in Bulgaria

Evaluation's method for the companies with two tier governance structure

Source of information

10.50

Please, point the way of the requirement's execution

yes partial no

When the execution is not in full compliance, please point the reasons

10%

I.1

Do the structure and the distribution of the tasks to the members on

the Management Board guarantee the effective performance of the

company?

10%

10.0%

The members and functions of MB are structured according to the statutes and

Corporate governance code. First investment bank functions with an organizational

structure, built in accordance with the good international standards in the area of

corporate governance, the EBA Guidelines and the principles of Basel commitee in

this area.

I.2

Do the compliance principles observed for competence level of the

candidates, by offer of choise of new members of the Management

Board, with the character of the company' s activity?

15%

15.0%

First investment bank has a Policy for nomination and assessment of the suitability

of the members of the managing and supervisory bodies and persons holding other

positions, which is in compliance with the regulatory requirements, activities of the

bank and development plans. In the bank works a Nomination Commitee, which

assists the Supervisory Board in assessing the individual and collective suitability of

members of the Supervisory Board and Managing Board, as well as assesses the

suitability of the key function and other holders in the Bank, in compliance with the

applicable legal provisions in this sphere.

I.3

In the contracts for assignment of the management, concluded with

the members of the Management board are determined their

obligations and tasks, the criteria of the size of their remuneration,

their obligations for loyality to the company and the reasons for

release?

15%

15.0%

In the contracts are included the total obligations, stipulated is the fixed

remuneration, as well as the payed expense in connection with the activity, incl.

such as health insurance, insurance, compensations and with respect to the

additional remunerations they are referred to the internal policies and rules of the

Bank. There are stipulated also the principles of loyalty, as well as the reasons for

termination of the contract.

I.4

Does the remuneration of the members of the Management Board

consist of basic salary and variable incentives?

15%

15.0%

First investment bank applies a Remuneration policy in compliance with the

regulating requirements, where the main principles in formation of remunerations

are regulated, as the goal of the Bank is the optimal structuring in accordance with

the functions and depending on the staff categories.

I.5

Are the additional incentives for the members of Management board

concrete appointed / appointable?

15%

15.0%

The principles for formation of remunerations in the Bank are structured so, that the

contribute to resonable and prudent corporate

overnance and reliable and effective

risk management.

I.6

Are the additional incentives for the members of Management board

bound by clear and concrete criteria and indicators for the results of

the company and / or by the achievement of preliminary determinated

by the Supervisory board goals? Describe the connection between

the additional incentives for the members of the Management board

and the achieved results of the company or other criteria and/or aims

determined by the Supervisory board.

15%

15.0%

In compliance with the Remuneration policy the variable remuneration, if such is

payed, is based on the results of the activity and achieved goals, having in mind the

economic cycle, the level of time horizon of the undertaken risks, the price of capital

and the necessary liquidity. It is given on the base of evaluation criteria for the

execution of the activity, which includes the appropriate combination of financial

(quantitative) and non-financial (qualitative) criteria, incl. execution of the budget,

achievement of purpose levels of profit, capital adequacy and effectiveness,

achievement of strategic goals, hold up to the Bank risk management policy,

customers satisfaction, observing of internal rules, initiative, motivation and others.

I.7

Is provided to the share holders approach to the information for deals

between the company and the members of Management board and

connected with it persons? Indicate the concrete place and the

order, eventual - the web page of the company, on which it can

obtain the above described information.

15%

15.0%

Information for deals with connected persons, incl. persons that control or manage

the Bank is published in the financial reports, which are published on the corporate

webpage of the Bank: www.fibank.bg

100%

Number of

points (3) = (1)

× (2)

Standart note

Criteria

Execution (1)

Standart note

(2)

Management board

Page 2 of 11

II.

10%

II.1

Is regulated in the organization acts the number of independent

members and the tasks' distribution between them?

10%

10.0%

The requirements for independent members of Supervisory board are regulated in

the Statute, Corporate governance code and Rules for the activity of Supervisory

board, as the requirement for 1/3 of the members of the Supervisory Board to be

independent members, which is applicable to significant banks and public

companies is met.

II.2

Are there appointed requirements for suitable knowledge and

experience for the members of Supervisory board, corresponding to

the position, which they hold? Indicate the specific place and order,

possibly - the webpage of the company, in which are determinated

the requirements for suitable knowledge and experience to the

members of Management board.

10%

10.0%

The requirements for suitable knowledge and experience, reliability and suitability to

the members of Supervisory board are regulated in the Statute, Corporate

governance code, Policy for nomination and assessment of the suitability of the

members of the managing and supervisory bodies and persons holding other

positions and Rules for the activity of Supervisory board in compliance with the

ulator

requirements. The Statute and Corporate

overnance code are published

on the corporate webpage of the Bank: www.fibank.bg

II.3

Do exist any determinated requirements for observing the principles

of continuity and stability of work of Supervisory board by the

elections of its members?

5.0%

The requirements for continuity and stability in the elections of members of SB are

regulated in the Policy for nomination and assessment of the suitability of the

members of the managing and supervisory bodies and persons holding other

positions and the Rules for the activity of SB. In succession planing the Bank takes

into account the principles for avoiding simultaneous replacement of too many

members, applying phasing out practices, compliance with temporary appointment

requirements and taking into account the diversity policy.

II.4

Is limited the number of consecutive mandates of the independent

members?

0.0%

Pursuant to the Bank's Statute, the members of SB could be re-elected for next

mandates without restrictions.

II.5

Is there at least one member of the Supervisory bord, who has

financial competence? Point the webpage of the company, where

could be found information for the competency of every member of

the supervisory board.

10%

10.0%

The SB members have high professional, incl. financial competences. Information

for the professional experience and competences of the members of Supervisory

board is included in the Annual activity report, as well as on the corporate webpage

of the Bank: www.fibank.bg

II.6

Is there established praxis the new members of the Supervisory

board to be introduced with the basic legal and financial questions,

connected with the activity of the company?

10%

10.0%

Pursuant to the Rules for activity of Supervisory board when elected, every member

of the Supervisory Board participates in introducing program, which includes the

common financial and legal questions, the financial reporting on behalf of the Bank,

concrete specifics for the Bank and its economic activity, as well as the

responsibilities of every member of Supervisory Board. The Bank has in place

Program for introductory and training of the members of the MB and SB, which is

integral part of the Policy for nomination and assessment of the suitability of the

members of the managing and supervisory bodies and persons holding other

positions. It includes information on the adopted governance policies and internal

rules, incl. on the Bank's structure, business model and risk profile and is presented

to each new member of MB or SB up to 1 month after election.

II.7

Does the education of the members of Supervisory board

encouraged? Indicate the actions, connected with increasing

qualification of someone or every members of the Supervisory board

during the last year?

10%

10.0%

In accordance with the Program for introductory and training of the members of the

MB and SB (integral part of the Policy for nomination and assessment of the

suitability of the members of the managing and supervisory bodies and persons

holding other positions), based on suitability assessment (individual and collective)

the areas with need of training shall be targetted, as well as taken into account the

changes in management, strategic changes, new products and technologies,

changes in applicable regulations and market development. During 2022

presentations have been organized related to changes in regulatory requirements,

incl. on capital and prudential requirements, sustainable development and ESG

risks, recovery and resolution, internal governance framework, AML/FT.

Supervisory board

Page 3 of 11

II.8

Is in the organizational acts of the company regulated the number of

companies in which the members of Supervisory board could hold

management positions? Point the document and the specific text, in

which are determinated the requirements for the number of

companies, in which the members of the Supervisory board hold

management positions.

10%

10.0%

As per the Rules for the activity of SB, the members of Supervisory Board shall limit

the holding of other positions, so to guarantee, that they can fulfill their obligations

as members of the Supervisory Board. Without the approval of the Supervisory

Board they shall not have the right to have more than a specific number of

memberships in boards in other companies. Pursuant to the Policy for nomination

and assessment of the suitability of the members of the managing and supervisory

bodies and persons holding other positions, limitations are included on the number

od directorship positions as specified in the Ordinance No 20 of the BNB on

Issuance of Approvals to Members of the Management Board (Board of Directors)

and Supervisory Board of a Credit Institution and Performance Requirements for

Their Duties.

II.9

Do the independent members of Supervisory board receive only

basic remuneration without additional incentives?

5.0%

Pursuant to the Remuneration policy, the members of Supervisory board receive

predominantly fixed remuneration.

II.10

Does the remuneration of the independent members of Supervisory

board influence their participation in meetings, the fulfillment of their

tasks to control the actions of executive management and their

effective participation in the activity of the company? Indicate the

specific place and order, possibly the webpage of the company,

describing the connection between the remuneration of independent

directors and the functions executed by them.

5.0%

The remuneration of the members of Supervisory Board is defined by the General

meeting of the shareholders in compliance with the Remuneration policy of the

Bank, as the participation in committees and the execution of the duties is taken into

account when determining of individual remunerations.

II.11

Does the company follows the principle of non-compensation of the

members of Supervisory board with shares and options?

5.0%

The remuneration of the members of Supervisory Board is structured in compliance

with the applicable regulations for credit institutions and the Remuneration policy of

the Bank, with the members of the Supervisory Board receiving predominantly fixed

remuneration.

II.12

Is ensured access for the shareholders to information for deals

between the company and the members of Supervisory board and

connected persons with it? Describe the procedure and the place,

possibly the webpage of the company, where could be obtained

information for the deals between the company and the members of

Supervisory board and the connected with it persons.

10%

10.0%

The information for deals with connected persons, incl. the persons that control or

manage the Bank, is published in the financial reports, which are published on the

corporate webpage: www.fibank.bg

II.13

Does the procedures for elections of new members report the

requirements for continuity and stability of functioning of Supervisory

board?

5.0%

The requirements for continuity and stability in the elections of members of SB are

regulated in the Policy for nomination and assessment of the suitability of the

members of the managing and supervisory bodies and persons holding other

positions and the Rules for the activity of SB. In succession planing the Bank takes

into account the principles for avoiding simultaneous replacement of too many

members, applying phasing out practices, compliance with temporary appointment

requirements and taking into account the diversity policy.

100%

95%

Page 4 of 11

III.

10%

III.1

Are there any incide for the company rules, regulating the regular,

timely and comprehensive exchange of information between the

Management and Supervisory board?

20%

20.0%

In compliance with the principles for good corporate governance, an opened

dialogue is maintained between SB and MB. Except for the regular reporting on the

execution of the assigned goals, general meetings are carried out. The members of

Supervisory Board have the right to direct contact with the management and the

Bank employees. The secretary has a key role for the entire support of this process.

The interaction between the SB and MB is regulated in the Corporate governance

code and the Rules for the activity of the MB and SB.

III.2

Did the Corporate governances establish policy of the company

regarding the disclosure of information and the connections with the

investors? Indicate the specific place and order, possibly the

webpage of the company, where could be an access to the above

described information. Indicate the date on which last are inspected

and / or updated the accepted policy.

20%

20.0%

First investment bank applies a Disclosure policy as a document, which is publicly

available on the corporate webpage www.fibank.bg

. The Disclosure policy was last

updated with a decision of MB of 24.01.2023, approved by a decision of SB of

22.02.2023.

III.3

Are the procedures of run away or disclose of conflict of interests

regulated in the regulation acts of the company? Indicate the specific

place and order, possibly the webpage of the company, where could

be an access to the above described information. Indicate the date

on which last are inspected and / or updated the accepted

procedures.

20%

20.0%

The requirements for avoiding and disclose of conflict of interests are regulated in

the Corporate governance code (last amended 23.03.2022), the Code of conduct

(last amended 24.08.2022), the Statute of the Bank (last amended 16.06.2022), the

Policy for managing of conflicts of interest (last amended 17.03.2021). The Statute

and the Corporate governance code are published on the corporate webpage:

www.fibank.bg

III.4

Are there definite requirements for observing the principles of

continuity and stability in the work of Management board, when

nominating and dismissing its members?

20%

20.0%

The requirements for continuity and stability in the elections of members of MB are

regulated in the Policy for nomination and assessment of the suitability of the

members of the managing and supervisory bodies and persons holding other

positions and the Rules for the activity of SB. In succession planing the Bank takes

into account the principles for avoiding simultaneous replacement of too many

members, applying phasing out practices, compliance with temporary appointment

requirements and taking into account the diversity policy.

III.5

Did the corporate directions accepted and observe the Ethic code?

Indicate the specific place and order, possibly the webpage of the

company, where could be an access to the above described

information. Indicate the date on which last are inspected and / or

updated the accepted the code and describe if there are cases in the

last year, requiring the execution of the principles, set in the code.

20%

20.0%

imin

at reco

nition of professional and ethic standards, applicable and executable

towards the Bank as a company, working environment and credit institution, Fibank

has a Code of Conduct, which defines the main principles, ethic norms and

corporate values, on which are build the policies and business plans, rules,

procedures and daily operative work. The Code of conduct is last updated with a

decision of MB of 14.06.2022, approved with a decision of SB on 24.08.2022.

100%

Collaboration between the Management and Supervisory board

Page 5 of 11

IV.

20%

IV.1

Has the company build up a system for internal control, which

including to identify the risks, concomitant the activity of the company

and to support their effective management?

25%

25.0%

First Investment Bank builds up and develops a sound and comprehensive internal

control framework, which includes independent control functions (the functions of

risk management, compliance and internal audit) structured in line with the principle

of "three lines of defence". The requirements in this area are regulated in the

Corporate governance code, the Policy of internal audit, the Rules for internal audit

and the Ethical code of the internal auditor in Fibank, the Polic

for risk mana

ement

and capital adequacy, the Rules for applying risk management function, the

Compliance policy, the Charter for implementing the compliance function.

IV.2

Does the system for internal control guarantee the effective

functioning of the systems for book-keeping and disclosure of

information?

25%

25.0%

The system for internal control includes control functions with the necessary rights

and access for independend execution of obligations, as well as control bodies, incl.

Audit committee, which observes the financial reporting and the independent

financial audit. The control functions and bodies contribute to the effective

management of the Bank, as they give reasonable confidence, that the normative

regulations, rules and procedures are strictly adhered to and there are appropriate

and timely correcting actions undertaken, as in this way it helps for minimizing risk of

losses and achiving the business goals of the Bank.

IV.3

Is the corporate management supported for its activity by the audit

committee?

25%

25.0%

In its capacity of a company of public interest, pursuant to the Law on the

independent financial audit, an Audit committee functions within the Bank, which is

responsible for the observing of the financial reporting and independent financial

audit, as well as the effectiveness of the internal audit function and the systems for

control and risk mana

ement in the Bank. The committee recommends the selection

of the external registered auditor, which is to execute an independent financial audit

of the Bank and observes its independance in compliance with the requirements of

the law, Regulation 537/2014 and the Ethical code of the professional accountants.

IV.4

Does the principle for rotation implies by the proposals and the

election of external auditor? Point the external auditors of the

company in the last three years.

25%

25.0%

First investment bank applies the requirements for rotation of the registered

auditors, applicable to the companies of public interest pursuant to the Law on the

independent financial audit. The registered auditors of the Bank in the last three

years are as follows: for 2020 joint audit by two audit companies - BDO Bulgaria

OOD and Mazars OOD, for 2021 joint audit by two audit companies - BDO Bulgaria

OOD and Ecovis odit BG OOD, for 2022 joint audit by two audit companies - Ecovis

Odit Bulgaria OOD and Mazars OOD.

100%

Audit and internal control

Page 6 of 11

20%

V.1

Are all shareholders treated equally, incl. the minority shareholders

and foreign?

10%

10.0%

The requirements for equal treatment of the shareholders, incl. minority and foreign

are regulated in the Corporate governance code of Fibank and Statute of FIBank.

V.3

Has the corporate bodies developed rules for the organizing and the

conducting of regular and extraordinary General meetings of the

shareholders of the company, which guarantee the equal treatment

of all shareholders and the right of every shareholder to express his

opinion on the items of the agenda of the General meeting? Indicate

the specific place and order, possibly the webpage of the company,

where the above described information could be accessed. Indicate

the date on which are inspected and updated the accepted rules.

15%

15.0%

The requirements for calling and conducting General meetings of the shareholders

are regulated in the Statute of the Bank and in the Corporate governance code of

Fibank. The documents are published on the corporate webpage www.fibank.bg.

The Statute is last updated by the General meeting of the shareholders on

16.06.2022. The corporate

overnance code is last updated with a decision of MB of

17.03.2022 and is approved by SB with a decision of 23.03.2022.

V.4

Do the corporate bodies organize procedures and order for conduct

of General meeting of shareholders in a way, which does not

encumber or make more expensive and unnecessary the voting?

10%

10.0%

The place of conducting the General meeting is easy accessible for the majority of

shareholders. The registration procedures are convenient and enable fast and easy

approach. The Bank makes the necessary efforts to ensure easier participation in

the voting of the items in the agenda of the General meeting of the shareholders.

V.5

Do the corporate bodies undertake actions for encouragement the

participation of the shareholders in the General meeting of the

shareholders and what?

10%

10.0%

The Bank has undertaken a number of initiatives for additional enagagement of the

shareholders, incl. maintenance of an Investors' club, with registration in which all

interested persons could receive notification on their e-mail about every disclosed

information by the Bank to the public, concerning the investors, as well as regular

meetin

s with minorit

shareholders. A mobile IR Fibank application is developed for

investors.

V.6

Are there presented in the materials of General meetings of the

shareholders all proposals about the basic corporate events as

separate points in the agenda of the General meeting (incl. the

proposals for distribution of the profit)? Indicate the address of the

section on the webpage of the company, where the above described

information and documents represented to the shareholders on the

last General meeting of the company could be found.

10%

10.0%

Each proposal is structured in a separate point. The information on the General

meeting of shareholders is in section Investors / General meetings of the

shareholders on the corporate webpage www.fibank.bg

V.7

Does the company maintains on its corporate website a special

section on shareholders' rights and their participation in the General

meeting of shareholders? Please, specifiy the address of the section

of this information is presented.

10%

10.0%

The section on shreholders' rights is in section Investors/ Corporate governance/

Shareholders' rights at the corporate website www.fibank.bg

V.8

Is there a mechanism ensured for supprting shareholders with rights

in accordance with the effective legislation to include additional

questions and propose decisions on already included questions in

the agenda of the General meeting? Please describe the mechanism.

10%

10.0%

The shareholders are provided with an information on their rights, incl. to propose

additional questions in the agenda of the GMS. The information is structured in the

section Investors/ Corporate governance/ Shareholders' rights at the corporate

website www.fibank.bg.

Information on shareholders' rights is included also in the

Invitation for convening of GMS.

V.9

Are shareholders informed on the results from the general meeting of

shareholders through internet in the specified term? Please, indicate

the section in which the relevant information is present at the website

of the company.

15%

15.0%

The results from the general meeting of shareholders are in section Investors/

General meeting of shareholders at the corporate website www.fibank.bg

V.10

Are all members of the corporate bodies present at the General

meeting of shareholders of the company? Specify how many

members were present at the last GMS of the company.

10%

10.0%

An opportunity is ensured for the members of the Manging Board and the

Supervisory Board to be present at the General meeting of shareholders (unless

important reasons require their absence). At the last Regular GMS five members of

the Managing Board and three members of the Supervisory Board were present,

incl. the chairs of the SB and MB.

100%

Protection of shareholders' rights

Page 7 of 11

VI.

20%

VI.1

Does the corporate bodies have adopted internal rules which ensure

timely disclosure of each material periodic and ad-hoq information for

the company, its management, corporate bodies, operating activity

and shareholders' structure?

10%

10.0%

First Investment Bank applies a Disclosure policy that outlines the framework for

provision of information to stakeholders, shareholders and investors and provides

an opportunity for making objective and informed decisions and assessments, while

complying with the principle of equaly treatment of addressees.

VI.2

Does the information disclosure system ensures equally treatment of

addressees (shareholders, stakeholders, investment community) and

avoids inside information abuse? Describe the main characteristics of

the maintained information disclosure system and the way it

guarantees equaly treatment of addressees.

10%

10.0%

In compliance with the Disclosure Polic

of Fibank, the Bank discloses information to

the public throu

h the electronic X3News s

stem

(

www.x3news.com

)

, which ensures

effective dissemination of information to the widest possible audience,

simultaneously and in a non-discriminatory manner. The information is also

published at the corporate website of the Bank www.fibank.bg

VI.3

Does the information disclosure system ensures full, timely, fair and

understandable information for taking objective and well informed

decisions and assessments?

5.0%

Fibank discloses information in its capacity of a credit institution, public company

and investment intermediar

in compliance with its Information Disclosure Polic

and

ots Corporate Governance Code, the applicable regulatory requirements and good

practices in this sphere. The Bank maintains also a financial calendar included in the

Disclosure Policy of Fibank, which is publicly accessible at the Corporate

governance section of the website of the Bank www.fibank.bg

VI.4

Does the corporate bodies adopted and control the compliance of

internal rules for preparing the annual and interim reports and way of

disclosing information?

10%

10.0%

The requirements are regulated in the Disclosure Policy and the Corporate

Governance Code of the Bank, as in addition the Bank has adopted internal Rules

on the requirments for disclosure of information that regulate the internal

organisation on information disclosure within the Bank.

VI.5

Does the company has an updated corporate website? Please, give

the address.

10%

10.0%

First Investment Bank has a corporate website www.fibank.bg, with established

content, scope and periodicity of the information disclosed therein in compliance

with the regulatory requirements and good corporate practices.

VI.6

Does the company discloses on its corporate website the whole

information pursuant to Chapter 4, p. 34 of the Code? In case the

company does not comply with any of the reccomendations please

describe the reasons.

15%

15.0%

The requested information is publicly accessible through the corporate website

www.fibank.bg

VI.7

Does the company has english version of its website with content

pursuant to Chapter 4, т. 34 from the Code?

15%

15.0%

First Investment Bank has an English version of its corporate website

www.fibank.bg,

with established content and scope of the information disclosed

therein.

VI.8

Does the company informs regularly in accordance with regulatory

norms and good international practices information of non-financial

character, for economical, social, ecological questions related to

stakeholders (e.g.: fight with corruption, work with employees,

clients, suppliers, social responsibility, environment protection?

10%

10.0%

Fibank has special sections in the Annual activity report on disclosing information of

non-financial character (non-financial declaration under the meaning of art.48 of the

Accountancy Act), incl. ecological, social, governance and ethical issues, human

capital management, business model description, etc.

VI.9

Is there an easy access for shareholders to the company's

remuneration policy and information on the Board's annual

remunerations and additional stimuluses?

10%

10.0%

Information on the Bank's Remuneration Policy and its execution (Report on the

execution of the Remuneration policy under the meaning of art.100m of LPOS) is

disclosed in the Annual activity reports, as well as quantitative information on the

remuneration of the key management personnel received during the year - in the

Annual Financial Statements, which are publicly available i.a. through the corporate

website www.fibank.bg

VI.10

Does the corporate bodies disclose in a timely manner the structure

of capital and agreements that lead to excercise of control in

accordance with its rules for disclosure of information?

5.0%

The requested information is disclosed in a timely manner and regularly in

accordance with the Bank's Disclosure policy and applicable regulatory

requirements. The information is disclosed through X3News system as well as on

the corporate website www.fibank.bg

100%

Disclosure of information

Page 8 of 11

VII.

10%

VII.1

Does the company has identified who are the stakeholders with

relation to its activity based on their spheres of influence, role and

attitute to its sustainable development?

20%

20.0%

The requirement is re

ulated in the Corporate Governance Code and the Disclosure

Policy of Fibank.

VII.2

Does the corporate bodies ensure effective cooperation with

stakeholders?

20%

20.0%

First Investment Bank applies a polic

of providin

information to stakeholders about

its activit

. Those include persons who are not shareholders but are interested in the

economic development of the company, such as creditors, bondholders, customers,

employees, the general public, and others. Periodically, in accordance with the legal

requirements and best practices, First Investment Bank discloses information of a

non-financial nature, as well as maintains and develops a corporate blog which

functions as a channel of communication aimed at open dialogue in accessible

language with customers, partners and other stakeholders.

VII.3

Does the compnay has specific rules for taking into consideration the

interests of the stakehodlers, which to ensure their attraction for

deciding on certain questions that require their position?

20%

20.0%

The rules for cooperation with stakeholders are regulated in the Corporate

Governance Code of Fibank, the Disclosure Policy and the Code of Conduct of the

Bank.

VII.4

Does the corporate bodies ensure enough information to all

stakeholders on their legal rights and if yes, how?

20%

20.0%

Fibank applies a policy of providing information to stakeholders in compliance with

applicable regulations as well as the Bank publishes additional information in the

form of presentations and interviews with senior management, press releases,

specialised journals (e.g. Fibank News), and detailed information on the products

and services of the Bank.

VII.5

Does the corporate bodies guarantee the right of regular and timely

access to relevant, sufficient and reliable information on the company

when the stakeholders take part in the process of corproate

governance and if yes, how?

20%

20.0%

The requirements are met with adopted by the Bank written policies which

application is monitored in accordance with the applicable regulatory and internal

requirements.

100%

Corporate governance - engagement (incl. stakeholders)

Page 9 of 11

10%

VIII. 1

Does the corporate bodies ensure effective cooperation between the

company and its shareholders - institutional investors, as well as with

the regulated markets in financial instruments and the investment

intermediaries on those markets and if yes, in what way?

20%

20.0%

With a view to creating an effective relation between First Investment Bank and its

shareholders and the persons interested in investing in financial instruments issued

by the Bank, First Investment Bank has appointed Investor Relation Director. In

compliance with best corporate governance practices, the Bank develops initiatives

for further engaging with minority shareholders and institutional investors. In

addition, in an effort to maintain an open line of communication with shareholders

and investors, First Investment Bank maintains an Investors Club as well as

organizes and holds regular meetings with minority shareholders, with a view to

furthering transparency and creating an opportunity for open dialogue and feedback

between them and the senior management of the Bank, as well as their opportunity

to contribute and work actively for the successful development of First Investment

Bank AD. The Bank has in place a mobile application for investor relations ensuring

fast access to financial information and the financial calendar of the Bank, as well as

to other data and news related to investors.

VIII. 2

When choosing investment intermediaries and respectively operators

of markets on which the financial instruments are traded, does the

corporate bodies take into consideration to what extent the actions of

these entities are based on market information and principles?

20%

20.0%

The Bank acts in relation to these requirements in a way that is compliant with

regulatory requirements and good practices.

VIII. 3

Does the corporate bodies coordinate with its investment

intermediaries and institutional investors the company's corporate

governance policy and practices?

20%

20.0%

The reporting on corporate governance policies and procedures are regularly

disclosed, incl. the goals for development for the next year and their execution.

VIII. 4

Does the company requires disclosure and limiting conflict of interest

from advisors, analysers, brokers, rating agencies and other persons

that provide consultations?

20%

20.0%

The Bank's policies on avoiding and disclosure of conflicts of interest is in

compliance with the re

ulator

requirements, applicable to the Bank in its capacit

a credit institution, public company and investment intermediary.

VIII. 5

If the company is admitted to trade in a jurisdiction, different from the

one it is incorporated in, does it disclose the applicable for this

jurisdiction corporate governance rules?

20%

20.0%

Fibank conforms its information disclose with the requirements, applicable to the

place at which the Bank and its financial instruments are admitted for trade.

100%

VIII. Institutional investors, markets in financial instruments and other intermediaries

Page 10 of 11

Corporate Governance Self-evaluation Scorecard

Standard

Share: 10%

Standard

Share: 20% Partial score: 100% Share: 10%

Partial score: 100% Partial score: 100%

Standard Standard score

100%

Standard

Share: 20% Share: 10%

Partial score: 100% Partial score: 100%

Standard Standard

Share: 10%

Standard

Share: 10%

Partial score: 100% Share: 10% Partial score: 95%

Partial score: 100%

Institutional investors, markets in

financial instruments and other

internediaries

Scorecard/Evaluation form for Corporate governance in Bulgaria

Corporate governance - engagement

(incl. Stakeholders)

Protection of shareholders' rights

Cooperation between the Managing

and Supervisory Boards

General results for companies with two-tier governance system

Information disclosure

Overall assessment Corporate

Governance

Managing Board

Supervisory BoardAudit and internal control

Page 11 of 11

Corporate governance code

of First Investment Bank AD

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 2

Table of Contents:

Introduction ...................................................................................................................................... 3

Corporate status and profile ............................................................................................................. 4

Mission .................................................................................................................................... 4

Scope and application ....................................................................................................................... 5

Organizational framework ................................................................................................................. 7

Principal bodies and functions in corporate governance .................................................................. 8

Supervisory Board ................................................................................................................... 8

Managing Board .................................................................................................................... 12

Remuneration policy in the Bank .......................................................................................... 15

Control Environment and Processes ..................................................................................... 16

Risk Management and Risk Control ...................................................................................... 17

Compliance ........................................................................................................................... 18

Internal audit ......................................................................................................................... 19

External Auditors (Registered Auditors) ................................................................................ 20

Audit Committee ................................................................................................................... 20

Shareholders’ rights and equitable treatment ................................................................................ 21

Convening of the General Meeting of Shareholders ............................................................. 22

Conducting of the General Meeting of Shareholders ............................................................ 23

Results .................................................................................................................................. 23

Disclosure of information and transparency ................................................................................... 24

Disclosure policy and disclosure practices ............................................................................ 24

Additional provisions ....................................................................................................................... 25

Transitional and Final provisions ..................................................................................................... 27

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 3

Introduction

The corporate policy of First Investment Bank AD /Fibank, the Bank/ shall be based on professional

and transparent governance in line with the internationally recognized standards and principles

for good corporate governance and sustainable development, taking into account the changes in

regulations and economic environment, as well as the importance of First Investment Bank to the

financial market in the country.

First Investment Bank shall develop and enhance corporate governance as a means to improve

efficiency, successfully attain the strategy and plans for long-term development, incl. with respect

to sustainability, as well as affirm its reputation.

The purpose of the present Corporate Governance Code /the Code/ shall be to define the main

principles and requirements for maintaining and furthering the organization and governance methods

of First Investment Bank, aiming at:

• Responsible, accountable and value-based management;

• Effective oversight of management and control;

• Executive body and senior management that act in the best interests of the Bank and seek to

enhance shareholder value;

• Timely financial and non-financial information disclosure and transparency;

• Effective system of risk management and internal control.

The purpose of the Code shall be also to outline the governance framework and to structure the

key components, functions and responsibilities of the corporate governance system of the Group of

First Investment Bank. Following the Code shall contribute to attaining the goals and plans, which

are in the interests of the Bank as a whole, the customers, shareholders, creditors, stakeholders

in the country and abroad, as well as to facilitate effective oversight, thus fostering more efficient

usage of resources.

The present Code shall comply with the National Corporate Governance Code, as well as with the

effective legislation in the Republic of Bulgaria, incl. the specific requirements applicable to credit

institutions.

The Code shall reflect also the Corporate governance principles for banks of the Basel Committee,

the European Banking Authority /EBA/ Guidelines on internal governance, as well as the Organisation

for Economic Co-operation and Development /OECD/ Principles of corporate governance.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 4

Corporate status and profile

First Investment Bank is a joint-stock company registered with Sofia City Court pursuant to a ruling

dated 8 October 1993. Since 28 February 2008 the Bank has been registered in the Commercial

First Investment Bank is a public company registered in the Commercial Register of Sofia City Court

by a decision dated 4 June 2007 and in the register of public companies and other issuers held by

the Financial Supervision Commission by a decision dated 13 June 2007.

The Bank owns a universal banking license for domestic and international operations.

First Investment Bank is a licensed primary dealer in government securities and is a registered

investment intermediary.

In pursuance of the applicable requirements, the Bank has a Legal Entity Identifier (LEI) code

549300UY81ESCZJ0GR95, issued by the Global Markets Entity Identifier (GMEI) Utility.

First Investment Bank has a two-tier governance system consisting of a Supervisory Board and a

Managing Board.

First Investment Bank offers a wide range of services in the sphere of corporate banking, lending

to companies, servicing individuals, card payments, payment and trade operations on the local and

international markets.

The Bank operates mainly on the Bulgarian financial market, as well as performs banking activity in

abroad throughout its branch in Cyprus and the subsidiary bank in Albania /First Investment Bank –

Albania Sh.a./.

First Investment Bank is among the leading credit institutions in the Republic of Bulgaria.

Mission

First Investment Bank AD aspires to continue to be one of the best banks in Bulgaria, recognized as

a rapidly growing, innovative, customer-oriented bank, offering outstanding products and services

to its customers, ensuring excellent careers for its employees, and contributing to the community.

The Bank shall continue to develop high-technological solutions providing its customers with

opportunities for banking from any place around the world at any time.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 5

Scope and application

The corporate governance

of First Investment Bank shall be a system of policies, rules, procedures

and practices, through which the Bank is managed and controlled under clearly defined functions,

rights and responsibilities at all levels – General Meeting of Shareholders, Supervisory Board and

committees to it, Managing Board and committees and councils to it, Internal Audit, structures in

the Head Office, branches and offices.

The corporate governance of First Investment Bank shall be based on the corporate governance

principles of the Basel Committee on Banking Supervision /the Basel Committee/, of the European

Banking Authority /EBA/ and of the Organisation for Economic Co-operation and Development /

OECD/, including the principles for:

• transparency;

• publicity;

• objectivity;

• fairness;

• trustworthiness;

• independence;

• sustainability.

The risk governance system shall be organized in line with “the three lines of defence”:

•

The business units shall be the first line of defence, which shall acknowledge and manage

the risks that they incur in conducting their activities.

•

The Risk management function and the Compliance function shall comprise the second

line of defence, which shall be responsible for further identifying, measuring, monitoring and

reporting risk on a Bank-wide basis, independently from the business units.

• T

he Internal audit function shall be charged with the third line of defence, conducting

risk-based audits and reviews to provide assurance to the Supervisory Board that the overall

corporate governance framework of the Bank, including the risk governance framework, is

effective and that appropriate policies, systems and processes are in place and consistently

applied.

The members of the Supervisory Board and of the Managing Board, the senior management and

all employees shall accept the present Code as a joint responsibility and apply the requirements set

forth and its spirit in fulfilling their obligations.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 6

Application at group level. The competent management bodies of the subsidiary companies shall

follow the guidelines and principles of the present Code, unless any legal or supervisory acts require

otherwise.

Aiming at exercising adequate control over subsidiary companies, the corporate governance

structure of First Investment Bank shall adopt and apply appropriate instruments for monitoring of

all risks that may affect the group. The Bank shall apply policies on internal governance at a group

level, thus contributing to effective control over the subsidiary companies, clear levels of reporting

and securing the necessary resources for applying the group and local governance standards.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 7

Organizational framework

According to the principles of the Basel Committee

The Supervisory Board should define appropriate governance structures and practices for

its own work, and put in place the means for such practices to be followed and periodically

reviewed for ongoing effectiveness.

The following governance bodies and key structures shall function within the Bank:

General Meeting of Shareholders - the highest governance body, allowing the shareholders to take

decisions on principle matters relating to the existence and the activity of the Bank.

Supervisory Board /SB/ - shall define the strategy for development and exercises oversight of the

management of the Bank. The Supervisory Board shall be supported in its activity by committees.

Managing Board /MB/ - shall manage the Bank by resolving all issues within its scope of activity,

except those within the exclusive competence of the General Meeting of Shareholders or the

Supervisory Board. It shall carry out the strategy for development of the Bank, adopted by the

Supervisory Board. The Managing Board shall be supported in its activity by committees and councils.

Risk management function – shall identify, measure and manage all material risks to the Bank in

compliance with the policies adopted by the Supervisory Board and the Managing Board.

Compliance function - shall manage the risk from non-compliance or violation of legal regulations,

ethical standards, rules and procedures in accordance with the policies adopted by the Supervisory

Board and the Managing Board.

Internal audit - shall support the Supervisory Board and the Managing Board by providing an

independent and objective assessment on the effectiveness of the risk management, control and

governance processes.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 8

Principal bodies and functions in corporate

governance

Supervisory Board

According to the principles of the Basel Committee

The Supervisory Board exercises supervision and where necessary advices the Managing

Board, and provides oversight of the general activity of the Bank, including approving and

overseeing the implementation of the Bank’s strategic objectives, corporate governance

framework and corporate culture.

The Supervisory Board of First Investment Bank shall function in line with the principles of the

Basel Committee and with the EBA guidelines. In the By-Laws of the Bank the following principal

functions are defined:

Functions

• Exercises supervisory functions and represents the Bank in its relations with the Managing

Board;

• Defines the general objectives of the Bank activity, as well as the attainment strategy, incl. in

the context of sustainable development;

• Approves decisions of the Managing Board that are within the competence of the Supervisory

Board in compliance with the By-Laws of the Bank, the By-Laws of the Supervisory Board and

the law;

• Approves the general corporate governance framework of the Bank.

Setting corporate culture, sustainability and ethical values

By applying high ethical standards and corporate values for business behavior, the Supervisory

Board shall establish high corporate culture and business ethics by applying “tone at the top”. The

Supervisory Board shall ensure the exercise of control over the compliance of ethical standards, set

forth in the Code of Conduct of the Bank, as well as for establishing a sustainability culture within

the Bank.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 9

Risk tolerance/appetite, management and control

The Supervisory Board shall be responsible for overseeing the risk governance framework, the risk

appetite; the internal system for management and control of all types of risk, including ESG risks, by

demanding strong risk culture among its employees.

Oversight of Managing Board activity and of senior management

The Supervisory Board shall exercise oversight of the collective and individual performance of

Managing Board members and senior management, as well as of attaining the targeted objectives

in a sustainable way.

Committees

The Supervisory Board shall be supported in its activity by a Presiding Committee, a Risk Committee,

a Remuneration Committee, and a Nomination Committee which shall function according to written

competencies, rights and responsibilities.

The Presiding Committee shall be responsible for overseeing the activities of the Managing Board

on important strategic decisions, including the issue of new shares, bonds, hybrid instruments,

the adoption of programs and budgets relating to the activity of the Bank, as well as overview and

control over the activity of the subsidiaries.

The Risk Committee shall assist the supervision over the risk management activities of the

Managing Board, as well as the broad strategic and tactical supervision of the risk management

function in the Bank. The committee shall advise the Supervisory Board regarding the overall current

and future strategy on the compliance with risk policy and risk limits, risk appetite and the control

over its performance by the senior management.

The Remuneration Committee shall assist the Supervisory Board in the implementation of the

Remuneration policy of the Bank and its subsequent amendments, as well as in any other matters

concerning remuneration, in accordance with the regulatory requirements and best practices in the

area.

The Nomination Committee shall assist the Supervisory Board in assessing the suitability of

candidates or active members of the Supervisory Board and of the Managing Board, as well as of

the key function holders in the Bank, in compliance with the applicable regulatory provisions and

internal regulations in this sphere.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 10

The Supervisory Board and its committees shall function according to written rights and

responsibilities, competences and rules of procedure, defined in the following rules of the Bank: By-

Laws of the Supervisory Board, Rules of procedure of the Presiding Committee to the Supervisory

Board, Rules of procedure of the Risk Committee to the Supervisory Board, Rules of procedure

of the Remuneration Committee to the Supervisory Board, Rules of procedure of the Nomination

Committee to the Supervisory Board.

Composition and professional qualification of Supervisory Board members

According to the principles of the Basel Committee

Supervisory Board members are qualified and maintain their high professional qualification

during the term of their mandate, individually and collectively, for their responsibilities.

Supervisory Board members understand their oversight and corporate governance role and

are able to exercise sound, objective judgment about the affairs of the bank.

The Supervisory Board shall consists of three to seven persons, who comply with the requirements

set forth in the applicable legislation, the By-Laws of the Bank and the By-Laws of the Supervisory

Board.

The composition of Supervisory Board shall include persons with appropriate qualification and

professional experience corresponding to the Bank’s activities and the main risks the Bank is

exposed to.

Supervisory Board members shall be elected by the General Meeting of Shareholders for a term of

up to 5 years.

The independent members of the Supervisory Board of First Investment Bank shall conform to

independence requirements set forth in the law (LCI, Art.10a, Para.2 and LPOS, Art.116a, Para.2).

First Investment Bank shall maintain a Suitability Matrix of the Supervisory Board with data on the

professional qualifications, skills and experience of its members. Each member of the Supervisory

Board shall possess experience, knowledge, qualifications and skills for team work, required for the

effective performance of his/her duties and ensuring the capability of the Supervisory Board as a

collective body to guarantee the attainment of the long-term interests of the Bank.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 11

The Bank shall ensure an orientation program for new members of the Supervisory Board, as well

as shall provide access to training courses to all members of the Supervisory Board as a matter of

furthering their professional qualifications in the best interest of the functions performed by them,

including on the novelty in the spheres of corporate governance and sustainable development. The

Nomination Committee shall ensure an annual review and assessment of the qualifications and

competences of the members of the Supervisory Board. The Supervisory Board and its committees

may use independent experts, if necessary.

Rules of procedure of the Supervisory Board

The Supervisory Board shall meet as often as necessary. The Supervisory Board shall meet at least

once every 3 months. If possible, meetings shall be scheduled annually in advance. The Supervisory

Board shall meet earlier than scheduled if deemed necessary by the Chair of the Supervisory Board,

another member of the Supervisory Board, or the Managing Board.

The Supervisory Board shall function according to written procedures, competencies and norms /

By-Laws of the Supervisory Board of First Investment Bank/, and in conformity to the By-Laws of

the Bank and the effective legislation.

Minutes shall be kept at all meetings of the Supervisory Board, signed by all members that have

attended the meeting.

In order to facilitate the organization of work of the Supervisory Board, the Bank has in place a

Chief Secretary. Further to organizing the meetings of the Supervisory Board and keeping minutes,

the Secretary shall be responsible for monitoring the compliance of procedures, as well as for

ensuring submission and exchange of information between the members of the Supervisory Board,

the members of the committees and the Managing Board.

Role of the Chair of the Supervisory Board

The Supervisory Board shall elect a Chair and a Deputy-Chair among its members.

The Chair shall ensure that the Supervisory Board decisions are taken on a sound and well informed

basis. The Chair shall encourage and promotes open and critical discussion and ensures that

dissenting views can be freely expressed and discussed within the decision-making process.

The Deputy-Chair shall substitute and take over the execution of the rights and obligations of the

Chair in his or her absence.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 12

Conflicts of interest of the members of the Supervisory Board

The members of the Supervisory Board shall be responsible for performing their duties objectively,

critically and independently by avoiding conflicts of interest and where this is not possible for

disclosing them in a timely manner.

Each member of the Supervisory Board shall immediately report to the Chair of the Supervisory

Board any conflict of interest or potential conflict of interest and shall provide all relevant information.

The Supervisory Board member concerned shall not take part in the assessment by the Supervisory

Board of whether a conflict of interest exists. The members of the Supervisory Board shall declare

in writing the existence of conflicts of interest.

Self-assessment of the activity of the competent governance body

At least once a year, the Supervisory Board shall perform assessment of the effectiveness of its

own activities, individually and collectively, assessment of the governance practices and procedures,

suitability, as well as of the functioning of the Managing Board and the committees to the Supervisory

Board.

Managing Board

According to the principles of the Basel Committee

Under the direction and oversight of the Supervisory Board, the Managing Board carries out

and manages the bank’s activities in a manner consistent with the business strategy, risk

appetite, incentive compensation and other policies approved by the Supervisory Board.

The Managing Board shall manage the Bank independently and responsibly in a manner consistent

with the established mission, objectives and strategies of First Investment Bank, as well as with the

priorities related to sustainable development.

The Managing Board shall function according to its By-Laws, approved by the Supervisory Board, as

its principle functions shall be to:

• Manage and represent the Bank, by resolving all issues within its scope of activity, except those

within the exclusive competence of the General Meeting of Shareholders or the Supervisory

Board – in compliance with the law and the By-Laws of the Bank;

• Organize the execution of the decisions of the General Meeting of Shareholders and these of

the Supervisory Board;

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 13

• Report on its activity to the Supervisory Board at least once every 3 months and to immediately

inform the Chair of the Supervisory Board or his or her deputy for all circumstances of material

importance to the Bank;

• Perform all other functions, delegated to it by the General Meeting of Shareholders or the

Supervisory Board and the law.

Committees and Councils

The Managing Board shall be assisted in its activities by a Credit Council, an Assets, Liabilities and

Liquidity Council, a Restructuring Committee, an Operational Risk Committee, IT Committee, which

all shall function in accordance with defined written structure, scope of activities and functions.

The Credit Council shall support the management of the credit risk undertaken by the Bank by

issuing opinions on loan transactions in accordance with the authority level assigned thereto.

The Assets, Liabilities and Liquidity Council (ALCO) – shall manage on an ongoing basis the

Bank’s assets, liabilities and liquidity. It shall conduct systemic analyses of the interest structure of

assets and liabilities, the maturity ladder and of liquidity indicators.

The Restructuring Committee shall act as a specialized body for monitoring, assessment,

classification, impairment and provisioning of risk exposures and commitments. It shall give

motivated written proposals to the Managing Board, respectively shall take decisions for restructuring

of exposures in accordance with the authority level assigned thereto.

The Operational Risk Committee shall be a consultative body established to facilitate the adequate

management of operational risk by monitoring and analyzing operating events. The committee shall

propose measures for the minimizing of operational risks, as well as preventive measures.

The IT Committee shall be an auxiliary body, responsible for monitoring the implementation of the

Bank‘s IT strategic program, and to manage and control the IT project portfolio, the targeted use of

resources and the approved budget in this area.

The internal regulations defining the committees and councils’ activity, their rights and responsibilities,

competences and rules of procedure are the following: Rules for the organisation and operation of

the Assets, Liabilities and Liquidity Council (ALCO), Rules for the operation of the Restructuring

Committee of First Investment Bank, Rules for the operation of the Credit Council of First Investment

Bank, Rules of procedure of the Operational Risk Committee of First Investment Bank, Rules for the

organisation and operation of the IT Committee.

The Managing Board shall submit information to the Supervisory Board in a timely manner in respect

to:

• Changes in the business strategy execution, risk appetite;

• Attainment of the objectives;

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 14

• Breaches of risk limits or compliance rules;

• Material internal control system failures;

• Legal or regulatory concerns.

Composition and professional qualification of Managing Board members

The Managing Board shall consist of three to nine legally capable physical persons, elected by the

Supervisory Board after recommendation from the Nomination Committee. They shall comply with

the requirements of the effective legislation, the By-Laws of the Bank and the Policy for Nomination

and Suitability Assessment of the Members of the Managing and Supervisory Bodies and of the

Key Function Holders of First Investment Bank. The Managing Board members shall be established

professionals with proven leadership skills being a prerequisite for attaining the Bank’s objectives.

All Managing Board members shall have the:

• Trust of the Supervisory Board members, the senior management of the Bank and its

employees;

• Ability to relate to the interests of all shareholders and the Bank, as well as to make well-

reasoned decisions;

• Professional expertise and education to be effective managers;

• Business experience, knowledge of national issues and trends and knowledge of the market,

products and competitors;

• Capacity to translate knowledge and experience into solutions that can be applied to the

practices in the Bank.

The Bank shall ensure an orientation program for new members of the Managing Board, as well

as shall provide access to training courses in accordance with the functions performed by them,

including on the novelty in the spheres of corporate governance and sustainable development.

Rules of procedure of the Managing Board

The Managing Board shall conduct meetings regularly, the agenda of which is prepared in advance.

The meetings of the Managing Board shall be conducted by a chairperson, elected by the Managing

Board. Minutes shall be kept at all meetings of the Managing Board, signed by all members that

have attended the meeting.

The rules of procedure of the Managing Board are described in detail in the By-Laws of the Managing

Board of First Investment Bank.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 15

Conflicts of interest

The members of the Managing Board shall be responsible for avoiding actions that can lead to

conflicts of interest between their interests and those of the Bank. In case such conflict appears,

they should disclose it and not take part in the discussion and the taking of the respective decision.

The members of the Managing Board shall declare in writing the existence of conflicts of interest.

Interaction between Supervisory Board and Managing Board

The Supervisory Board and the Managing Board shall keep an open dialogue in accordance with the

good corporate governance principles. Except for regular reports on the implementation of the set

objectives, general meetings shall also be conducted. The members of the Supervisory Board shall

have unrestricted access to the management and the employees of the Bank. The Chief Secretary

shall play a key, overall role in facilitating this process.

The Chief Secretary shall be employed on a full-time basis and shall possess the necessary

qualifications and skills to ensure that the governing bodies follow internal rules and external

regulations, shall facilitate the communication between them, and shall keep the Supervisory Board

members and the key officers abreast of the latest corporate governance developments.

Senior management shall be presented with ample opportunity to present during Managing Board

meetings, as well as during reporting to the Supervisory Board, which shall contribute to obtain

direct information and better gauge the next generation of managers and future leaders.

Remuneration policy in the Bank

According to the principles of the Basel Committee

The bank’s remuneration structure supports sound corporate governance and risk

management.

The remuneration principles in the Bank shall comply with the business strategy, objectives, values

and long-term interests of the Bank, and promote sound and effective risk management so as not

to encourage risk-taking above the acceptable levels for the Bank.

The Bank shall apply clear, dully-documented and disclosed among all employees procedures for

determining remunerations that are defined in the Remuneration Policy of First Investment Bank

and the Rules for determining and development of remunerations.

The policy is aimed at attracting and retaining highly qualified employees, and motivating them

towards achieving high results at a moderate level of risk, and in accordance with the long-term

interests of the Bank and its shareholders.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 16

In determining remunerations considered are not only the financial results, but also the ethical

standards and corporate values underlying the Code of Conduct of the Bank, as well as the sound

and effective risk management and sustainable development.

Control Environment and Processes

The Bank shall establish and promote a reliable and comprehensive internal control framework,

with the necessary powers and rights of access enabling independent performance of duties by the

structural and auxiliary units exercising monitoring and control.

Improvement of the efficiency of risk management processes shall be achieved by both top-down

board leadership, and bottom-up involvement of management at all levels. While determination of

risk appetite may be initiated by the Managing Board, its successful implementation shall depend

upon the effective interaction between the Supervisory Board, the Managing Board, the risk function,

the CFO and the operational businesses units.

The risk management processes, procedures and requirements shall be structured in accordance

with “the three lines of defense” principle.

• First line of defense: the business units. Constituting the front line of risk taking, those are

responsible for management of risks including identifying, assessing and reporting according

to the limits, procedures and controls currently in force in the Bank.

• Second line of defense: the Risk Management and Compliance functions. Those shall be

independent from the first line of defense. The Risk Management function carries out

monitoring, assessment and reporting of risks independently of the first line.

• This second line of defense also includes the independent Compliance function which monitors

and controls the compliance of internal bank regulations with the applicable legislation.

• Internal audit function: independently from the first and the second lines of defense, assures

independent review of the quality and effectiveness of the risk management framework,

including strategic and business planning, and internal processes and procedures.

The control functions shall be independent from the operational business units monitored and

controlled by them, as well as organizationally independent from one another insofar as they perform

different functions.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 17

Risk Management and Risk Control

Risk Management

According to the principles of the Basel Committee

The Bank should have an effective independent risk management function, under the

direction of Chief Risk Officer (CRO), with sufficient stature, independence, resources and

access to the board.

First Investment Bank shall establish, maintain and develop an effective risk management system

ensuring timely identification of material risks to the Bank, their monitoring and assessment,

introducing of control measures and risk mitigation procedures, as well as regular and comprehensive

reporting to the Managing Board and the Supervisory Board.

The general risk profile of the Bank shall be managed through ensuring of balance between risks

incurred, return, and capital adequacy.

The Bank shall apply a written Policy for Risk Management and Capital Adequacy which shall provide

the framework for identification, assessment, management and internal analysis of risks and capital

adequacy. Along with the Policies for management of credit, market, operational and other types of

risks, the Policy for management of assets, liabilities and liquidity, and the internal rules, guidelines

and instructions related thereto, it shall form the overall risk management framework of the Bank.

The policy followed by the Bank with respect to management of risk and capital adequacy shall be

in compliance with the business strategy of the Bank and its product policy, reflecting the applicable

for the Bank ESG risks/factors related to sustainable development.

The Risk management and control function shall be organized under the direction of a Chief Risk

Officer with sufficient stature, independence, resources and access to the Managing Board, the

Risk Committee, and the Supervisory Board.

Risk identification, monitoring and control

According to the principles of the Basel Committee

Risks should be identified, monitored and controlled on an ongoing bank-wide and individual

entity basis. The sophistication of the bank’s risk management and internal control

infrastructure should keep pace with changes to the bank’s risk profile, to the external risk

landscape and in industry practice.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 18

Risks in the Bank shall be identified, monitored and controlled on an ongoing basis, as well as regularly

analyzed. The sophistication of the risk management system and internal control framework shall

develop according to changes in the internal and external environment.

Risk identification shall encompass all material risks to the Bank, including risk related to climate

change and sustainable development (ESG risks), on- and off-balance sheet items, as well as analysis

on portfolio basis and on a business-line level.

In the identification and assessment of risks, the Bank shall utilize tools for preliminary analysis /

future-oriented tools/ and tools for subsequent analysis /past-oriented tools, or back-testing/ which

shall supplement the monitoring of current risk exposures of the Bank. By using future-oriented

tools, the Bank shall identify potential risk exposures under certain adverse circumstances, while

by using back-testing the Bank shall review the compliance of its current risk profile with the risk

appetite and risk management framework, and carry out appropriate adjustments where necessary.

The tools used shall allow for aggregation of the risk exposures of different business lines, and

facilitate the identification of risk concentrations.

The Bank shall consider risks conservatively, and apply rating models which shall be subject to

periodic validation.

There is an independent risk control function established in the Bank which guarantees that risks are

identified and managed in an appropriate manner by the relevant units within the Bank, and provides

the Managing Board and the Supervisory Board with comprehensive review of all risks.

Compliance

According to the principles of the Basel Committee

The bank’s Supervisory Board oversees the management of the bank’s compliance risk.

The Board ensures the establishment of a compliance function and approves the bank’s

policies and processes for identifying, assessing, monitoring and reporting and advising on

compliance risk.

The Supervisory Board of First Investment Bank oversees the management of risk of non-compliance

with applicable legislation and internal regulations, as well as ensures implementation of established

norms, best practices and ethical standards.

The Compliance function shall be organizationally independent from the business units and has

separate hierarchical subordination and line of reporting. The Compliance function advises the

Managing and Supervisory Boards on implementation of the applicable legislation, best practices

and standards, and assesses the impact of any changes in the legal framework on the Bank’s

activities.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 19

The Compliance function ensures that all new products of the Bank meet the requirements of

the existing legal framework and of any known and upcoming changes in the regulations and

supervisory requirements. The Compliance function monitors the Bank’s transactions and manages

risks deriving from non-standard transactions, thus exercising ongoing control over their compliance

with the regulatory requirements and assisting with their implementation.

A written Compliance Policy shall be applied within the Bank. The Compliance function shall ensure

implementation of that Policy, and provide the necessary information to the Managing Board, the

Risk Committee, and the Operational Risk Committee.

Internal audit

According to the principles of the Basel Committee

The internal audit function provides independent assurance to the board and supports board

and senior management in promoting an effective governance process and the long-term

soundness of the bank.

For the purpose of achieving the goals and objectives and exercising of efficient control, there is an

Internal Audit Department established within the Bank. It conducts regular internal audits in order

to ensure:

• achievement of goals and objectives;

• economical and efficient use of resources;

• adequate control of various risks;

• safeguarding of assets;

• reliability and integrity of the financial and management information;

• compliance of the Bank’s activity with the regulatory requirements, policies, plans, internal

rules and procedures.

The Director of Internal Audit shall submit an annual report on the activity of the Service to the General

Meeting of Shareholders, the Supervisory and Managing Board, informing on the main results of the

control activities of the internal auditors, of the measures undertaken and their execution.

The Internal Audit shall function according to written rules; it shall conduct, at least on a quarterly

basis, working meetings with the Audit Committee; it shall be independent from the audited

activities, and have the necessary reputation, competences, resources and powers.

The internal auditors shall adhere to the national and international professional standards for internal

audit.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 20

External Auditors (Registered Auditors)

The General Meeting of Shareholders shall decide on the selection of External Auditors upon

proposal by the Supervisory Board, and following a recommendation by the Audit Committee. The

External auditors shall perform an independent financial audit in order to express an independent

auditor‘s opinion on the fair presentation in all material respects in the financial statements of the

financial position, the reported financial results, the cash flows and the equity of the Bank. The

external auditors shall be auditing companies independent from the Bank.

Audit Committee

In its capacity as a company of public interest, pursuant to the requirements of the Law on Independent

Financial Audit /LIFA/, the Bank has established a functioning Audit Committee which is responsible

for monitoring the financial reporting and independent financial audit within the Bank, as well as the

effectiveness of the internal audit function and the systems for control and management of risks in

the Bank. The Audit Committee makes a recommendation in the selection of registered auditors to

perform the independent financial audit of the Bank, and monitors their independence in accordance

with the requirements of LIFA and Regulation (EU) No 537/2014 of the European Parliament and

of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest

entities and repealing Commission Decision 2005/909/EC.

The members of the Audit Committee shall be elected by the General Meeting of Shareholders,

which shall vote their mandate.

The functions and responsibilities of the Audit Committee are set out in the Rules of Procedure of the

Audit Committee (Statute of the Audit Committee, within the meaning of Art. 107, para. 7 of LIFA).

The members of the Supervisory Board and Managing Board of Fibank, the committees thereto, as

well as all employees of the Bank shall be obliged to assist the Audit Committee in carrying out its

activities, including to provide, within a reasonable timeframe, the information requested by it.

The Audit Committee shall report its activities before the General Meeting of Shareholders once a

year.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 21

Shareholders’ rights and equitable treatment

According to the principles of OECD

The corporate governance framework should protect the rights of the shareholders, the

depositors and the other clients of the Bank.

The corporate governance of First Investment Bank protects the rights of the shareholders, the

depositors and the other clients of the Bank by applying a system of rules and procedures, including,

but not limited to the following:

• secure methods for registration of ownership;

• compliance with legal requirements in conveyance or transfer of shares;

• regular and timely receipt and disclosure of financial and non-financial information relating to

the company;

• participation and voting rights in the General Meeting of Shareholders;

• participation of shareholders in the distribution of the company’s profit.

First Investment Bank operates in accordance with the current regulations and the By-Laws of the

Bank which govern the rights of the shareholders, the registration of ownership, the conveyance

or transfer of shares, the regular preparation and disclosure of information concerning the financial

position, corporate governance and sustainable development of the company, and the participation

in distribution of profits.

Information on all shareholders of the Bank and the shares owned by them shall be recorded in

Fibank’s shareholder register, kept by the Central Depository AD.

Disposal of shares shall be carried out in accordance with the By-Laws of the Bank; for any

outstanding issues the current legislation shall apply.

Right to information: the operations of First Investment Bank are organized in such a way as to

ensure timeliness and completeness of information provided to the executive management, the

collective bodies of the Bank: Managing and Supervisory Boards, and to its shareholders.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 22

According to the principles of OECD

The corporate governance framework should ensure equitable treatment of all shareholders,

including minority shareholders and foreign shareholders.

The corporate governance framework should ensure equitable treatment of all shareholders,

including minority shareholders and foreign shareholders.

The Corporate governance of First Investment Bank treats all shareholders equally, including minority

shareholders and foreign shareholders.

Fibank’s managing bodies ensure regularly and timely disclosure of material corporate information

to shareholders and investors, related to the activity and condition of the Bank.

The managing bodies of the Bank shall make best efforts to ensure easy and timely access to the

above information, with a view to informed exercising of shareholders‘ rights, respectively making

of informed investment decisions by investors.

No limitations on the rights of individual shareholders holding shares of the same class shall be

allowed.

First Investment Bank shall maintain a special section on the shareholders’ rights on its corporate

website:

http://www.fibank.bg/bg/prava-na-aktsionerite/page/ 3598.

The By-Laws of the Bank provide a detailed description of the rights of shareholders, as well as of the

procedures for convening, conducting and decision-making by the General Meeting of Shareholders.

Convening of the General Meeting of Shareholders

The General Meetings shall be convened by written invitation to the shareholders in compliance

with the By-Laws of the Bank, with a view to encouraging their participation in the General Meeting

and in a way that does not impede, or unnecessarily increase the cost of the vote.

The Bank shall provide shareholders with timely and sufficient information for decision making,

considering the scope of competence of the General Meeting of Shareholders.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 23

The invitation, together with the written materials relating to the agenda of the General Meeting,

shall be announced in the Commercial Register to the Registry Agency, submitted to the Financial

Supervision Commission, and made available to the public through the www.x3news.com internet

platform no less than 30 days prior to conducting of the General Meeting. They shall also be

published on the Bank’s website in both Bulgarian and in English languages for the period from the

announcing of the General Meeting to its conclusion. Upon request, the materials shall be provided

to each shareholder free of charge.

The Bank shall maintain contact information for its shareholders, having 5 or exceeding 5% of

the issued share capital, with the aim for facilitating the communication with them or with person

defined by them.

Conducting of the General Meeting of Shareholders

The venue of the General Meeting of Shareholders shall be easily accessible to the majority of

shareholders. The registration procedures shall be convenient and allowing for quick and easy

access.

The Bank shall make the necessary efforts to facilitate the participation and voting on the items of

the agenda by the shareholders attending the General Meeting.

The Bank shall apply a fair and effective procedure for inclusion of items on the agenda of the

General Meeting, including of proposals for election of members of the Supervisory Board. No

changes to the agenda shall be allowed after its approval by the General Meeting.

Each shareholder shall have the right to take the floor and speak on items from the agenda.

Results

The voting results and other relevant materials shall be distributed to shareholders either at the end

of the General Meeting, or in the shortest time possible after its conclusion. The results shall be

disclosed to the general public by publishing them on the Bank’s website and in the media, and also

submitted to the Commercial Register and the supervisory authorities.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 24

Disclosure of information and transparency

According to the principles of OECD

The corporate governance framework should ensure that timely and accurate disclosure

is made on all material matters regarding the corporation, including the financial situation,

performance, ownership, and governance of the company.

Transparency and timely disclosure of information are key principles in corporate governance. As a

public company, First Investment Bank regularly discloses information about its financial situation

and any material business or corporate developments, as well as non-financial information, including

related to sustainable development. The Bank discloses all shareholders holding more than 5% of

its share capital.

Information is disclosed in a way that ensures equal treatment of recipients, enables informed

decision making and assessments, and prevents misuse of inside information. Fibank discloses

information through:

• the X3News Internet platform (www.x3news.com) thus ensuring effective dissemination of

information to the widest possible range of persons simultaneously, and in a way which does

not discriminate them;

• its corporate website /www.fibank.bg/ with established content, scope and frequency

of information disclosed therein in accordance with the regulatory requirements and best

corporate practices.

Disclosure policy and disclosure practices

In its capacity as a credit institution, public company and investment intermediary, First Investment

Bank applies a Disclosure Policy.

The Bank shall disclose and provide easy access to any material information, including with regard

to its financial position, achievement of objectives, shareholding and management structure, non-

financial information and sustainable development. The Supervisory Board shall adopt the Disclosure

Policy detailing the information subject to regular disclosure. The Policy itself shall be disclosed on

the corporate website of the Bank.

First Investment Bank shall publish an Annual Report including detailed information on the Bank’s

development and financial results, achievement of objectives and business overview by type of

activity, as well as information on the organizational structure, corporate governance framework,

risk management and non-financial information, i.e. on ecological, social, governance and ethical

issues.

The Bank shall promptly publish any material information, including on corporate developments, in

the investors’ section of its corporate website.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 25

Additional provisions

§1.

As per the Code:

Risk capacity:

The maximum amount of risk the Bank is able to assume given its

capital base, risk management and control measures, as well as its

regulatory constraints.

Control functions:

Those functions that have a responsibility independent from

management to provide objective assessment, reporting and/

or assurance. This includes the risk management function, the

compliance function and the internal audit function.

Corporate Governance:

A set of relationships between a company’s management, its

board, its shareholders and other stakeholders which provides

the structure through which the objectives of the company are

set, and the means of attaining those objectives and monitoring

performance. It helps define the way authority is allocated and how

corporate decisions are made

Stakeholders:

Parties that are not shareholders but are concerned with the

economic growth of the bank such as creditors, employees, bond

holders, other.

Risk governance

framework:

Part of the overall corporate governance framework, through

which: decisions are made with respect to business strategy and

risk approach; adherence to risk appetite and limits is monitored

vis-Ў-vis strategy; including risk is identified, measured, managed

and controlled.

Risk appetite framework:

The overall approach, including policies, processes, controls and

systems though which risk appetite is established, communicated

and monitored. It includes a risk appetite statement, risk limits and

an outline of the roles and responsibilities of those overseeing the

implementation and monitoring of the risk appetite framework.

The risk appetite framework should consider material risks to the

bank, as well as to its reputation vis-Ў-vis policyholders, depositors,

investors and customers. The risk appetite framework aligns with

the strategy.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 26

Risk limits:

Specific quantitative measures or limits based on, for example,

forward-looking assumptions that allocate the aggregate risk

appetite statement to business lines, legal entities as relevant,

specific risk categories, concentrations and, as appropriate, other

measures.

Risk profile:

Point in time assessment of the gross (ie before the application of

any mitigants) or, as appropriate, net risk exposures (ie after taking

into account mitigants) aggregated within and across each relevant

risk category based on current or forward-looking assumptions.

Risk appetite:

The aggregate level and types of risk a bank is willing to assume,

decided in advance and within its risk capacity, to achieve its

strategic objectives and business plan.

ESG risks:

Risks, related to sustainable development, taking into consideration

ecological, social and governance factors.

Internal control system/

framework:

A set of rules and controls governing the organizational and

operational structure including reporting processes, and functions

for risk management, compliance and internal audit.

Risk management:

The processes established to ensure that all material risks and

associated risk concentrations are identified, measured, limited,

controlled, mitigated and reported on a timely and comprehensive

basis.

Sustainable development:

Development of the activity, based on an integrated approach

combining economic, social, ecological and governance issues,

which are supporting and balancing one another.

CORPORATE GOVERNANCE CODE OF FIRST INVESTMENT BANK AD 27

Transitional and Final provisions

§.2.

The Code discontinues the operation of the Program of First Investment Bank for the

application of the internationally recognized good corporate governance standards.

§.3. The Code is publicly available on the Bank’s corporate website: www.fibank.bg

§.4. The Code is reviewed annually or more regularly, according to circumstances.

§.5. The Corporate Governance Code of First Investment Bank was adopted by the Managing

Board of First Investment Bank AD with a decision dated 30 June 2015, approved by the

Supervisory Board with a decision dated 21 July 2015 and were amended in compliance with

Managing Board resolution of 24 November 2015 to amend the Bank’s internal rules and

regulations with a view to the updated organizational structure of Fibank approved by the

Supervisory Board on 24 November 2015, amended and supplemented with a decision of

the Managing Board dated 13 April 2017 and with approval by the Supervisory Board dated

25 April 2017, amended and supplemented with a decision of the Managing Board dated

18.04.2019 and with approval by the Supervisory Board dated 24.04.2019, amended and

supplemented with a decision of the Managing Board dated 17.03.2022 and with approval

by the Supervisory Board dated 23.03.2022.

DISCLOSURE POLICY

OF FIRST INVESTMENT BANK AD

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I. GENERAL PROVISIONS

1.1. This Policy defines the scope of information subject to disclosure by First Investment

Bank_AD (Fibank, the Bank) in its capacity as a credit institution, a public company and

an investment intermediary.

1.2. The Bank discloses and provides easy access to all relevant information, including

financial condition, achievement of objectives, shareholding and management structure.

1.3. The Policy on disclosure of information complies with, and is applied in accordance with

the current regulatory requirements in the Republic of Bulgaria, including with the Law on

Credit Institutions (LCI); the Public Offering of Securities Act (POSA); the Markets in

Financial Instruments Act (MFIA); the Accountancy Act; the Independent Financial Audit

Act (IFAA); the Law on the Recovery and Resolution of Credit Institutions and Investment

Firms (LRRCIIF); the Commerce Act and the regulations for their implementation; with

Regulation (EU) № 575/2013 of the European Parliament and of the Council on prudential

requirements for credit institutions (Regulation (EU) № 575/2013); Regulation (EU) №

596/2014 of the European Parliament and of the Council on market abuse (Regulation

(EU) № 596/2014); Regulation (EU) 2020/852 of the European Parliament and of the

Council on the establishment of a framework to facilitate sustainable investment

(Regulation (EU) 2020/852) and its delegated/implementing acts; Regulation (EU)

2019/2088 of the European Parliament and of the Council on sustainability‐related

disclosures in the financial services sector (Regulation (EU) 2019/2088); Commission

Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards on the

specification of a single electronic reporting format (Delegated Regulation (EU) 2019/815);

Ordinance №2 of FSC on the initial and subsequent disclosure of information in public

offering of securities and admission to trade on a regulated market (Ordinance №2 of

FSC); the EBA Guidelines, incl. on internal governance (EBA/GL/2021/05); the National

Corporate Governance Code (NCGC) as of July 2021; as well as with the Principles of

Corporate Governance of the Organization for Economic Cooperation and Development

(OECD Principles); the Principles of Corporate Governance for banks by the Basel

Committee on Banking Supervision (the Basel Committee principles); the Code of

Corporate Governance of First Investment Bank AD, and with the relevant internal bank

documents.

II. PURPOSE AND PRINCIPLES

2.1. The purpose of this Policy is to outline the framework for provision of information to

stakeholders, shareholders and investors, with a view to enable making objective and

informed decisions and evaluations.

2.2. In disclosing information, the Bank shall be guided by the principles of:

2.2.1. Accuracy;

2.2.2. Accessibility;

2.2.3. Equitability;

2.2.4. Timeliness;

2.2.5. Integrity;

2.2.6. Regularity.

2.3. First Investment Bank AD shall disclose any relevant information regardless of its nature,

subject to the principle of equal treatment.

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2.4. In certain cases, under the current legislation or the rules of the regulated markets of

financial instruments, the disclosure of certain information is not allowed. Such cases are:

2.4.1. when disclosure leads to violation of a law or regulation;

2.4.2. when information is confidential or relates to unfinished negotiations;

2.4.3. when information constitutes official, bank or trade secret (confidential

information).

III. INFORMATION CHANNELS

3.1. For the purposes of disclosure First Investment Bank AD uses the following information

channels:

3.1.1. Electronic system for disclosure of information X3News (www.x3news.com),

through which effective dissemination of information is ensured to the widest

possible audience, simultaneously and in a non-discriminatory manner;

3.1.2. Corporate website (www.fibank.bg) with validated content, scope and periodicity

of disclosed information;

3.1.3. Other channels, including media; the websites of the Financial Supervision

Commission (FSC) and the Bulgarian Stock Exchange (BSE), on which the latter

publish relevant information.

IV. INVESTOR RELATIONS

4.1. In order to achieve effective liaison between First Investment Bank AD, its shareholders

and the persons interested in investing in financial instruments issued by the Bank, First

Investment Bank AD has an appointed Investor Relations Director.

4.2. The Investor Relations Director exercises functions of maintaining and provision of

information on the current financial position of the Bank, as well as of any other

information that the shareholders and persons interested in investing in financial

instruments of the Bank wish and are entitled to receive in their capacity as shareholders

or investors.

4.3. The Investor Relations Director submits an annual activity report before the General

Meeting of Shareholders.

4.4. Information regarding the Investor Relations Director of First Investment Bank AD,

including contact information, is available on the website of the Bank (www.fibank.bg).

V. PERIODIC INFORMATION

5.1. The periodic information disclosed by First Investment Bank AD includes but is not limited

to:

5.1.1. Annual financial statements on a standalone and consolidated basis certified by

registered auditor/s;

5.1.2. Financial statements for the first half of the year, as well as for the first, third and

fourth quarter on a standalone and consolidated basis;

5.1.3. Annual activity report on a standalone and consolidated basis;

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5.1.4. Interim activity report for the first half of the year, as well as for the first, third and

fourth quarter on a standalone and consolidated basis;

5.1.5 Quarterly, semi-annual and annual disclosure of information pursuant to Regulation

(EU) № 575/2013 on a consolidated basis.

5.2. The financial statements of the Bank are prepared applying the International Accounting

Standards as required by applicable law. Audited financial statements are published in

Bulgarian and English languages on the website of the Bank (www.fibank.bg).

5.3. First Investment Bank AD prepares an Annual activity report in Bulgarian and English

languages, which is subject to review by registered auditor/s and contains detailed

information about:

5.3.1. the development and competitive position of the Bank;

5.3.2. an analysis of the financial results and financial condition of the Bank;

5.3.3. a business overview by main type of activity;

5.3.4. the development objectives of the Bank, as well as information on their

implementation;

5.3.5. information on the corporate governance framework, including shareholding and

management structure and compliance with the Bank’s Corporate Governance

Code, as well as information on the members of the management and supervisory

bodies of the Bank, as well as on the applied diversity policy (Declaration on

corporate governance under the meaning of Art.100m of POSA and Art.40 of

Accounting Act);

5.3.6. information on the remuneration policy of the Bank and its implementation (Report

on the implementation of the remuneration policy under the meaning of Art.100m of

POSA);

5.3.7. information on risk management, including on all material risks to the Bank;

5.3.8. information on corporate social responsibility and other non-financial information,

incl. related to sustainable development pursuant to the requirements of Regulation

(EU) 2020/852 and its delegated/implementing acts (Non-financial declaration

under the meaning of Art.48 of Accounting Act);

5.3.9. an analysis of macroeconomic developments and the condition of the banking

system the Republic of Bulgaria.

5.4. The annual financial statements and activity report on a standalone basis, along with the

supplementing documents, are presented in XHTML format, while on a consolidated basis

– in XHTML format, with part of the disclosed data being marked with the XBRL markup

language in compliance with the requirements of Delegated Regulation (EU) 2019/815 on

the single electronic reporting format.

5.5. The Annual activity report, along with the audited by register auditor/s financial

statements, is published in a special edition of the Bank: "Annual Report", which is also

published on the website of the Bank.

VI. INSIDE INFORMATION

6.1. First Investment Bank AD shall publicly disclose as soon as possible inside information in

accordance with Regulation (EU) № 596/2014.

6.2. The inside information disclosed by the Bank shall include but not be limited to:

6.2.1. Data on members of the management and supervisory bodies of the Bank;

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6.2.2. Persons who hold 5 or more percent of the votes at the General Meeting of

Shareholders of the Bank, or are able to control it;

6.2.3. Changes in the Statutes of the Bank;

6.2.4. Changes in the management and supervisory bodies;

6.2.5. Increase or decrease of the issued share capital;

6.2.6. Decisions for transformation of the company;

6.2.7. Any other material circumstances.

VII. OTHER INFORMATION

7.1. In connection with holding a General Meeting of Shareholders, First Investment Bank AD

shall provide timely information on convening and decision-making.

7.2. The invitation together with the written materials related to the agenda of the General

Meeting shall be announced and provided in the statutory manner, and made available to

the public through the information channels used by the Bank. Upon request, the

materials shall be provided to each shareholder free of charge.

7.3. The results of the conducted General Meeting shall be disclosed to the public in the

statutory manner and timeframe, including via the corporate website of the Bank.

7.4. In its capacity as an issuer of financial instruments and in order to enable stakeholders,

shareholders and investors to familiarize themselves with the financial instruments issued,

First Investment Bank AD shall prepare and submit prospectuses (or other documents) to

the regulated market on which such instruments are traded.

7.5. The prospectuses shall contain all the required information, including but not limited to:

7.5.1. The purpose and motives for issuance of securities;

7.5.2. Information on the dividend policy;

7.5.3. Information on the financial position, performance results, and trends for

development;

7.5.4. Information on the corporate governance, the structure and membership of the

governing bodies of the Bank.

7.6. Upon conclusion outside the regulated market or multilateral trading system of

transactions in financial instruments admitted to trading on a regulated market the Bank,

in its capacity of an investment intermediary, shall publicly disclose information on the

type, issue, number, and unit price of the financial instruments subject to the transaction,

on the currency of the transaction and the date and time of its conclusion, incl. statement

that the transaction was concluded outside the regulated market or multilateral trading

system.

7.7. The disclosure pursuant to p.7.6 shall be executed within the timeframe specified in MFIA

throughout the respective trading venue, in case such disclosures are permitted or via a

licensed operator for approved disclosure data mechanism, the Bank has contract with.

7.8. First Investment Bank AD shall prepare and disclose once per year on its corporate

website information on each class of financial instruments for the first five places for

execution of orders based on transaction volumes, and for the leading brokers/investment

intermediaries through which the Bank has executed client orders during the previous

year, as well as on the quality of execution.

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7.9. Pursuant to the requirements of Regulation (EU) 2019/2088, First Investment Bank AD in

its capacity of an investment intermediary, managing individual investment portfolios and

offering investment advices, shall disclose on its corporate website information on the

integration of the risks regarding sustainability in the investment decision-taking process

when offering services to clients.

7.10. In its capacity of an investment intermediary, First Investment Bank AD shall disclose on

its corporate website and other required information as per regulatory requirements, with

the aim of informing the potential and existing investors and clients in the area of

investment services and activities in financial instruments.

7.11. The scope of information disclosed by First Investment Bank AD shall exceed the

requirements of national legislation. In addition, the Bank shall:

7.11.1. Publish information on the Bank in the form of presentations and interviews with

senior management;

7.11.2. Publish press releases;

7.11.3. Publish specialized editions (e.g. Fibank News);

7.11.4. Disclose detailed information on the products and services of the Bank, the

applicable general terms and conditions and tariff, as well as amendments in

them;

7.11.5. Disclose information about events and initiatives as part of the policy for

corporate social responsibility of the Bank.

7.12. The internal organization in the Bank, as well as the units responsible with regard to the

scope and procedure for disclosure of information, are regulated by the Rules of First

Investment Bank AD for implementation of the disclosure requirements.

VIII. CORPORATE WEBSITE

8.1. As part of the framework for disclosure of information, First Investment Bank maintains a

corporate website (www.fibank.bg) with validated content, scope and periodicity of the

information disclosed, in accordance with the regulatory requirements and best corporate

practices.

8.2. The Bank also maintains an English-language version of the corporate website with

identical content.

8.3. The information on the corporate website is constantly reviewed, updated and archived.

Historical information is also maintained with a view to ensuring transparency and

familiarizing all stakeholders, shareholders and investors with the performance of the

Bank.

8.4. The website of First Investment Bank AD (www.fibank.bg) supports a special, easily

accessible “Investors” section with detailed and up-to-date information about the Bank in

Bulgarian and English, including:

8.4.1. Corporate governance, including information on shareholders’ rights;

8.4.2. Stock exchange information;

8.4.3. Financial information;

8.4.4. News for investors;

8.4.5. General Meetings of Shareholders.

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8.5. With a view to maintaining constant communication with shareholders and investors, a

Club of investors of First Investment Bank AD has been created. By registering in it,

members can receive electronic updates on notifications published by the Bank through

its information channels.

8.6. Information disclosed through the Bank’s corporate website shall include at least:

8.6.1. Basic commercial and corporate information identifying the Bank, and on its

business model;

8.6.2. Updated information on the shareholding structure;

8.6.3. The Statutes of the Bank and documents relating to its activities and functioning,

including the Corporate Governance Code of First Investment Bank AD and this

Policy on Disclosure of Information;

8.6.4. Information on the structure and composition of the management bodies of the

Bank, as well as information about their members, including information about

the auxiliary bodies operating to them;

8.6.5. Annual and semi-annual financial statements for at least the last ten years, as

well as quarterly financial statements for at least the last five years;

8.6.6. Materials for upcoming General Meetings of Shareholders of the Bank, as well as

additional materials submitted following the legal procedures. Information on the

resolutions of the General Meetings of Shareholders for at least the last five

years;

8.6.7. Information on upcoming events;

8.6.8. Information on shares and other financial instruments issued;

8.6.9. Inside information and notifications pursuant to Regulation (EU) № 596/2014, as

well as other important information related to the activities of the Bank;

8.6.10. Information on shareholders’ rights;

8.6.11. Contact information for the Investor Relations Director of the Bank.

IX. FINANCIAL CALENDAR OF FIRST INVESTMENT BANK AD FOR 2023

9.1. In 2023, pursuant to the Law on Credit Institutions, the Regulation (EU) № 575/2013, the

Accountancy Act, the Public Offering of Securities Act, and Ordinance №2 of the FSC,

First Investment Bank AD shall prepare and present to the Financial Supervision

Commission and to the public the following reports:

9.1.1. Quarterly standalone financial report for the fourth quarter of 2022, also including

interim activity report – until 30.01.2023;

9.1.2. Quarterly consolidated financial report for the fourth quarter of 2022, also

including interim activity report – until 01.03.2023;

9.1.3. Annual standalone financial report for 2022, certified by registered auditor/s, also

including an annual activity report – until 31.03.2023;

9.1.4. Annual consolidated financial report for 2022, certified by registered auditor/s,

also including a consolidated annual activity report – until 30.04.2023;

9.1.5. Quarterly standalone financial report for the first quarter of 2023, also including

interim activity report – until 30.04.2023;

9.1.6. Quarterly consolidated financial report for the first quarter of 2023, also including

interim activity report – until 30.05.2023;

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9.1.7. Quarterly consolidated disclosure of information pursuant to Regulation (EU) №

575/2013 for the first quarter of 2023 – until 30.06.2023;

9.1.8. Semi-annual standalone financial report for the first half of 2023, also including

interim activity report – until 30.07.2023;

9.1.9. Semi-annual consolidated financial report for the first half of 2023, also including

interim activity report – until 29.08.2023;

9.1.10. Semi-annual consolidated disclosure of information pursuant to Regulation (EU)

№ 575/2013 for the first half of 2023 – until 30.09.2023;

9.1.11. Annual consolidated disclosure of information pursuant to Regulation (EU) №

575/2013 for 2022 – until 30.09.2023;

9.1.12. Quarterly standalone financial report for the third quarter of 2023, also including

interim activity report – until 30.10.2023;

9.1.13. Quarterly consolidated financial report for the third quarter of 2023, also including

interim activity report – until 29.11.2023;

9.1.14. Quarterly consolidated disclosure of information pursuant to Regulation (EU) №

575/2013 for the third quarter of 2023 – until 31.12.2023;

9.1.15. Other reports submitted to the Financial Supervision Commission, the Bulgarian

National Bank, and other authorities.

9.2. The regular annual General Meetings of Shareholders of First Investment Bank AD shall

be held by the end of the first half of the year following the reporting year.

9.3. The dates and information concerning other events and reports that First Investment Bank

AD is obliged to publicly disclose shall be announced within the legally prescribed

timeframes.

X. ADDITIONAL PROVISIONS

§1. For the purposes of this Policy:

Inside information

Information of a precise nature, which has not been made

public, relating directly or indirectly to one or more issuers or to

one or more financial instruments, and which, if it were made

public, would be likely to have a significant effect on the prices of

those financial instruments or on the price of related derivative

financial instruments, pursuant to Regulation (EU) № 596/2014.

Material information

Information whose omission or misrepresentation could change

or influence the assessment or decision of a user relying on that

information for making economic decisions.

Bank secret

Facts and circumstances concerning the balances and

transactions on accounts and deposits of the bank's clients.

Trade secret

Information whose disclosure would compromise the competitive

position of the institution. It may include information on products

or systems whose sharing with competitors would reduce the

value of investments of the institution in them.

Confidential information

Information concerning obligations to customers or other

counterparty relationships, under which obligations the institution

must maintain the confidentiality of such information.

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Stakeholders

Persons who are not shareholders but have an interest in the

economic development of the company, such as creditors,

bondholders, customers, employees, the public, and others.

XI. FINAL PROVISIONS

§2. This Policy is publicly available on the corporate website of the Bank at: www.fibank.bg.

§3. This Policy shall be reviewed once a year or more frequently if circumstances require it.

§4. This Policy was adopted by the Managing Board of First Investment Bank AD by

resolution of 13.10.2015, approved by resolution of the Supervisory Board of 21.10.2015,

amended and supplemented by a resolution of MB of 19.01.2016 and approval by SB of

28.01.2016, by a resolution of MB of 17.01.2017 and approval of SB of 24.01.2017, by a

resolution of MB of 16.01.2018 and approval of SB of 25.01.2018, by a resolution of MB of

22.01.2019 and approval of SB of 30.01.2019, by a resolution of MB of 07.02.2020 and

approval of SB of 11.02.2020, by a resolution of MB of 02.02.2021 and approval of SB of

17.02.2021, by a resolution of MB of 16.12.2021 and approval of SB of 22.12.2021, as well as

by a resolution of MB of 24.01.2023 and approval of SB of 22.02.2023.