Consolidated annual report. Information line

Transcription

1 Consolidated annual report Information line

2 GE Money Bank, a.s., Consolidated annual report 2015 Board of Directors Chairman's Introduction 1 CONTENT 1 Board of Directors Chairman's Introduction 3 Basic Information about GE Money Bank, a.s. Basic details Basic facts about shareholder 7 Board of Directors and Management Supervisory Board, Board of Directors and Senior Management Team Report of the Board Information on Supervisory Board Members Information on members of the Board of Directors and Management 17 Report of the Supervisory Board 19 Outlook 29 Auditor s Report and Consolidated Financial Statements 33 Consolidated Financial Statements 39 Notes to consolidated financial statements 127 Auditor s Report and Separate Financial Statements 131 Separate Financial Statements 137 Notes to Separate Financial Statements 215 Social responsibility 219 Report on relations between related parties Board of Directors Chairman's Introduction

3 2 GE Money Bank, a.s., Consolidated annual report 2015 Basic Information about GE Money Bank, a.s. 3 Dear shareholder, customers, business partners and colleagues, 2015 marked strong economic growth, which, after the double economic recession dragging on since 2009, poured fresh blood into the Czech economy activity and improved consumer and business confidence. The positive external environment has resulted in strong and profitable results for the GE Money Group was for our group a year of change. Following the announcement made by General Electric Corporation (GE) on the 10th April 2015 in which GE expressed the intention to reduce the size of GE Capital through the sale of most of GE Capital s assets, including GE Money in the Czech Republic, we are currently preparing for the change in ownership. It is our belief that also under the new shareholders, we will remain a solid and trustworthy partner with strong capital adequacy and liquidity. We also keep our position at the forefront of banking innovations, which is confirmed by the first place in the Bank Innovator category of the Best Bank of 2015 competition for the SignPad biometric signature technology. We were the first bank in the Czech Republic to introduce this technology and it is my great pleasure to see how popular it has become among our customers. While significantly simplifying communication at branches, this innovation also is more friendly to the environment and brings higher level of security. Our Group would not have achieved its current success without the excellent work of all its employees, trust of our customers and business partners and support of our current shareholder. Let me thank you for all this and wish you a lot of success in the I look forward to continuing to work with you. Basic Information about GE Money Bank, a.s. In 2015 we also adopted a new accounting standard under the International Financial Reporting Standards ( IFRS ) as adopted by the EU so all financials in the annual report are now aligned to IFRS. Despite the strong competition we remain one of the key players on the consumer lending market and our well-aimed investments help us grow in the area of commercial financing. In line with our strategy to expand our business, we ve managed to fully integrate GE Money Leasing, s.r.o., after having acquired the company at the end of 2014, thus offering our commercial customers a range of leasing financing options. We continue to adhere to the high standards of risk management enabling us to improve the Group s credit loss performance. Tomáš Spurný Chairman of the Board of Directors and CEO GE Money Bank, a.s. BASIC INFORMATION ABOUT GE MONEY BANK, A.S., AND GE MONEY GROUP IN THE CZECH REPUBLIC AS AT 31 DECEMBER 2015

4 4 GE Money Bank, a.s., Consolidated annual report 2015 Basic Information about GE Money Bank, a.s. 5 Company name: Registered office: Company ID no.: Legal form: Type, form and format of issued shares and their nominal value: 511 dematerialised ordinary inscribed shares with a nominal value of CZK 1 mil. each GE Money Bank, a.s. (further as the Bank ) Vyskočilova 1422/1a, Praha 4 Michle Joint-stock company Date of registration: 9 June 1998 Share capital: Paid-up share capital: 100% CZK 511 mil. Bank s Supervisory Board Position Position held from Todd Lamar Smith Supervisory Board Chairman Paul David Hurd Supervisory Board Member Andrew Charles Bull Supervisory Board Member Bank s Board of Directors Position Position held from Tomáš Spurný Chairman of the Board of Directors Philip Holemans Member of the Board of Directors Carl Normann Vökt Member of the Board of Directors Jan Novotný Member of the Board of Directors Number of branches as at : 229 Organisational units abroad: no Name and registered address of Bank s shareholder: GE Capital International Holdings Limited The Ark, 201 Talgarth Road London W68BJ United Kingdom of Great Britain and Northern Ireland Scope of business of Bank s shareholder: Establishing subsidiaries with seats outside the United Kingdom of Great Britain and Northern Ireland, exercising rights arising from the existence of the relevant investments and providing finance to these subsidiaries in the form of loans or otherwise

5 6 GE Money Bank, a.s., Consolidated annual report 2015 Board of Directors and Management 7 Basic Information about GE Money Group in the Czech Republic as at 31 December 2015 GE Money Group in the Czech Republic consists of the Bank (i.e. parent company and consolidating entity), its subsidiaries and associates listed in the note 35 of the consolidated financial statements as at and for the year ended 31 December 2015 (the Group or GEM GROUP ). Basic activities of the Group: The Group focuses primarily on secured and unsecured consumer lending and commercial financing. The consumer portfolio consists of secured and unsecured lending. Unsecured lending includes consumer loans, credit cards, consumer overdrafts. Secured lending is provided in the form of mortgages, auto & equipment loans and auto & equipment leases. Commercial lending products range from working capital, investment loans, auto & equipment loans, auto & equipment financial leases, automated overdrafts, inventory & fleet finance and unsecured business loans. Additionally the Group offers guarantees, letters of credits and foreign exchange transactions. Next to lending products, The Group provides a wide range of deposit and transactional products to retail and commercial customers. The Group also issues debit and credit cards in cooperation with VISA and Mastercard. In addition, the Group intermediates additional payment protection insurance which covers the customer s monthly loan payment in the event of unemployment, accident or sickness. Finally the Group also acts as the intermediary to provide its customers with other insurance and investment products. Board of Directors and Management

6 8 GE Money Bank, a.s., Consolidated annual report 2015 Board of Directors and Management 9 Supervisory Board, Board of Directors and Management of GE Money Bank, a.s., as at Bank s Supervisory Board Position Position held from Todd Lamar Smith Supervisory Board Chairman Paul David Hurd Supervisory Board Member Andrew Charles Bull Supervisory Board Member Bank s Board of Directors Position Position held from Tomáš Spurný Chairman of the Board of Directors Philip Holemans Member of the Board of Directors Carl Normann Vökt Member of the Board of Directors Jan Novotný Member of the Board of Directors Organisational chart as at Internal Audit Department Senior Manager Audit M. Wrlík Supervisory Board P. D. Hurd, T. L. Smith, A. C. Bull Chief Executive Officer T. Spurný Board of Directors T. Spurný, J. Novotný, C. N. Vökt, P. Holemans Division Senior Management Team Position Position held from Tomáš Spurný Chief Executive Officer Finance Division Philip Holemans Chief Financial Officer Risk Division Carl Normann Vökt Chief Risk Officer Commercial Banking Jan Novotný Chief Commercial Banking Officer Compliance Division Thomas Dodd Chief Compliance Officer Legal Division Tomáš Černý Chief Legal Officer Products & Marketing Ronald Boddy Chief Product & Marketing Officer Human Resources Division Radka Pekelská Chief Human Resources Officer Information Technologies Division Radim Šilhánek Chief Information Officer Internal Audit Department Martin Wrlík Senior Internal Audit Manager Retail Sales Division Aleš Sloupenský Chief Retail Growth Officer Shared Services Centre Department Petr Brunclík Chief Shared Services Officer Risk Division Chief Risk Officer C. N. Vökt Finance Divison Chief Financial Officer P. Holemans Legal Division Chief Legal Officer T. Černý Compliance Division Chief Compliance Officer T. Dodd Products & Marketing Division Chief Products & Marketing Officer R. Boddy Commercial Banking Division Chief Commercial Banking Officer J. Novotný Retail Sales Division Chief Retail Growth Officer A. Sloupenský Information Technologies Division Chief Information Officer R. Šilhánek Human Resources Division Chief Human Resources Officer R. Pekelská Shared Services Center Department Chief Shared Services Officer P. Brunclík

7 10 GE Money Bank, a.s., Consolidated annual report 2015 Board of Directors and Management 11 Report of the Board Statement of Financial Position Summary Due to strong economic growth in the Czech Republic, trading conditions within the sector improved in the past year. As a result, GE Money Group achieved better financial results in fiscal year 2015 thus being able to follow up on its last year s performance. We continue in our long-term strategy aimed at simplifying both products and processes and offering innovative services which bring us closer to our clients. In 2015, we fully integrated a range of leasing products into our product portfolio, which are currently offered to our clients via GE Money Leasing. We kept growing in the area of commercial financing and once again scored in different competitions in the Innovations category. GE Money Group remains stable with strong capital adequacy and good liquidity. In 2015 the Group published its results in IFRS international accounting standards for the first time in its history. The information in this annual report is in strict alignment with these standards. Responsible lending practices helped the Group deliver excellent business results: Group net profit increased by 7.8% to CZK 4.5 billion, High quality liquid assets remained strong at CZK 26.4 billion, Capital Adequacy Ratio stands at 17.7% and continues to exceed regulatory requirements, Total Group s assets stood at CZK 140 billion, Total customer loans grew by 1.2% to CZK billion, Total customer deposits went up by 12% to CZK billion, Strong loan-to-deposit ratio remains at 99.8% in net value, Credit losses decreased by CZK 893 million to CZK 849 million. On 10th April 2015, General Electric Corporation announced that it will create a simpler, more valuable company by reducing the size of GE Capital, including GE Money in the Czech Republic. The Group is, therefore, currently preparing for sale to new shareholders. We are confident that the bank will remain a strong Czech business after the sale, simply with different ownership structure. Overall, the Board of GE Money Bank is satisfied with the 2015 results of GE Money Group. Due to good economic situation the Group increased its profitability, remained strong and stable, maintained very good liquidity and above-average capital adequacy ratio and continuously implemented controls regarding responsible lending practices and daily operations. Finally, we would like to thank all our customers for their trust in us and for their loyalty, our partners for their support and all our employees for their continued dedication and hard work. Tomáš Spurný, Chairman of the Board Philip Holemans, Member of the Board Carl Normann Vökt, Member of the Board Jan Novotný, Member of the Board CZK m 31 Dec Dec Dec CAGR Cash and Cash Equivalents 15,475 11,746 9, % Financial assets available for sale 13,255 20,401 22,835 (23.8%) Financial assets at fair value % Loans and receivables to banks ,114 (64.7%) Loans and receivables to customers 108, ,197 97, % Gross loans and receivables to customers 120, , , % Loss allowances for loans and receivables to customers 11,778 12,900 13,836 (7.7%) Intangibles and Goodwill (22.6%) Other Assets 2,191 2,764 2,913 (13.3%) Total Assets 140, , , % Liabilities & Equity Customer Deposits 108,698 97,006 93, % Provisions % Other Liabilities 2,957 3,424 2, % Total Liabilities 112, ,820 96, % Total Equity 27,839 42,583 38,047 (14.5%) Tangible Equity 27,306 41,833 37,158 (14.3%) Total Liabilities & Equity 140, , , % Risk Weighted Assets 126, , , % Income Statement Summary CZK m CAGR P&L Interest Income 9,522 9,670 10,385 (4.2)% Interest Expense (212) (285) (557) (38.3)% Net Interest Income 9,310 9,385 9,828 (2.7)% Fee and Comission Income 2,631 3,004 3,523 (13.6)% Fee and Comission Expense (295) (330) (365) (10.2)% Net Fee and Commission Income 2,336 2,674 3,158 (14.0)% Divdend Income % Net Income from financial operations (11.5)% Other operating income (14.1)% Net Non-Interest Income 2,792 3,246 3,746 (13.7)% Total Operating Income 12,102 12,631 13,574 (5.6)% Personnel expenses (2,243) (1,991) (2,275) (0.7)% Other administrative expenses (1,792) (1,933) (1,887) (2.6)% Depreciation and amortisation (520) (479) (531) (1.0)% Other operating expenses (978) (1,045) (886) 5.1 % Total Operating Expenses (5,533) (5,448) (5,579) (0.4)% Pre-Loss allowances Profit 6,569 7,183 7,995 (9.4)% Net impairment of loans and receivables (849) (1,742) (2,547) (42.3)% Other 0 0 (7) (100.0)% Profit for the year before tax 5,720 5,441 5, % Taxes on Income (1,214) (1,261) (1,182) 1.4 % Profit for the year after tax 4,506 4,180 4, %

8 12 GE Money Bank, a.s., Consolidated annual report 2015 Board of Directors and Management 13 Key Performance Ratios CZK m Total Increase/ (Decrease) Profitability Yield (% Avg Net Customer Loans) 8.7% 9.3% 10.3% (1.6)% Yield (% int Earning Assets) 6.9% 7.1% 7.9% (1.0)% Cost of Funds (% Avg Deposits) 0.2% 0.3% 0.6% (0.4)% NIM* (% Avg Net Customer Loans) 8.6% 9.2% 9.9% (1.2)% NIM* (% Avg Int Earning Assets) 6.7% 6.9% 7.5% (0.8)% Net Non-Interest Income / Operating Income (%) 23.1% 25.7% 27.6% (4.5)% Net F&C income as % of Total Operating Income 19.3% 21.2% 23.3% (4.0)% Cost to Income 45.7% 43.1% 41.1% 4.6 % Cost of Risk (% Avg Net Customer Loans) 0.8% 1.7% 2.6% (1.8)% Risk-adjusted net interest margin 6.1% 5.6% 5.6% 0.5 % Reported RoTE 16.5% 10.0% 11.5% 5.0 % RoAA 3.2% 3.0% 3.2% 0.0 % Liquidity / Leverage Net Loan to Deposit ratio** 99.8% 110.5% 104.1% (4.3)% Total Equity / Total Assets 19.9% 29.7% 28.3% (8.4)% Liquid Assets / Total Assets 20.6% 22.8% 24.8% (4.2)% Capital Adequacy RWA / Total Assets 90.4% 86.9% 90.2% 0.2 % CET1 ratio (%) 17.7% 30.0% 27.1% (9.4)% Tier 1 ratio (%) 17.7% 30.0% 27.1% (9.4)% Total capital ratio (%) 17.7% 30.0% 27.1% (9.4)% Asset Quality Non Performing Loan Ratio (%) 11.7% 12.9% 14.8% (3.1)% Non Performing Loan Coverage (%)*** 77.4% 75.4% 74.8% 2.6 % Total Coverage (%)**** 84.0% 83.0% 83.8% 0.2 % * NIM = Net Interest Margin ** calculated as net receivables to customers / due to customers *** NPL allowances / NPL receivables **** Total allowances / NPL receivables Information on the Members of the Supervisory Board Todd Lamar Smith studied business administration at the University of Florida. In 1997, he started his career in GE Capital, where in one of his roles he worked as commercial activities auditor in GE Commercial Finance. In 2005, he started at GE Commercial Finance Australia & New Zealand in Sydney as CFO. After working for a short time in Japan as CFO of GE Capital Real Estate Asia Pacific, he returned to the United States in 2009, where he worked as Global Controller in GE Capital Real Estate. In 2012 and 2013 he held the position of CFO in GE Life Sciences. Since 2013, Todd Lamar Smith has worked in London as CFO in GE Capital International. Since 5 February 2014, he has been Chairman of the GE Money Bank, a.s., supervisory board. Paul David Hurd attended Loughborough University and graduated in economics in He started working at the UK s central bank, the Bank of England, regulating and supervising banks, before joining Standard Chartered Bank in the UK. He worked for Standard Chartered Bank for 12 years, living in the UK, Singapore and Thailand, while performing senior roles in treasury, markets and risk management, including Deputy Group Treasurer. During this time, he earned an MBA degree from Henley Management College. In 2006, he joined the Cooperative Financial Services Group in the UK as Group Treasurer. He joined GE Capital in 2008 as Managing Director, Treasury & ALM Risk within GE Money. He subsequently performed the same role for GE Capital Global Banking from 2009, GE Capital EMEA and EMRG from 2011 and GE Capital International from In 2014 he moved to the GE Capital International Capital Planning team as a Managing Director responsible for Recovery and Resolution Planning, Regulatory Capital and Capital Projects. Since December 2013, he has been a member of the Supervisory Board of GE Money Bank, a.s. Andrew Charles Bull graduated from the University of Cape Town with a bachelor of commerce in 1992 and an LLB degree in He is a dual qualified South African and English lawyer. Prior to joining GE, he practiced in London as a solicitor for Clifford Chance LLP where he advised on general banking and acquisition finance transactions. He also gained experience working at the investment banking firm of DKB International. In 2001 he joined the UK business of GE Consumer Finance as senior legal counsel responsible for corporate and commercial transactions. In 2005 he was appointed as head of the business development legal team responsible for Mergers & Acquisitions for GE Money EMEA. Since 2009 he has held a variety of General Counsel roles including GE Capital Global Banking, Western Europe, Russia and Latvia ( ), GE Capital European Mortgage and Restructuring Group ( ) and the Strategic Ventures and Restructuring Group of GE Capital International ( ). In May 2014 he was appointed to his current position as Chief Legal Counsel of GE Capital International based in London. Since August 2014 he has been a member of the Supervisory Board of GE Money Bank, a.s.

9 14 GE Money Bank, a.s., Consolidated annual report 2015 Board of Directors and Management 15 Information on members of the Board of Directors and Management Tomáš Spurný holds a bachelor s degree from New York University and an MBA from Columbia Business School. He started his career at McKinsey & Company and has extensive experience from managerial positions in the banking and financial sector. Serving as the CEO or CFO, he worked at major banks in Central and Eastern Europe, including the CIB Bank in Hungary, at PPF Group companies, at Komerční banka, at CCS in the Czech Republic, and also at VÚB a.s., an Intesa Sanpaolo bank in Slovakia. For most of the last four years he served as the CEO of Romanian biggest bank, BCR. Since October 2015, he has been CEO and Chairman of the Board of GE Money Bank, a.s. Philip Holemans has a Master s degree in applied economics from Leuven University in Belgium. He joined GE group in He worked at the headquarters of the company GE Capital Fleet Services, which operated out of Brussels, and he has held increasingly senior positions in the area of finance throughout the company GE Capital. Before joining GE Money Bank, he worked almost five years as Chief Financial Officer (CFO) in the company GE Capital for Germany and Benelux. Since January 2014, he has held the position of Chief Financial Officer GE Money Bank, a. s., and, since July 2014, he has been a member of the board of directors of GE Money Bank, a. s. Carl Normann Vökt holds a university degree with a major in Finance and Marketing gained at the Karl-Franzens University in Graz/Austria. His career started back in 1990 in Vienna in the area of Project and Structured Finance of Creditanstalt, followed by a short secondment to the International Finance Corporation in Washington and since 1996 he had been working in Poland. During his more than 15 years stay in Poland, Norman held different senior positions in Corporate Banking and Risk Management. The last position he held there was Chief Risk Officer and Deputy President of the Management Board at Bank BPH in Warsaw. Throughout his career in Poland he also served on the supervisory boards of several group related companies like mortgage bank, leasing firms and fund management businesses. Since November 2012 Carl Norman Vökt has been the Chief Risk Officer at GE Money Bank in the Czech Republic and a member of the Board of GE Money Bank, a.s., since January Jan Novotný has worked in several positions at GE Money Bank, a.s., since joining the bank in He began as a commercial banking analyst and later became the data team leader; he also led product development and ultimately product management. He left in 2007 to gain more experience within the GE Capital Group in Singapore, where he was Product Manager for Small and Medium Enterprises for the South-East Asia Region (Singapore, the Philippines, Thailand and China). He returned to the Czech Republic the following year, working as Head of the Micro and Small Enterprises Segment, and later as the Manager of the entire Small and Medium Enterprises Segment. He was appointed Chief Commercial Banking Officer at GE Money Bank, a.s., in May 2013, and a member of the Board of GE Money Bank, a.s., since December Radim Šilhánek studied information technology and banking and graduated from the University of Economics in Prague. He also studied finance at the Stockholm School of Economics. He has worked in the field of information technology for more than 15 years and for the GE Group since In 2001, he implemented the financial systems at the GE European Equipment Finance Division in Dublin, Ireland. At GE Money Bank, a.s., in the Czech Republic, he was responsible for the management of technological projects and the definition and implementation of IT strategy. He led the whole project management agenda and most recently was responsible for the operation of IT systems. Since July 2012, he has been Chief Information Officer at GE Money Bank, a.s Radka Pekelská graduated from the Faculty of Economics and Administration and also from the Transport Faculty of the University of Pardubice. She has an extensive experience in human resource management in international corporations. She started her career with the American company Babcock & Wilcox, working on the implementation of computerized control system to the power station in Chvaletice. Before joining GE Money Bank, a.s., she worked for Tesco Stores ČR, s.r.o., for more than 11 years, where she was a Human Resources Director for 8 years and a member of the Board of Directors in the Czech Republic and in Slovakia. Since June 2010 she has been Chief Human Resources Officer of GE Money Bank, a.s. Tomáš Černý graduated from the Law Faculty of Charles University. Before coming to GE Money Bank, a.s., Tomáš worked for five years at the Prague office of the leading international law firm, where he focused mainly on commercial law, banking and M&A. Before that Tomáš worked for for two years for a large multinational consultancy and for one of the best London law firms at its Prague and London office. From April 2005 he held position of Chief Legal Counsel; from February 2009, he has been Chief Legal & Compliance Officer and, since August 2011, he is the Chief Legal Officer of GE Money Bank, a.s. Thomas Dodd holds an Economics degree from Manchester Metropolitan University and an MBA with Distinction from Warwick Business School in the UK. He has extensive experience in international banking, regulation and compliance. Before joining GE, he worked in Dubai for 7 years, as a Senior Banking Regulator, responsible for bank inspections carried out for the Central Bank of the United Arab Emirates. Prior to this, he worked for a number of financial services companies including Crédit Lyonnais in Paris, France and for the Czech companies Expandia Finance and Expandia a. s. He joined GE Money Bank in May 2007 and served as Chief Auditor for over 7 years. During this time, he built up an extensive knowledge of the bank processes. In February 2015, he was appointed to the position of Chief Compliance Officer of GE Money Bank, a.s. Martin Wrlík achieved his Master s degree at CZU in Prague and he has completed Certified Internal Auditor certification in Prior to joining GE in July 2006, Martin worked as an Internal Auditor in the government agency CzechInvest. During his time in GE he has held several Internal Audit roles including Internal Auditor, Lead Auditor and Senior Auditor between and more recently he has been the Senior Security & Fraud Manager within Compliance Team since June Martin was appointed as Senior Manager of Internal Audit for the Czech GE Money business as of August Ronald Boddy holds a MBA degree from the University of Liverpool. He gained experience in various senior management positions at Barclays, one of Britain s leading banks. For example, he was responsible for the Barclaycard international expansion strategy and was also in charge of its introduction in Europe and Asia. He joined GE Money bank, a.s., in 2010 as Credit Card Manager. Since January 2012, he has held the position of the Chief Products Officer and, from July 2013, he has held the position of Chief Products and Marketing Officer at GE Money Bank, a.s. Aleš Sloupenský studied marketing and management at the Faculty of Economics of the University of West Bohemia in Plzen and has an MBA from Nottingham Trent University in Great Britain. During his career he has focussed on the retail area of the banking sector. He has worked in Česká spořitelna, a.s., where for 12 years he focused on management and development of the retail distribution network, and he has also held management positions in Komerční banka, a.s., and Bank Austria Creditanstalt Czech Republic, a.s. He gained foreign experience in the company Banca Comerciala Romana in Romania, where he cooperated on creating a successful retail development strategy. Since April 2014, he has held the position of Chief Retail Growth Officer in GE Money Bank, a.s. Petr Brunclík studied at the University of Economics in Prague, Faculty of Informatics and Statistics. He joined GE Money Bank, a.s., in 2003 and has held various executive positions within the Operation and Information Technologies division. He then gained experience in the Information Management Leadership Program in GE Consumer Finance Americas both in the United States and the Czech Republic. After completing the program he worked in the Information Technologies Division of GE Money Bank, a.s., as head of the electronic banking team, and later as the senior IT manager, he contributed to the development of all distribution channels. Since 2012, he has been running the Shared Services Centre Department, and, since June 2014, he has held the position of Chief Shared Services Officer in GE Money Bank, a.s.

10 16 GE Money Bank, a.s., Consolidated annual report 2015 Report of the Supervisory Board 17 Report of the Supervisory Board

11 18 GE Money Bank, a.s., Consolidated annual report 2015 Outlook 19 The Supervisory Board carried out its tasks in accordance with the law of the Czech Republic, the Bank s Articles of Association, and the Board s rules of procedure. The Board of Directors of GE Money Bank, a.s. (further as the Bank ), provided all materials and information necessary for the Board s supervisory activities. The Supervisory Board discussed the 2015 results of the Bank on a separate and consolidated level as detailed in the separate and consolidated financial statements as at and for the year ended 31 December 2015 both audited by the auditing firm KPMG Česká republika Audit, s.r.o., and came to the following conclusion to be presented to the Bank s General Meeting: The Supervisory Board recommends that the General Meeting can approve the separate financial statements of the Bank as at and for the year ended 31 December 2015 and the consolidated financial statements of the Bank as at and for the year ended 31 December Todd Lamar Smith, Supervisory Board Chairman Outlook Paul David Hurd, Supervisory Board Member Andrew Charles Bull, Supervisory Board Member

12 20 GE Money Bank, a.s., Consolidated annual report marked the strongest economic growth since the double recession, which manifested fully in the Czech Republic in Our country has entered a period of economic prosperity which is likely to continue this year. It brings along decrease in unemployment, growth in investment activity and business ventures that go hand in hand with plenty of opportunities for our customers and our Group. We are confident that with our financial strength expressed by our solid capital and liquidity position we will continue to support the economic success of our country. We remain ready to help our customers fulfill their dreams through our products, both in lending and deposits. Last year we continued in the integration of our leasing company GE Money Leasing we acquired in late This integration allowed us to expand the range of our products and we are now able to service a wider range of customers. In addition, we continue our effort to simplify our products and processes to keep coming up with innovative solutions which change the view of the banking industry and bring us closer to our customers. Retail Net Loan Portfolio as at 31 December % 10% Auto&Equipment Loans and Leases and Others 29% Consumer Overdrafts and Credit Cards Consumer Loans Mortgages 57% (1) Retail unsecured includes consumer loans concumer authorised overdrafts and credit cards Retail Unsecured 1 : 67% We continue to invest as well in corporate social responsibility programs. We stay true to our mission to offer simple and affordable products and support the efforts of both companies and consumers. It is our belief that we are the right partner for starting mutually beneficial cooperation and that our innovations enable us to respond flexibly to the changing needs of the market. Commercial Net Loan Portfolio as at 31 December % Inventory&Fleet Finance 2% Automated Overdrafts 16% Working Capital Auto&Equipment Financial Leases Auto&Equipment Loans 49% 15% Unsecured Business Loans Investments Loans 15% 2%

13 22 GE Money Bank, a.s., Consolidated annual report Total Net Loan Portfolio Evolution Retail Deposits Portfolio Evolution Auto&Equipment Financial Lease, Auto&Equipment Loans and Others retail Consumer Authoriesed Overdrafts and Credit Cards Mortgages CZK bn CAGR* 5.5% Term Deposits Saving Accounts Current Accounts CZK bn CAGR 2.7% Auto & Equipment Financial Lease, Auto&Equipment Loans and Other commercial Consumer Loans Commercial Loans 31 Dec Dec Dec 2015 * Compound Annual Growth Rate 31 Dec Dec Dec 2015 New Business Volume Development* Commercial Deposits Portfolio Evolution* Auto&Equipment Loans commercial Auto&Equipment Financial Leases commercial Unsecured Business Loans commercial CZK bn CAGR 15.4% Term Deposits Saving Accounts Current Accounts CZK bn CAGR 16.9% Investment Loans commercial Auto&Equipment Financial Leases, Auto&Equipment Loans and Other retail Mortgages Dec Dec Dec 2015 Consumer Loans * excluding deposits from banks * development of new business volume for loans and leases (excluding overdrafts, credit cards and working capital)

14 24 GE Money Bank, a.s., Consolidated annual report Composition of Liquid Assets Regulatory Capital Evolution % Customer Deposits 35.6% 33.7% 26.6% CZK bn (19.7) CZK bn Loans and Receivables to Banks 3.3% 0.1% 0.1% 1.6% 0.5% 0.5% Treasury Bonds 21.1% 26.2% 40.0% Treasury Bills Cash & Cash Equivalents 47.4% 36.2% 5.4% Other CET1 Capital 2013 Net income 2013 Other CET1 Capital 2014 Share premium Net income 2014 One-off Dividend Other CET 1 Capital % 35.9% 53.6% 31 Dec Dec Dec 2015 NPL Coverage Ratio Total Loan 83.8% 83.0% 84.0% Coverage 1 Liquidity Coverage Ratio 9.0% 7.6% 6.6% After the special dividend of CZK 19.7bn which was paid in Sep-15 IBNR 2 NPL Coverage NPL ratio NPL Coverage 74.8% 75.4% 77.4% CZK 7.6 bn 100% % 12.9% 11.7% 20% 10% % 187% 140% % 2016 (1) Including specific and generic allowances (2) IBNR (incurred but not recognised) allowances are generic provisions and shown as a % of NPL balance 31 Dec Dec Dec 2015 Regulatory Requirement

15 26 GE Money Bank, a.s., Consolidated annual report 2015 Information about capital 27 Cost of Risk Evolution Information about capital as at 31 December 2015 Capital Retail Commercial Total 3.4% 2.6% 2.5% 1.7% 1.2% 0.7% 0.8 % CZK m GEM Group GEMB Capital 22,343 21,012 Tier 1 (T1) Capital 22,343 21,012 Common Equity Tier 1 Capital 22,343 21,012 Instruments eligible as CET1 Capital* 5,539 5,539 Subscribed share capital* Share premium* 5,028 5,028 Retained earnings 17,147 15,775 Retained earnings from previous periods 17,147 15,775 Other reserve funds* Items deductible from Capital (510) (404) CET 1 capital adjustments due to the application of prudential filters (13) (13) (-) Value adjustments due to the requirements for prudent valuation (13) (13) (-) Goodwill* (104) 0 (-) Goodwill included in the valuation of significant investments* (104) 0 (-) Other intangible assets (393) (391) (-) Other intangible assets - gross amount* (429) (428) Deferred tax liabilities associated to other intangible assets * items reconciled to Statement of financial position Contribution to the Consolidated Financial Statements as at 31 December 2015 CZK m GEMB* GEMA* GEML* Other Total Entities* Consolidated Loans and receivables to customers 89,259 5,875 13, ,437 Total Assets 120,522 5,950 13, ,037 Due to customers 108, ,698 Interest and similar income 8, ,522 Interest expense and similar charges (212) (212) Net interest income 8, ,310 Net fee and commission income 2, ,336 Total operating income 10, ,102 Operating expenses (5,067) (206) (245) (15) (5,533) Profit for the year before tax and net impairment of loans and receivables and AFS 5, (15) 6,569 Net impairment of loans and receivables (622) (43) (184) 0 (849) Profit for the year before tax 4, (15) 5,720 Capital requirements GEM Group GEM Group GEMB GEMB CZK m 8%* 14%** 8%* 10.5%** Total risk exposure amount 10,125 17,719 10,402 13,653 Risk weighted exposure amount for credit, counterparty credit and dilution risks and free deliveries 8,768 15,344 9,274 12,172 Standardised approach (SA) 8,768 15,344 9,274 12,172 SA exposure classes excluding securitisation positions 8,768 15,344 9,274 12,172 Regional governments or local authorities Institutions Corporates 4,299 7,523 4,018 5,274 Retail 3,593 6,287 3,304 4,337 Exposures in default Items associated with particular high risk ,188 1,560 Other items Total risk exposure amount for operational risk (OpR) 1,357 2,375 1,128 1,481 OpR Standardised (STA) / Alternative Standardised (ASA) approaches 1,357 2,375 1,128 1,481 Taxes on income (1,086) (71) (56) (1) (1,214) Profit for the year after tax 3, (16) 4,506 * including intercomapy elimination entries

16 28 GE Money Bank, a.s., Consolidated annual report 2015 Auditor s Report and Consolidated Financial Statements 29 Capital Ratios GEM Group GEM Group GEMB GEMB 8%* 14%** 8%* 10.5%** CET1 Capital ratio 17.7% 17.7% 16.2% 16.2% Surplus (+)/deficit (-) of CET1 capital (CZK m) 16,648 16,648 15,161 15,161 Capital ratio T1 17.7% 17.7% 16.2% 16.2% Surplus (+)/deficit (-) of T1 capital (CZK m) 14,750 14,750 13,211 13,211 Total capital ratio 17.7% 17.7% 16.2% 16.2% Surplus (+)/deficit (-) of total capital (CZK m) 12,218 4,624 10,610 7,359 AUDITOR S REPORT AND CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2015 * based on the Annex 14 to the Decree 163/2014 Coll (referencing to article 438 point c) of Capital Requirement Regulation) ** based on Czech National Bank requirement (see note in the Consolidated Financial Statements and note in the Separate Financial Statements) GEM Group GEMB ROAE* 15.1% 14.2% ROAA 3.2% 2.9% Total operating expenses per employee ('000) 1,303 1,322 Total assets per employee ('000] 45,217 49,973 Net profit per employee ('000) 1,455 1,449 Number of employees** 3,097 2,811 * based on the average regulatory capital ** average recalculated number of employees (see note 12)

17 30 GE Money Bank, a.s., Consolidated annual report 2015 Auditor s Report and Consolidated Financial Statements 31

18 32 GE Money Bank, a.s., Consolidated annual report 2015 Consolidated Financial Statements 33 CONSOLIDATED FINANCIAL STATEMENTS Name of the Bank: GE Money Bank, a.s. Registered office: Vyskočilova 1422/1a, Praha 4 Michle Identification no: Business: Bank Code of the Bank: 0600 Date of preparation: 25 February 2016

19 34 GE Money Bank, a.s., Consolidated annual report 2015 Consolidated Financial Statements 35 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION as at 31 December December 31 December 31 December 1 January CZK m Note Assets Cash and balances with the central banks 19 15,475 11,746 9,372 16,674 Financial assets at fair value through profit or loss Financial assets avilable for sale 23 13,255 20,401 22,835 8,902 Loans and receivables to banks ,114 3,848 Loans and receivables to customers , ,197 97, ,502 Intangible assets Property and equipment Non current assets held for sale Goodwill Investments in associates Current tax assets Deferred tax assets ,251 1,664 1,672 Other assets Total assets 140, , , ,953 Liabilities Deposits from banks Due to customers ,698 97,006 93,641 96,944 Financial liabilities at fair value through profit or loss Provisions Current tax liabilities Deferred tax liabilities Other liabilities 34 2,439 2,957 2,447 3,239 Total liabilities 112, ,820 96, ,966 Equity Share capital Share premium 36 5,028 4,702 4,702 4,702 Legal and statutory reserve Available for sale reserve Share based payment reserve (2) (2) 2 4 Retained earnings 21,653 36,856 32,686 28,445 Total equity 27,839 42,583 38,047 33,987 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the year ended 31 December 2015 CZK m Note Interest and similar income 9,522 9,670 10,385 Interest expense and similar charges (212) (285) (557) Net interest income 7 9,310 9,385 9,828 Fee and commission income 2,631 3,004 3,523 Fee and commission expense (295) (330) (365) Net fee and commission income 8 2,336 2,674 3,158 Dividend income Net income from financial operations Other operating income Total operating income 12,102 12,631 13,574 Personnel expenses 12 (2,243) (1,991) (2,275) Other administrative expenses 13 (1,792) (1,933) (1,887) Depreciation and amortisation 14 (520) (479) (531) Other operating expenses 15 (978) (1,045) (886) Total operating expenses (5,533) (5,448) (5,579) Profit for year before tax and net impairment of loans and receivables and AFS 6,569 7,183 7,995 Net impairment of loans and receivables 16 (849) (1,742) (2,547) Impairment of financial assets available for sale 0 0 (7) Profit for year before tax 5,720 5,441 5,441 Taxes on income 17 (1,214) (1,261) (1,182) Profit for year after tax 4,506 4,180 4,259 Intems that are or might be reclassified to profit or loss Change in fair value of AFS investments recognised in OCI (82) Change in fair value of AFS investments recognised in P&L (13) (77) (164) Deferred tax (29) (84) 47 Other comprehensive income, net or tax (199) Total comprehensive income 4,629 4,538 4,060 Earnings per share Profit for the year after attributable to the equity holders 4,506 4,180 4,259 Weighted average of ordinary shares (number of shares) Basic/Diluted eamings per share 18 8,84 8,20 8,35 Total liabilities and equity 140, , , ,953

20 36 GE Money Bank, a.s., Consolidated annual report 2015 Consolidated Financial Statements 37 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY for the year ended 31 December 2015 CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December 2015 Share Legal and Available based Share Share statutory for sale payment Retained CZK m capital premium reserve reserve reserve earnings Total Opening balance 1 January , ,445 33,987 Transactions with owners of the company Transfers to reserve funds (20) 0 Other changes (2) 2 0 Total comprehensive income Profit for the year after tax ,259 4,259 CZK m Note Cash flows from operating activities Profit for the year after tax 4,506 4,180 4,259 Adjustments for: Depreciation and amortisation Net impairment of loans and receivables ,742 2,547 Net gain on sale of available for sale financial assets 10 (13) (77) (164) Net loss on sale of tangible and intangible assets Dividend income 9 (9) (9) (8) Taxes on income 17 1,214 1,261 1,182 7,077 7,590 8,351 Other comprehensive income, net of tax Change in fair value of AFS assets Change in fair value of AFS investments recognised in OCI (82) 0 0 (82) Change in fair value of AFS investments recognised in P&L (164) 0 0 (164) Deferred tax Balance 31 December , ,686 38,047 Opening balance 1 January , ,686 38,047 Changes in: Financial assets at fair value through profit or loss 24 5 (6) (2) Loans and receivables to customers 16,22,26 (2,089) 438 1,462 Other assets 26,30 (9) Deposits from banks (255) Due to customers 32 11,692 3,365 (3,303) Financial liabilities at fair value through profit or loss 24 (8) 11 4 Other liabilities and provisions 26,33,34 (39) (8,646) (779) 16,671 2,903 5,550 Transactions with owners of the company Transfers to reserve funds (12) 0 Other changes (4) 2 (2) Total comprehensive income Profit for the year after tax ,180 4,180 Other comprehensive income, net of tax Change in fair value of AFS assets Change in fair value of AFS investments recognised in OCI Change in fair value of AFS investments recognised in P&L (77) 0 0 (77) Deferred tax (84) 0 0 (84) Balance 31 December , (2) 36,856 42,583 Opening balance 1 January , (2) 36,856 42,583 Taxes on income paid (788) (1,159) (1,225) Net cash from/(used in) operating activities 15,883 1,744 4,275 Cash flows from investing activities Acquisition of financial assets available for sale (16,398) (24,990) (31,191) Proceeds from financial assets available for sale 23,707 27,942 17,187 Acquisition of subsidiaries (net of cash and cash equivalents acquired) 26 0 (2,724) 0 Acquisition of property and equipment and intagible assets 25,26,27 (191) (191) (315) Proceeds from the sale of property and equipment and Intangible assets 25, Dividends received Net cash from/(used in) investing activities 7, (14,309) Cash flows from financing activities Share-based payments reserve 0 (4) (2) Dividend paid (19,700) 0 0 Net cash from/(used in) financing activities (19,700) (4) (2) Transactions with owners of the company Dividends (19,700) (19,700) Transfers to reserve funds (9) 0 Capitalization of liability into equity Net change in cash and cash equivalents 3,335 1,793 (10,036) Cash and cash equivalents at the beginning of the period 20 12,279 10,486 20,522 Cash and cash equivalents at the end of the period 20 15,614 12,279 10,486 Total comprehensive income Profit for the year after tax ,506 4,506 Other comprehensive income after tax Change in fair value of AFS assets Change in fair value of AFS investments recognised in OCI Change in fair value of AFS investments recognised in P&L (13) 0 0 (13) Deferred tax (29) 0 0 (29) Interest received* 8,698 9,093 9,805 Interest paid* (259) (402) (549) * Interest received and Interest paid are included within cash flows from operating activities Balance 31 December , (2) 21,653 27,839

21 38 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF GE MONEY BANK, A.S. AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2015 PREPARED ACCORDING TO IFRS AS ADOPTED BY EU

22 40 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 41 CONTENT 1 GENERAL INFORMATION BASIS OF PREPARATION Basis of presentation and adoption of International Financial Reporting Standards Going concern Functional and presentation currency USE OF ESTIMATES AND JUDGEMENTS NEW STANDARDS AND INTERPRETATIONS Standards and amendments issued by the IASB and endorsed by the EU but effective after 31 December Standards and amendments issued by the IASB but effective after 31 December 2015 and not endorsed by the EU SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Foreign Currency Basis of consolidation Business Combinations Non Controlling Interests Subsidiaries Associates Loss of Control Transactions Eliminated on Consolidation Interest Fees and Commissions Dividends Financial Assets and Financial Liabilities Recognition Classification Reclassification Derecognition Offsetting Amortized Cost Measurement Derivatives Impairment of financial assets Repurchase and Reverse Repurchase agreements Fair Value Measurement Provisions Leases Property and Equipment Impairment of Goodwill Intangible Assets Impairment of Non-Financial Assets Employee Benefits Cash and cash balances with the central bank Income Tax and Deferred Tax Segment Reporting Financial Guarantees and Loan Commitments EXPLANATION OF TRANSITION TO IFRS NET INTEREST INCOME NET FEE AND COMMISSION INCOME DIVIDEND INCOME NET INCOME FROM FINANCIAL OPERATIONS OTHER OPERATING INCOME PERSONNEL EXPENSES OTHER ADMINISTRATIVE EXPENSES DEPRECIATION AND AMORTISATION OTHER OPERATING EXPENSES NET IMPAIRMENT OF LOANS AND RECEIVABLES TAXES ON INCOME EARNINGS PER SHARE CASH AND BALANCES WITH THE CENTRAL BANK CASH AND CASH EQUIVALENTS LOANS AND RECEIVABLES TO BANKS LOANS AND RECEIVABLES TO CUSTOMERS FINANCIAL ASSETS AVAILABLE FOR SALE FINANCIAL ASSETS/LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS INTANGIBLE ASSETS GOODWILL AND NEWLY ACQUIRED ENTITIES PROPERTY AND EQUIPMENT Property and equipment held for sale CURRENT TAX ASSETS DEFERRED TAX ASSETS AND LIABILITIES OTHER ASSETS DEPOSITS FROM BANKS DUE TO CUSTOMERS PROVISIONS OTHER LIABILITIES CONSOLIDATION GROUP EQUITY BONUSES AND STOCK OPTION PLAN Stock Option Stock options outstanding Stock options activity Restricted stock units (RSU) CONTINGENT LIABILITIES Loan commitments and issued guarantees Legal disputes LEASING TRANSACTIONS WITH RELATED PARTIES Remunaration paid to Key Members of Management SEGMENT REPORTING RISK MANAGEMENT Risk Management Organisational Structure Capital Management Internal Capital Requirement on a One-year Horizon Three-Year Capital Outlook Recovery Plan Credit risk Credit Risk Management Categorisation of Receivables Collateral Assessment Allowances Calculation Credit Concentration Risk Credit Portfolio and its Quality Forborne Receivables Risk of Concentration Interest Rate Risk Foreign Exchange Risk Liquidity Risk Operational Risk Model Risk FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES MANDATORY PUBLISHED INFORMATION SUBSEQUENT EVENTS

23 42 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements GENERAL INFORMATION 2. BASIS OF PREPARATION 3. USE OF ESTIMATES AND JUDGEMENTS (a) IFRS 9 Financial Instruments GE Money Group consist of parent company GE Money Bank, a.s. (the Bank), and its subsidiaries and associate listed in the note 35, (the Group ). As of the 31th December 2015 the Bank is a wholly owned subsidiary of GE Capital International Holdings Limited (GECIHL). Ultimate parent of GECIHL is General Electric Company (GE). The Bank s registered office is at Vyskočilova 1422/1a, Praha 4 Michle, Czech Republic and its ID number is The Group focuses primarily on secured and unsecured consumer lending and commercial financing. The consumer portfolio consists of secured and unsecured lending. Unsecured lending includes personal loans, credit cards, personal overdrafts and finance leases. Secured lending is provided in the form of mortgages. Commercial lending products range from working capital, investment loans, finance leases, financing of small businesses and entrepreneurs through guarantees, letters of credits and foreign exchange transactions. The Group provides a wide range of deposit and transactional products to retail and commercial customers. The Group issues debit and credit cards in cooperation with VISA and Mastercard. In addition, the Group intermediates additional payment protection insurance which covers the customer s monthly loan payment in the event of unemployment, accident or sickness. The Group also acts as the intermediary to provide its customers with other insurance and investment products. The Group s financial statements were authorised for issue by the Directors on the 25th of February In addition, the financial statements are subject to approval at the General Meeting of shareholders. All press releases, financial reports and other information are available on our website: Basis of presentation and adoption of International Financial Reporting Standards International Financial Reporting Standards comprise accounting standards issued or adopted by the International Accounting Standards Board ( IASB ) as well as interpretations issued or adopted by the IFRS Interpretations Committee ( IFRIC ). The financial statements contained herein are consolidated financial statements of the Group prepared in accordance with International Financial Reporting Standards as adopted by the EU ( IFRS ). The Group firstly prepared financial statements in accordance with IFRS for the year ended 31 December The Group has consistently applied the accounting policies used in the preparation of its opening IFRS statement of financial position as at 1 January 2013 and throughout all periods presented, as if these policies had always been in effect. For periods up to and including the year ended 31 December 2014, the Group prepared its statutory financial statements in accordance with Czech accounting legislation for banks as required by legislation of the Czech Republic (CZ GAAP) which were prepared as the Group s statutory financial statements. For year ended 31 December 2015 only IFRS financial statements were prepared and presented. Note 6 discloses the impact of the transition to IFRS on the Group s reported financial position and financial performance in comparison to CZ GAAP. 2.2 Going concern The consolidated financial statements are prepared on a going concern basis, as the Directors are satisfied that the Group have the resources to continue in business for the foreseeable future. In making this assessment, the Directors have considered a wide range of information relating to present and future conditions, including future projections of profitability, cash flows and capital resources. 2.3 Functional and presentation currency The Group s financial statements are presented in Czech Koruna (CZK) which is the Group s functional currency. All amounts have been rounded to the nearest million, except where otherwise indicated. The preparation of the Group s financial statements in conforminty with IFRSs requires the use of estimates and judgements about future conditions. In view of the inherent uncertainties and the high level of subjectivity involved in the recognition or measurement of items listed below, it is possible that the outcomes in the next financial year could differ from those on which management s estimates are based, resulting in materially different conclusions from those reached by management for the purposes of the 2015 Consolidated Financial Statements. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about critical judgements and estimates in applying accounting policies that have the most significant effect on the amounts recognised in the Group s financial statements is included in the following notes: Deferred tax asset note 29 Impairment of financial assets notes 16 and 42.3 Provisions note 33 Fair value note 43 Goodwill note 5.12 and 26 Classification of leases note NEW STANDARDS AND INTERPRETATIONS 4.1 Standards and amendments issued by the IASB and endorsed by the EU but effective after 31 December 2015 During 2015 the EU endorsed amendments issued by the IASB through the Annual Improvements to IFRSs Cycle. The Group did not early adopt the Annual improvements and they have immaterial impact on the Group s financial statements. 4.2 Standards and amendments issued by the IASB but effective after 31 December 2015 and not endorsed by the EU Certain new accounting standards and interpretations have been published by the IASB that are not mandatory for 31 December 2015 reporting periods and have not been adopted by the European Union. The Group intends to adopt these standards, if applicable, when they become effective as endorsed by the EU. The Group s assessment of the impact of these new standards and interpretations is set out below. IFRS 9 Financial Instruments issued on 24 July 2014 replaces IAS 39 Financial Instruments: Recognition and Measurement. The Standard includes requirements for recognition and measurement, impairment, derecognition and general hedge accounting. IFRS 9 issued in 2014 is mandatorily effective for periods beginning on or after 1 January 2018 subject to endorsement by the EU. Classification and measurement IFRS 9 divides all financial assets into two classifications - those measured at amortised cost and those measured at fair value. Where assets are measured at fair value, gains and losses are either recognised entirely in profit or loss (fair value through profit or loss, FVTPL), or recognised in other comprehensive income (fair value through other comprehensive income, FVTOCI). The classification of a financial asset is made at the time it is initially recognised, namely when the entity becomes a party to the contractual provisions of the instrument and the classification and measurement will depend on the company s business model and contractual cash flow characteristics. All financial instruments are initially measured at fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs. Impairment The impairment model in IFRS 9 is based on the premise of providing for expected losses, while IAS 39 is based on an incurred loss model. The IFRS 9 impairment model applies to financial assets measured at amortised cost; financial assets mandatorily measured at FVTOCI; loan commitments when there is a present obligation to extend credit, financial guarantee contracts and lease receivables. Under the IFRS 9 model, credit losses are required to be measured through a loss allowance at an amount equal to: the 12-month expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).

24 44 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 45 A loss allowance for full lifetime expected credit losses (ECL) is required for a financial instrument if the credit risk of that financial instrument has increased significantly since initial recognition. The assessment of whether there has been a significant increase in credit risk is based on an increase in the probability of a default occurring since initial recognition. The assessment of credit risk, and the estimation of ECL, are required to be unbiased and probability-weighted and should incorporate all available information which is relevant to the assessment, including information about past events, current conditions and reasonable and supportable forecasts of future events and economic conditions at the reporting date. In addition, the time value of money must also be incorporated into the calculation. Using an expected loss model for allowances the impairment charge will tend to be more volatile and more likely than not lead to an increase in the total level of impairment allowances. Hedge Accounting IFRS 9 will contain fewer restrictions regarding hedging instruments and hedge accounting is more principles based than IAS 39 providing better links to a company s risk management activities. More types of financial instruments will be accepted as hedging instruments. A hedged item can be a recognised asset or liability, an unrecognised firm commitment, a highly probable forecast transaction or a net investment in a foreign operation and must be reliably measurable. The Group does not currently apply hedge accounting. Transition The classification and measurement and impairment requirements are applied retrospectively by adjusting the opening statement of financial position at the date of initial application, with no requirement to restate comparative periods. Hedge accounting is generally applied prospectively from that date. The Group is currently assessing the impact that IFRS 9 will have on the financial statements. (b) IFRS 15 Revenue from Contracts with Customers IFRS 15 is effective for accounting periods starting on and after 1 January 2018 subject to endorsement by the EU. IFRS 15 Revenue from Contracts with Customers applies to all contracts with customers except for: leases within the scope of IAS 17 Leases; financial instruments and other contractual rights or obligations within the scope of IFRS 9 Financial Instruments, IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures; insurance contracts within the scope of IFRS 4 Insurance Contracts; and non-monetary exchanges between entities in the same line of business to facilitate sales to customers or potential customers. The standard provides a single, principles based five-step model to be applied to all contracts with customers. Identify the contract(s) with a customer Identify the performance obligations in the contract Determine the transaction price Allocate the transaction price to the performance obligations in the contract Recognise revenue when (or as) the entity satisfies a performance obligation. The standard should be applied retrospectively with certain practical expedients available. The Group is currently assessing the impact that IFRS 15 will have on the financial statements. (c) IFRS 16 Leases In January 2016 IFRS 16 was issued and effective on 1 January 2019 subject to endorsement by EU. The standard shall be effective for annual periods beginning on or after 1 January 2005 with full or modified retrospective approach. A contract is identified as a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. IFRS 16 will bring major changes in the accounting of lessees. Right of use of the asset and the corresponding liablity shall be recognized in the lessee s statement of financial position with only two exceptions: When the lease term does not exceeds 12 months and contains no purchase option When the underlying asset has a low value when new Right of use shall be depreciated for the shorter period of: the economic useful life of the underlying asset; or the lease term. Interest expense arising from the lease liability shall be recognized separately from depreciation charge in the statement of profit and loss. A lessor shall classify each of its leases 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. The Group is currently assessing the impact that IFRS 16 will have on the financial statements. 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 5.1 Foreign Currency The consolidated financial statements are presented in Czech Koruna (CZK) which is the Group s functional currency. Transactions in foreign currencies are translated into the functional currency of the Group at the exchange rates at the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the profit or loss 5.2 Basis of consolidation Business Combinations Business combinations are accounted for using the acquisition method as at acquisition date i.e. when control is transferred to the Group. The consideration transferred in the acquisition is measured at the fair value as are the identifiable net assets acquired. Any goodwill that arised is tested annually for impairment (see note 5.12.). Goodwill is measured as the excess of the aggregate of the consideration transferred, the amount of any noncontrolling interest and the fair value of any previously held equity interest in the acquiree, if any, over the net of the fair values of the identifiable assets and liabilities assumed. Any gain on a bargain purchase is recognized in profit or loss immediately. Acquisition-related costs are recognized as an expense in the profit or loss in the period in which they are incurred. Any contingent consideration payable is measured at fair value at the acquisition date Non Controlling Interests Non controlling interests are measured at their proportionate share of the acquiree s identifiable net assets at the acquisition date. Changes in the Group s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions Subsidiaries Subsidiaries are investees controlled by the Group. The Group controls an investee if it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date when control ceases Associates Associates are all entities over which the Group has significant influence but no control or joint control. This is generally the case where the Group holds between 20-50% of the voting rights. The consolidated financial statements of the Group also include the attributable share of the results and other comprehensive income of associates determined using the equity-method and based on either financial statements for the annual period ended 31 December or on pro-rated amounts adjusted for any material transactions or events occurred between the date of financial statements available and 31 December Loss of Control When the Group loses control over a subsidiary it derecognizes the assets and liabilities of the subsidiary and any related non controlling interests and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

25 46 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements Transactions Eliminated on Consolidation Inter-group balances and transactions, and any unrealized income and expenses arising from intra group transactions, are eliminated in preparing the consolidated financial statements. Unrealized losses are eliminated in the same way as unrealized gains but only to the extent that there is no evidence of impairment. 5.3 Interest Interest income or expense from all interest-bearing financial instruments except financial instruments measured at fair value through profit or loss is recognized using the effective interest rate and reported in the profit or loss in the line items Interest and similar income and Interest expense and similar charges respectively as part of revenue and expenses from continuing operations. The effective interest rate is a method of calculating the amortized cost of a financial asset or a financial liability that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or financial liability to their carrying amount. When calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of the financial instrument but not future credit losses including transaction costs and fees paid or received that are an integral part of the effective interest rate. Transaction costs include incremental costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. Interest income and expense presented in the profit or loss include: Interest on financial assets and financial liabilities measured at amortized cost calculated on an effective interest basis Interest on available-for-sale investment securities calculated on an effective interest basis If the financial receivable is considered impaired, only the interest income representing the time value of money between the impairment event and the estimated recovery date is recognized unwinding. The Group calculates unwinding for the period using portfolio approach based on average net book value of impaired loans and receivables and attributable effective interest rate. 5.4 Fees and Commissions Fees and commission income and expense that are integral to the effective interest rate on a financial asset or financial liability are included in the measurement of the effective interest rate. Other fees and commission income are recognized when the related services are performed. Fees and commissions income are earned mainly from providing payment services, intermediary and investment services. Fee income on impaired financial assets is recognized on receipt of cash or performance of the service obligation whichever is later. 5.5 Dividends Dividend income is recognized when the right to receive the payment is established. Dividend income is reported in the profit or loss in the line item Dividend income. 5.6 Financial Assets and Financial Liabilities Recognition The Group initially recognizes financial assets measured at amortized cost on the date on which they are originated. All other financial instruments are recognized on the trade date which is the date the Group becomes a party to the contractual provisions of the instrument. All financial instruments are initially recognized at their fair value plus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue Classification Financial Assets The Group classifies its non derivative financial assets into one of the following categories: loans and receivables held-to-maturity available-for-sale financial assets financial assets at fair value through profit or loss held for trading or designated at fair value through profit or loss Management determines the classification based upon management s intent for acquiring a particular asset and the cash flow characteristics of that asset. Currently the Group does not hold any non derivative assets that are classified as held-to-maturity or designated at fair value through profit or loss. (a) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market other than: financial assets designated as held for trading that the Group intends to sell immediately or in the near term and those assets designated as at fair value through profit or loss those financial assets that the Group upon initial recognition designates as available for sale or; those financial assets for which the Group cannot recover the majority of its initial investment for a reason other than deterioration of credit quality. These assets will be classified as available for sale. Loans and receivables are subsequently measured at the amortized cost using the effective interest rate method. Financial assets in this category are reported in the line item "Loans and receivables to banks" or "Loans and receivables to customers". (b) Available for sale financial assets Available-for-sale ( AFS ) financial assets are non derivative investments that are designated as AFS or are not classified as another category of financial assets. Available-for-sale financial assets include equity and debt securities. Debt securities in this category are those that are intended to be held for an indefinite period of time and that may be sold in response to needs for liquidity or in response to changes in market conditions. Interest income is recognized in the profit or loss using the effective interest method. Dividend income is recognized in the profit or loss when the Group becomes entitled to the dividend. Foreign exchange gains or losses on AFS debt securities investments are recognized in profit or loss. Fair value changes other than impairment losses are recognized in other comprehensive income and reported in the Available-for-sale reserve. When the AFS asset is disposed of or impaired, the cumulative gain or loss previously recognized in other comprehensive income is reclassified to profit or loss. Disposal gains/losses are recorded in Net income from financial operations. Details on how the fair value of financial instruments is determined are disclosed in note 5.8. The Group has not designated any loans or receivables as available-for-sale Financial Liabilities The Group classifies its non-derivative financial liabilities, other than financial guarantees and loan commitments, at amortized cost. Non-derivative financial liabilities are contractual arrangements resulting in the Group having an obligation to either deliver cash or another financial asset to the holder Reclassification Generally, the Group does not reclassify any financial asset or liabilities after initial recognition Derecognition The Group derecognises a financial asset when the contractual rights to receive cash flows from the financial assets expire or the rights to receive the contractual cash flows and substantially all the risks and rewards of ownership have been transferred. On derecognition the difference between the carrying amount of the asset and the sum of the consideration received and any cumulative gain or loss recognized in other comprehensive income is recognized in profit or loss. A financial liability is derecognised when the obligation under the liability as specified in the contract is discharged, cancelled or expires Offsetting Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position, when and only when, the Group has a legal right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under IFRS.

26 48 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements Amortized Cost Measurement The amortized cost of a financial asset or financial liability is the amount at which the asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount recognized and the maturity amount, minus any reduction for impairment Derivatives Derivatives are initially recognised, and are subsequently remeasured, at fair value. Fair values of derivatives are obtained by using valuation techniques. A derivative that is not designated and effective as a hedging instrument is reported in the category financial assets at fair value through profit or loss. Derivatives include currency derivatives (swaps and forwards). Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. Derivatives as used by the Group are not designated as hedging instruments and in the statement of financial position they are presented under the line item Financial assets at fair value through profit or loss and Financial liabilities at fair value through profit or loss. Changes in the fair value of derivatives and any interest income/expense related to these derivatives are recorded in Net income from financial operations. As a matter of policy, the Group use derivatives for risk management purposes and does not use derivatives for speculative purposes Impairment of financial assets Financial assets carried at amortised cost An assessment is made at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred, if and only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event) and that loss event has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Objective evidence that a financial asset or group of assets is impaired includes observable data about the following events: Delinquency in contractual payments of principal or interest Cash flow difficulties Breach of loan covenants Deterioration of the borrower s competitive position Deterioration in the value of collateral External downgrade below an acceptable level Initiation of bankruptcy proceedings Granting a concession to a borrower for economic or legal reasons relating to the borrower s financial difficulty that would not otherwise be considered. In terms of the individually assessed financial assets (which are primarily represented by individually managed commercial loans and finance lease (see the individually managed exposures defined in the section ), the Group first assesses whether objective evidence of impairment exists individually for these financial assets. If the Group determines that no objective impairment exists for an individually assessed financial asset, the Group includes the financial asset in a group of financial assets with similar credit risk characteristics and collectively measures them for impairment. Financial assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized, are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the financial asset s carrying amount and the present value of the estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective interest rate. The carrying amount of the financial asset is reduced through the use of an allowance account and the amount of the loss is recognized in the profit or loss. The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable. For the purposes of a collective evaluation of impairment (see note ), financial assets are grouped on the basis of similar credit risk characteristics. Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors ability to pay all amounts due according the contractual terms of the assets being evaluated. Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets in the group and historical loss experience for assets with credit risk characteristics similar to those in the group. The methodology (see note 43) and assumptions (see note 16) used for estimating future cash flows are reviewed regularly to reduce difference between loss estimates and actual loss experience. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor s credit rating), the reversal of the previously recognised impairment loss is recognised in the profit or loss. When a loan is deemed uncollectible, it is derecognized and the provision for impairment is utilized. Subsequent recoveries are recognized as a credit in the profit or loss. Available-for-sale financial assets Available-for-sale financial assets are assessed at each balance sheet date for objective evidence of impairment. Where such evidence exists an impairment loss is recognized. In addition to the factors set out above, a prolonged (i.e. 12 consecutive months) decline in the fair value of an investment in an available-for-sale equity instrument below its cost is considered in determining whether an impairment loss has been incurred. If an impairment loss has been incurred, the cumulative loss that has been recognized in other comprehensive income is removed from equity and recognized in the profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases, and the increase can be objectively related to an event occurring after the impairment loss was recognized, the impairment loss is reversed through the profit or loss. Impairment losses on equity instruments that were recognised in the profit or loss are not reversed through profit or loss in a subsequent period. 5.7 Repurchase and Reverse Repurchase agreements From time to time, the Group enters into contracts to sell and buy back financial instruments at a specific future date ( repo ) or to buy and sell back financial instruments at a specific future date ( reverse repo ). In repo transactions the securities provided by the Group continue to be recognized and reported in the statement of financial position as the Group retains substantially all the risks and rewards of ownership together with all coupons and other income payments received during the period of repo transaction. The corresponding cash received is recognised in the statement of financial position and a corresponding obligation to return it (including accrued interest) is recorded as a liability. Securities purchased as a reverse repo transaction are not recognised in the statement of financial position. The consideration paid (including accrued interest) is recorded in the statement of financial position as Loans and receivables to banks or Loans and receivables to customers. Reverse repo securities are not recognised in the statement of financial position. The Group is allowed to provide securities received in reverse repo transactions as collateral or sell them, even in the absence of default by their owner. The difference between the sale and repurchase price or between the purchase and resale price is treated as interest and recognised in net interest income over the life of the agreement. 5.8 Fair Value Measurement Fair value is the price the Group would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. In the absence of active markets for the identical assets or liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date.

27 50 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 51 Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect group market assumptions. Preference is given to observable inputs. These two types of inputs create the following fair value hierarchy: Level 1 Quoted prices for identical instruments in active markets. Level 2 Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 Significant inputs to the valuation model are unobservable. The Group maintains policies and procedures to value instruments. In addition, we have risk management teams that review valuation, including independent price validation for certain instruments (e.g. treasury bills). With regard to Level 3 valuations, we perform a variety of procedures to assess the reasonableness of the valuations. Such reviews, which may be performed quarterly, monthly or weekly, include an evaluation of instruments whose fair value change exceeds predefined thresholds (and/or does not change) and consider the current interest rate, currency and credit environment, as well as other published data, such as rating agency market reports and current appraisals. Fair values of financial assets and liabilities that are not presented in the Group s balance sheet at fair values are shown in the note Provisions A provision is recognized by the Group when: it has a present obligation (legal or constructive) as a result of past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the Group can reliably estimate the amount of the obligation. Provisions are reported on the statement of financial position and include provisions for credit risk (loan commitments) and provisions for litigation and other obligations. Expenses or income related to provisions are reported based on substance of the expense. Provisions are disclosed in note Leases A lease is classified as a finance lease if it transfers substantially all the risks and rewards incident to ownership. All other leases are classified as operating leases. Classification is made at the inception of the lease. Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than the form. (i) Group as Lessee Payments made under operating leases are recognized in profit or loss on a straight line basis over the term of the lease. Any lease incentives received are recognized as an integral part of the total lease expense over the term of the lease. Operating lease payments made by the Group are recorded in Other administrative expenses in the profit or loss. As a lessee, operating leased assets are not recognized in the statement of financial position of the Group. Assets subject to a finance lease are recognized in the Group s statement of financial position initially at the fair value of the asset or, if lower, the present value of the minimum lease payments. The asset is recorded in Property and Equipment and the corresponding liability to the lessor is included in Other liabilities. Impairment losses are recognised to the extent that the carrying values are not fully recoverable. (ii) Group as Lessor The amount due from the lessee under a finance lease is recognised in the Group's statement of financial position as a receivable at an amount equal to the lessor s net investment in the lease and presented in Loans and receivables to customers. The underlying asset is not recognized in the balance sheet. The finance income from finance lease is recognised in Interest and similar income based on a pattern reflecting a constant periodic rate of return on the net investment, i.e. using the effective interest method Property and Equipment Items of property and equipment are measured at cost less accumulated depreciation less impairment losses over their estimated useful lives. Cost includes the purchase price of the asset, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item. Property and equipment is depreciated on a straight-line basis over their estimated useful lives as follows: Cars 4-5 years Technical Improvements related to branches and HQ building 5-15 years Furniture 4-10 years Equipment 5 years Computers and servers 3-6 years Leasehold improvements are depreciated on a straight-line basis over the shorter of the lease terms or their remaining useful lives. Assets' residual values and useful lives are monitored and adjusted if appropriate at each financial statement date. Property and equipment are subject to annual impairment reviews (see note 5.14). If the carrying amount of the asset exceeds its estimated recoverable amount, the asset is adjusted accordingly. Its estimated recoverable amount is the higher of fair value including costs to sell and its value in use. Gains and losses on disposals are determined by deducting the carrying value from the consideration received. Any gain/loss on sale is recognized in the profit or loss Impairment of Goodwill The Group tests goodwill for impairment annually or whenever there is an indication of possible imparment during the year. The impairment test involves determination of the recoverable amount for cash-generating unit (CGU), see note 26. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. The recoverable amount is the higher of its fair value less costs of disposal and its value in use. The Group determines the recoverable amount of CGU as a value in use which is estimated using income approach based on the present value of estimated future cash flows discounted at an appropriate risk-adjusted rate. The Group uses internal forecasts to estimate future cash flows and include an estimate of longterm future growth rates based on the most recent views of the long-term outlook for each business. Actual results may differ from those assumed in the forecasts. For the purposes of impairment testing, goodwill acquired in a business combination shall, from the acquisition date, be allocated to each of the acquirer s CGU that is expected to benefit from the synergies of the combination. An impairment loss is recognised if the carrying amount of CGU exceeds its recoverable amount. In other words, the recoverable amount of CGU is compared with the sum of the carrying amount of the CGU for the purposes of consolidation and the relevant goodwill. The impairment loss shall first reduce the carrying amount of any goodwill allocated to CGU and then to other assets of CGU pro rata on the basis of the carrying amount of each asset in CGU. The impairment test consists of two steps: in step one, the carrying value of the cash generating unit is compared with its recoverable amount; in step two, which is applied when the carrying value of the cash generating unit is more than its recoverable amount, the amount of goodwill impairment, if any, is derived by deducting the fair value of the cash generating unit s assets and liabilities from the fair value of its equity, and comparing that amount with the carrying amount of goodwill

28 52 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements Intangible Assets Short Term Bonuses Payment 5.16 Cash and cash balances with the central bank 5.18 Segment Reporting Software Software acquired by the Group is measured at cost less accumulated amortization and any accumulated impairment losses. Expenditure on internally developed software is recognized as an asset when the Group is able to demonstrate its intention and ability to complete the development and use the software to generate future economic benefits and the costs to complete the development can be reliably measured. Internally developed software is stated at capitalized cost less accumulated amortization and impairment. Software is amortized over its useful life usually not exceeding 5 years. Subsequent expenditure on software assets is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred Impairment of Non-Financial Assets At the end of each reporting date the Group reviews the carrying amounts of its non-financial assets to determine whether there is any indication of impairment. If any such indication exists then the assets recoverable amount is estimated. An asset s recoverable amount is the higher of the asset s fair value less costs of disposal and its value in use. An impairment loss is recognized if the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in the profit or loss. An impairment loss may be reversed to the extent it does not exceed the carrying amount that would have been determined if no impairment loss had been recognized Employee Benefits Employee benefits include short term bonus payments, bonus for loyalty and bonuses tied to equity and stock option plan. Manager and Retention Bonuses: used as a motivation for the Group s management. Measurement is based on meeting performance indicators. The payments are payable in the next quarter after the end of the period. Bonus payments are accrued over time and represent the best estimate of the amount that will be paid. Sales incentives: represent performance benefit to retail employees at branches and commercial bankers. The size of the sales incentives depends on fulfilment performance targets, which is evaluated quarterly and the payment is partially made in the subsequent quarter and in the first quarter after the end of the year. The Bank recognizes a liability as of the reporting date representing the sum of the sales incentives in the fourth quarter and the amounts deferred from the previous reporting periods. Bonuses for Loyalty Long service award is a corporate program that rewards employees for loyalty. Employees are eligible for an award each five years of employment with the Group. A liability is recognized for the benefit reflecting the probability of each eligible employee attaining each anniversary. The Group records a provision for a loyalty based on an actuarial model that is in line with IAS 19 and it is recognised in the statement of financial position in the line item Provisions. Bonuses Share-based payments Share options and restricted units over the shares of General Electric Company, the ultimate parent entity are granted to certain employees and executives of the Group. The fair value of options and units granted is recognised as Personnel expenses with a corresponding increase in Share based payment reserves within equity. The fair value is measured at grant date using the Black-Scholes option pricing model, and is recognised as an expense over the period the employees become unconditionally entitled to the options/units. The amount recognised as an expense is adjusted to reflect the actual number of options/units expected to vest. The credit to share based payment reserve over the vesting period on expensing an award represents the effective capital contribution from General Electric Company. To the extent the Group will be, or has been, required to fund a share-based payment arrangement, this reserve is reduced. Cash and balances with the central bank include current accounts and time deposits with the Czech National Bank (CNB), cash in ATMs and in branches. Cash and balances are reported in the statement of financial positon in Cash and balances with the central bank. The Group s mandatory minimum reserve held by the CNB is also included within Cash and balances with the central bank Income Tax and Deferred Tax Income tax expense comprises current and deferred tax. It is recognized in the profit or loss except to the extent that it relates to items recognized directly in equity or in other comprehensive income. Current Tax Current tax represents the tax expected to be payable on the taxable profit for the year, calculated using tax rates enacted or substantively enacted by the balance sheet date, and any adjustment to tax payable in respect of previous years. Current tax assets and liabilities are offset when the Group intends to settle on a net basis and the legal right to offset exists. Deferred Tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and the amounts attributed to such assets and liabilities for tax purposes. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probably that the related tax benefit will be realized. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. Significant temporary and timing differences arise mainly from different accounting and tax value adjustments to receivables, provisions and from the revaluation of financial assets. Our operating businesses are organized based on the nature of markets and customers. Operating segments are reported in accordance with the internal reports prepared on a regular basis and presented to the members of the senior management team. The Group has identified the following segments. Commercial clients includes individually and portfolio managed commercial loans, finance leases. Clients are mainly entrepreneurs and business corporations. Retail clients segment covers most of the Group s consumer products (consumer loans, mortgages, auto financing including finance leases etc.). Products in the Group s consumer portfolio have similar characteristic. They consist mainly of term loans offered through a network of individual branches, call centers and external partners. The products are primarily targeted at consumers and households. Other it includes mainly investment banking and equity investments and other areas that are not included in the above segments. Information about the reported segments is described in note Financial Guarantees and Loan Commitments Financial guarantees are contracts that require the Group to make specified payments to reimburse the holder for a loss that it incurs because a specified debtor fails to make payment when it is due in accordance with the terms of a debt instrument. Loan commitments are firm commitments to provide credit under pre-specified terms and conditions. Liabilities under financial guarantee contracts are recorded initially at their fair value, which is generally the fee received or present value of the fee receivable. Subsequently, financial guarantee liabilities are measured at the higher of the initial fair value, less cumulative amortisation, and the best estimate of the expenditure required to settle the obligations. The provided guarantees are shown in note 38.

29 54 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements EXPLANATION OF TRANSITION TO IFRS Reconciliation of the Statement of Financial Position as at 1 January 2013 The accounting policies set out in note 5 have been applied in preparing the financial statements for the year ended 31 December 2015, the comparative information presented in these financial statements for the years ended 31 December 2013 and 2014 and in the preparation of an opening IFRS statement of financial position at 1 January 2013 (the Group s date of transition). In preparing its opening IFRS statement of financial position, the Group has adjusted amounts reported previously in financial statements prepared in accordance with Czech accounting legislation for banks (CZ GAAP). An explanation of how the transition from previous CZ GAAP to IFRSs has affected the Group s financial position and financial performance is set out in the following tables and the notes that accompany the tables. The Group was not required to prepare a statement of cash flows under CZ GAAP. Therefore, no explanation of impact of the transition to IFRSs on cash flows is included. IFRS Exceptions and Applied Exemption Options As set out in IFRS 1, paragraph 18, the Group has opted to use the following exemptions contained in Appendices C-E for share-based payment transactions and business combinations before the date of transition to IFRS: The Group decided to use the exemption specified in Appendix D3 for share based payments. Based on the exemption the Group is not required to apply IFRS 2 to liabilities arising from share-based payment transactions that were settled before the date of transition to IFRSs. Based on IFRS 1, any hindsight since the transition date is not allowed to be used to create or revise estimates in the financial statements and was treated as non-adjusting event. Therefore, the estimates previously made by the Group under CZ GAAP were not revised for application of IFRS except where necessary to reflect any difference in accounting policies. CZ GAAP as at Notes to FS caption Notes IFRS Effect IFRS as at 1 Jan 2013 reclasses CZ GAAP to transition of transition 1 Jan 2013 IFRS reclasses to IFRS ASSETS Cash and balances with the central bank 15,610 R 1, ,674 Financial assets at fair value through profit or loss 0 N Financial assets available for sale 8, ,902 Loans and receivables to banks 3, ,848 Loans and receivables to customers 101,899 0 A, J (397) 101,502 Intangible assets Property and equipment 1,047 0 B, C, J (183) 864 Investments in subsidiaries and associates 4 0 K (3) 1 Current tax assets Deferred tax assets 0 O 1,561 D 111 1,672 Other assets 3,224 N, O, R, X (2,629) E, I, J (49) 546 Total assets 135,474 0 (521) 134,953 LIABILITIES Deposits from banks Due to customers 97,064 0 J, K (120) 96,944 Financial liabilities at fair value through profit or loss 0 N Provisions 307 O (58) C, F, G, H, J Current tax liabilities 0 O Deferred tax liabilities Other liabilities 3,239 N, X (1) B, I, J 1 3,239 Total liabilities 100,988 0 (22) 100,966 EQUITY Share capital Share premium 4, ,702 Legal and statutory reserve Available for sale reserve Effect of non-controlling interest purchase (219) M Share based payment reserve 0 0 H 4 4 Retained earnings 29,167 M (219) (503) 28,445 Total equity 34,486 0 (499) 33,987 Total equity and liabilities 135,474 0 (521) 134,953

30 56 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 57 Reconciliation of the Statement of Financial Position as at 31 December 2013 Total Comprehensive Income Reconciliation for the year ended 31 December 2013 CZ GAAP as at Notes to FS caption Notes IFRS Effect IFRS as at 31 Dec 2013 reclasses CZ GAAP to transition of transition 31 Dec 2013 IFRS reclasses to IFRS ASSETS Cash and balances with the central bank 8,071 R 1, ,372 Financial assets at fair value through profit or loss 0 N Financial assets available for sale 22, ,835 Loans and receivables to banks 1, ,114 Loans and receivables to customers 97,476 0 A, J 17 97,493 Intangible assets Property and equipment B, C, J (58) 682 Investments in subsidiaries and associates 4 0 K (2) 2 Current tax assets 0 O Deferred tax assets 0 O 1,642 D 22 1,664 Other assets 3,507 N, O, R (2,990) E, I, J, K Total assets 134,636 0 (14) 134,622 LIABILITIES Deposits from banks Due to customers 93,668 0 J, K (27) 93,641 Financial liabilities at fair value through profit or loss 0 N Provisions C, F, G, H, J Current tax liabilities Deferred tax liabilities Other liabilities 2,442 N (5) B, I, J, K 10 2,447 Total liabilities 96, ,575 EQUITY Share capital Share premium 4, ,702 Legal and statutory reserve Available for sale reserve Effect of non-controlling interest purchase (219) M Share based payment reserve 0 0 H 2 2 Retained earnings 33,003 M (219) (98) 32,686 Total equity 38,143 0 (96) 38,047 Total equity and liabilities 134,636 0 (14) 134,622 CZ GAAP Notes to FS caption Notes IFRS Effect IFRS fot the for 2013 reclasses CZ GAAP to transition of transition year ended IFRS reclasses to IFRS 31 Dec 2013 Interest and similar income 10,322 0 A, J 63 10,385 Interest expense and similar charges (557) 0 0 (557) Net interest income 9, ,828 Fee and commission income 3,549 P, S 396 A (422) 3,523 Fee and commission expense (700) P 27 A 308 (365) Net fee and commission income 2, (114) 3,158 Dividend income 9 0 (1) 8 Net income from financial operations Other operating income 762 P, Q, S, Y (420) J, K (175) 167 Total operating income 13,798 3 (227) 13,574 Personnel expenses (2,204) U, V (161) A, G, H, K 90 (2,275) Other administrative expenses (2,112) U 151 A, B, E, J, K 74 (1,887) Depreciation and amortisation (648) 0 B, C, J, L 117 (531) Other operating expenses (903) Q, V, Y 7 F, J, K 10 (886) Total operating expenses (5,867) (3) 291 (5,579) Total net operating income 7, ,995 Net impairment of loans and receivables (2,982) 0 A, J 435 (2,547) Impairment of financial assets available for sale (5) 0 (2) (7) Profit for the year before tax 4, ,441 Taxes on income (1,088) D (94) (1,182) Profit for the year after tax 3, ,259 Items that may be reclassified to profit or loss Change in fair value of AFS investments recognised in OCI 0 (82) (82) Change in fair value of AFS investments recognised in P&L 0 (164) (164) Deferred tax Total other comprehensive income 0 (199) (199) Total comprehensive income for the year 0 0 4,060

31 58 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 59 Reconciliation of the Statement of Financial Position as at 31 December 2014 Total Comprehensive Income Reconciliation for the year ended 31 December 2014 CZ GAAP as at Notes to FS caption Notes IFRS Effect IFRS as at 31 Dec 2014 reclasses CZ GAAP to transition of transition 31 Dec 2014 IFRS reclasses to IFRS ASSETS Cash and balances with the central bank 9,882 R 1, ,746 Financial assets at fair value through profit or loss 0 N Financial assets available for sale 20, ,401 Loans and receivables to banks Loans and receivables to customers 100,068 0 A, J 7, ,197 Intangible assets Property and equipment 8,368 0 B, C, J (7,714) 654 Goodwill L (366) 104 Investments in subsidiaries and associates 14 0 K (12) 2 Current tax assets 0 O Deferred tax assets 0 O 1,195 D 56 1,251 Other assets 3,743 N, O, R, T (3,232) E, I, J, K Total assets 144, (861) 143,403 LIABILITIES Deposits from banks Due to customers 97,025 W 5 J, K (24) 97,006 Financial liabilities designated at fair value through profit or loss 0 N Provisions C, F,G, H, J Current tax liabilities Deferred tax liabilities 0 O 73 D Other liabilities 3,753 N, T, W 45 B, I, J, K (841) 2,957 Total liabilities 101, (651) 100,820 EQUITY Share capital Share premium 4, ,702 Legal and statutory reserve Available for sale reserve J (15) 359 Effect of non-controlling interest purchase (219) M Share based payment reserve 0 0 H (2) (2) Retained earnings 37,268 M (219) (193) 36,856 Total equity 42,793 0 (210) 42,583 Total equity and liabilities 144, (861) 143,403 CZ GAAP as at Notes to FS caption Notes IFRS Effect IFRS as at 31 Dec 2014 reclasses CZ GAAP to transition of transition 31 Dec 2014 IFRS reclasses to IFRS Interest and similar income 9,533 0 A, J 137 9,670 Interest expense and similar charges (285) 0 0 (285) Net income from operating lease Net interest income 9, ,385 Fee and commission income 2,986 P, S 303 A (285) 3,004 Fee and commission expense (715) P 102 A 283 (330) Net fee and commission income 2, (2) 2,674 Dividend income Net income from financial operations J Other operating income 1,312 P, Q, S, Y (387) J, K (751) 174 Total operating income 13, (596) 12,631 Personnel expenses (1,940) U, V (146) A, G, H, K 95 (1,991) Other administrative expenses (2,151) U 134 A, B, E, J, K 84 (1,933) Depreciation and amortisation (977) 0 B, C, J, L 498 (479) Other operating expenses (1,166) Q, V, Y (6) F, J, K 127 (1,045) Total operating expenses (6,234) (18) 804 (5,448) Total net operating income 6, ,183 Net impairment of loans and receivables (1,414) 0 A, J (328) (1,742) Profit for the year before tax 5,561 0 (120) 5,441 Taxes on income (1,282) D 21 (1,261) Profit for the year after tax 4,279 0 (99) 4,180 Items that may be reclassified to profit or loss Change in fair value of AFS investments recognised in OCI Change in fair value of AFS investments recognised in P&L 0 (77) (77) Deferred tax 0 (84) (84) Total other comprehensive income Total comprehensive income for the year 0 4,538

32 60 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 61 Notes to the Effect of transition to IFRS The Group has adjusted the gross carrying amount of its loans to reflect income recognition and loan balances using A) Loans (the Bank and GE Money Auto) the effective interest rate and to reverse those penalties previously charged and recorded but not received. Interest income and fees Impairment In CZ GAAP the Group recognized its interest income based on the nominal rate stated in the loan contract. Loan origination fees and transaction costs were recorded directly to the profit or loss. Any penalties charged on defaulted loans are immediately recognized in Loans and receivables to customers and Interest and similar income. All transactional costs (e.g. commission paid to 3rd parties) were immediately expensed and recognize in Fee and In CZ GAAP impairment allowances are calculated in accordance with CNB decree (i.e. using coefficient based on days past due or statistical models). The impairment allowance was calculated on the entire balance of the loan (including any penalties) based on the coefficient prescribed by the CNB decree for past due loans buckets for commercial and mortgage and by statistical models for retail portfolios. commission expense. IFRS uses a principles based model of impairment. If there IFRS requires the use of the effective interest model to record income on interest bearing assets and liabilities. The effective interest rate is a method of calculating the amortized cost of a financial asset or a financial liability that exactly discounts the estimated future cash flows through the expected life of the financial asset or financial liability to their carrying amount. When calculating the is objective evidence of impairment (as defined in note 5.6.8) an impairment loss is recorded representing the difference between the loan carrying amount and the present value of the future expected cash flows discounted at the loan original effective interest rate. Estimated future cash flows include all fees, commissions (including employees acting as selling agents) and incremental direct origination costs. effective interest rate, the Group estimates future cash flows considering the contractual terms of the financial instrument including transaction costs and fees paid or received that are an integral part of the effective interest rate. The penalties on loans in default are not recognized in the statement of profit or loss and other comprehensive The Group s impairment review of the loan portfolio in accordance with IFRS requirements has resulted in an impairment adjustment to reflect the Standard s (IAS 39) requirements (refer to note in the Group s accounting policies). income unless the fee is received in cash. The impact arising from the change is summarized as follows: Statement of financial position 1 January December December 2014 Loans and receivables to customers* (578) (60) (189) Adjustment to retained earnings (578) (60) (189) The method applied for CZ GAAP for impaired loans works with large pools with a recovery window of 4 years (refers only to those recoveries of balances which existed 4 years ago and that were 360+ day past due at that time), whereas In 2014, the variation between the CZ GAAP and IFRS net impairment of loans and receivables changed according to the change of external environment (the Czech economy recovered from an economic recession). the IFRS methodology is based on estimation of the migration of the accounts into impairment status, on the incurred loss B) Leases Bank Equipment (the Group as a lessee) period and on the amount of recoveries after the impairment, where the portfolio is split into pools of homogenous exposures. Under IFRS, the recoveries after impairment are estimated as the present value of the recovered cash flows after impairment discounted using effective interest rate estimated for the pools of homogenous exposures. The pools In CZ GAAP leased assets are typically not recognized on the balance sheet and the rental payment due is recognized in the profit or loss as the expense is incurred. Under CZ GAAP, the similar accounting treatment and classification of operating or finance leases is applied. are based on the characteristics to allow the estimation of future cash flows for groups of such assets based on the debtors ability to pay all amounts due according to the contractual terms of the assets being evaluated. As a result, specific time dependent recovery (recovery for each month in default) is assigned under IFRS whereas for each CNB risk categories only one average recovery for the entire category under CZ GAAP is applied. In general the allowance is higher under IFRS mainly for loans within the Czech National Bank loss category. Moreover, the allowances calculated by the IFRS methodology is more stable in In IFRS leases must be classified as either operating leases or finance leases depending on the substance of the lease contract. Operating leases are treated in a similar manner to that in CZ GAAP however, leases classified as finance leases are recognized on the Group s statement of financial position as at 1 January 2013 at the fair value. The asset is recorded in Property and Equipment or Intangible assets, and the corresponding liability to the lessor is included in Other liabilities (refer to accounting policy note 5.10 and 5.11). time (mainly due to specific time dependent recovery and estimated length of the recovery window). The Group has conducted a review of its leases and determined that contracts relating to the lease of certain The difference between the CZ GAAP and IFRS net impairment banking equipment should be classified as a finance of loans and receivables in 2013 is mainly caused by higher lease. The Group has recognized the leased asset and CZ GAAP allowances increase due to higher pro-cyclicality corresponding liability in the statement of financial position. of CZ GAAP impairment models and their reaction to the economic cycle. The IFRS impairment models reaction to economic cycles is slower due to above mentioned facts. Statement of financial position 1 January December December 2014 Property and equipment Other liabilities Adjustment to retained earnings (2) (4) (5) Statement of profit and loss and other comprehensive income Interest and similar income Fee and commission income (422) (285) Fee and commission expense Personnel expenses Other administrative expenses Net impairment of loans and receivables* 435 (313) Adjustment before income tax 518 (129) * Group prepared models and accounting policies for the measurement of impairment loss under IFRS, which is fully compliant with IAS39 requirements. In contrary, the existing impairment model used under CZ GAAP does not meet the requirements defined under IFRS. Statement of profit and loss and other comprehensive income 2014 Depreciation and amortization (7) Other administrative expenses 6 Adjustment before income tax (1) C) Asset Retirement Obligation The Group has a number of leased premises where IFRS requires an initial estimate of the costs of restoring the modifications have been made. As per the lease contract property to its original condition to be included in the asset such premises must be returned to the property s original value. The Group has adjusted its asset value to reflect the state upon expiration of the lease. cost of restoration. In CZ GAAP, the Group did not recognize restoration provision.

33 62 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 63 Statement of financial position 1 January December December 2014 Property and equipment Provisions Adjustment to retained earnings (11) (12) (14) Statement of profit and loss and other comprehensive income 2014 Depreciation and amortization (2) Adjustment before income tax (2) F) Provisions off-balance sheet exposures The Group provides certain financial guarantees and loan commitments to its customers. In CZ GAAP and in accordance with CNB decree the Group was required to create provisions for off balance sheet exposures using a coefficient prescribed by the CNB decree. IFRS requires a provision to be recorded when it is more likely than not that a present obligation exists at financial statement date. The Group has reviewed its off balance sheet exposures and it has determined that an additional provision was required. New methodology was applied as described in note D) Taxation As of 1 January 2013 the Group has recognized the additional deferred tax asset of CZK 111 mil. arising from temporary and timing differences between the tax based assets and liabilities and their IFRS carrying amounts in the Group s consolidated financial statements. Statement of financial position 1 January December December 2014 Provisions Adjustment to retained earnings (62) (63) (67) Statement of profit and loss and other comprehensive income 2014 Other operating expenses (4) Adjustment before income tax (4) Statement of financial position 1 January December October 2014 GEML* 31 December 2014 Deferred tax liability Deferred tax assets Adjustment to retained earnings 111 (102) (75) Statement of profit and loss and other comprehensive income 2014 Taxes on income 21 Adjustment after income tax 21 * GE Money Leasing, s.r.o. G) Long service award The Group provides its employees with a long service award program (LSA). Under CZ GAAP the Group has not recognized the provision for LSA in Following a review of the terms and conditions of the awards the Group has determined that the LSA program as currently offered meets the definition of other long-term employee benefits as defined in IAS 19 Employee Benefits. The Group has a present legal or constructive obligation to make payments as a result of past events and a reliable estimate can be made of the amount payable. As such, the Group has recognized an amount for the estimated LSA it considers will likely be paid. E) Other assets rent incentives Certain rental contracts entered into by the Group as a lessee contain lease incentives from the lessor. In CZ GAAP the Group did not defer and amortize the lease incentive over the period of the lease. a lease are non-linear in nature due to the lessor providing discounts or receiving a premium. An adjustment was made in the IFRS statements recognizing the lease incentive on a straight line basis over the term of the lease. IFRS: Lease incentives are to be recognized on a straightline basis over the life of the lease even if payments under Statement of financial position 1 January December December 2014 Other assets (7) (8) (9) Adjustment to retained earnings (7) (8) (9) Statement of profit and loss and other comprehensive income 2014 Other administrative expenses (1) Adjustment before income tax (1) Statement of financial position 1 January December December 2014 Provisions Adjustment to retained earnings (17) (17) (4) Statement of profit and loss and other comprehensive income 2014 Personnel expenses 13 Adjustment before income tax 13 H) Shared based payments General Electric Company, the ultimate parent of the Group offers various long-term incentive compensation awards to employees. The types of share-based incentive compensation awards that have recently been issued include stock options and restricted stock units ( RSU ). IFRS requires all share based payment transactions in which share options are granted to employees must be reflected in the financial position of the company. The Group has recognized the outstanding share options and shares as liabilities in the financial statements adjusting share based payment reserve in the equity. In CZ GAAP the Group has not expensed the fair value of the share awards to employees over its vesting period. An expense for such awards to employees was recognized by the Group only if and when it received a recharge from General Electric Company.

34 64 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 65 Statement of financial position 1 January December December 2014 Provisions Share based payments reserve 4 2 (2) Adjustment to equity (6) (3) 1 Statement of profit and loss and other comprehensive income 2014 Personnel expenses 4 Adjustment before income tax 4 Statement of financial position 1 January December October 2014 GEML 31 December 2014 Loans and receivables to customers ,252 7,318 Property and equipment (219) (95) (7,628) (7,741) Other assets (60) (8) (16) 37 Due to customers (88) 10 (9) 12 Provisions (2) 0 (11) (7) Other Liabilities (48) (51) (833) (878 Available for sale reserve (15) (15) Adjustment to retained earnings I) Financial guarantees The Group provides its customer with financial guarantees. Premium represents regular fee and is paid by customer on the quarterly basis. CZ GAAP: Premium is recognized as fee income once is paid. IFRS: Financial guarantee shall be initially recognized at fair value. If there is no evidence of the contrary present value of future premiums is deemed as fair value. Respective asset of future premiums payments receivable is also recognized. Subsequently financial guarantee is measured at initially recognized amount less cumulative amortization or the amount determined in accordance with IAS 37 whichever is higher. Statement of profit and loss and other comprehensive income Interest and similar income Net income from financial operations 0 20 Other operating income (175) (749) Other administrative expenses 0 22 Depreciation and amortization Other operating expense Net impairment of loans and receivables 0 (15) Adjustment before income tax (25) 11 K) Non-consolidated subsidiaries under CZ GAAP Statement of financial position 1 January December December 2014 Other Assets Other Liabilities Adjustment to retained earnings Under CZ GAAP some subsidiaries were not included in the consolidated financial statements due to their immateriality. All controlled entities (i.e. subsidiaries, associate or joint venture) of the Group were included in the Group consolidated financial statements as required by the IFRS. J) Finance lease in Bank s subsidiaries (the Group as a lessor) GE Money Auto and GE Money Leasing subsidiaries of GE Money Bank offer to their customers a lease, i.e. the Group is a lessor. In CZ GAAP leased assets are typically recognized in the statement of financial position of the lessor. A lease receivable for a particular month is recognized in the statement of financial position and depreciated into profit or loss. The lease income is recognized in the profit or loss on the straight-line basis over the contractual term of the lease and presented in Other operating income (i.e. any payments in advance are deferred as Other liabilities and amortized to the profit or loss using the straight-line basis pattern of the lease). Under CZ GAAP, the similar accounting treatment and classification of operating or finance leases is applied. In IFRS leases must be classified as either operating leases or finance leases depending on the substance of the lease contract. Operating leases are treated in a similar manner to that in CZ GAAP, however, for leases classified as finance leases the Group as a lessor shall recognize lease receivable in the amount of the net investment in the underlying leased asset. Subsequently, any lease payments shall be partially recognized as (i) a capital repayments used to reduce the outstanding lease receivable and as (ii) an interest income using effective interest method and thus no deferred liability is recognized (refer to accounting policy note 5.10). The Group has conducted a review of its leases and determined that contracts with the clients should be classified as a finance lease. Consequently, the Group has derecognized the leased asset and any related deferred liability from the statement of financial position and recognized the lease receivable in the amount equal to the present value of the remaining minimum lease payments using the interest rate implicit to the lease. Statement of financial position 1 January December December 2014 Investments in subsidiaries and associates (3) (2) (12) Other assets 0 (6) (7) Due to customers (32) (37) (36) Other liabilities (3) (16) Adjustment to retained earnings Statement of profit and loss and other comprehensive income 2014 Other operating income (2) Personnel expenses (5) Other administrative expenses 9 Other operating expenses (1) Adjustment before income tax 1 L) Goodwill remeasurement In 2014, the Group acquired a business of GE Money Leasing. Under CZ GAAP the goodwill represents difference between the acquisition cost of participation interests in the consolidated entity adjusted by allowances and its valuation according to the parent company s share of equity of the influence is gained. The value of net assets is influenced by the accounting treatment of finance lease as described in the Note J (i.e. leased asset recognized in the balance sheet). Subsequently, the recognized goodwill is amortized to profit or loss. subsidiary at the date when the controlling or substantial

35 66 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 67 Business combinations under IFRS are accounted for using the acquisition method. Under this method at the date of acquisition, the acquired identifiable assets and the liabilities assumed (recognized under IFRS) are measured The different basis used for goodwill calculation (i.e. mainly the impact of different reporting of finance leasing) under IFRS compared to CZ GAAP led to a goodwill remeasurement, including amortization charged. at the fair value. The goodwill is recorded as the excess of the consideration transferred over the fair value of the net identifiable assets acquired. The goodwill is not amortized but is subject to impairment test. Statement of financial position 1 January October 2014 GEML 31 December 2014 Goodwill (378) (366) Adjustment to retained earnings (378) (366) In IFRS credit card providers who grant loyalty credits to cardholders and receive consideration for doing so from vendors accepting payment by credit card are required to follow the guidance in IFRIC 13. This guidance requires the Group to recognize the income from the vendors net of any payments made to the credit cardholders. This has resulted in a reclassification of the income and expenses recognized under previous GAAP. Reclassification between the line Fee and commission income, the line Fee and commission expense and the line Other operating income in the profit or loss. S) Commission income The Group charges commission for 3rd party products to customers (e.g. credit insurance taken by the borrowers). Under CZ GAAP the related income is recognized in Other operating income. Under IFRS commission is recognized in Fee and commission income. Reclassification between line Other operating income and Fee and commission income in the profit or loss. Statement of profit and loss and other comprehensive income Depreciation and amortization (12) Adjustment before income tax (12) Notes to FS caption CZ GAAP-IFRS reclasses M) Business combination under common control prior O) Taxation to IFRS adoption In CZ GAAP deferred tax assets and liabilities are reported in In 2010 the Group acquired the business of GE Money Auto Other assets and Other liabilities. and other subsidiaries. IFRS requires deferred tax assets and liabilities to be reported Under CZ GAAP, a valuation difference was recognized as separately. The Group has reclassified its current tax and its a separate component of equity in the statement of financial deferred tax assets/liabilities to reflect this requirement. position. In terms of current tax assets, there was a reclassification between the lines Other assets and the line Current tax Under IFRS this valuation difference is presented under assets. Retained earnings. In terms of deferred tax assets, there was a reclassification between the line Other assets and the line Deferred tax N) Derivatives assets. In terms of current tax liability, there was a reclassification Under CZ GAAP the Group reported the positive fair value between the line Provisions and Current tax liability. of derivatives in Other assets and negative fair value of derivatives in Other liabilities. P) Loyalty program At the date of transition to IFRS the Group is required to The Group provides credit cards to its customers with a type classify all financial assets/liabilities into one of the four of loyalty program. The loyalty program requires the Group categories as outlined in the Group s accounting policies to refund cardholders a certain % of the turnover realized (Note 5.6.2). The Group classifies all derivatives as either when the cardholder uses the card at specified business a financial asset at fair value through profit or loss or partners (retailers). a financial liability at fair value through profit or loss. Financial assets/liabilities classified as at fair value through profit or In CZ GAAP the Group currently recognizes an expense loss must be disclosed separately. The Group has reclassified (i.e. amount paid to the cardholder) and an income its derivatives to reflect the separate disclosure requirements. (i.e. amount received from the retailer). The Group currently does not net this amount. Reclassification between the line Financial assets at fair value through profit or loss and the line Other assets in assets and between the line Financial liabilities at fair value through profit or loss and the line Other liabilities in liabilities. Q) Recognition of fees related to collection of impaired loans The Group uses collection agencies to collect loans and receivables to clients in arrears. The Group pays a fee for such services; this fee is then re-charged to the Group s customers. In CZ GAAP the Group recognized the collection fee income in the profit or loss when the collection fee is paid by the customer. At the same time the Group recognized the expense and liability to collection agency. The income and expenses were reported on net basis. In IFRS netting is permissible when, and only when, an entity currently has a legally enforceable right of set-off and intends either to settle on a net basis or to realize the financial asset and settle the financial liability simultaneously with the same counterparty. The fees charged by the third party collection agency do not meet the IFRS definition for netting. An adjustment has been made to income and expense to gross up the amounts previously netted. Reclassification between line Other operating income and Other operating expenses in the Profit or loss. R) Cash in transit reclassification Under CZ GAAP, the Group recognized cash in transit under Other assets. Under IFRS cash in transit is recognized in Cash and balances with the central bank. Reclassification between line Other assets and Cash and balances with the central bank in the statement of financial position. T) VAT Under CZ GAAP current tax assets and VAT receivable are recognized as a single receivable from the local tax authorities. Under IFRS the disclosure requirements require the current tax asset to be recognized separately from the VAT receivable. The VAT receivable is a credit balance, so the VAT receivable was reclassified from Other assets to Other liabilities. Reclassification between line Other assets and Other liabilities in the statement of financial position. U) Other employee costs Under CZ GAAP the Group only presented expenses related to salaries, bonuses, social and health insurance in Personnel expenses. All other employee expenses were presented by the Group in Other administrative costs. Under IFRS all other employee expenses were reclassified to Personnel expenses. Reclassification between line Other administrative costs and Personnel expenses in the profit or loss. V) Other provisions Under CZ GAAP all provisions were presented in consolidated profit or loss item Creation/Release of other provisions. Under IFRS all provisions were reclassified according to the substance of transaction to Other operation expense and Personnel expenses. Reclassification to lines Other operating expenses and Personnel expenses in the profit or loss.

36 68 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 69 W) Unapplied cash 7. NET INTEREST INCOME 10. NET INCOME FROM FINANCIAL OPERATIONS 13. OTHER ADMINISTRATIVE EXPENSES Under CZ GAAP unapplied cash from customers was presented the line item Other liabilities. Under IFRS unapplied cash from customers is presented in the line item Due to customers. CZK m Interest income from financial assets measured at amortised cost 9,434 9,564 10,287 Loans to customers 9,428 9,558 10,275 CZK m Net gain on available-for-sale financial assets Net income from financial assets CZK m IT and software expense (242) (265) (275) Rent expense (471) (419) (497) Rent-related services (138) (149) (150) Reclassification to line Due to customers from Other liabilities. Loans to banks Cash and deposit with central bank Interest income from and liabilities at FVTPL (7) Expense on currency derivative instruments (120) (49) (123) Advisory services (30) (16) (13) Audit fees (11) (7) (8) Marketing (203) (232) (266) X) Receivables and liabilities due to mutual funds available-for-sale financial assets Interest income and similar income 9,522 9,670 10,385 Income from currency derivative instruments Travel cost (27) (31) (31) Other expenses (670) (814) (647) Under CZ GAAP receivables and liabilities due to mutual funds and due to customers investing in mutual funds were recognized in line Other liabilities. Under IFRS receivables due to mutual fund are shown in line Other assets. Interest expense from financial liabilities measured at amortised cost (212) (285) (557) Deposit from banks 0 0 (2) Deposit from customers (212) (285) (553) Interest expense on other liabilities 0 0 (2) Interest expense and similar expense (212) (285) (557) Net interest income 9,310 9,385 9,828 Exchange rate differences Net income from financial operations OTHER OPERATING INCOME CZK m out of that: services provided by GE companies (260) (354) (241) Total other administrative expenses (1,792) (1,933) (1,887) 14. DEPRECIATION AND AMORTISATION CZK m Reclassification from line Other liabilities to Other assets. Y) Proceeds from selling repossessed cars Interest income from loans to customers includes interest income from impaired loans of CZK 272 million in 2015 (2014: CZK 332 million, 2013: CZK 411 million). See section 5.3. Service revenues Rent income Other collection income Other income Depreciation of property and equipment (223) (204) (234) Amortisation of intangible assets (297) (275) (297) Total depreciation and amortisation (520) (479) (531) Total other operating income Under CZ GAAP proceeds from selling the repossessed cars were recognized as revenue and shown in line "Other operating income". Derecognition of the repossessed cars was recognised as expense and shown in line "Other operating expense". 8. NET FEE AND COMMISSION INCOME CZK m Fees and commissions from lending 12. PERSONNEL EXPENSES OTHER OPERATING EXPENSES CZK m Under IFRS these revenues and expenses are presented net. activities ,308 Fees and commissions from payment The average recalculated number of employees during the period* 3,097 3,142 3,030 Deposit insurance (156) (146) (149) Trademark GE (174) (188) (180) Reclassification from line Other operating expenses to Other operating income. processing 1,458 1,572 1,687 Fee and commissions from intermediary of insurance out of which: Board of Directors out of which: Supervisory Board out of which: other executives Trademark GE - witholding tax (19) (19) (18) Damages (29) (100) (50) Unrecoverable VAT (264) (396) (312) Other fees and commissions income Other collection expenses (117) (152) (78) Fee and commission income 2,631 3,004 3,523 CZK m Other expenses (219) (44) (99) Fees and commissions Salaries and bonuses (1,572) (1,387) (1,587) Total other operating expenses (978) (1,045) (886) on payment processing (164) (175) (202) Salaries and bonuses actuals (1,395) (1,315) (1,537) Other fees and commissions (131) (155) (163) Salaries and bonuses accruals (177) (72) (50) Fee and commission expense (295) (330) (365) Social security and health insurance (523) (468) (529) Net fee and commission income 2,336 2,674 3,158 Other employee related expenses (148) (136) (159) Total personnel expenses (2,243) (1,991) (2,275) 9. DIVIDEND INCOME * The average recalculated number of employees during the period is an CZK m Dividends from equity instruments Dividend income average of the figures reported to Czech Statistical Authority (CSA) on a monthly basis in accordance with Article 15 of Czech Act No. 518/2004. The figures reported to CSA equal to quotient of the following nominator and the following denominator. The nominator is defined as all hours worked by all employees, their related leaves/holidays and their related sickdays. The denominator represents a standard working hours per a employee and a month.

37 70 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements NET IMPAIRMENT OF LOANS AND RECEIVABLES CZK m Additions & release At each financial statement date financial assets not measured at fair value through profit or loss are assessed for impairment. The Group has to determine whether as a result from event or events occurred alone or in a combination an impairment loss should be recognized and in which amount. 17. TAXES ON INCOME Tax expense from the Group's profit before tax can be analysed as follows: 19. CASH AND BALANCES WITH THE CENTRAL BANK CZK m 31 Dec 31 Dec 31 Dec of loan loss allowances (896) (1,748) (2,573) Use of loan loss allowances 1,746 2,352 1,941 Income from previously written-off receivables Write offs of uncollectable receivables (1,746) (2,352) (1,941) Change in allowances to operating receivables 17 (12) 4 Net impairment of loans and receivables* (849) (1,742) (2,547) * The decrease in Net impairment of loans and receivables from CZK mil. for 2014 to CZK 849 mil. for 2015 is due to a positive trend occuring in consumer portfolio relating to the strong performance of the Czech economy, leading to improvement in Probability of Defaults (PDs) and Loss Given Defaults (LGDs), which resulted in a decrease in Allowances for Loan Losses (ALLLs). Moreover, consumer loan portoflio (in gross) has been decreasing in the last few years (incl. 2015). These decreases have been compensated by the increases in commercial loan portfolio (incl. 2015). As consumer loan portfolio is uncollateralized and thus is covered by allowances more than commercial loans, the shift of the portfolio mix towards commercial loans was another factor influencing lower Net impairment of loans and receivables. For loans and receivables managed on an individual basis, judgment is required to determine if there is an objective evidence of impairment. The identification of the evidence of impairment is based on the analysis of the financial status, payment history, collateral value, industry conditions and other relevant factors. For impaired loans the estimate needs to be made by determining future amount and timing of expected recovery cash flows. These estimates are made by taking into the account the range of factors like prospects of the business model, the collateral fair value, expected proceeds from a bankruptcy or liquidation and other relevant factors. Pool managed loans and receivables are subject to estimation uncertainty as the identification of the impairment on the individual contract level is not practical due to the large amount of such exposures. The loss is measured using statistical models with inputs based on historically observed data by the Group such as historical credit losses and default rates. Judgment is required to determine whether the current macroeconomic situation is in line with the historical loss experience. For further detail see the Risk management section (see note 42). CZK m Current income tax of the current year (924) (887) (1,125) Income tax related to prior years 4 (12) (3) Change in deferred tax recognised in profit or loss (294) (362) (54) Taxes on income (1,214) (1,261) (1,182) The chart below shows the reconciliation of actual tax charge and the tax charge based on applying standard corporate income tax rate according to Czech Republic income tax law: CZK m Theoretical income tax accounted for into expenses, calculated with the rate of 19% (1,088) (1,040) (1,038) Income tax related to the prior years 4 (12) (3) Impact of the tax non-deductible expenses (142) (272) (174) Impact of the tax non-deductible income Taxes on income (1,214) (1,261) (1,182) Effective income tax rate 21% 23% 22% Cash and cash in transit 3,778 4,120 3,610 Balances with the central bank other than mandatory minimum reserves 9,700 5,740 3,890 Mandatory minimum reserve requirement with the central bank 1,997 1,886 1,872 Total cash and balances with the central bank 15,475 11,746 9,372 The Group includes mandatory minimum reserve with Czech National Bank into Cash and balances with the central bank. The Group may draw funds from the mandatory minimum reserve at any point in time provided that the average balance over the relevant period meets the minimum levels require according to the regulations of the Czech National Bank. 20. CASH AND CASH EQUIVALENTS For the purposes of consolidated statement of cash flows, cash and cash equivalents comprise the following balances with maturities at the date of acquisition of less than 3 months: If loss given by default (LGD) (in the either individual assessment or statistical models) changed by +/-10% in relative terms, then the loan loss allowances would change +/- CZK 410 mil. as at 31 December 2015 (+/- CZK 452 mil. as at 31 December 2014, resp. +/- CZK 558 mil. as at 31 December 2013). 18. EARNINGS PER SHARE Earnings per share amounts are calculated by dividing the net profit for the year after tax attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year. CZK m 31 Dec 31 Dec 31 Dec Cash and deposits with the central bank 15,475 11,746 9,372 Loans and receivables to banks ,114 Total cash and cash equivalents 15,614 12,279 10,486 CZK m Profit for the year after tax 21. LOANS AND RECEIVABLES TO BANKS attributable to the equity holders 4,506 4,180 4,259 Weighted average of ordinary shares Loans and receivables to banks include: (number of shares) Basic earnings per share CZK m 31 Dec 31 Dec 31 Dec During 2015 one additional share was issued as a consequence of capital infusion (see note 36). Current accounts at banks Term deposits in banks payable within 3 months As the Group has not issued any potentially dilutive instruments, the basic earnings per share equals to diluted earnings per share. The Group discloses earnings per share on voluntarily basis. Included in cash equivalents ,114 Total receivables from banks ,114 The Group has not created any allowances on loans and receivables to banks as no impairment has been identified.

38 72 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements LOANS AND RECEIVABLES TO CUSTOMERS c) Loss allowances for loans and receivables to customers a) Loans and receivables to customers by sector CZK m 31 December December December January 2013 Financial organisations Non-financial organisations 44,553 40,702 29,926 28,512 Government sector Non-profit organisations Entrepreneurs 12,191 12,148 9,472 9,449 Resident individuals 62,351 66,027 70,576 75,600 Non-residents entrepreneurs Non-residents individuals Gross loans and receivables to customers 120, , , ,117 Loss allowances for loans and receivables to customers* (11,778) (12,900) (13,836) (13,615) Net loans and receivables to customers 108, ,197 97, ,502 Gross loans and receivables to customers without impairment 106, ,550 94,816 98,453 CZK m Individual Portfolio Total Individual Portfolio Total Individual Portfolio Total allowances allowances allowances allowances allowances allowances allowances allowances allowances 1 January ,972 12, ,016 13, ,826 13,615 Additions and release of allowances ,535 1, ,344 2,573 Effect of written off receivables (71) (1,675) (1,746) (74) (2,278) (2,352) (159) (1,782) (1,941) Interest income from impaired loans (22) (250) (272) (31) (301) (332) (39) (372) (411) Net movement of allowances 99 (1,221) (1,122) 108 (1,044) (936) December 1,027 10,751 11, ,972 12, ,016 13,836 d) Loss allowances for loans and receivables to customers by sectors Financial Non-financial Non-profit Resident Non-residents Total CZK m organisations organisations organisations Entrepreneurs individuals individuals 1 January , ,095 10, ,900 Net change of allowances (1) Effect of written off receivables 0 (199) (4) (121) (1,417) (5) (1,746) 31 December , ,061 8, ,778 * Total allowances to non-impaired loans and receivables to customers amounts to CZK 921 mil. as at 31 December 2015 (2014: CZK mil., 2013: CZK mil., : CZK mil.). b) Loans and receivables to customers by product (net of loss allowances) CZK m 31 December December December January 2013 Consumer authorised overdrafts and credit cards 5,407 6,399 7,363 7,971 Consumer loans 30,526 30,407 31,805 33,418 Mortgages 15,387 16,850 17,640 19,693 Commercial loans 38,340 36,040 34,629 33,140 Auto & equipment financial lease 8,038 7, Commercial 8,025 7, Retail Auto & equipment loans 10,274 9,400 5,132 5,619 Commercial 8,329 7,426 2,900 2,971 Retail 1,945 1,974 2,232 2,648 Other loans ,418 Commercial Retail ,401 Net loans and receivables to clients 108, ,197 97, ,502 Financial Non-financial Non-profit Resident Non-residents Total CZK m organisations organisations organisations Entrepreneurs individuals individuals 1 January , ,119 11, ,836 Net change of allowances (1) ,208 (8) 1,416 Effect of written off receivables 0 (85) 0 (24) (2,243) 0 (2,352) 31 December , ,095 10, ,900 Financial Non-financial Non-profit Resident Non-residents Total CZK m organisations organisations organisations Entrepreneurs individuals individuals 1 January , ,110 11, ,615 Net change of allowances (1) ,816 (5) 2,162 Effect of written off receivables 0 (225) 0 (77) (1,639) 0 (1,941) 31 December , ,119 11, ,836

39 74 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements FINANCIAL ASSETS AVAILABLE FOR SALE Assets available for sale acquired by the Group represent equity investments, Czech government bonds, treasury bills and bonds with fixed or variable coupon issued mainly by financial institutions. CZK m 31 Dec 31 Dec 31 Dec Treasury bills 1,557 11,811 15,787 Treasury bonds 11,563 8,559 7,017 Equity investments Total available-for-sale financial assets 13,255 20,401 22,835 By listing: listed 12,874 20,094 22,120 unlisted In 2015 and 2014 no impairment of available-for-sale assets has been recognized. In 2013 the Group recognized the impairment loss of minority interest in MOPET CZ a.s. of CZK 6.5 million. Based on the analysis of the new financial plan of the company, the Group decided to write down the asset. Equity investments include investments in Prague Stock Exchange, SWIFT and VISA Europe Limited. 24. FINANCIAL ASSETS/LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS The portfolio of financial assets at fair value through profit or loss includes positive fair value of Over the Counter ( OTC ) derivatives classified as held for trading. The Group enters into such derivates to hedge its risks and not for speculative purposes. However it does not apply hedge accounting under IAS 39. The portfolio of financial liabilities at fair value through profit or loss only includes negative fair value of OTC derivatives held for trading. Nominal value Fair value CZK m Assets Liabilities Assets Liabilities 31 December 2015 CURRENCY DERIVATIVES Currency swaps 3,283 3, Currency forwards Total derivatives for trading 3,593 3, INTANGIBLE ASSETS CZK m Software Other intangibles Intangibles not in use Total At cost As at 1 January , ,148 Additions to assets Disposals/transfers of assets (17) (123) (300) (440) As at 31 December , ,255 Cost increase due to corporate structure changes Additions to assets Disposals/transfers of assets (17) (3) (244) (264) As at 31 December , ,279 Additions to assets Disposals/transfers of assets (16) (1) (116) (133) As at 31 December , ,342 Accumulated amortisation and impairment As at 1 January 2013 (2,925) (284) 0 (3,209) Additions to accumulated amortisation (279) (18) 0 (297) Release of accumulated amortisation As at 31 December 2013 (3,187) (179) 0 (3,366) Additions to accumulated amortisation (251) (24) 0 (275) Release of accumulated amortisation As at 31 December 2014 (3,432) (201) 0 (3,633) Additions to accumulated amortisation (268) (29) 0 (297) Release of accumulated amortisation As at 31 December 2015 (3,684) (229) 0 (3,913) Remaining book value As at 31 December As at 31 December As at 31 December Nominal value Fair value CZK m Assets Liabilities Assets Liabilities 31 December 2014 CURRENCY DERIVATIVES Currency swaps 3, Currency forwards Total derivatives for trading 3, As at 31 December 2015 cost of purchased Software was of CZK 494 mil. And the related net book value was of CZK 64 mil. (2014: CZK 499 mil., CZK 98 mil. and 2013: CZK 476 mil., CZK 117 mil.) As at 31 December 2015 cost of purchased Other intangibles was CZK 176 mil. And the related net book value was of 2 mil. (2014: CZK 175 mil., CZK 7 mil. and 2013: CZK 172 mil., CZK 10 mil.) 26. GOODWILL AND NEWLY ACQUIRED ENTITIES Nominal value Fair value CZK m Assets Liabilities Assets Liabilities 31 December 2013 CURRENCY DERIVATIVES Currency swaps Currency forwards Total derivatives for trading Reconciliation of Goodwill on the following entities: CZK m GE Money Leasing, s.r.o. & GE Money Leasing Services, s.r.o. Goodwill as of 1 January Additions arising from business combinations Less impairment Goodwill as of 31 December Goodwill impairment assessment has been made with the following asumptions: value in use has been determined using cash flow predictions based on financial budgets covering a five-year period, with a terminal growth rate of 2% applied thereafter. The forecast cash flows have been discounted at a pre tax rate of 10%. As at 31 October 2014, a share purchase agreement was concluded between GE Money Bank and VB Leasing International Holding GmbH for the purchase 100% share

40 76 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 77 of VB Leasing group comprising of VB Leasing CZ and VB Leasing Services (0.0016% shares of VB Leasing CZ were owned by VB Leasing Services). Both entities represent a single CGU for goodwill impairment testing. The acquisitions were performed to utilize economies of scale from administration of the enlarged Group s leasing and loans portfolio. The final acquisition cost amounted to CZK million and there is no contingent consideration resulting from the transaction. With the effect from 1 January 2015 acquired companies were renamed to GE Money Leasing and GE Money Leasing Services. The fair values of the identifiable assets acquired and liabilities assumed of VB Leasing group as at the date of acquisition were: In 2014, VB Leasing CZ and VB Leasing Services have contributed CZK 128 million of revenue and CZK 66 million of profit after tax to profit after tax from continuing operations of the Group since the date of acquisition. If the acquisition had occurred on 1 January 2014, consolidated pro-forma revenue and profit before tax would have been CZK 768 million and CZK 396 million respectively. These amounts have been calculated using the subsidiary s IFRS results and contribution to Group s revenues and profit and loss after acquisition. Analysis of cash flow on acquisition CZK m Net cash acquired with the subsidiary (included in CFs from investing activities) 224 Cash paid - transaction costs of the acquisition (included in CFs from investing activities) (2,948) Net cash flow on acquisition (2,724) 27. PROPERTY AND EQUIPMENT Capital Property improvements Equipment Fixtures and Property of leased and and other equipment CZK m and plant assets machinery tangibles not in use Total At cost As at 1 January , ,755 Additions to assets Disposals/transfers of assets 0 (30) (112) (2) (82) (226) As at 31 December , ,679 Cost increase due to corporate structure changes Additions to assets Disposals/transfers of assets 0 (7) (120) (3) (122) (252) As at 31 December , ,733 Additions to assets Disposals/transfers of assets (22) (68) (210) (5) (68) (373) As of 31 December , ,537 Fair value recognized on acquisition CZK m as at 31 October 2014 Cash 224 Loans and receivables to customers (finance leases and loans) 11,884 Property and equipment 36 Intangible assets 1 Other assets 60 Current tax and deferred tax liabilities 173 Other liabilities 9,188 Fair value of net assets 2,844 Goodwill 104 Purchased price 2,948 VB Leasing CZ and VB Leasing Services were included into the consolidated financial statements of the Group using the acquisition method. The goodwill of CZK 104 million comprises the value of expected synergies arising from the acquisition. None of the goodwill recognized is expected to be deductible for income tax purposes. The fair value of acquired portfolio as at 31 October 2014 of CZK million was determined based on the valuation report. The gross contractual value of the portfolio was of CZK million. The difference between the carrying value and the fair value determined by independent appraisal represents the best estimate of credit deterioration of the receivables that occurred before the acquisition date and changes in market conditions since the contract was originated to acquisition date. As of 31 December 2015 the Group is not reporting any provisional balances of acquired assets or liabilities assumed resulting from acquisition. Accumulated depreciation and impairment As at 1 January (513) (1,337) (42) 0 (1,892) Additions to accumulated depreciation 0 (78) (149) (7) 0 (234) Release of accumulated depreciation As at 31 December (570) (1,378) (49) 0 (1,997) Additions to accumulated depreciation 0 (76) (121) (7) 0 (204) Release of accumulated depreciation As at 31 December (641) (1,383) (55) 0 (2,079) Additions to accumulated depreciation 0 (97) (121) (5) 0 (223) Release of accumulated depreciation As of 31 December (688) (1,308) (56) 0 (2,052) Remaining book value As at 31 December As at 31 December As of 31 December Net book value of assets leased under finance lease is CZK 15 million as at 31 December 2015 (2014: CZK 23 million, 2013: CZK 31 million) Property and equipment held for sale CZK m 31 Dec 31 Dec 31 Dec In March 2015, management decided to abandon and sell Building the headquarters building of GE Money Leasing in Brno. The building was classified as non-current asset held for sale Total non-current assets held for sale and measured at lower of its carrying amount and fair value less costs to sell. There is interested party and the sale is expected to be completed in first quarter of CURRENT TAX ASSETS CZK m 31 Dec 31 Dec 31 Dec Income tax receivable Total current tax assets

41 78 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements DEFERRED TAX ASSETS AND LIABILITIES 32. DUE TO CUSTOMERS Deferred tax is determined based on all temporary and timing differences between the tax bases of assets and liabilities and their carrying amounts in the Group s financial statements. Deferred tax is determined using tax rate enacted by balance sheet date. The applicable rate is 19%. The recognition of deferred tax assets relies on an assesstment of the probability and sufficiency of future taxable profits, future reversals of existing taxable temporary differences and ongoing tax planning strategies. Deferred tax asset and liabilities consists of following differences: CZK m 31 Dec 31 Dec 31 Dec Deferred tax liabilities Loans and lease loss allowances (57) 0 0 Difference between remaining book value and tax remaining book value of long-lived assets Other temporary variances Deferred tax assets 944 1,251 1,664 Loss allowances for loans and receivables to customers 950 1,344 1,648 Difference between remaining book value and tax remaining book value of long-lived assets 19 (31) (39) Revaluation of available-for-sale financial assets (113) (84) 0 Other temporary variances Net deferred tax asset 724 1,047 1,664 The following table shows the movement of the net deferred tax asset: CZK m Net deferred tax asset at the beginning of period 1,047 1,664 1,672 Change of the net deferred tax - total profit and loss impact (294) (361) (55) Loss allowances for loans and receivables to customers (337) (304) (121) Difference between remaining book value and tax remaining book value of long-lived assets Change of the net deferred tax - other temporary variances (3) (65) 43 Change of the net deferred tax - equity impact (29) (84) 47 Revaluation of available-for-sale financial assets (29) (84) 47 Change of the net deferred tax - acquisition of GEML impact 0 (172) 0 Net deferred tax receivable at the end of period 724 1,047 1, OTHER ASSETS CZK m 31 Dec 31 Dec 31 Dec Accounts receivables Advances and gurantees for rent related services Receivables to finance authorities Other receivables net of allowances Prepayments and accrued income Other accruals Total other assets Breakdown of due to customers by sector: CZK m 31 December December December January 2013 Financial organisations 1, ,110 Non-financial organisations 24,001 19,720 18,664 18,781 Insurance organisations , Government sector 6,243 5,256 2,861 2,836 Non-profit organisations 2,111 1,116 1,056 1,178 Entrepreneurs 9,445 8,919 7,733 7,832 Resident individuals 64,020 60,263 60,822 63,518 Non-residents Total due to customers 108,698 97,006 93,641 96,944 Rate type: Fixed interest rate 6,023 3,140 6,058 8,272 Floating interest rate 102,515 93,728 87,413 88,443 Non-interest bearing Total due to customers 108,698 97,006 93,641 96,944 Breakdown of due to customers according to the type is as follows: CZK m 31 December December December January 2013 Deposits on demand 102,515 93,730 87,413 88,445 Savings accounts with notice period Term deposits 5,639 2,658 5,528 7,689 Other liabilities towards clients Total due to customers 108,698 97,006 93,641 96, DEPOSITS FROM BANKS The Group has following liabilities to other banks: CZK m 31 Dec 31 Dec 31 Dec Deposits on demand Total deposits from banks Type of rate: Floating interest rate

42 80 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements PROVISIONS 35. CONSOLIDATION GROUP CZK m Provisions for undrawn loan commitments Balance as at 1 January Additions to provisions Use of provisions (7) (12) 0 Release of unused provisions (14) 0 (2) Balance as at 31 December Provisions for legal claims Balance as at 1 January Change due to the changes in corporate structure Additions to provisions Use of provisions (15) (58) 0 Release of unused provisions 0 0 (5) Balance as at 31 December Other provisions Balance as at 1 January Change due to the changes in corporate structure Additions to provisions Use of provisions (7) 0 (7) Release of unused provisions (87) (1) (3) Balance as at 31 December Total provisions Provisions for undrawn loan commitments are created for irrevocable loan commitments (refer to note 38). The provision created for anticipated settlement in Agrobanka Praha, a.s. v likvidaci is included in the line provisions for legal claims. The balance as at 31 December 2015 of CZK 230 mil. (2014: CZK 188 mil., 2013: CZK 240 mil.) should be used to complete the settlement. In the past, three lawsuits against the Bank as a defendant were filed, each of which contested the validity of the agreement for the sale of a part of the enterprise of Agrobanka Praha, a.s. on 22 June In 2015, based on the settlement agreement concluded with the involved parties on 1 July 2010, the settlement conditions were further fulfilled and this process is still continuing. The Bank created other provisions for legal obligation of the Bank associated with the retirement of the premises leased for operation, for the long-term employee benefit that entitles employees to receive award after specific year of service, for legal costs associated with claims of solicitors related to collection of the bad debts, and for onerous contracts resulting from rental contracts. 34. OTHER LIABILITIES CZK m Trade payables 688 1, Payables to deposit insurance fund Payables to the state Payables for social and health insurance Other accruals Clearing technical accounts Deferred income Other liabilities Total other liabilities 2,439 2,957 2,447 As at 31 December 2014 and 2013 the line Other liabilities included mainly funding received from GE Capital International Holdings Corporation at CZK 327 million. As at 23 November 2015, these funds were used to increase the share capital and share premium of the Bank (see note 36) by debt capitalization at request of debt holder. The Group s companies included in consolidation as at 31 December 2015, together with the ownership were as follows: 31 December 2015 CZK m Name Registered Business Equity as at Bank's share Method office activity 31 Dec 2015 in equity of consolidation Inkasní Expresní Servis s.r.o. Vyskočilova 1422/1a, Debt recovery % Full Prague 4 services AgroConsult Bohemia s.r.o. Vyskočilova 1422/1a, Technical advisory 3 100% Full in liquidation* Prague 4 in agriculture and woodcraft industry GE Money Auto, s.r.o. Vyskočilova 1422/1a, Auto financing 8, % Full Prague 4 (Loans and Leases) GE Money Leasing Services, s.r.o. Holandská 1006/10, Lease and rental % Full Štýřice, Brno of movables GE Money Leasing, s.r.o. Holandská 1006/10, Financing of loans Štýřice, Brno and leasing 3, % Full CBCB - Czech Banking Na Vítězné pláni 1719/4 Banking Credit Register 1 20% Equity Credit Bureau, a.s Prague 4 * The company was deregistered from the commercial register on 25 January 2016 The Group s companies included in consolidation as at 31 December 2014, together with the ownership were as follows: 31 December 2014 CZK m Name Registered Business Equity as at Bank's share Method office activity 31 Dec 2014 in equity of consolidation Inkasní Expresní Servis s.r.o. Vyskočilova 1422/1a, Debt recovery % Ful Prague 4 services AgroConsult Bohemia s.r.o. Vyskočilova 1422/1a, Technical advisory 3 100% Full in liquidation Prague 4 in agriculture and woodcraft industry GE Money Auto, s.r.o. Vyskočilova 1422/1a, Auto financing 7, % Full Prague 4 (Loans and Leases) GE Money Leasing Services, s.r.o. Heršpická 813/5, Lease and rental % Full (renamed from 1 Jan 2015) Brno of movables GE Money Leasing, s.r.o. Heršpická 813/5, Financing of loans 2, % Full (renamed from 1 Jan 2015) Brno and leasing CBCB Czech Banking Na Vítězné pláni 1719/4 Banking Credit 1 20% Equit Credit Bureau, a.s Prague 4 Registery

43 82 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 83 Legal and statutory reserve of the Group 37. BONUSES AND STOCK OPTION PLAN The Group s companies included in consolidation as at 31 December 2013 together with the ownership were as follows: 31 December 2013 CZK m Name Registered Business Equity as at Bank's share Method office activity 31 Dec 2013 in equity of consolidation Inkasní Expresní Servis s.r.o. Vyskočilova 1422/1a, Debt recovery services % Full Prague 4 AgroConsult Bohemia s.r.o. Vyskočilova 1422/1a, Technical advisory 3 100% Ful in liquidation Prague 4 in agriculture and woodcraft industryl GE Money Auto, s.r.o. Vyskočilova 1422/1a, Auto financing 7, % Full Prague 4 (Loans and Leases) CBCB - Czech Banking Na Vítězné pláni 1719/4 Banking Credit Register 1 20% Equity Credit Bureau, a.s Prague EQUITY Share capital and share premium of the Group In accordance with the statutes of the Bank and GE Money Auto, s.r.o., the Group created a non-distributable reserve fund from profit or from shareholders' contributions. The reserve fund is allocated 5% of profit after tax until it reaches the level of 20% of the share capital. Legal and statutory reserve at CZK 167 mil. as at 31 December 2015 (2014: CZK 158 mil., 2013: CZK 146 mil.) consists of the following: the reserve fund at CZK 102 mil. as at 31 December 2015 (2014: CZK 102 mil., 2013: CZK 102 mil.) which is presented by Legal and statutory reserve of GE Money Bank, a.s. and the reserve fund at CZK 65 million as at 31 December 2015 (2014: CZK 56 mil., 2013: CZK 44 mil.) which is represented by post-acquisition legal and statutory reserve arising from GE Money Auto, s.r.o. General Electric Company, the ultimate parent of the Group offers various long-term incentive compensation awards to employees 1. The types of share-based incentive compensation awards that have recently been issued include stock options and restricted stock units ( RSU ) Stock Option Fair value of each stock option at the date of grant is calculated using Black-Scholes option pricing model. The weighted average grant-date fair value of options granted during 2015 was CZK (2014: CZK ; 2013: CZK 89.92). The following assumptions were used in arriving at the fair value of options granted during 2015: risk free rate is 2.8% (2014: 2.3%, 2013: 2.5%); dividend yields 3.7% (2014: 3.1%,2013: 4.0%); expected volatility of 33% (2014: 26%, 2013: 28%); and expected live of 7.0 years (2014: 7.3, 2013: 7.5). Expected volatilities are based on implied volatilities from traded options and historical volatility of GE stock. In order to establish the Bank GE Capital International Holdings Corporation subscribed 500 shares of original capital with a nominal value of CZK 1 million per share and paid CZK million for such shares. No authorized shares are incorporated under the Czech law. In 1998 the Bank issued 10 (ten) ordinary shares with a nominal value of CZK 1 million each and in 2015 an additional 1 (one) ordinary share with the same nominal value. The increase in registered capital was recorded in the Commercial Register on 25 March 2003 and on 23 November 2015, respectively. All of the Bank's shares are freely transferable. The common shares carry a right to participate in the General Meeting of the Bank through voting rights (one vote per share) and the right to share in profits. As at 23 November 2015 the registered capital of the Bank was CZK 511 million which has been paid up and is presented as Share capital in the statement of financial position. Since then, the Bank has not issued any ordinary shares. The share premium amounts to CZK million (2015 debt capitalization resulted in increase of CZK 326 million). Stock option expense recognized in net earnings in 2015 amounted to CZK 8.8 mil. (2014 and 2013: CZK 3 mil.). The fair value of received services is valued based on value of granted shares Stock options outstanding Following table summarizes information about stock options outstanding at 31 December 2015: in CZK Outstanding Exercisable Excercise price range Shares Average Average Shares Average life exercise price exercise price , , Total 148, The shareholder of the Bank as at 31 December 2015 was as follows: Following table summarizes information about stock options outstanding at 31 December 2014: Name Registered office Number of shares Ownership in % GE Capital International The Ark, 201 Talgarth Road, W68BJ Holdings Limited London, United Kingdom of Great Britain and Northern Ireland No other person or other related party to the Bank held any shares of the Bank as at 31 December 2015, 2014 or The shareholder of the Bank as at 31 December 2014 and as at 31 December 2013 was as follows: Name Registered office Number of shares Ownership in % GE Capital International 1209 Orange Street, Wilmington, Holdings Corporation Delaware, USA in CZK Outstanding Exercisable Excercise price range Shares Average Average Shares Average life exercise price exercise price , , Total 216, , Following table summarizes information about stock options outstanding at 31 December 2013: in CZK Outstanding Exercisable Excercise price range Shares Average Average Shares Average life exercise price exercise price , , Total 201, , In 2007 Board of directors of GE Corporation approved the 2007 Long Term Incentive Plan

44 84 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements Stock options activity 38. CONTINGENT LIABILITIES in CZK Shares Weighted average Weighted average Agregate excercise price remaining contractual intrinsic term (in years) value Outstanding at 1 January , Granted 8, Excercised 70, Forfeited 2, Expired 3, Outstanding at 31 December , ,862,545 Excercisable at 31 December , ,747,246 in CZK Shares Weighted average Weighted average Agregate excercise price remaining contractual intrinsic term (in years) value Outstanding at 1 January , Granted 59, Excercised 28, Forfeited 4, Expired 11, Outstanding at 31 December , ,708,671 Excercisable at 31 December , ,316,577 in CZK Shares Weighted average Weighted average Agregate excercise price remaining contractual intrinsic term (in years) value Outstanding at 1 January , Granted 26, Excercised 70, Forfeited 51, Expired 4, Outstanding at 31 December , ,270,544 Excercisable at 31 December , ,158, Restricted stock units (RSU) The fair value of each restricted stock unit is the market price of GE stock on the date of grant. The number of outstanding RSUs at 31 December 2013 was equal to zero. During 2015 in CZK Shares Weighted average grant date fair value and 2014 no new RSU were granted. Outstanding at 1 January Granted 0 0 Vested Forfeited Outstanding at 31 December Excercisable at 31 December Loan commitments and issued guarantees CZK m 31 Dec 31 Dec 31 Dec Irrevocable loan commitment 14,576 13,984 13,221 Issued guarantees 1,044 1,051 1,241 Credit limits on issued guarantees* Issued letter of credit Total issued loan commitments 16,043 15,620 15,199 * This line represents commited limits on guarantees that can be withdrawn by customers Legal disputes Claims against the Group s individual entities were filed by customers in connection with providing products and services. Given the current legislation changes in the Czech Republic and evolving environment especially after implementation of New Civil Code, the Group cannot reliably estimate new interpretation of legal provisions nor the results of court proceedings. Ongoing litigations relating to various specific claims that are not published by the Group are not expected to have a significant impact on the Group s financial situation as of reporting date. 39. LEASING Operating lease the Group as a Lessee The Group leases mainly office or branch property and personal cars. Property leases are both for indefinite and definite period (usually 5 years). Personal cars are leased at maximum for 5 years. Following table summarizes non-cancellable operating lease commitments not provided for in the financial statements: Non-cancellable operating lease commitments CZK m 31 Dec 31 Dec 31 Dec No later than one year Later than one year but not later than five years Later than five years Total minimum lease payments 854 1,139 1,215 Expense resulting from non-cancellable operating leases recognized in the statement of total comprehensive income: CZK m Lease payments expensed within the period Less received sub-lease payments (9) (3) (2) Total expense for period Sub-lease payments represent rent charge to companies affiliated to General Electric Company. Such leases do not have non-cancellable lease term. Finance lease the Group as a Lessee The Bank leases various banking equipment such as bill counters with lease term of 5 years. Such leases are classified as finance leases on inception. Lessor is legal owner of the leased asset during the lease term according to Czech law, after the end of the lease term legal ownership is transferred to the Bank. Minimum Lease Payments Finance lease CZK m 31 Dec 31 Dec 31 Dec No later than one year Later than one year but not later than five years Total minimum lease payments Less Finance charges (1) (8) (13) Total outstanding liability Finance lease the Group as a Lessor Minimum Lease Payments Finance lease CZK m 31 Dec 31 Dec 31 Dec No later than one year 3,770 3, Later than one year but not later than five years 5,398 4, Later than five years Total minimum lease payments 9,197 8, Less unearned income (656) (772) (10) Present value of lease receivable 8,541 7, Less allowances (503) (340) (345) Carrying value of lease receivable 8,038 7,

45 86 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 87 The carrying value of lease receivable is presented under Loans and receivables to customers in the consolidated statement of financial position. 40. TRANSACTIONS WITH RELATED PARTIES The ultimate parent company of the Group is General Electric Company, a company incorporated in the United States of America. As at the reporting date, the immediate parent of the Group was GE Capital International Holdings Limited. The Group s related parties include the parent, fellow subsidiaries, associates, joint ventures, key management personnel, close family members of key management personnel. Transactions provided by the Group to the related parties are mainly bank services, including loans, interest bearing deposits, overdrafts, current accounts and other services (see the table below). The transactions provided to the Group are mainly related to using of trademark and administrative services. The ultimate parent irrevocably and unconditionally guarantees the due and punctual payments due to the landlord under the terms and conditions of lease agreement of the Group s headquarter buildings. Transactions with related parties are carried out in the normal course of business operations. Transactions with related parties are conducted under normal market conditions. The balances at year end are unsecured. The Group did not create any provisions for doubtful receivables to related parties (2014: 0 CZK, 2013: 0 CZK). The following transactions were undertaken between related parties in 2013: CZK m Membership Parent Other Total of the Board and company related other managers parties Loans and receivables to customers Financial assets at fair value through profit or loss Other assets Due to customers Financial liabilities at fair value through profit or loss Other liabilities Interest expense and similar charges 0 0 (1) (1) Fee and commission expense 0 0 (3) (3) Operating expenses 0 (35) (544) (579) Other operating income The following transactions were undetaken between related parties in 2015: CZK m Membership Parent Other Total of the Board and company related other managers parties Loans and receivables to customers Financial assets at fair value through profit or loss Due to customers Financial liabilities at fair value through profit or loss Other liabilities Interest expense and similar charges 0 0 (1) (1) Fee and commission expense 0 0 (1) (1) Operating expenses 0 (57) (513) (570) Other operating income The following transactions were undertaken between related parties in 2014: CZK m Membership Parent Other Total of the Board and company related other managers parties Loans and receivables to customers Financial assets at fair value through profit or loss Other assets Due to customers Financial liabilities at fair value through profit or loss Other liabilities Interest expense and similar charges 0 0 (1) (1) Operating expenses 0 (26) (697) (723) Other operating income Line Operating expenses includes the services provided to the Group based on master service agreement with GE Capital EMEA Services in the amount of CZK 238 million (2014: CZK 327 million, 2013: CZK 240 million). The Bank received from GE Capital International Holdings Corporation credit lines in the amount of CZK mil. (2014: CZK 500 mil., 2013: CZK 500 mil.). This credit line was not drawn down by the Bank at the financial statement date Remunaration paid to Key Members of Management The following bonuses were paid to the key members of the management during the year: CZK m Short-term employee benefits, there of: Members of the Board of Directors Other executives Other long-term employee benefits, there of: Members of the Board of Directors Other executives Pay-outs from stock option plans Members of the Board of Directors Other executives Severance pay Other executives Total remuneration SEGMENT REPORTING The segment reporting is prepared in accordance with IFRS 8 operating segments. Operating segments are reported in a manner consistent with reporting to Board of Directors and senior management team, which is responsible for allocating resources and assessing performance of operating segments. Group s operating segments are following: Commercial, Retail and Other/Treasury. Commercial segment consists of deposits, investment loans, revolving products, financing of real estate, finance lease and other services related to transactions with small and medium entrepreneurs, corporate clients, financial institutions, public sector institutions. Service is provided through branch network or external sales channel. Retail segment focuses on deposits, loans, revolving products, credit cards, mortgages, finance lease and other transactions with retail customers. Retail customers are comprised of private individuals, Group s employees and employees of Group s partners. This segment provides service to citizens through branch network, online and external sales channel.

46 88 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 89 Other/Treasury segment includes primarily the treasury function. Focus of the segment is on foreign exchange income of the Group. Below segment reported revenues represent only revenues realized with external customers. transactions, investment in debt securities, equity investments, other non interest bearing assets and other operations that cannot be associated with above mentioned segments. The Group has no client or economic group for which the proceeds of realized transactions exceeded 10% of the Cross-funding among operating segments is not material, because most of the liabilities are represented by customers current accounts which bear no interest or only 0.1% p.a. Most of the Group's income is generated within the territory of the Czech Republic and there are no intersegment revenues. CZK m Commercial Retail Other/Treasury Total 31 December 2015 Interest and similar income 2,527 6, ,522 Interest expense and similar charges (48) (164) 0 (212) Net fee and commission income 589 1,750 (3) 2,336 Dividend income Net income from financial operations Other operating income Personnel expenses (583) (1,653) (7) (2,243) Other administrative expenses (373) (1,375) (44) (1,792) Depreciation and amortisation (124) (324) (72) (520) Other operating expenses (267) (682) (29) (978) Net impairment of loans and receivables (416) (450) 0 (866) Net impairment of other receivables Profit for the year before tax 1,320 4, ,720 Taxes on income (279) (875) (60) (1,214) Profit for the year after tax 1,041 3, Total assets of the segment 58,056 57,022 24, ,037 Net value of loans and receivables to customers 54,732 53, ,437 Total liabilities of the segment 45,559 66, ,198 CZK m Commercial Retail Other/Treasury Total 31 December 2014 Interest income and similar income 1,967 7, ,670 Interest expense and similar charges (61) (224) 0 (285) Net fee and commission income 561 2,120 (7) 2,674 Dividend income Net income from financial operations Other operating income Personnel expenses (527) (1,458) (6) (1,991) Other administrative expenses (460) (1,413) (60) (1,933) Depreciation and amortisation (119) (347) (13) (479) Other operating expenses (268) (732) (45) (1,045) Net impairment of loans and receivables (288) (1,442) 0 (1,730) Net impairment of other receivables 0 (12) 0 (12) Profit for the year before tax 852 4, ,441 Taxes on income (245) (935) (81) (1,261) Profit for the year after tax 607 3, ,180 Total assets of the segment 54,755 60,609 28, ,403 Net value of loans and receivables to customers 50,926 56, ,197 Total liabilities of the segment 36,007 64, ,820 CZK m Commercial Retail Other/Treasury Total 31 December 2013 Interest income and similar income 1,917 8, ,385 Interest expense and similar charges (88) (469) 0 (557) Net fee and commission income 595 2, ,158 Dividend income Net income from financial operations Other operating income Personnel expenses (588) (1,680) (7) (2,275) Other administrative expenses (411) (1,434) (42) (1,887) Depreciation and amortisation (121) (404) (6) (531) Other operating expenses (248) (589) (49) (886) Net impairment of loans and receivables (451) (2,100) 0 (2,551) Net impairment of other receivables Impairment of investments in subsidiaries and associates (2) (5) 0 (7) Profit for the year before tax 634 4, ,441 Taxes on income (154) (935) (93) (1,182) Profit for the year after tax 480 3, ,259 Total assets of the segment 40,869 65,150 28, ,622 Net value of loans and receivables to customers 37,622 59, ,493 Total liabilities of the segment 31,603 64, , RISK MANAGEMENT The aim of the Group is to achieve competitive yields at an acceptable risk level as part of its business activities. Risk management covers the control of risks associated with all When managing risks, the Group relies on the qualifications and experience of its employees, the organisational segregation of duties, and the use of sophisticated analytical business activities in the environment in which the Group instruments and technologies. This combination of operates and ensures that the risks taken are in compliance with regulatory limits. analytical skills and technologies, together with adherence to procedural measures, has supported the Group s economic results. The level of risk is measured in terms of its impact on the value of assets and/or capital and the profitability of the Group. In this respect, the Group evaluates potential effects of changes in political, economic, market and operational conditions and changes of clients creditworthiness on its business. The Bank provides for centralised risk management of the Group wherever possible and practical. Risk management is centralised in the Bank primarily through outsourcing or through the transfer of risk from the Group members to the Bank.

47 90 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements Risk Management Organisational Structure Supervisory Board Management Board Enterprise Risk Management Committee (Risk Management Framework, Corporate Governance, Operational Risk, Model Risk and Capital Allocation) Credit Committee (Credit Risk) Asset & Liability Committee (Asset & Liability Management, Market Risk and Liquidity Risk) The Bank has three main committees for risk management on a consolidated basis: the Enterprise Risk Management Committee (ERMC) for risk management framework, internal control system, internal capital adequacy assessment process and capital planning, the Asset & Liability Committee (ALCO) for asset and liability management, market risk and liquidity risk management and the Credit Committee (CRCO) for credit risk management issues. The members of these committees include the members of the Board of Directors and other senior managers of the Bank. The committees are responsible for, inter alia: Commercial Risk Reserving and credit models Collection commercial and valuation Capital Allocation Operational Risk Model Risk Credit Risk CRO Enterprise Risk Management Market Risk (incl. FX risk and Interestrate risk) Liquidity Risk Asset & Liability Management Consumer Risk Risk infrastructure Collection consumer Approval of the overall risk management framework including the basic methods, limits, scenario assumptions and any other parameters used in the risk management process; Monitoring the development of relevant risks, including the observance of limits, approval of remedial measures in the case of exceeded limits or unfavourable development trends; and Monitoring the adequacy, reliability and efficiency of risk management s internal regulations, processes and limits. Other committees that are appointed by the Bank s Chief Risk Officer (CRO) and who manage individual risks include: The Credit Monitoring and Management Committee (CMMC) monitors and manages the credit risk of the Bank s commercial credit portfolio not in work-out process. Members of the committee are comprised of employees of the Risk Division, the Commercial Banking Division and the Finance Division. The CMMC reports to the CRCO. The Problem Loan Committee (PLC) monitors and manages the credit risk of the Bank s commercial credit portfolio in the early work-out process for commercial individually managed loans and its members are employees of the Risk Division and the Legal Division. The PLC reports to the CRCO. The New Product Introduction Council (NPIC) manages and coordinates development and implementation of new or changes of current products. The Model Risk Oversight Committee (MROC) monitors the model risk. Its members are employees of the Risk Division and the Finance Division. The MROC reports to the ERMC. The Bank s Risk Division is responsible for risk management on a consolidated basis. The Risk Division is headed by the CRO, who is also a member of the Board of Directors of the Bank. The Risk Division primarily: Monitors, measures and reports credit, market, operational and liquidity risks and proposes remedial measures in the case of limits being exceeded or unfavourable trends; Sets terms and conditions for granting loans and line of credits including their subsequent approval; Assesses the adequacy of collateral given by borrowers to the Bank as security for extending loans and lines of credit; Manages the loans portfolio; Executes controls in the area of credit deals; Administers the data infrastructure and analytical systems supporting risk management; Ensures the model risk management; Maintains and develops credit, Treasury, collections, provisioning, management of operational risks and capital allocation models; Monitors indicators of fraudulent operations at credit portfolio and is involved in the prevention of fraud; and Collects amounts due from borrowers. The Enterprise Risk Management Department (ERM) is a part of the Risk Division. ERM is responsible for the critical aspects of the key parts of credit, market, operational, model, and liquidity risk management, in particular in the area of methodology, monitoring and measurement. ERM performs the following key tasks: Coordinating all activities so that Group s risks are managed reliably and efficiently; Ensuring assets and liabilities are appropriately managed with a view to preserving the value of capital; Developing and maintaining the methodology for assessing operational risk, including identification and classification models and key risk indicators; Implementing and maintaining the processes and infrastructure for recording and analysing operational risk data; Maintaining and developing the methodology of calculating and allocating regulatory and economic capital; and Preparing risk reports for the ALCO, CRCO, ERMC, NPIC, and MROC. The Group s business activities involve the provision of: deposit accounts, loans and lines of credit to retail customers; and providing funding to entrepreneurs, as well as small to medium sized businesses in the Czech Republic. The Group takes steps to avoid risks that are not associated with its main line of business and to minimise all other risks. Principal objectives in the management of risks and tolerance of individual types of risks are defined in the Risk Appetite Statement document approved by the ERMC.

48 92 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements Capital Management The framework used for capital management involves monitoring and complying with the capital adequacy limit in accordance with the Basel III rules codified in Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No. 648/2012, as amended. In order to calculate the regulatory capital requirement for credit risk both on an individual and a consolidated basis, the Bank uses the standardised STA approach. To calculate the capital requirement for operational risk, the Bank uses the alternative standardised approach (ASA) on an individual basis. The standardised approach (TSA) is used to calculate the capital requirement for operational risk on a consolidated basis for the rest of the consolidated On a consolidated basis the Bank manages its capital in order to meet the regulatory capital adequacy requirements prescribed in Basel III and allow the Group to continue its operations on a going concern basis while maximising the return to shareholders through the optimisation of the Group. In order to calculate the internal capital requirement, the Bank applied methods similar to advanced approaches according to regulatory Pillar 1 both on an individual and a consolidated basis. debt and equity balance. The minimum regulatory capital requirement on consolidated basis is equal to 8% of risk weighted assests for periods 2012 and Pursuant to the assessment of the information on the internal capital adequacy assessment process, the Czech National Bank informed the Bank (in November 2014) that it expects that the Bank will meet the capital requirement, on a consolidated basis, by achieving 14% from The Group s capital on a consolidated basis primarily consists of share capital, share premium and unallocated profit from prior years, that is, the highest quality common equity Tier 1 capital. In line with the announcement on the 10th April 2015 that GE will create a simpler, more valuable company by reducing the size of GE Capital through the sale of most of GE Capital s assets the Board of Directors of the Bank approved on 30 June 2015 a dividend distribution to its In accordance with applicable regulations, the Bank manages capital on a consolidated basis both above the level of the regulatory capital requirement (Pillar I) and the internal capital requirement (Pillar II or also the Internal sole Shareholder in the amount of CZK 19.7 billion. The Bank met all regulatory requirements regarding capital adequacy on an individual and a consolidated basis in 2013, 2014 and 2015, even after the payment of the dividend in Capital Adequacy Assessment Process). Regulatory capital and its components: CZK m 31 December December 2014* 31 December 2013* 31 December 2012* Common equity Tier 1 capital CET1 Subscribed share capital Share premium 5,028 4,702 4,702 4,702 Retained earnings and Other reserve funds 17,314 32,834 28,573 24,348 Items deductible from the core capital (510) (710) (846) (884) Regulatory capital 22,343 37,336 32,939 28,676 Total risk exposure 126, , , ,098 Regulatory capital adequacy requirement 14% 14% 8% 8% Capital requirement 17,719 17,445 9,716 10,088 Capital adequacy ratio 17.7% 30.0% 27.1% 22.7% * Calculated based on IFRS which differ from reported figures based on CZ GAAP as at 31 December 2014, 31 December 2013 and 31 December 2012 (see table below). CZK m 31 December December 2014** 31 December 2013** 31 December 2012** Common equity Tier 1 capital CET1 Subscribed share capital Share premium 5,028 4,702 4,702 4,702 Retained earnings and Other reserve funds 17,314 33,147 29,293 25,070 Items deductible from the core capital (510) (1,075) (889) (940) Supplementary capital (Tier 2) Regulatory capital 22,343 37,284 33,617 29,348 Total risk exposure 126, , , ,590 Regulatory capital adequacy requirement 14% 14% 8% 8% Capital requirement 17,719 18,777 11,355 11,727 Capital adequacy ratio 17.7% 27.8% 23.7% 20.0% ** Based on reported figures according to CZ GAAP Internal Capital Requirement on a One-year Horizon The internal capital requirement represents the stock of capital which is needed to cover unexpected losses in the following 12 months at the chosen confidence level Three-Year Capital Outlook In addition to the assessment of the internal capital requirement, the Bank annually prepares a three-year capital outlook which includes the anticipated development of the base case scenario of the economic environment and To determine the internal capital requirement, the Bank currently uses the ECAP model. This model covers all regular risks that are defined for the Bank as being material and the Bank decided to hold capital to cover them: Credit risk including concentration risk; Interest rate risk in the banking book; at least one downside scenario. The capital outlook includes the outlook of the regulatory capital requirement, outlook of the internal capital requirement, outlook of capital sources and outlook of economic results. The downside scenario assumes the worsening of the most significant risk factors that may occur once in a 25 year period. Operational risk; and Business risk: the risk that the Bank does not achieve Recovery Plan the planned profit level due to the volatility in business volumes. Given the regulatory requirements, the Bank also prepares a recovery plan on a consolidated basis. The recovery The ECAP model is calibrated in order to respect General Electric s credit rating. plan includes stress scenarios for an unfavourable market situation with a proposal of relevant measures to ensure it is possible to respond to the developing situation in a timely Other risks, that could be material for the Bank in the and proper manner as and when needed. following reporting period, are identified annually during a workshop with the Bank s top managers. Pursuant 42.3 Credit risk to an expert analysis, the ERMC subsequently decides on additional internal capital requirements. Credit risk is the risk of loss for the Group resulting from the failure of a counterparty to meet its obligations arising from Capital sources to cover the internal capital requirement are the same as the capital sources to cover the regulatory capital requirement. the terms and conditions of the contract under which the Group became the creditor of this counterparty. The Group is exposed to credit risk in particular in the case of credits granted, non-approved debits, guarantees provided, letters The same approach is applied both on an individual and of credit issued, and interbank deals. a consolidated basis.

49 94 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements Credit Risk Management b) Approval Process d) Recovery of Debtors Receivables c) Monitoring Credit risk management is organised along approval process: Individually managed exposures represent exposures to enterpreneurs and SME where loans and lines of credit, are approved based on an individual assessment of the borrower s creditworthiness due to the loan size. Portfolio managed exposures include exposures to natural persons, natural persons acting as entrepreneurs, and small and medium-sized enterprises (SME) where loans and lines of credit are approved using an automated credit scoring process. Mortgages has a specific position as mortgages form part of the retail exposures (usually portfolio managed), but a number of the processes and methods used fall within the category of individually managed exposures. The exposures to counter-parties on the financial market include the exposures to banks and governments. These exposures primarily arise as part of the liquidity management (interbank deposits, highly liquid securities) and market risks management (derivatives). Transactions on financial markets are performed only by the Bank; other entities in the Group have only immaterial receivables to banks in respect of current account balances. The credit risk of these exposures is managed through limits to countries and counter-parties approved based on external ratings. Individually managed exposures a) Internal Rating The Group uses an internal statistical rating model, which uses the most recent available qualitative and quantitative information, to estimate the probability that a commercial borrower will default in the following 12 months. The rating calculation is based on an assessment of ratios of two types. First type ratios (financial) are derived from financial statements and reflect the financial strength of a customer. Second type ratios (non-financial) are used to assess the customer based on qualitative information, which reflect non-financials attributes of the customer s business. The rating model assigns a rating grade of zero to eight to borrowers who are not in default. Clients in default are given internal rating grade nine. The predictive power of the rating tool is reviewed annually and changes in the model, if any, are approved by the CRCO. The approval process is based on an individual evaluation of a borrower. The approval process of Bank s and GE Money Auto, s. r. o., (GEMA) products is executed at Bank with approval required from two authorised persons one of the sales department and one of the Risk Division. Approval authorities are set on an individual basis and are determined by combining the level of exposure, the debtor s internal rating, maturity, product and collateral. The approval process of GEML s products is executed at GEML s level on the basis of the delegation of approval authorities. As part of the approval process, the Group assesses the financial situation of the prospective borrower, the persons economically related to the borrower and the collateral being offered using external data sources, including credit registers. The Bank has implemented its own IT solution supporting the process of SME credit approval and administration facilitating the preparation of credit applications, the linking thereof with data warehouses, document storage and the subsequent production of contract documentation. The system enables access to financial analysis tools including internal ratings. c) Monitoring All SME clients are monitored both individually and on a portfolio basis. Individual monitoring and any potential remedial measures for Bank s clients are dealt with by the CMMC, which also decides on categorisation changes according to CNB Decree No. 163/2014 Coll. Potential remedial measures in respect of GEML s clients are discussed within GEML on a monthly basis at meetings attended by heads of risk management, financial management and collection and statutory executives of the company. Reports on the quality of the commercial portfolio are discussed by the CRCO each month. And, if necessary, or required by the CRCO, the CRCO will also review individual loan exposures. In order to achieve maximum recovery, the Remedial & Collection Department of the Risk Division manages loans where recoverability of the exposure is not reasonable assured. The department engages affected borrowers with a view to recovering the Bank s exposure; this may involve taking legal action against the borrower, restructuring the loans, taking relevant legal steps to realise collateral or debt sale and represents the Bank in creditors committees in the event a borrower declares bankruptcy. GEML uses assistance of external agencies in collecting its receivables from debtors independently from the Bank. Portfolio managed exposures a) Scoring Instruments When approving portfolio managed exposure, internal scoring models are used. These statistical models classify individual borrowers into categories of homogeneous exposures using socio-demographic and behavioural data. The development of these scoring models and approval strategies and monitoring of their predictive power is completed by the Planning, Reserving & Models Department of the Risk Division. In order to ensure methodological and factual accuracy, models are validated on a yearly basis. b) Approval Process With the exception of mortgages, the approval process is based on the use of internally-developed scoring models and access to external data sources (in particular credit registers). Approval strategies are set by the Risk Division for the Bank s and GEMA s products. Risk Division underwriters may approve individual exposures that do not pass the automatic approval process. For car financing products, the automated approval process is always supplemented with individual assessment. Mortgages are approved based on an individual assessment of the prospective borrower with approval required from an authorized underwriter from the Risk Division. GEML s portfolio managed exposures are approved only based on individual assessments. The Risk Division regularly monitors segments of the portfolio managed exposures, which are reported to the CRCO. d) Collection The Collections & Recovery Department of the Risk Division is in charge of the initial phase of collection. Loans are transferred to the Remedial & Collection Department for: Commercial loans that were originally approved through an automated process and which are 120 days past due; Mortgage loans that are 90 days past due. Other receivables are managed by the Collections & Recovery Department of the Risk Division with the aim of maximising recoveries. The Bank uses external agencies and/or sales of receivables in the collection process. GEMA and GEML use assistance of external agencies in collecting their receivables to debtors independently from the Bank. Counterparties in the Financial Market a) External Rating The main tool for measuring the credit risk of countries and counter-parties (institutions) with respect to transactions in financial markets is the rating of international rating agencies: Standard & Poor s, Moody s, and Fitch. The Bank sets individual limits for individual countries and institutions, for which it requires a minimum short-term rating of A 1 / P 1 / F1. b) Approval Process The approval of limits is based on an individual assessment with approval required from an authorised approver from the Risk Division. The approval levels are determined individually and are based primarily on the combination of the limit, external rating, maturity and product. In selected cases, the prior approval of the CRCO is required. The limits for counter-parties are additionally approved by GE as part of the integrated management of credit risk for financial institutions and sovereigns in GE.

50 96 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 97 c) Monitoring All counter-parties and countries with a determined limit are monitored individually. The subject of the monitoring is primarily the external rating and key indicators of risks individually approved for each country. Remedial measures (decrease/cancellation of the limit, categorisation of receivables) are approved by an authorised approver from the Risk Division. The ERM prepares regular monthly reporting for the ALCO as part of the reports on liquidity and market risks. The Bank additionally monitors compliance with limits. A potential breach of limits is escalated to the CRO and the ALCO Categorisation of Receivables The Bank assigned receivables to individual categories in compliance with CNB Decree No. 163/2014 Coll., on the performance of the activity of banks, credit unions and investment firms, as amended ( CNB Decree No. 163/2014 Coll. ). The categorisation is used for regulatory reporting, impairment testing and calculation of loan loss allowances. The categorisation is as follows: Receivables without Borrower Default The receivables without borrower default are classified as performing and without impairment. The Bank assigns receivables without borrower default to the following subcategories: a) Standard Receivables A receivable is regarded as standard if there is no reason to doubt that it will be repaid in full. The Bank includes in this category receivables where the principal, interest and fees are being duly paid, with none of them being more than 30 days past due and they are not in work-out process. None of the receivables from the borrower have been forborne in the last two years due to the deterioration in the borrower s financial situation. In case of individually managed commercial receivables the current value of the borrower's internal rating is better than 7. b) Watch Receivables A receivable is regarded as watch if, given the borrower s financial and economic situation, it is likely to be repaid in full. The Bank includes in this category receivables where the principal or interest and fees are being paid with some problems, but none of them are more than 90 days past due. None of the receivables from the borrower have been forborne in the last six months due to the deterioration in the borrower s financial situation. In addition, this category includes individually approved commercial receivables with the borrower's internal rating of 7 or 8. Receivables with Borrower Default Receivables where the borrower has defaulted are classified as non-performing and impaired and assigned to one of three categories: a) Sub-standard Receivables A receivable is regarded as sub-standard if, given the borrower s financial and economic situation, its full repayment is uncertain, although its partial settlement is highly likely. The Bank includes in this category receivables where the principal, interest or fees are being paid with problems, but with none of them more than 180 days past due. In addition, sub-standard receivables include receivables that were forborne in the past 6 months due to the deterioration in the borrower s financial situation, and a commercial individually approved receivable with the borrower s internal rating of 9. b) Doubtful Receivables A receivable is regarded as doubtful if, given the borrower s financial and economic situation, its full repayment is highly unlikely, although its partial settlement is possible and likely. The Bank includes in this category receivables where the principal, interest or fees are being paid with problems, but with none of them being more than 360 days past due. A receivable is also considered doubtful if a competent court has issued a decision on settling the borrower s bankruptcy via a discharge from debts or reorganisation. c) Loss Receivables A receivable is regarded as loss if, given the borrower s financial and economic situation, its full repayment is impossible. The expectation is that such receivable will not be repaid or will only be repaid in part in a very small amount. The Bank involves in this category receivables where principal, interest or fees are more than 360 days past due. A receivable from a borrower who is subject to bankruptcy or settlement proceedings is also considered to be a loss receivable. c) Loss Receivables For the categorisation on a daily basis, the Bank automatically assesses: The fulfilment of the debt service (not assessed in non-approved debits on current accounts up to CZK 2 thousand); Borrower s internal rating (in respect of individually approved commercial receivables); Completed/not completed forbearance of the debt; and Announcement of the bankruptcy or allowed discharge from debt or reorganisation or settlement to the borrower s assets. Receivables within other entities of the Group are categorised according to the same principles Collateral Assessment The Bank determines the nature and extent of collateral that is required either by individually assessing a prospective borrower creditworthiness or as an integral part of the given credit product. The Bank considers the following types of collateral acceptable for minimising the credit risk on a loan or line of credit: C a s h; Securities; Account receivables; Bank guarantees; Guarantee of a reliable third party; Real estate properties; and Movable assets (machinery, equipment, breeding stock). To determine the realisable value of collateral, the Bank uses external expert appraisals or internal assessments made by the Collateral Management Department of the Risk Division, a department operating independently of the Bank s sales departments. The ultimate realisable value of collateral is then set by applying the collateral acceptance ratios reflecting the Bank s ability to realise the collateral in case of default. The Bank has its own rules and methodology for the collateral assessment and regularly reviews the values of collateral acceptance ratios, which are approved by the CRCO. The above principles are applied in a consistent manner also in GEMA. In determining the realisable value, in 2015 GEML used a discount on the cost derived from model depreciation curves (describing relation between fair value as percentage of purchase price and time) for individual asset classes Allowances Calculation Allowances are determined in accordance with International Financial Reporting Standards. In order to calculate allowances, the portfolio is divided into unimpaired receivables and impaired receivables, which are further segmented into commercial and retail exposures by product. The calculation of allowances for the non-impaired portfolio is based on statistical models. These models are used for calculation of probability of default (PD) and loss given default (LGD), further for retail exposures the cure rate is determined. The PD and LGD for commercial manually approved exposures are calculated directly from statistical models. For other receivables (i.e. commercial automatically approved and retail exposures) models based on the probability of a transfer to default are used to determine the PD, and discounted anticipated cash flows from collection where the effective interest rate is used as the discount rate are used to derive the LGD. Allowances for the impaired part of the portfolio are split into individual and portfolio allowances. Individual allowances are determined for impaired commercial manually approved exposures by calculating the discounted future cash flows. Portfolio allowances based on the LGD statistical approach are determined for remaining portfolios. For these, the LGD is adjusted to correspond to remaining anticipated cash flows. A provision is recognised for irrevocable loan commitments using CCF (credit conversion factor) coefficients that determine which part of the loan commitment is brought onto the balance sheet until the receivable impairment moment. Back testing is performed no less than annually; it assesses the adequacy of the volume of recognised allowances given the actual losses in the portfolio. The above methods are also used in GEMA and GEML on a consistent basis Credit Concentration Risk As part of managing credit risk, the Bank regularly monitors and actively manages the credit concentration risk (see note 42.4.) of the Group through the limits to countries, counterparties and economic sectors. Regional concentration is not relevant as most income is generated within the territory of the Czech Republic (see note 41).

51 98 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 99 a) The exposures to top 10 groups of customers CZK m 31 December December December January 2013 Top 10 exposures* 4,144 3,380 3,230 3,737 * Exposure includes gross loans and receivables, unused commitments including credit lines, and guarantees. b) The structure of the Group s commercial credit portfolio by economic sectors 31 December December December January 2013 Sector CZK m* % Sector CZK m* % Sector CZK m* % Sector CZK m* % 1 Agriculture 17,403 30% 1 Agriculture 16,792 32% 1 Agriculture 15,715 39% 1 Agriculture 14,086 37% 2 Mining 17 0% 2 Mining 101 0% 2 Mining 105 0% 2 Mining 103 0% 3 Food industry 1,783 3% 3 Food industry 1,746 3% 3 Food industry 1,847 5% 3 Food industry 2,004 5% 4 Textile industry 406 1% 4 Textile industry 326 1% 4 Textile industry 352 1% 4 Textile industry 329 1% 5 Wood processing industry 685 1% 5 Wood processing industry 644 1% 5 Wood processing industry 504 1% 5 Wood processing industry 423 1% 6 Chemical industry 1,204 2% 6 Chemical industry 1,083 2% 6 Chemical industry 888 2% 6 Chemical industry 745 2% 7 Metal processing industry 2,163 4% 7 Metal processing industry 1,950 4% 7 Metal processing industry 1,246 3% 7 Metal processing industry 1,107 3% 8 Electric and optical equipment 123 0% 8 Electric and optical equipment 130 0% 8 Electric and optical equipment 79 0% 8 Electric and optical equipment 118 0% 9 Manufacturing of equipment, 9 Manufacturing of equipment, 9 Manufacturing of equipment, 9 Manufacturing of equipment, including transportation 1,533 3% including transportation 1,491 3% including transportation 1,173 3% including transportation 1,195 3% 10 Construction industry 10 Construction industry 10 Construction industry 10 Construction industry and construction modifications 3,395 6% and construction modifications 3,345 6% and construction modifications 2,817 7% and construction modifications 2,959 8% 11 Wholesale 5,350 9% 11 Wholesale 5,275 10% 11 Wholesale 3,872 10% 11 Wholesale 3,791 10% 12 Retail sale 3,745 7% 12 Retail sale 3,309 6% 12 Retail sale 2,766 7% 12 Retail sale 2,834 7% 13 Transport and telecommunication 6,384 11% 13 Transport and telecommunication 5,700 11% 13 Transport and telecommunication 764 2% 13 Transport and telecommunication 834 2% 14 Finance 541 1% 14 Finance 662 1% 14 Finance 779 2% 14 Finance 927 2% 15 Services 10,371 18% 15 Services 8,446 16% 15 Services 5,084 13% 15 Services 5,035 13% 16 Public sector 166 0% 16 Public sector 268 1% 16 Public sector 336 1% 16 Public sector 476 1% 17 Health industry 1,291 2% 17 Health industry 1,337 3% 17 Health industry 852 2% 17 Health industry 776 2% 18 Power sector 802 1% 18 Power sector 689 1% 18 Power sector 624 2% 18 Power sector 726 2% Total 57, % Total 53, % Total 39, % Total 38, % * The amounts represent the relevant gross loans and receivables to customers. Exposures of Other loans are excluded.

52 100 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 101 c) Maximum credit risk exposure 31 December 2015 CZK m Statement Off balance Total credit Available of financial position sheet risk exposure collateral* Cash and balances with the central bank 15, ,475 0 Financial assets at fair value through profit or loss Currency swaps Currency forwards Financial assets available for sale 13, ,255 0 Treasury bills 1, ,557 0 Treasury bonds 11, ,563 0 Equity investments Loand and receivables to banks Current accounts at banks Term deposits at banks payable within 3 months Loans and receivables to customers 108,437 14, ,013 47,246 Consumer authorized overdrafts and credit cards 5,407 6,231 11,638 0 Consumer loans 30, ,675 0 Mortgages 15, ,864 15,227 Commercial loans 38,340 7,675 46,015 20,433 Auto & Equipment Financial Lease 8, ,038 6,901 Commercial 8, ,025 6,901 Retail Auto & Equipment Loans 10, ,318 4,685 Commercial 8, ,373 4,685 Retail 1, ,945 0 Other loans Commercial Retail Issued guarantees and credit limits on guarantees 0 1,450 1,450 0 Letter of credit Other assets 2, , December 2014 CZK m Statement Off balance Total credit Available of financial position sheet risk exposure collateral* Cash and balances with the central bank 11, ,746 0 Financial assets at fair value through profit or loss Currency swaps Currency forwards Financial assets available for sale 20, ,401 0 Treasury bills 11, ,811 0 Treasury bonds 8, ,559 0 Equity investments Loand and receivables to banks Current accounts at banks Term deposits at banks payable within 3 months Loans and receivables to customers 107,197 13, ,181 45,869 Consumer authorized overdrafts and credit cards 6,399 6,138 12,537 0 Consumer loans 30, ,407 0 Mortgages 16, ,466 16,799 Commercial loans 36,040 7,150 43,190 19,784 Auto & Equipment Financial Lease 7, ,461 5,557 Commercial 7, ,440 5,557 Retail Auto & Equipment Loans 9, ,480 3,729 Commercial 7, ,506 3,729 Retail 1, ,974 0 Other loans Commercial Retail Issued guarantees and credit limits on guarantees 0 1,635 1,635 0 Letter of credit Other assets 3, ,514 0

53 102 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements December 2013 CZK m Statement Off balance Total credit Available of financial position sheet risk exposure collateral* Cash and balances with the central bank 9, ,372 0 Financial assets at fair value through profit or loss Currency swaps Currency forwards Financial assets available for sale 22, ,835 0 Treasury bills 15, ,787 0 Treasury bonds 7, ,017 0 Investment securities Loand and receivables to banks 1, ,114 0 Current accounts at banks Term deposits at banks payable within 3 months Loans and receivables to customers 97,493 13, ,714 37,275 Consumer authorized overdrafts and credit cards 7,363 5,658 13,021 0 Consumer loans 31, ,805 0 Mortgages 17, ,393 17,625 Commercial loans 34,629 6,810 41,439 19,650 Auto & Equipment Financial Lease Commercial Retail Auto & Equipment Loans 5, ,132 0 Commercial 2, ,900 0 Retail 2, ,232 0 Other loans Commercial Retail Issued guarantees and credit limits on guarantees 0 1,977 1,977 0 Letter of credit Other assets 3, ,802 0 * Available collateral represents realisable value of collateral relevant for each loan exposure. The realisable value of collateral is capped up to the Total exposure presented in the statement of financial position on a loan-by-loan basis for the purpose of the presentation in these breakdowns Credit Portfolio and its Quality a) Loans and receivables to banks and customers according the categorisation Loans and receivables to banks and customers can be summarised as follows: CZK m 31 December December 2014 Loans and Loans and Receivables receivables to Receivables receivables to to banks customers Total to banks customers Total Not-impaired before due date , , ,727 99,260 Not-impaired past due date 0 5,051 5, ,823 5,823 Total not-impaired , , , ,083 Total impaired 0 14,023 14, ,547 15,547 Gross loans and receivables , , , ,630 Allowances 0 (11,778) (11,778) 0 (12,900) (12,900) Net loans and receivables , , , ,730 Individual allowances 0 (1,027) (1,027) 0 (928) (928) Portfolio allowances 0 (10,751) (10,751) 0 (11,972) (11,972) Total allowances 0 (11,778) (11,778) 0 (12,900) (12,900) CZK m 31 December January 2013 Loans and Loans and Receivables receivables to Receivables receivables to to banks customers Total to banks customers Total Not-impaired before due date 1,114 89,280 90,394 3,848 91,841 95,689 Not-impaired past due date 0 5,536 5, ,612 6,612 Total not-impaired 1,114 94,816 95,930 3,848 98, ,301 Total impaired 0 16,513 16, ,664 16,664 Gross loans and receivables 1, , ,443 3, , ,965 Allowances 0 (13,836) (13,836) 0 (13,615) (13,615) Net loans and receivables 1,114 97,493 98,607 3, , ,350 Individual allowances 0 (820) (820) 0 (789) (789) Portfolio allowances 0 (13,016) (13,016) 0 (12,826) (12,826) Total allowances 0 (13,836) (13,836) 0 (13,615) (13,615)

54 104 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 105 b) Gross loans and receivables to customers that are not impaired according to the probability of default The quality of the credit portfolio in respect of gross loans and receivables that are not impaired can be analysed according to the probability of default* as follows: CZK m Retail Authorized Auto and overdrafts equipment Auto and Credit Probability and credit Consumer financial equipment Other quality of default cards loans Mortgages leases loans loans 31 December (PD<=1.3%) 2,742 10,123 13, , (1.3%<PD<=3.2%) 1,166 12, (3.2%<PD<=7.7%) 679 4, (7.7%<PD<=15.6%) 367 1, (PD>15.6%) 388 1, unrated Total loans and receivables 5,346 29,689 14, , December (PD<=1.3%) 3,565 9,448 14, , (1.3%<PD<=3.2%) 1,250 9, (3.2%<PD<=7.7%) 741 6, (7.7%<PD<=15.6%) 399 2, (PD>15.6%) 359 1, unrated Total loans and receivables 6,314 29,859 16, , CZK m Retail Authorized Auto and overdrafts equipment Auto and Credit Probability and credit Consumer financial equipment Other quality of default cards loans Mortgages leases loans loans 31 December (PD<=1.3%) 3,806 8,836 15, , (1.3%<PD<=3.2%) 1,569 10, (3.2%<PD<=7.7%) 879 7, (7.7%<PD<=15.6%) 517 2, (PD>15.6%) 471 2, unrated Total loans and receivables 7,242 30,960 17, , January (PD<=1.3%) 4,310 8,929 17, , (1.3%<PD<=3.2%) 1,770 10, (3.2%<PD<=7.7%) 857 7, (7.7%<PD<=15.6%) 487 3, (PD>15.6%) 458 2, unrated Total loans and receivables 7,882 32,347 19, ,462 1,111 CZK m Commercial Auto and equipment Auto and Credit Probability Commercial financial equipment Other quality of default loans leases loans loans Total 31 December (PD<=1.3%) 28,309 3,405 5, ,914 2 (1.3%<PD<=3.2%) 7,431 3,561 2, ,259 3 (3.2%<PD<=7.7%) ,956 4 (7.7%<PD<=15.6%) 1, ,820 5 (PD>15.6%) ,991 unrated Total loans and receivables 38,020 7,797 8, , December (PD<=1.3%) 25, , ,631 2 (1.3%<PD<=3.2%) 7,651 4,731 2, ,441 3 (3.2%<PD<=7.7%) ,094 4 (7.7%<PD<=15.6%) 1, ,344 5 (PD>15.6%) ,749 unrated Total loans and receivables 35,543 7,059 7, ,550 CZK m Commercial Auto and equipment Auto and Credit Probability Commercial financial equipment Other quality of default loans leases loans loans Total 31 December (PD<=1.3%) 23, , ,029 2 (1.3%<PD<=3.2%) 8, ,321 3 (3.2%<PD<=7.7%) ,949 4 (7.7%<PD<=15.6%) 2, ,937 5 (PD>15.6%) ,358 unrated Total loans and receivables 33, , ,816 1 January (PD<=1.3%) 21, , ,085 2 (1.3%<PD<=3.2%) 8, ,211 3 (3.2%<PD<=7.7%) 1, ,273 4 (7.7%<PD<=15.6%) ,362 5 (PD>15.6%) ,871 unrated Total loans and receivables 32, , ,453 * Probability of default is defined as a probability that a customer will default (mostly by being more than 90 days past due with repayments) in the following 12 months

55 106 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 107 c) Gross loans and receivables to customers that are not impaired according to due dates As of 31 December 2015, 31 December 2014 and 31 December 2013 and 1 January 2013, the Group reported the following gross receivables with their due dates that are not individually impaired: 31 December 2015 CZK m Retail Authorized Auto and overdrafts equipment Auto and and credit Consumer financial equipment Other cards loans Mortgages leases loans loans Not past due 5,055 27,891 14, , days past due 232 1, days past due days past due Total 5,346 29,689 14, , December 2013 CZK m Retail Authorized Auto and overdrafts equipment Auto and and credit Consumer financial equipment Other cards loans Mortgages leases loans loans Not past due 6,708 28,307 16, , days past due 403 2, days past due days past due Total 7,242 30,960 17, , CZK m Commercial Auto and equipment Auto and Commercial financial equipment Other loans leases loans loans Total Not past due 36,892 7,023 7, , days past due 1, , days past due days past due Total 38,020 7,797 8, ,192 CZK m Commercial Auto and equipment Auto and Commercial financial equipment Other loans leases loans loans Total Not past due 32, , , days past due 1, , days past due days past due Total 33, , , December 2014 CZK m Retail Authorized Auto and overdrafts equipment Auto and and credit Consumer financial equipment Other cards loans Mortgages leases loans loans Not past due 5,916 27,761 15, , days past due days past due days past due Total 6,314 29,859 16, , January 2013 CZK m Retail Authorized Auto and overdrafts equipment Auto and and credit Consumer financial equipment Other cards loans Mortgages leases loans loans Not past due 7,338 29,519 18, ,260 1, days past due 402 2, days past due days past due Total 7,882 32,347 19, ,462 1,111 CZK m Commercial Auto and equipment Auto and Commercial financial equipment Other loans leases loans loans Total Not past due 34,273 6,185 6, , days past due 1, , days past due days past due Total 35,543 7,059 7, ,550 CZK m Commercial Auto and equipment Auto and Commercial financial equipment Other loans leases loans loans Total Not past due 30, , , days past due 1, , days past due days past due Total 32, , ,453

56 108 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 109 d) Loans and receivables to customers that are individually impaired As of 31 December 2015, 31 December 2014, 31 December 2013 and 1 January 2013, the Group reported the following amounts of loans and receivables to banks and clients that are individually impaired and to which individual allowances are created (commercial individually managed loans): CZK m 31 December December December January 2013 Gross individually impaired loans and receivables, to which an individual loss provision is created 1,453 1,504 1,577 1,618 Individual allowances (1,027) (928) (820) (789) Net individually impaired loans and receivables to wich an individual loss provision is created Collateral Forborne Receivables Forborne receivables are receivables for which the Group provided the debtor with relief as it assessed that it would likely incur a loss if it did not do so. For economic or legal reasons associated with the debtor s financial position, Commercial loans/leases If the customer is willing and able to resolve its situation (caused mainly by temporary reasons) and continue under original product conditions, it is possible to restructure the business case. the Group granted it with relief that it would not otherwise have granted. These primarily include the reworking of the repayment plan, decrease in the interest rate, waiver of default interest, deferral of principal or accrued interest repayments. Forborne receivables do not include receivables arising from the roll-over of a short-term loan for current assets if the debtor met all of its payment and non-payment obligations arising from the loan contract. For customers who are temporarily unable to meet their financial obligations, the Group uses a tool in the form of a temporary reduction/postponing of the customer s repayments. In cases where there is a long-term reduction in income, an extension of the repayment period is used. Restructuring may be combined with improvement of creditors s collateral position (new collateral, use of notarial deed, which enables quicker and lower cost sale of collateral). The forbearance is reflected in the categorisation Only instalments not past due are subject of rescheduling. of receivables in accordance with the receivables The customer is obliged to repay all past due payments categorisation rules (42.3.2). As categorisation rules also trigger impairment, allowances for forborne receivables are calculated accordingly. For commercial and mortgage receivables, the same methods as for receivables without forbearance are used. For other retail receivables, forborne receivables with impairment allowances are created up to the value of an estimated life time loss. in full and delinquency status is calculated according the oldest unpaid instalment. Interest rate is not changed. As impairment is driven by categorization (see note ), in compliance with categorization rules, forborne receivables are treated as impaired for at least 6 consecutive months after forbearance. They become non-impaired if their categorization improve to watch or standard. The Group applies the following general principles for the forbearance: Mortgages Retail products (Bank only forbearance measures are not applied for GEMA products) The main situations for forbearance are lost/decrease of income (unemployment/salary decrease), long term illness, invalidity, death of partner, natural disaster. Ability to pay is checked according to Income/expenditure analysis model. Willingness to pay is tested during period when customer demonstrates ability to pay according modified conditions. The customer may be granted with relief if he is not in personal bankruptcy and the mortgage is at least 9 months on the books. Forbearance is offered in the form of a temporary reduction of the client s repayments and/or an extension of the repayment period. Only instalments not past due are subject of rescheduling. Customer is obliged to repay all past due payments in full and delinquency status is calculated according to the oldest unpaid instalment. Situations, ability and willingness to pay checks are similar to those for mortgages. Product/customer criteria include mainly the following: customer is not in personal bankruptcy, none of customer s loan is terminated, loan is at least 9 months on the books loan is past due less than 30 days. If customer proves his/her willingness and ability to pay (through 3 consecutive payments), Bank offers him/ her a new loan contract. Customer s original (delinquent) loans are, by signature of this new contract, repaid and closed and new (restructured) loan with different monthly instalment, interest rate and maturity is opened as nondelinquent (current). Impairment classification is the same as for commercial loans and leases. Interest rate is not changed. Impairment classification is the same as for commercial loans and leases. a) All gross loans and receivables with forbearance: 31 December 2015 CZK m Mortgages Consumer loans Commercial loans Total Forborne receivables ,144 Total , December 2014 CZK m Mortgages Consumer loans Commercial loans Total Forborne receivables 144 1, ,439 Total 144 1, , December 2013 CZK m Mortgages Consumer loans Commercial loans Total Forborne receivables 158 1, ,792 Total 158 1, ,792 1 January 2013 Customer demonstrably lost ability to repay loan according to original loan contract, Customer demonstrates willingness and ability to pay his debts, Specific product/customer criteria must be met, Loan was not restructured more than once in last 12 months and more than twice during last 5 years. CZK m Mortgages Consumer loans Commercial loans Total Forborne receivables 170 1, ,927 Total 170 1, ,927

57 110 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 111 b) Impaired loans out of all gross loans and receivables with forbearance: 42.4 Risk of Concentration 31 December 2015 CZK m Mortgages Consumer loans Commercial loans Total Forborne receivables Total December 2014 CZK m Mortgages Consumer loans Commercial loans Total Forborne receivables Total December 2013 CZK m Mortgages Consumer loans Commercial loans Total Forborne receivables Total January 2013 CZK m Mortgages Consumer loans Commercial loans Total Forborne receivables ,132 Total ,132 c) Number of loans and receivables to customers forborne within the reporting year 31 December 2015 Mortgages Consumer loans Commercial loans Number of incrementally forborne receivables within the reporting year Balance of the incrementally forborne gross receivables at the end of the reporting year CZK m December 2014 Mortgages Consumer loans Commercial loans Number of incrementally forborne receivables within the reporting year Balance of the incrementally forborne gross receivables at the end of the reporting year CZK m The risk of concentration means the risk arising from the concentration of exposures with respect to a person, an economically-related group of persons (see note 40), sector (see note ), region (see note 41), activity, or commodity. The Group manages the risk of concentration within individual risks, primarily the credit risk (see note 42.3) and liquidity risk (see note 42.7). Activity and commodity concentrations are not relevant Interest Rate Risk Interest rate risk is the risk of a loss arising from changes in interest rates on financial markets. The Group is exposed to interest rate risk as interest bearing assets and liabilities have different maturity periods or interest rate readjustment periods. The Bank strives to minimise the Group s interest rate risk by setting limits and keeping positions within these limits. Its activities in the area of interest rate risk management are aimed at reducing the risk of losses. The Group s interest rate risk management is centralised in the Bank. To monitor and measure interest rate risk, a model of interest rate sensitivity is used, which serves to determine the sensitivity of the Group to changes in the market interest rates. The model is based on the inclusion of interestsensitive assets and liabilities into relevant time bands. The Group prefers to use behavioural features of cash flows rather than those that are purely contractual. All behavioural assumptions are approved by the ALCO. The model works with 1-month time bands up to the 10 year period and a time band exceeding 10 years. Simultaneously, the Bank carries out stress testing based on the parallel shift of the yield curve by 200 basis points for all currencies that account for more than 5% of the Group s assets. In 2015, only the portfolio denominated in Czech Koruna exceeded 5% share of the Group s assets. To manage the interest rate risk, the Group uses a limit for the impact of the stress test on the total capital and annual net interest income. The results of stress testing are presented to ALCO on a monthly basis. To manage the discrepancy between the interest sensitivity of assets and liabilities, interest rate derivatives are used in most cases. During 2015 (2014) the Bank did not need to use any interest rate derivatives due to natural offsets between assets and liabilities. % change in annual 31 Dec 31 Dec 31 Dec net interest income Impact of the interest rate shock +200 basis points (0.96)% 1.77% 1.02% Impact of the interest rate shock -200 basis points 0.05% (0.30)% (0.26)% change in economic value 31 Dec 31 Dec 31 Dec of equity as a % of capital Impact of the interest rate shock +200 basis points (4.38)% (2.83)% (3.66)% Impact of the interest rate shock -200 basis points 0.88% 0.56% 1.90% The below table summarises the Group s exposure to interest rate risk. Balances are allocated to the buckets based on the following parameters: for assets the next repricing date or principal payment dates, whichever occurs earlier, for non maturity deposits the expected maturity/repricing behaviour and for term deposits the maturity date. 31 December 2013 Mortgages Consumer loans Commercial loans Number of incrementally forborne receivables within the reporting year 8 1, Balance of the incrementally forborne gross receivables at the end of the reporting year CZK m

58 112 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements December 2015 Within More than CZK m 1 month months months years 5 years Unspecified* Total Cash and balances with the central bank 15, ,475 Financial assets at fair value through profit or loss Financial assets available for sale ,040 6,130 2,400 1,635 13,255 Loans and receivables to banks Loans and receivables to customers 28,083 4,008 14,255 44,660 8,109 9, ,437 Other assets ,724 2,724 Total financial assets 43,424 4,008 17,295 50,790 10,509 14, ,037 Deposits from banks Due to customers 48,002 5,671 13,551 27,887 9,841 3, ,698 Financial liabilities through profit or loss Other liabilities (without the equity) ,636 3,203 Total financial liabilities 48,742 5,676 13,569 27,928 9,853 6, ,198 Net interest rate exposure (5,318) (1,668) 3,726 22, ,581 27, December 2013 Within More than CZK m 1 month months months years 5 years Unspecified* Total Cash and balances with the central bank 9, ,372 Financial assets at fair value through profit or loss Financial assets available for sale 2,508 4,064 10, ,500 1,367 22,835 Loans and receivables to banks ,112 1,114 Loans and receivables to customers 26,842 3,523 13,368 42,119 6,949 4,692 97,493 Other assets ,802 3,802 Total financial assets 38,532 7,587 24,364 42,519 10,449 11, ,622 Deposits from banks Due to customers 40,454 3,548 14,170 25,797 7,212 2,460 93,641 Financial liabilities at fair value through profit or loss Other liabilities (without equity) ,222 2,806 Total financial liabilities 41,071 3,551 14,182 25,825 7,221 4,725 96,575 Net interest rate exposure (2,539) 4,036 10,182 16,694 3,228 6,446 38, December 2014 Within More than CZK m 1 month months months years 5 years Unspecified* Total Cash and balances with the central bank 11, ,746 Financial assets at fair value through profit or loss Financial assets available for sale 1,300 2,500 9,772 2,300 3,050 1,479 20,401 Loans and receivables to banks Loans and receivables to customers 27,419 4,103 15,368 43,501 7,690 9, ,197 Other assets ,514 3,514 Total financial assets 40,251 6,603 25,140 45,801 10,740 14, ,403 Deposits from banks Due to customers 37,645 3,913 14,236 29,398 8,576 3,238 97,006 Financial liabilities at fair value through profit or loss Other liabilities (without the equity) ,866 3,551 Total financial liabilities 38,403 3,920 14,260 29,449 8,590 6, ,820 Net interest rate exposure 1,848 2,683 10,880 16,352 2,150 8,670 42,583 * Loans and receivables to customers presented under Unspecified category as at 31 December 2015 at CZK mil. (31 December 2014: CZK mil., 31 December 2013: CZK mil.) represent impaired loans, exposures in foreign currencies (the loan portfolio denominated in CZK represent the majority of the whole loan portfolio) and accrued interest (i.e. exposure other than principal) Foreign Exchange Risk Foreign exchange risk covers the risk of a loss due Ratio of the absolute value of the net currency position to to changes in exchange rates. The Group is exposed capital for each foreign currency; to the foreign exchange risk primarily due to the provision Ratio of the absolute value of the net currency position in of foreign exchange loan products to commercial borrowers Czech Koruna to capital; and foreign exchange deposits. Ratio of the absolute value of the total net currency position to capital; To measure foreign exchange risk, the Bank uses, on Absolute value of the net currency position for each foreign a daily basis, net currency positions and a VaR (Value at Risk) currency; and model based on historical data. The Bank strives to minimise VaR (maximum expected loss per business day at the 99% foreign exchange risk of the Group. For this purpose, confidence level) for the foreign currency portfolio. the Bank maintains a balance of assets and liabilities in foreign currencies (by using a mix of FX spots and forwards/ The same methods of measurement, monitoring and control swaps transactions) and uses the following limits: of foreign exchange risk are also used on a consolidated basis. The management of the Group s foreign exchange risk is centralised in the Bank as other companies in the Group either do not have FX positions, or regularly close the FX positions with the Bank. 31 December Average in 31 December Average in 31 December Average in CZK VaR of currency instruments

59 114 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements Liquidity Risk Liquidity risk represents the risk of inability to meet financial liabilities when due or to finance assets. The daily measurement of liquidity risk in key currencies (share of the total assets exceeding 5%) includes: Calculation of the liquidity position based on the liquidity gap model, which measures net cash flows in set time bands; Calculation of the Liquidity Coverage Ratio (ratio of highlyliquid assets to net outflow in 30 days); and Calculation of Early Warnings Indicators. The monthly measurement of liquidity risk includes: Assessment of the impact of liquidity management stress scenarios on the Group s liquidity position; and Measurement of concentration in deposits. To manage liquidity risk for key currencies, the Bank applies a system of the following limits: Liquidity positions in selected time buckets; Liquidity Coverage Ratio; Structure of the portfolio for liquidity management; and Concentration in deposits. and monitors a chosen set of Early Warning Indicators. The Group has access to diversified sources of financing, which include deposits, loans taken, as well as the Group s equity. The bond and money markets are used to further diversify sources of liquidity and to deposit excess cash. The Bank also has a credit line within the GE Capital Corporation, which, together with sources to other financing, gives the Bank flexibility regarding liquidity. For the purpose of liquidity management under extraordinary circumstances, the Bank has a contingency plan containing measures for recovering liquidity. The ERM regularly reviews the contingency plan and liquidity management scenarios, which are based on the analysis of historical data, and forwards them to the ALCO for approval. The liquidity coverage ratio of the Bank in 2015 is 140% (2014: 187% and 2013: 236%). As other companies of the Group are financed exclusively by the Bank, the Group s liquidity management is executed exclusively as part of the Bank s liquidity management by including credit exposures to other companies of the Group. a) The below table summarises the remaining maturity of carrying amounts of assets, liabilities and equity according to their contractual maturity. 31 December 2015 Within More than CZK m 1 month months months years 5 years Unspecified* Total Cash and balances with the central bank 15, ,475 Financial assets at fair value through profit or loss Financial assets available for sale ,793 6,629 3, ,255 Loans and receivables to banks Loans and receivables to customers 7,449 5,164 11,182 51,201 27,837 5, ,437 Investments in associates Current tax assets Deferred tax assets Other assets ,370 1,606 Total assets 23,355 5,185 14,026 57,845 31,503 8, ,037 Deposits from banks Due to customers 103,873 2,901 1, ,698 Financial liabilities at fair value through profit or loss Provisions Deferred tax liabilities Other liabilities 1, ,440 Equity ,839 27,839 Total liabilities and equity 106,145 2,905 2, , ,037 Net liquidity position** (82,790) 2,280 11,694 57,464 31,488 (20,136) 0 Issued guarantees and credit limits on guarantees 1, ,450 Loan commitments*** 1, ,596

60 116 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements December December 2013 Within More than CZK m 1 month months months years 5 years Unspecified* Total Cash and balances with the central bank 11, ,746 Financial assets at fair value through profit or loss Financial assests available for sale 1,440 2,637 9,304 2,496 4, ,401 Loans and receivables to banks Loans and receivables to customers 8,847 3,702 17,648 44,240 25,599 7, ,197 Investments in associates Current tax assets Deferred tax assets ,251 1,251 Other assets ,722 1,961 Total assets 22,761 6,346 27,001 46,736 30,092 10, ,403 Deposits from banks Due to customers 95, ,006 Financial liabilities at fair value through profit or loss Provisions Deferred tax liabilities Other liabilities 2, ,957 Equity ,583 42,583 Total liabilities and equity 97, , , ,403 Net liquidity position** (74,816) 6,038 25,724 45,817 30,092 (32,855) 0 Issued guarantees and credit limits on guarantees 1, ,635 Loan commitments*** 2, ,146 Within More than CZK m 1 month months months years 5 years Unspecified* Total Cash and balances with the central bank 9, ,372 Financial assets at fair value through profit or loss Financial assets available for sale 2,782 4,244 11, , ,835 Loans and receivables to banks 1, ,114 Loans and receivables to customers 11,073 1,704 15,479 36,437 25,207 7,593 97,493 Investments in subsidiaries and associates Current tax assets Deferred tax assets ,664 1,664 Other assets ,964 2,095 Total assets 24,363 5,953 26,702 36,904 29,405 11, ,622 Deposits from banks Due to customers 89, ,715 1, ,641 Financial liabilities at fair value through profit or loss Provisions Other liabilities 1, ,447 Equity ,047 38,047 Total liabilities and equity 90, ,353 1, , ,622 Net liquidity position** (66,192) 5,473 23,349 35,524 29,405 (27,559) 0 Issued guarantees and credit limits on guarantees 1, ,977 Loan commitments*** 2, ,295 * Loans and receivables to customers presented under Unspecified category as at 31 December 2015 CZK mil., (31 December 2014 at CZK mil., 31 December 2013: CZK mil.) represent the loans and receivables that are overdue more than 1 month. ** Net liquidity position of assets and liabilities within 1 month as at 31 December 2015 at CZK mil., (31 December 2014 at CZK mil., 31 December 2013: CZK mil.) is primarily due to to the fact that contractual maturity of current accounts falls within 1 month. *** The loan commitments represent irrevocable loan commitments only relating to commercial investment loans and mortgages. Total undrawn commitments on credit cards are not included in the table above as, historically, average limit usage is significantly below 100% and this behaviour is expected to continue.

61 118 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 119 b) The below table shows the remaining contractual maturity of non-derivative financial liabilities and issued financial guarantees and loan commitments held for the Group s liquidity management purposes. The presented amounts include contractual nondiscounted cash flows. c) The remaining maturity of derivative financial liabilities reported as derivatives for trading by remaining contractual maturity as of 31 December 2015, 31 December 2014 and 31 December 2013 is as follows: 31 December 2015 Within More than CZK m 1 month months months years 5 years Not specified Total Deposits from banks Due to customers 103,873 2,904 1, ,711 Provisions Other liabilities 1, ,660 Total non-derivative financial liabilities 106,141 2,904 2, ,203 Issued guarantees and credit limits on guarantees 1, ,450 Loan commitments* 1, , December 2014 Within More than CZK m 1 month months months years 5 years Not specified Total Deposits from banks Due to customers 95, ,041 Provisions Other liabilities 2, ,161 Total non-derivative financial liabilities 97, , ,839 Issued guarantees and credit limits on guarantees 1, ,635 Loan commitments* 2, , December 2015 CZK m Within 1 month 1-3 months 3-12 months 1-5 years More than 5 years Total Currency derivatives Currency swaps Currency forwards Total derivatives held for trading December 2014 CZK m Within 1 month 1 3 months 3 12 months 1 5 years More than 5 years Total CURRENCY DERIVATIVES Currency swaps Currency forwards Total derivatives held for trading December 2013 CZK m Within 1 month 1 3 months 3 12 months 1 5 years More than 5 years Total CURRENCY DERIVATIVES Currency forwards Total derivatives held for trading December 2013 Within More than CZK m 1 month months months years 5 years Not specified Total Deposits from banks Due to customers 89, ,747 1, ,738 Provisions Other liabilities 1, ,447 Total non-derivative financial liabilities 90, ,383 1, ,667 Issued guarantees and credit limits on guarantees 1, ,977 Loan commitments* 2, ,295 * The loan commitments represent irrevocable loan commitments only relating to commercial investment loans and mortgages.

62 120 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 121 d) The below table shows the remaining expected maturity of assets and liabilities as follows: 31 December December 2015 Within More than CZK m 1 month months months years 5 years Unspecified Total Cash and balances with the central bank 15, ,475 Financial assets at fair value through profit or loss Financial assets available for sale ,793 6,629 3, ,255 Loans and receivables to banks Loans and receivables to customers 7,449 5,164 11,182 51,201 27,837 5, ,437 Investments in associates Current tax assets Deferred tax assets Other assets ,370 1,606 Total assets 23,355 5,185 14,026 57,845 31,503 8, ,037 Deposits from banks Deposits from customers 21,540 9,164 24,872 43,076 9, ,698 Financial liabilities at fair value through profit or loss Provisions Deferred and current tax liabilities Other liabilities 1, ,439 Equity ,839 27,839 Total liabilities and equity 23,593 9,189 25,576 43,413 9,853 28, ,037 Net liquidity position (238) (4,004) (11,550) 14,432 21,650 (20,290) 0 Within More than CZK m 1 month months months years 5 years Unspecified Total Cash and balances with the central bank 11, ,746 Financial assets at fair value through profit or loss Financial assets available for sale 1,440 2,637 9,304 2,496 4, ,401 Loans and receivables to banks Loans and receivables to customers 8,847 3,702 17,648 44,240 25,599 7, ,197 Investments in associates Current tax assets Deferred tax assets ,251 1,251 Other assets ,722 1,961 Total assets 22,761 6,346 27,001 46,736 30,092 10, ,403 Deposits from banks Due to customers 21,753 6,116 21,360 39,021 8, ,006 Financial liabilities at fair value through profit or loss Provisions Deferred tax liability Other liabilities 2, ,957 Equity ,583 42,583 Total liabilities and equity 24,133 6,141 21,763 39,323 8,590 43, ,403 Net liquidity position (1,372) 205 5,238 7,413 21,502 (32,986) 0 31 December 2013 Within More than CZK m 1 month months months years 5 years Unspecified Total Cash and balances with the central bank 9, ,372 Financial assets at fair value through profit or loss Financial assets available for sale 2,782 4,244 11, , ,835 Loans and receivables to banks 1, ,114 Loans and receivables to customers 11,073 1,704 15,479 36,437 25,207 7,593 97,493 Investments in associates Current tax assets Deferred tax assets ,664 1,664 Other assets ,964 2,095 Total assets 24,363 5,953 26,702 36,904 29,405 11, ,622 Deposits from banks Due to customers 20,680 6,133 22,503 36,952 7, ,641 Financial liabilities at fair value through profit or loss Provisions Other liabilities Equity ,047 38,047 Total liabilities and equity 22,118 6,141 23,163 36,994 7,221 38, ,622 Net liquidity position 2,245 (188) 3,539 (90) 22,184 (27,690) 0

63 122 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements Operational Risk Operational risk represents the risk of a loss resulting from inadequate or failed internal processes, people and systems, or from external events, including the risk of loss due to a breach or failure to comply with a legal or regulatory requirement or threat to the Group s good reputation. It also covers legal and outsourcing risk. Within the scope of operational risk management, the Bank uses identification and classification models to identify and describe events, risk factors, the organisational structure, risk classification, and indicators. The ERM maintains models. The ERMC approves the risk classification model; other models are approved by the head of the ERM. Individual organisational units have operational risk coordinators who provide employees with methodological support in the area of operational risk management and cooperate with the ERM in activities relating to operational risk. The operational risk measurement uses the Loss Data Collection (LDC) process. Events whose impact exceeded the limit (CZK 10 thousand) are subject to data collection. Key risk indicators are monitored regularly. The basic limit for operational risk management is the limit for the size of the losses from the operational risk events. Losses stemming from events with low frequency and adverse impact are not included in this limit. The limit is approved by the ERMC on the basis of both the outcomes of the annual RCSA process (Risk Control Self-Assessment) and the LDC process. To mitigate the operational risk, the Bank produces and maintains: A business continuity plan for critical situations and operations recovery, with the aim of ensuring business activities at a backup workplace; and IT disaster recovery plans for key IT applications; and uses the following methods: Mitigation of risk by means of process improvements, process and organization changes, introduction of limits and controls, and use of technologies; Transfer of risk via outsourcing or insurance; and Avoidance of risk by terminating risk-inducing activities. The same methods of identification, measurement, monitoring and control of operational risk are also used in the Group (implemented in GEML in 2015) Model Risk Model risk is defined as a potential loss or other negative impact, which might emerge from decisions based on the results of an incorrect model or an incorrect use of model outputs and/or reports (linked to errors in the development, implementation or use of the models). The Group manages the model risk mainly by a correct setup of processes and controls in individual phases of the model life cycle, among others by imposing requirements on: Standards for model development and implementation; Model documentation; Model validations and revisions; Model use; and Model approvals. In the area of model risk management the Group uses GE rules and principles. The ERMC is responsible for the general setup of the model risk management process in the Group. The MROC mainly: Monitors compliance of model risk management in the Group with regulatory requirements and requirements of corresponding GE rules; Monitors model performance on a regular basis, ensures that the model performance is in compliance with model complexity and importance, escalates potential issues to the ERMC; and Submits quarterly a holistic report on model risk management to the ERMC for acknowledgement. 43. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES The following table shows the carrying values and fair values of financial assets and liabilities that are not presented in the Group s balance sheet at fair values. The fair value includes anticipated future losses while the carrying value (amortised cost and related impairment) includes only losses arising at the end of the reporting period. The Group uses the following inputs and techniques to estimate the fair value: Cash and balances with the central bank The carrying value of cash and balances with the central bank approximates their fair value. Loan and receivables to banks The carrying value of receivables to banks approximates their fair values due to the short maturity of those receivables. Loans and receivables to customers Fair values of loans are estimated on the basis of discounted future expected cash flows using the interest rate common for loans with similar credit risk and interest risk conditions profile and maturity dates (discounted rate technique according to IFRS 13). For impaired loans the present value of future expected cash flows including the expected proceeds from a collateral foreclosure, if any. Deposits from banks The carrying value of deposits from banks in principle approximates their fair values due to the short maturity of those deposits. Due to customers Fair values of deposits repayable on demand at request and term deposits bearing a variable interest rate are equal to their carrying value as of the balance sheet date. Fair values of term deposits with a fixed interest rate are estimated on the basis of discounted cash flows using the market interest rates. CZK m 31 Dec Dec Dec Dec Dec Dec 2013 Carrying value Fair value FINANCIAL ASSETS Cash and balances with the central bank 15,475 11,746 9,372 15,475 11,746 9,372 Loans and receivables to banks , ,114 Loans and receivables to customers 108, ,197 97, , ,660 99,835 FINANCIAL LIABILITIES Deposits from banks Due to customers 108,698 97,006 93, ,698 97,006 93,641 Cash and balances with the central bank, Loans and receivables to banks and Deposits from banks are classified as level 2, all other fair values presented above are classified as level 3 as the data used for the estimation of the discount rate are not based on the data from the active market. There are assumptions applied for the estimation of the cash flows used for discounting taking into account expected repayment profile of the particular pool or product. The discount rates used for discounting are based on the rates of the major competitors or other benchmark rates for similar type of assets.

64 124 GE Money Bank, a.s., Consolidated annual report 2015 Notes to consolidated financial statements 125 The following table summarises the hierarchy of fair values of financial assets and financial liabilities that are carried at fair value in the statement of financial position: 31 Dec Dec Dec 2013 CZK m Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 FINANCIAL ASSETS Financial assets at fair value through profit or loss Financial assets available for sale 11,315 1, ,282 12, ,332 16, FINANCIAL LIABILITIES Financial liabilities at fair value through profit or loss MANDATORY PUBLISHED INFORMATION The Group publishes the mandatory information according to Part 8 of Regulation of the European Parliament and the Council (EU) No. 575/2013 of 26 June 2013 on its website in the section Mandatory information at the following address: SUBSEQUENT EVENTS The Group is currently being prepared for exit from GE structure with respect to GE announcement on the 10th April 2015 that it will create a simpler, more valuable company by reducing the size of GE Capital through the sale of most of GE Capital s assets. As part of this it is GE s intention to sell the GE Money Group as a going concern within the next 12 months. There were no transfers between level 1 and 2 during the year 2015 (2014: 0 CZK, 2013: 0 CZK). The Group uses the following inputs and techniques to determine the fair value under level 2 and level 3: Signature of statutory representatives The level 2 assets include mainly financial derivatives and treasury bills. For derivative exposures the fair value is estimated using the present value of the cash flows resulting from the transactions taking into account market inputs like FX spot and forwards rates, benchmark interest rates, swap rates, etc. The fair value of treasury bills is calculated as the present value of cash flows using the benchmark interest rates. The level 3 assets include equity instruments not traded on the market where the fair value is calculated using the valuation techniques including expert appraisals. Movement analysis of level 3 financial assets and liabilities: Tomáš Spurný Chairman of the Board of Directors Philip Holemans Member of the Board of Directors Total gains and losses Total gains and losses in the period recognised in the period recognised CZK m As at 1 January 2015 in the income statement in OCI As at 31 December 2015 Available for sale Equity investments Total gains and losses Total gains and losses in the period recognised in the period recognised CZK m As at 1 January 2014 in the income statement in OCI As at 31 December 2014 Available for sale Equity investments Total gains and losses Total gains and losses in the period recognised in the period recognised CZK m As at 1 January 2013 in the income statement in OCI As at 31 December 2013 Available for sale Equity investments 35 (6) 2 31 * In 2013 impairment loss of minority interest in MOPET CZ a.s. was recognized in Profit or Loss (see note 23). * In 2015 GEMB received an offer to sell its holding of Visa Europe Limited, what had been previously valuated at cost. Therefore, revaluation gain of CZK 104 mil. was recognized in OCI.

65 126 GE Money Bank, a.s., Consolidated annual report 2015 Auditor s Report and Separate Financial Statements 127 AUDITOR S REPORT AND SEPARATE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2015

66 128 GE Money Bank, a.s., Consolidated annual report 2015 Auditor s Report and Separate Financial Statements 129

67 130 GE Money Bank, a.s., Consolidated annual report 2015 Separate Financial Statements 131 SEPARATE FINANCIAL STATEMENTS Name of the Bank: GE Money Bank, a.s. Registered office: Vyskočilova 1422/1a, Praha 4 Michle Identification no: Business: Bank Code of the Bank: 0600 Date of preparation: 25 February 2016

68 132 GE Money Bank, a.s., Consolidated annual report 2015 Separate Financial Statements 133 SEPARATE STATEMENT OF FINANCIAL POSITION as at 31 December 2015 SEPARATE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the year ended 31 December December 31 December 31 December 1 January CZK m Note CZK m Note Assets Interest and similar income 8,453 9,061 9,800 Cash and balances with the central banks 19 15,475 11,746 9,372 16,674 Interest expense and similar charges (215) (288) (559) Financial assets at fair value through profit or loss Net interest income 7 8,238 8,773 9,241 Financial assets available for sale 23 13,255 20,401 22,835 8,902 Fee and commission income 2,446 2,888 3,373 Loans and receivables to banks ,104 3,838 Fee and commission expense (284) (327) (361) Loans and receivables to customers 22 99,350 98,497 91,724 95,171 Net fee and commission income 8 2,162 2,561 3,012 Intangible assets Dividend income Property and equipment Net income from financial operations Investments in subsidiaries and associates 27 9,767 9,771 6,823 6,823 Other operating income Current tax assets Total operating income 10,893 11,915 12,869 Deferred tax assets ,263 1,507 1,518 Personnel expenses 12 (2,027) (1,878) (2,154) Other assets Other administrative expenses 13 (1,689) (1,880) (1,846) Total assets 140, , , ,217 Depreciation and amortisation 14 (526) (475) (525) Other operating expenses 15 (871) (1,011) (816) Total operating expenses (5,113) (5,244) (5,341) Liabilities Profit for year before tax and net impairment of loans and receivables and AFS 5,780 6,671 7,528 Deposits from banks Net impairment of loans and receivables 16 (622) (1,624) (2,339) Deposits from customers ,515 99,655 95,927 98,614 Impairment of financial assets available for sale (7) Financial liabilities at fair value through profit or loss Profit for year before tax 5,158 5,047 5,182 Provisions Current tax liabilities Taxes on income 17 (1,086) (1,048) (1,076) Other liabilities 34 2,167 2,688 2,240 2,981 Profit for year after tax 4,072 3,999 4,106 Total liabilities 114, ,980 98, ,328 Intems that are or might be reclassified to profit or loss Change in fair value of AFS investments recognised in OCI (82) Equity Change in fair value of AFS investments recognised in P&L (13) (77) (164) Share capital Deferred tax (29) (84) 47 Share premium 35 5,028 4,702 4,702 4,702 Other comprehensive income, net or tax (199) Legal and statutory reserve Available for sale reserve Total comprehensive income 4,195 4,357 3,907 Share based payment reserve (2) (2) 2 4 Retained earnings 19,847 35,475 31,479 27,371 Earnings per share Total equity 25,968 41,146 36,796 32,889 Profit for the year after attributable to the equity holders 4,072 3,999 4,106 Weighted average of ordinary shares (number of shares) Total liabilities and equity 140, , , ,217 Basic/Diluted eamings per share

69 134 GE Money Bank, a.s., Consolidated annual report 2015 Separate Financial Statements 135 SEPARATE STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2015 SEPARATE STATEMENT OF CASH FLOWS for the year ended 31 December 2015 Share Legal and Available based Share Share statutory for sale payment Retained CZK m capital premium reserve reserve reserve earnings Total Opening balance 1 January , ,371 32,889 Transactions with owners of the company Other changes (2) 2 0 Total comprehensive income Profit for the year after tax ,106 4,106 Other comprehensive income, net of tax Change in fair value of AFS assets Change in fair value of AFS investments recognised in OCI (82) 0 0 (82) Change in fair value of AFS investments recognised in P&L (164) 0 0 (164) Deferred tax Balance 31 December , ,479 36,796 Opening balance 1 January , ,479 36,796 Transactions with owners of the company Other changes (4) (3) (7) Total comprehensive income Profit for the year after tax ,999 3,999 Other comprehensive income after tax Change in fair value of AFS assets Change in fair value of AFS investments recognised in OCI Change in fair value of AFS investments recognised in P&L (77) 0 0 (77) Deferred tax (84) 0 0 (84) Balance 31 December , (2) 35,475 41,146 Opening balance 1 January , (2) 35,475 41,146 Transactions with owners of the company Dividends (19,700) (19,700) Capitalization of liability into equity CZK m Note Cash flows from operating activities Profit for the year after tax 4,072 3,999 4,106 Adjustments for: Depreciation and amortisation Net impairment of loans and receivables ,624 2,339 Net gain on sale of available for sale financial assets 10 (13) (77) (164) Net loss on sale of tangible and intangible assets Dividend income 9 (9) (9) (9) Taxes on income 17 1,086 1,048 1,076 6,294 7,074 7,877 Changes in: Financial assets at fair value through profit or loss 24 5 (6) (2) Loans and receivables to customers 16,22 (1,475) (8,397) 1,108 Other assets (9) 7 Deposits from banks (255) Deposits from customers 32 11,860 3,728 (2,687) Financial liabilities at fair value through profit or loss 24 (8) 11 4 Other liabilities and provisions 33,34 (41) 484 (733) 16,701 3,009 5,319 Taxes on income paid (785) (1,044) (1,046) Net cash from/(used in) operating activities 15,916 1,965 4,273 Cash flows from investing activities Acquisition of financial assets available for sale (16,398) (24,990) (31,191) Proceeds from financial assets available for sale 23,707 27,942 17,187 Acquisition of subsidiaries (net of cash and cash equivalents acquired) 27 4 (2,948) 0 Acquisition of property and equipment and intagible assets 25,26 (230) (191) (314) Proceeds from the sale of property and equipment and Intangible assets Dividends received Net cash from/(used in) investing activities 7, (14,307) Cash flows from financing activities Share-based payments reserve 0 (4) (2) Dividend paid (19,700) 0 0 Net cash from/(used in) financing activities (19,700) (4) (2) Net change in cash and cash equivalents 3,326 1,790 (10,036) Total comprehensive income Profit for the year after tax ,072 4,072 Cash and cash equivalents at the beginning of the period 20 12,266 10,476 20,512 Cash and cash equivalents at the end of the period 20 15,592 12,266 10,476 Other comprehensive income after tax Change in fair value of AFS assets Change in fair value of AFS investments recognised in OCI Change in fair value of AFS investments recognised in P&L (13) 0 0 (13) Deferred tax (29) 0 0 (29) Interest received* 7,699 8,253 8,841 Interest paid* (259) (402) (549) * Interest received and Interest paid are included within cash flows from operating activities Balance 31 December , (2) 19,847 25,968

70 136 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 137 NOTES TO SEPARATE FINANCIAL STATEMENTS OF GE MONEY BANK, A.S., AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2015 PREPARED ACCORDING TO IFRS AS ADOPTED BY EU

71 138 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 139 CONTENT 1. GENERAL INFORMATION BASIS OF PREPARATION Basis of Presentation and Adoption of International Financial Reporting Standards Going Concern Functional and Presentation Currency USE OF ESTIMATES AND JUDGEMENTS NEW STANDARDS AND INTERPRETATIONS Standards and amendments issued by the IASB and endorsed by the EU but effective after 31 December Standards and amendments issued by the IASB but effective after 31 December, 2015 and not endorsed by the EU SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Foreign Currency Interest Fees and Commissions Dividends Financial Assets and Financial Liabilities Recognition Classification Reclassification Derecognition Offsetting Amortized Cost Measurement Derivatives Impairment of Financial Assets Repurchase and Reverse Repurchase Agreements Fair Value Measurement Provisions Leases Property and Equipment Intangible Assets Impairment of Non-Financial Assets Employee Benefits Cash and cash balances with the central bank Income Tax and Deferred Tax Segment Reporting Financial Guarantees and Loan Commitments EXPLANATION OF TRANSITION TO IFRS NET INTEREST INCOME NET FEE AND COMMISSION INCOME DIVIDEND INCOME NET INCOME FROM FINANCIAL OPERATIONS OTHER OPERATING INCOME PERSONNEL EXPENSES OTHER ADMINISTRATIVE EXPENSES DEPRECIATION AND AMORTISATION OTHER OPERATING EXPENSES NET IMPAIRMENT OF LOANS AND RECEIVABLES TAXES ON INCOME EARNINGS PER SHARE CASH AND BALANCES WITH THE CENTRAL BANK CASH AND CASH EQUIVALENTS LOANS AND RECEIVABLES TO BANKS LOANS AND RECEIVABLES TO CUSTOMERS FINANCIAL ASSETS AVAILABLE FOR SALE FINANCIAL ASSETS/LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS INTANGIBLE ASSETS PROPERTY AND EQUIPMENT INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES CURRENT TAX ASSETS DEFERRED TAX ASSETS AND LIABILITIES OTHER ASSETS DEPOSITS FROM BANKS DEPOSITS FROM CUSTOMERS PROVISIONS OTHER LIABILITIES EQUITY BONUSES TIED TO THE EQUITY AND STOCK OPTION PLAN Stock option outstanding Stock options outstanding Stock options activity Restricted stock units (RSU) CONTINGENT LIABILITIES LOAN COMMITMENTS AND ISSUED GUARANTEES LEGAL DISPUTES LEASING TRANSACTIONS WITH RELATED PARTIES Remuneration paid to key members of management SEGMENT REPORTING RISK MANAGEMENT Risk Management Organisational Structure Capital Management Internal Capital Requirement on a One-year Horizon Three-Year Capital Outlook Recovery Plan Credit Risk Credit Risk Management Categorisation of receivables Collateral Assessment Allowances Calculation Credit Concentration Risk Credit Portfolio and its Quality Forborne Receivables RISK OF CONCENTRATION INTEREST RATE RISK FOREIGN EXCHANGE RISK LIQUIDITY RISK OPERATIONAL RISK MODEL RISK FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES MANDATORY PUBLISHED INFORMATION SUBSEQUENT EVENTS

72 140 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements GENERAL INFORMATION 3. USE OF ESTIMATES AND JUDGEMENTS (a) IFRS 9 Financial Instruments GE Money Bank, a.s. (the Bank ) is a wholly owned subsidiary of GE Capital International Holdings Limited (GECIHL). Ultimate parent of GECIHL is General Electric Company (GE). The Bank is a joint-stock company incorporated and domiciled in the Czech Republic, its registered office and principal place of business is Vyskocilova 1422/1a, Prague 4, Michle, Czech Republic. The Bank is registered in the Czech Republic by the Municipal Court in Prague, Section B, and Entry No and its identification number is The Bank focuses primarily on secured and unsecured consumer lending and commercial financing. The consumer portfolio consists of secured and unsecured lending. Unsecured lending includes personal loans, credit cards, and personal overdrafts. Secured lending is provided in the form of mortgages. Commercial lending products range from working capital and investment loans, financing of small businesses and entrepreneurs through guarantees, letters of credits and foreign exchange transactions. The Bank provides a wide range of deposit and transactional products to retail and commercial customers. The Bank issues debit and credit cards in cooperation with VISA and Mastercard. In addition, the Bank acts as an intermediary and provides additional payment protection insurance which covers the customer s monthly loan payment in the event of unemployment, accident or sickness. The Bank also acts as the intermediary to provide its customers with other insurance and investment products. The Bank s financial statements were authorised for issue by the Directors on the 25th of February In addition, the financial statements are subject to approval at the General Meeting of shareholders. All press releases, financial reports and other information are available on our website: The Bank has not prepared a separate annual report, because the Bank includes the respective information in the consolidated annual report. 2. BASIS OF PREPARATION 2.1. Basis of Presentation and Adoption of International Financial Reporting Standards International Financial Reporting Standards comprise accounting standards issued or adopted by the International Accounting Standards Board ( IASB ) as well as interpretations issued or adopted by the IFRS Interpretations Committee ( IFRIC ). The financial statements contained herein are separate financial statements of the Bank prepared in accordance with International Financial Reporting Standards as adopted by the EU ( IFRS ). The Bank firstly prepared financial statements in accordance with IFRS for the year ended 31 December The Bank has consistently applied the accounting policies used in the preparation of its opening IFRS statement of financial position as at 1 January 2013 and throughout all periods presented, as if these policies had always been in effect. For periods up to and including the year ended 31 December 2014, the Bank prepared its statutory financial statements in accordance with Czech accounting legislation for banks as required by legislation of the Czech Republic (CZ GAAP) which were prepared as the Bank s statutory financial statements. For year ended 31 December 2015 only IFRS financial statements were prepared and presented. Note 6 discloses the impact of the transition to IFRS on the Bank s reported financial position and financial performance in comparison to CZ GAAP Going Concern The separate financial statements are prepared on a going concern basis, as the Directors are satisfied that the Bank has the resources to continue in business for the foreseeable future. In making this assessment, the Directors have considered a wide range of information relating to present and future conditions, including future projections of profitability, cash flows and capital resources Functional and Presentation Currency The Bank s financial statements are presented in Czech Koruna (CZK) which is the Bank s functional currency. All amounts have been rounded to the nearest million, except where otherwise indicated. The preparation of the Bank s financial statements in conforminty with IFRSs requires the use of estimates and judgements about future conditions. In view of the inherent uncertainties and the high level of subjectivity involved in the recognition or measurement of items listed below, it is possible that the outcomes in the next financial year could differ from those on which management s estimates are based, resulting in materially different conclusions from those reached by management for the purposes of the 2015 Separate Financial Statements. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about critical judgements and estimates in applying accounting policies that have the most significant effect on the amounts recognised in the Bank s financial statements is included in the following notes: Deferred tax assets note 29 Impairment of financial assets notes 16 and Provisions note 33 Fair value note 42 Classification of leases note NEW STANDARDS AND INTERPRETATIONS 4.1. Standards and amendments issued by the IASB and endorsed by the EU but effective after 31 December 2015 During 2015 the EU endorsed amendments issued by the IASB through the Annual Improvements to IFRSs Cycle. The Bank did not early adopt the Annual improvements and they have immaterial impact on the Bank s financial statements Standards and amendments issued by the IASB but effective after 31 December, 2015 and not endorsed by the EU Certain new accounting standards and interpretations have been published by the IASB that are not mandatory for 31 December 2015 reporting periods and have not been adopted by the European Union. The Bank intends to adopt these standards, if applicable, when they become effective as endorsed by the EU. The Bank s assessment of the impact of these new standards and interpretations is set out below. IFRS 9 Financial Instruments issued on 24 July 2014 replaces IAS 39 Financial Instruments: Recognition and Measurement. The Standard includes requirements for recognition and measurement, impairment, derecognition and general hedge accounting. IFRS 9 issued in 2014 is mandatorily effective for periods beginning on or after 1 January 2018 subject to endorsement by the EU. Classification and measurement IFRS 9 divides all financial assets into two classifications - those measured at amortised cost and those measured at fair value. Where assets are measured at fair value, gains and losses are either recognised entirely in profit or loss (fair value through profit or loss, FVTPL), or recognised in other comprehensive income (fair value through other comprehensive income, FVTOCI). The classification of a financial asset is made at the time it is initially recognised, namely when the entity becomes a party to the contractual provisions of the instrument and the classification and measurement will depend on the company s business model and contractual cash flow characteristics. All financial instruments are initially measured at fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs. Impairment The impairment model in IFRS 9 is based on the premise of providing for expected losses, while IAS 39 is based on an incurred loss model. The IFRS 9 impairment model applies to financial assets measured at amortised cost; financial assets mandatorily measured at FVTOCI; loan commitments when there is a present obligation to extend credit, financial guarantee contracts and lease receivables. Under the IFRS 9 model, credit losses are required to be measured through a loss allowance at an amount equal to: the 12-month expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).

73 142 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 143 A loss allowance for full lifetime expected credit losses (ECL) is required for a financial instrument if the credit risk of that financial instrument has increased significantly since initial recognition. The assessment of whether there has been a significant increase in credit risk is based on an increase in the probability of a default occurring since initial recognition. The assessment of credit risk, and the estimation of ECL, are required to be unbiased and probability-weighted and should incorporate all available information which is relevant to the assessment, including information about past events, current conditions and reasonable and supportable forecasts of future events and economic conditions at the reporting date. In addition, the time value of money must also be incorporated into the calculation. Using an expected loss model for allowances the impairment charge will tend to be more volatile and more likely than not lead to an increase in the total level of impairment allowances. Hedge Accounting IFRS 9 will contain fewer restrictions regarding hedging instruments and hedge accounting is more principles based than IAS 39 providing better links to a company s risk management activities. More types of financial instruments will be accepted as hedging instruments. A hedged item can be a recognised asset or liability, an unrecognised firm commitment, a highly probable forecast transaction or a net investment in a foreign operation and must be reliably measurable. The Bank does not currently apply hedge accounting. Transition The classification and measurement and impairment requirements are applied retrospectively by adjusting the opening statement of financial position at the date of initial application, with no requirement to restate comparative periods. Hedge accounting is generally applied prospectively from that date. The Bank is currently assessing the impact that IFRS 9 will have on the financial statements. (b) IFRS 15 Revenue from Contracts with Customers IFRS 15 is effective for accounting periods starting on and after 1 January 2018 subject to endorsement by the EU. IFRS 15 Revenue from Contracts with Customers applies to all contracts with customers except for: leases within the scope of IAS 17 Leases; financial instruments and other contractual rights or obligations within the scope of IFRS 9 Financial Instruments, IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures; insurance contracts within the scope of IFRS 4 Insurance Contracts; and non-monetary exchanges between entities in the same line of business to facilitate sales to customers or potential customers. The standard provides a single, principles based five-step model to be applied to all contracts with customers. Identify the contract(s) with a customer Identify the performance obligations in the contract Determine the transaction price Allocate the transaction price to the performance obligations in the contract Recognise revenue when (or as) the entity satisfies a performance obligation. The standard should be applied retrospectively with certain practical expedients available. The Bank is currently assessing the impact that IFRS 15 will have on the financial statements. (c) IFRS 16 Leases In January 2016 IFRS 16 was issued and effective on 1 January 2019 subject to endorsement by EU. Standard shall be effective for annual periods beginning on or after 1 January 2005 with full or modified retrospective approach. The contract is identified as lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. IFRS 16 will bring major changes in accounting of lesses. Right of use of the asset and corresponding liablity shall be recognized in lessee s statement of financial position with only two exceptions: When the lease term does not exceeds 12 months and contains no purchase option When the underlying asset has a low value when new Right of use shall be depreciated for shorter period of economic useful life of the underlying asset and the lease term. Interest expense arising from lease liability shall be recognized separately from depreciation charge in the statement of profit and loss. A lessor shall classify each of its leases 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. The Bank is currently assessing the impact that IFRS 16 will have on the financial statements. 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 5.1. Foreign Currency The separate financial statements are presented in Czech Koruna (CZK) which is the Bank s functional currency. Transactions in foreign currencies are translated into the functional currency of the Bank at the exchange rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the profit or loss Interest Interest income or expense from all interest-bearing financial instruments except financial instruments measured at fair value through profit or loss is recognized using the effective interest rate and reported in the profit or loss in the line items Interest and similar income and Interest expense and similar charges respectively as part of revenue and expenses from continuing operations. The effective interest rate is a method of calculating the amortized cost of a financial asset or a financial liability that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or financial liability to their carrying amount. 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 including transaction costs and fees paid or received that are an integral part of the effective interest rate. Transaction costs include incremental costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. Interest income and expense presented in the profit or loss include: Interest on financial assets and financial liabilities measured at amortized cost calculated on an effective interest basis Interest on available-for-sale investment securities calculated on an effective interest basis If the financial receivable is considered impaired, only the interest income representing the time value of money between impairment event and estimated recovery date is recognized unwinding. The Bank calculates unwinding for the period using portfolio approach based on average net book value of impaired loans and receivables and attributable effective interest rate Fees and Commissions Fees and commission income and expense that are integral to the effective interest rate on a financial asset or financial liability are included in the measurement of the effective interest rate. Other fees and commission income are recognized when the related services are performed. Fees and commissions income are earned mainly from providing payment services, intermediary and investment services. Fee income on impaired financial assets is recognized on receipt of cash or performance of the service obligation whichever is later Dividends Dividend income is recognized when the right to receive the payment is established. Dividend income is reported in the profit or loss in the line item Dividend income Financial Assets and Financial Liabilities Recognition The Bank initially recognizes financial assets measured at amortized cost on the date on which they are originated. All other financial instruments are recognized on the trade date which is the date the Bank becomes a party to the contractual provisions of the instrument.

74 144 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 145 All financial instruments are initially recognized at their fair value plus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issue Classification Financial Assets The Bank classifies its non derivative financial assets into one of the following categories: loans and receivables held-to-maturity available-for-sale financial assets financial assets at fair value through profit or held for trading or designated at fair value through profit or loss Management determines the classification based upon management s intent for acquiring a particular asset and the cash flow characteristics of that asset. Currently the Bank does not hold any non derivative assets that are classified as held-to-maturity or designated at fair value through profit or loss. (a) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market other than: financial assets designated as held for trading that the Bank intends to sell immediately or in the near term and those assets designated as at fair value through profit or loss; those financial assets that the Bank upon initial recognition designates as available for sale or; those financial assets for which the Bank cannot recover the majority of its initial investment for a reason other than deterioration of credit quality. These assets will be classified as available for sale. Loans and receivables are subsequently measured at the amortized cost using the effective interest rate method. Financial assets in this category are reported in the line item "Loans and receivables to banks" or "Loans and receivables to customers". (b) Available for sale financial assets Available-for-sale ( AFS ) financial assets are non derivative investments that are designated as AFS or are not classified as another category of financial assets. Available-for-sale financial assets include equity and debt securities. Debt securities in this category are those that are intended to be held for an indefinite period of time and that may be sold in response to needs for liquidity or in response to changes in market conditions. Interest income is recognized in the profit or loss using the effective interest method. Dividend income is recognized in the profit or loss when the Bank becomes entitled to the dividend. Foreign exchange gains or losses on AFS debt securities investments are recognized in profit or loss. Fair value changes other than impairment losses are recognized in other comprehensive income and reported in the Available-for-sale reserve. When the AFS asset is disposed of or impaired, the cumulative gain or loss previously recognized in other comprehensive income is reclassified to profit or loss. Disposal gains/losses are recorded in Net income from financial operations. Details on how the fair value of financial instruments is determined are disclosed in note 5.7. The Bank has not designated any loans or receivables as available-for-sale. Financial Liabilities The Bank classifies its non derivative financial liabilities, other than financial guarantees and loan commitments, at amortized cost. Non-derivative financial liabilities are contractual arrangements resulting in the Bank having an obligation to either deliver cash or another financial asset to the holder Reclassification Generally, the Bank does not reclassify any financial asset or liabilities after initial recognition Derecognition The Bank derecognises a financial asset when the contractual rights to receive cash flows from the financial assets expire or the rights to receive the contractual cash flows and substantially all the risks and rewards of ownership have been transferred. On derecognition the difference between the carrying amount of the asset and the sum of the consideration received and any cumulative gain or loss recognized in other comprehensive income is recognized in profit or loss. A financial liability is derecognised when the obligation under the liability as specified in the contract is discharged, cancelled or expires Offsetting Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position, when and only when, the Bank has a legal right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under IFRS Amortized Cost Measurement The amortized cost of a financial asset or financial liability is the amount at which the asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount recognized and the maturity amount, minus any reduction for impairment Derivatives Derivatives are initially recognised, and are subsequently remeasured, at fair value. Fair values of derivatives are obtained by using valuation techniques. A derivative that is not designated and effective as a hedging instrument is reported in the category financial assets at fair value through profit or loss. Derivatives include currency derivatives (swaps and forwards). Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. Derivatives as used by the Bank are not designated as hedging instruments and in the statement of financial position they are presented under the line item Financial assets at fair value through profit or loss and Financial liabilities at fair value through profit or loss. Changes in the fair value of derivatives and any interest income/expense related to these derivatives are recorded in Net income from financial operations. As a matter of policy, the Bank use derivatives for risk management purposes and does not use derivatives for speculative purposes Impairment of Financial Assets Financial assets carried at amortised cost An assessment is made at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred, if and only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event) and that loss event has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Objective evidence that a financial asset or group of assets is impaired includes observable data about the following events: Delinquency in contractual payments of principal or interest Cash flow difficulties Breach of loan covenants Deterioration of the borrower s competitive position Deterioration in the value of collateral External downgrade below an acceptable level Initiation of bankruptcy proceedings Granting a concession to a borrower for economic or legal reasons relating to the borrower s financial difficulty that would not otherwise be considered. In terms of the individually assessed financial assets (which are primarily represented by commercial loans, see the individually managed exposures defined in the section ), the Bank first assesses whether objective evidence of impairment exists individually for these financial assets. If the Bank determines that no objective impairment exists for an individually assessed financial asset, the Bank includes the financial asset in a group of financial assets with similar credit risk characteristics and collectively measures them for impairment. Financial assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized, are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the financial asset s carrying amount and the present value of the estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective interest rate. The carrying amount of the financial asset is reduced through the use of an allowance account and the amount of the loss is recognized in the profit or loss.

75 146 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 147 The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable. For the purposes of a collective evaluation of impairment (see note ), financial assets are grouped on the basis of similar credit risk characteristics. Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors ability to pay all amounts due according the contractual terms of the the assets being evaluated. Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets in the group and historical loss experience for assets with credit risk characteristics similar to those in the group. The methodology (note 41) and assumptions (note 16) used for estimating future cash flows are reviewed regularly to reduce difference between loss estimates and actual loss experience. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor s credit rating), the reversal of the previously recognised impairment loss is recognised in the profit or loss. When a loan is deemed uncollectible, it is derecognized and the provision for impairment is utilized. Subsequent recoveries are recognized as a credit in the profit or loss. Available-for-sale financial assets Available-for-sale financial assets are assessed at each balance sheet date for objective evidence of impairment. Where such evidence exists an impairment loss is recognized. In addition to the factors set out above, a prolonged (i.e. 12 consecutive months) decline in the fair value of an investment in an available for sale equity instrument below its cost is considered in determining whether an impairment loss has been incurred. If an impairment loss has been incurred, the cumulative loss that has been recognized in other comprehensive income is removed from equity and recognized in the profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases, and the increase can be objectively related to an event occurring after the impairment loss was recognized, the impairment loss is reversed through the profit or loss. Impairment losses on equity instruments that were recognised in the profit or loss are not reversed through profit or loss in a subsequent period Repurchase and Reverse Repurchase Agreements From time to time, the Bank enters into contracts to sell and buy back financial instruments at a specific future date ( repo ) or to buy and sell back financial instruments at a specific future date ( reverse repo ). In repo transactions the securities provided by the Bank remain to be recognized and reported in the statement of financial position as the Bank retains substantially all the risks and rewards of ownership together with all coupons and other income payments received during the period of repo transaction. The corresponding cash received is recognised in the statement of financial position and a corresponding obligation to return it (including accrued interest) is recorded as a liability. Securities purchased as a reverse repo transaction are not recognised in the statement of financial position. The consideration paid (including accrued interest) is recorded in the statement of financial position as Loans and receivables to banks or Loans and receivables to customers. Reverse repo securities are not recognised in the statement of financial position. The Bank is allowed to provide securities received in reverse repo transactions as collateral or sell them, even in the absence of default by their owner. The difference between the sale and repurchase price or between the purchase and resale price is treated as interest and recognised in net interest income over the life of the agreement Fair Value Measurement Fair value is the price the Bank would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date in the principal or, in its absence, the most advantageous market to which the Bank has access at that date. In the absence of active markets for the identical assets or liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. Preference is given to observable inputs. These two types of inputs create the following fair value hierarchy: Level 1 Quoted prices for identical instruments in active markets. Level 2 Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and modelderived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 Significant inputs to the valuation model are unobservable The Bank maintains policies and procedures to value instruments. In addition, we have risk management teams that review valuation, including independent price validation for certain instruments (e.g. treasury bills). With regard to Level 3 valuations, we perform a variety of procedures to assess the reasonableness of the valuations. Such reviews, which may be performed quarterly, monthly or weekly, include an evaluation of instruments whose fair value change exceeds predefined thresholds (and/or does not change) and consider the current interest rate, currency and credit environment, as well as other published data, such as rating agency market reports and current appraisals. Fair values of financial assets and liabilities that are not presented in the Bank s balance sheet at fair values are shown in the note Provisions A provision is recognized by the Bank when: it has a present obligation (legal or constructive) as a result of past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the Bank can reliably estimate the amount of the obligation. Provisions are reported on the statement of financial position and include provisions for credit risk (loan commitments) and provisions for litigation and other obligations. Expenses or income related to provisions are reported based on substance of the expense. Provisions are disclosed in note Leases A lease is classified as a finance lease if it transfers substantially all the risks and rewards incident to ownership. All other leases are classified as operating leases. Classification is made at the inception of the lease. Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than the form. (i) Bank as Lessee Payments made under operating leases are recognized in profit or loss on a straight line basis over the term of the lease. Any lease incentives received are recognized as an integral part of the total lease expense over the term of the lease. Operating lease payments made by the Bank are recorded in Other administrative expenses in the profit or loss. As a lessee operating leased assets are not recognized in the statement of financial position of the Bank. Assets subject to a finance lease are recognized in the Bank s statement of financial position initially at the fair value of the asset or, if lower, the present value of the minimum lease payments. The asset is recorded in Property and Equipment and the corresponding liability to the lessor is included in Other liabilities. Impairment losses are recognised to the extent that the carrying values are not fully recoverable. (ii) Bank as Lessor The Bank only subleases office premises to other entities. Rentals receivable from clients with operating leases are spread on a straight-line basis over the lease periods and are recognised in Other operating income. The majority of operating lease income is derived from subleasing office premises to other companies Property and Equipment Items of property and equipment are measured at cost less accumulated depreciation less impairment losses over their estimated useful lives Cost includes the purchase price of the asset, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item.

76 148 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 149 Property and equipment is depreciated on a straight-line basis over their estimated useful lives as follows: Cars 4-5 years Technical Improvements related to branches and HQ building 5-15 years Furniture 4-10 years Equipment 5 years Computers and servers 3-6 years Leasehold improvements are depreciated on a straight-line basis over the shorter of the lease terms or their remaining useful lives. Assets' residual values and useful lives are monitored and adjusted if appropriate at each financial statement date. Property and equipment are subject to annual impairment reviews (see note 5.12.). If the carrying amount of the asset exceeds its estimated recoverable amount, the asset is adjusted accordingly. Its estimated recoverable amount is the higher of fair value including costs to sell and its value in use. Gains and losses on disposals are determined by deducting the carrying value from the consideration received. Any gain/loss on sale is recognized in the profit or loss Intangible Assets Software Software acquired by the Bank is measured at cost less accumulated amortization and any accumulated impairment losses. Expenditure on internally developed software is recognized as an asset when the Bank is able to demonstrate its intention and ability to complete the development and use the software to generate future economic benefits and the costs to complete the development can be reliably measured. Internally developed software is stated at capitalized cost less accumulated amortization and impairment. Software is amortized over its useful life usually not exceeding 5 years. Subsequent expenditure on software assets is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred Impairment of Non-Financial Assets At the end of each reporting date the Bank reviews the carrying amounts of its non-financial assets to determine whether there is any indication of impairment. If any such indication exists then the assets recoverable amount is estimated. An asset s recoverable amount is the higher of the asset s fair value less costs of disposal and its value in use. An impairment loss is recognized if the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in the profit or loss. An impairment loss may be reversed to the extent it does not exceed the carrying amount that would have been determined if no impairment loss had been recognized Employee Benefits Employee benefits include short term bonus payments, bonus for loyalty and bonuses tied to equity and stock option plan. Short Term Bonuses Payment Manager and Retention Bonuses: used as a motivation for the Bank s management. Measurement is based on meeting performance indicators. The payments are payable in the next quarter after the end of the period. Bonus payments are accrued over time and represent the best estimate of the amount that will be paid. Sales incentives: represent performance benefit to retail employees at branches and commercial bankers. The size of the sales incentives depends on fulfilment performance targets, which is evaluated quarterly and the payment is partially made in the subsequent quarter and in the first quarter after the end of the year. The Bank recognizes a liability as of the reporting date representing the sum of the sales incentives in the fourth quarter and the amounts deferred from the previous reporting periods. Bonuses for Loyalty Long service award is a corporate program that rewards employees for loyalty. Employees are eligible for an award each five years of employment with the Bank. A liability is recognized for the benefit reflecting the probability of each eligible employee attaining each anniversary. The Bank records a provision for a loyalty based on an actuarial model that is in line with IAS 19 and it is recognised in the statement of financial position in the line item Provisions. Bonuses Tied to the Capital Share-based payments Share options and restricted units over the shares of General Electric Company, the ultimate parent entity are granted to certain employees and executives of the Bank. The fair value of options and units granted is recognised as Personnel expenses with a corresponding increase in Share based payment reserve within equity. The fair value is measured at grant date using the Black-Scholes option pricing model, and is recognised as an expense over the period the employees become unconditionally entitled to the options/units. The amount recognised as an expense is adjusted to reflect the actual number of options/units expected to vest. The credit to share based payment reserve over the vesting period on expensing an award represents the effective capital contribution from General Electric Company. To the extent the Bank will be, or has been, required to fund a share-based payment arrangement, this reserve is reduced Cash and cash balances with the central bank Cash and balances with the central bank include current accounts and time deposits with the Czech National Bank (CNB), cash in ATMs and in branches. Cash and balances are reported in the statement of financial positon in Cash and balances with the central bank. The Banks mandatory minimum reserve held by the CNB is also included within Cash and balances with the central bank Income Tax and Deferred Tax Income tax expense comprises current and deferred tax. It is recognized in the profit or loss except to the extent that it relates to items recognized directly in equity or in other comprehensive income. Current Tax Current tax represents the tax expected to be payable on the taxable profit for the year, calculated using tax rates enacted or substantively enacted by the balance sheet date, and any adjustment to tax payable in respect of previous years. Current tax assets and liabilities are offset when the Bank intends to settle on a net basis and the legal right to offset exists. Deferred Tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and the amounts attributed to such assets and liabilities for tax purposes. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probably that the related tax benefit will be realized. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. Significant temporary and timing differences arise mainly from different accounting and tax value adjustments to receivables, provisions and from the revaluation of financial assets Segment Reporting Our operating businesses are organized based on the nature of markets and customers. Operating segments are reported in accordance with the internal reports prepared on a regular basis and presented to the members of the senior management team. The Bank has identified the following segments. Commercial clients includes individually and portfolio managed commercial loans contracts. Clients are mainly entrepreneurs and business corporations. Retail clients segment covers most of the Bank s consumer products (consumer loans, mortgages etc.). Products in the Bank s consumer portfolio have similar characteristic. They consist mainly of term loans offered through a network of individual branches, call centers and external partners. The products are primarily targeted at consumers and households. Other it includes mainly investment banking and equity investments and other areas that are not included in the above segments. Information about the reported segments is described in note 40.

77 150 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements Financial Guarantees and Loan Commitments IFRS Exceptions and Applied Exemption Options Reconciliation of the Statement of Financial Position as at 1 January 2013 Financial guarantees are contracts that require the Bank to make specified payments to reimburse the holder for a loss that it incurs because a specified debtor fails to make payment when it is due in accordance with the terms of a debt instrument. Loan commitments are firm commitments to provide credit under pre-specified terms and conditions. Liabilities under financial guarantee contracts which are are recorded initially at their fair value, which is generally the fee received or present value of the fee receivable. Subsequently, financial guarantee liabilities are measured at the higher of the initial fair value, less cumulative amortisation, and the best estimate of the expenditure required to settle the obligations. The provided guarantees are shown in note EXPLANATION OF TRANSITION TO IFRS The accounting policies set out in note 5 have been applied in preparing the financial statements for the year ended 31 December 2015, the comparative information presented in these financial statements for the year ended 31 December 2013 and 2014 and in the preparation of an opening IFRS statement of financial position at 1 January 2013 (the Bank s date of transition). In preparing its opening IFRS statement of financial position, the Bank has adjusted amounts reported previously in financial statements prepared in accordance with Czech accounting legislation for banks (CZ GAAP). An explanation of how the transition from previous CZ GAAP to IFRSs has affected the Bank s financial position and financial performance is set out in the following tables and the notes that accompany the tables. The Bank was not required to prepare a statement of cash flows under CZ GAAP. Therefore, no explanation of impact of the transition to IFRSs on cash flows is included. As set out in IFRS 1, paragraph 18, the Bank has opted to use the following exemptions contained in Appendices C-E for share-based payment transactions: The Bank decided to use the exemption specified in Appendice D3 for share based payments. Based on the exemption the Bank is not required to apply IFRS 2 to liabilities arising from share-based payment transactions that were settled before the date of transition to IFRSs. Based on IFRS 1, any hindsight since the transition date is not allowed to be used to create or revise estimates in the financial statements and was treated as non-adjusting event. Therefore, the estimates previously made by the Bank under CZ GAAP were not revised for application of IFRS except where necessary to reflect any difference in accounting policies. CZ GAAP as at Notes to FS caption Notes IFRS Effect IFRS as at 1 Jan 2013 reclasses CZ GAAP to transition of transition 1 Jan 2013 IFRS reclasses to IFRS ASSETS Cash and balances with the central bank 15,602 P 1, ,674 Financial assets at fair value through profit or loss 0 L Financial assets - available for sale 8, ,902 Loans and receivables to banks 3, ,838 Loans and receivables to customers 96,328 0 A (1,157) 95,171 Intangible assets Property and equipment B, C, D Investments in subsidiaries and associates 6, ,823 Deferred tax assets 0 M 1,293 E 225 1,518 Other assets 2,855 L, M, P, U (2,374) F, K Total assets 136,041 (5) (819) 135,217 LIABILITIES Deposits from banks Deposits from customers 98, ,614 Financial liabilities at fair value through profit or loss 0 L Provisions 272 M (24) D, G, H, I Current tax liability 0 M Other liabilities 2,938 L, U (6) C, K 49 2,981 Total liabilities 102,202 (5) ,328 EQUITY Share capital Share premium 4,726 0 J (24) 4,702 Legal and statutory reserve Share based payments reserve 0 0 I 4 4 Available for sale reserve Retained earnings 28,301 (930) 27,371 Total equity 33,839 0 (950) 32,889 Total equity and liabilities 136,041 (5) (819) 135,217

78 152 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 153 Reconciliation of the Statement of Financial Position as at 31 December 2013 Total Comprehensive Income Reconciliation for the year ended 31 December 2013 CZ GAAP as at Notes to FS caption Notes IFRS Effect IFRS as at 31 Dec 2013 reclasses CZ GAAP to transition of transition 31 Dec IFRS reclasses to IFRS 2013 ASSETS Cash and balances with the central bank 8,064 P 1, ,372 Financial assets at fair value through profit or loss 0 L Financial assets - available for sale 22, ,835 Loans and receivables to banks 1, ,104 Loans and receivables to customers 92,243 0 A (519) 91,724 Intangible assets Property and equipment B, C, D Investments in subsidiaries and associates 6, ,823 Current tax assets 0 M Deferred tax assets 0 M 1,399 E 108 1,507 Other assets 3,183 L, M, P (2,717) F, K Total assets 135,742 0 (313) 135,429 LIABILITIES Deposits from banks Deposits from customers 95, ,927 Financial liabilities at fair value through profit or loss 0 L Provisions D, G, H, I Current tax liability Other liabilities 2,183 L (5) C, K 62 2,240 Total liabilities 98, ,633 EQUITY Share capital Share premium 4,726 0 J (24) 4,702 Legal and statutory reserve Share based payments reserve 0 0 I 2 2 Available for sale reserve Retained earnings 31,911 0 (432) 31,479 Total equity 37,250 0 (454) 36,796 Total equity and liabilities 135,742 0 (313) 135,429 IFRS for the year CZ GAAP Notes to FS caption Notes IFRS Effect ended for 2013 reclasses CZ GAAP to transition of transition 31 Dec IFRS reclasses to IFRS 2013 Interest and similar income 9,468 0 A 332 9,800 Interest expense and similar charges (559) 0 0 (559) Net interest income 8, ,241 Fee and commission income 3,353 N, Q 380 A (360) 3,373 Fee and commission expense (388) N 27 (361) Net fee and commission income 2, ,012 Dividend income Net income from financial operations Other operating income 543 O, Q (349) Total operating income 12, (28) 12,869 Personnel expenses (2,083) S, T (159) A, H, I 88 (2,154) Other administrative expenses (2,055) S 150 A, C, F 59 (1,846) Depreciation and amortisation (493) B, C, D (32) (525) Other operating expenses (768) O, T (49) G 1 (816) Operating expenses (5,399) (58) 116 (5,341) Net impairment of loans and receivables (2,864) 0 A 525 (2,339) Impairment of financial assets available for sale (7) 0 0 (7) Profit for the year before tax 4, ,182 Taxes on income (959) 0 E (117) (1,076) Profit for the year after tax 3, ,106 Items that may be reclassified to profit or loss - Change in fair value of AFS investments recognised in OCI 0 (82) (82) - Change in fair value of AFS investments recognised in P&L 0 (164) (164) - Deferred tax Total other comprehensive income 0 (199) 0 (199) Total comprehensive income for the year 0 (199) 497 3,907

79 154 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 155 Reconciliation of the Statement of Financial Position as at 31 December 2014 Total Comprehensive Income Reconciliation for the year ended 31 December 2014 CZ GAAP as at Notes to FS caption Notes IFRS Effect IFRS as at 31 Dec 2014 reclasses CZ GAAP to transition of transition 31 Dec IFRS reclasses to IFRS 2014 ASSETS Cash and balances with the central bank 9,882 P 1, ,746 Financial assets at fair value through profit or loss 0 L Financial assets - available for sale 20, ,401 Loans and receivables to banks Loans and receivables to customers 99,050 0 A (553) 98,497 Intangible assets Property and equipment B, C, D Investments in subsidaries and associates 9, ,771 Current tax assets 0 M Deferred tax assets 0 M 1,143 E 120 1,263 Other assets 3,590 L, M, P, R (3,112) F, K Total assets 144, (372) 144,126 LIABILITIES Deposits from banks Deposits from customers 99, ,655 Financial liabilities at fair value through profit or loss 0 L Provisions D, G, H, I Current tax liability Other liabilities 2,585 L, R 50 C, K 53 2,688 Total liabilities 102, ,980 EQUITY Share capital Share premium 4,726 0 J (24) 4,702 Legal and statutory reserve Share based payments reserve 0 0 I (2) (2) Available for sale reserve Retained earnings 35,957 0 (482) 35,475 Total equity 41,654 0 (508) 41,146 Total equity and liabilities 144, (372) 144,126 IFRS for the year CZ GAAP Notes to FS caption Notes IFRS Effect ended for 2014 reclasses CZ GAAP to transition of transition 31 Dec IFRS reclasses to IFRS 2014 Interest and similar income 8,768 0 A 293 9,061 Interest expense and similar charges (288) 0 0 (288) Net interest income 8, ,773 Fee and commission income 2,846 N, Q 293 A (251) 2,888 Fee and commission expense (429) N (327) Net fee and commission income 2, (251) 2,561 Dividend income Net income from financial operations Other operating income 507 O, Q (330) Total operating income 11, ,915 Personnel expenses (1,827) S, T (151) A, H, I 100 (1,878) Other administrative expenses (2,080) S 142 A, C, F 58 (1,880) Depreciation and amortisation (442) 0 B, C, D (33) (475) Other operating expenses (941) O, T (53) G (17) (1,011) Operating expenses (5,290) (62) 108 (5,244) Net impairment of loans and receivables (1,412) 0 A (212) (1,624) Impairment of investments in subsidiaries and associates Profit for the year before tax 5,106 0 (59) 5,047 Taxes on income (1,060) 0 E 12 (1,048) Profit for the year after tax 4,046 0 (47) 3,999 Items that may be reclassified to profit or loss Change in fair value of AFS investments recognised in OCI Change in fair value of AFS investments recognised in P&L 0 (77) (77) Deferred tax 0 (84) (84) Total other comprehensive income Total comprehensive income for the year (47) 4,357

80 156 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 157 Notes to the Effect of transition to IFRS A) Loans Interest income and fees In CZ GAAP the Bank recognized its interest income based on the nominal rate stated in the loan contract. Loan origination fees and transaction costs were recorded directly to the profit or loss. Any penalties charged on defaulted loans are immediately recognized in Loans and receivables to customers and Interest and similar income. All transactional costs (e.g. commission paid to 3rd parties) were immediately expensed and recognize in Fee and commission expense. IFRS requires the use of the effective interest model to record income on interest bearing assets and liabilities. The effective interest rate is a method of calculating the amortized cost of a financial asset or a financial liability that exactly discounts the estimated future cash flows through the expected life of the financial asset or financial liability to their carrying amount. When calculating the effective interest rate, the Bank estimates future cash flows considering the contractual terms of the financial instrument including transaction costs and fees paid or received that are an integral part of the effective interest rate. The penalties on loans in default are not recognized in the statement of profit or loss and other comprehensive income unless the fee is received in cash. The Bank has adjusted the gross carrying amount of its loans to reflect income recognition and loan balances using the effective interest rate and to reverse those penalties previously charged and recorded but not received. Impairment In CZ GAAP impairment allowances are calculated in accordance with CNB decree (i.e. using coefficient based on days past due or statistical models). The impairment allowance was calculated on the entire balance of the loan (including any penalties) based on the coefficient prescribed by the CNB decree for past due loans buckets for commercial and mortgage and by statistical models for retail portfolios. IFRS uses a principles based model of impairment. If there is objective evidence of impairment (as defined in note ) an impairment loss is recorded representing the difference between the loan carrying amount and the present value of the future expected cash flows discounted at the loan original effective interest rate. Estimated future cash flows include all fees, commissions (including employees acting as selling agents) and incremental direct origination costs. The Bank s impairment review of the loan portfolio in accordance with IFRS requirements has resulted in an impairment adjustment to reflect the Standard s (IAS 39) requirements (refer to note in the Bank s accounting policies). The impact arising from the change is summarized as follows: Statement 1 Jan 31 Dec 31 Dec of financial position Loans and receivables to customers* (1,157) (519) (553) Adjustment to retained earnings (1,157) (519) (553) Statement of profit and loss and other comprehensive income Interest and similar income Fee and commission income (360) (251) Personnel expenses Other administrative expenses Net impairment of loans and receivables* 525 (212) Adjustment before income tax 636 (34) * The Bank prepared models and accounting policies for the measurement of impairment loss under IFRS, which is fully compliant with IAS39 requirements. In contrary, the existing impairment model used under CZ GAAP does not meet the requirements defined under IFRS. The method applied for CZ GAAP for impaired loans works with large pools with a recovery window of 4 years (refers only to those recoveries of balances which existed 4 years ago and that were 360+ DPD at that time), whereas the IFRS methodology is based on estimation of the migration of the accounts into impairment status, on the incurred loss period and on the amount of recoveries after the impairment, where the portfolio is split into pools of homogenous exposures. Under IFRS, the recoveries after impairment are estimated as the present value of the recovered cash flows after impairment discounted using effective interest rate estimated for the pools of homogenous exposures. The pools are based on the characteristics to allow the estimation of future cash flows for groups of such assets based on the debtors ability to pay all amounts due according to the contractual terms of the assets being evaluated. As a result, specific time dependent recovery (recovery for each month in default) is assigned under IFRS whereas for each CNB risk categories only one average recovery for the entire category under CZ GAAP is applied. In general the allowance is higher under IFRS mainly for loans within the Czech National Bank loss category. Moreover, the stock of allowances calculated by the IFRS methodology is more stable in time (mainly due to specific time dependent recovery and used length of the recovery window). The difference between the CZ GAAP and IFRS net impairment of loans and receivables in 2013 is mainly caused by higher CZ GAAP allowances increase due to higher pro-cyclicality of CZ GAAP impairment models and their reaction to the economic cycle. The IFRS impairment models reaction to economic cycles is slower due to above mentioned facts. In 2014, the variation between the CZ GAAP and IFRS net impairment of loans and receivables changed according to the change of external environment (the Czech economy recovered from an economic recession). B) Fixed Assets Acquired prior to transition As part of the Bank s transition to IFRS the Bank is required to assess all assets and liabilities recognized under previous GAAP and determine if those assets and liabilities meet the recognition criteria for IFRS. In 2010, as a result of acquiring assets from a company under common control the Bank recorded a negative valuation difference of CZK million representing the difference between the fair value and the book value of the assets recognised. In CZ GAAP the negative valuation difference was recognized as a credit to fixed assets as adjustments to acquired fixed assets and accredited into income over 5 years as a reduction of depreciation and amortisation. In IFRS the valuation adjustment does not qualify for recognition of the negative valuation difference of CZK million which was derecognized with a corresponding accumulated amortization made to retained earnings. The impact arising from the change is summarized as follows: Statement 1 Jan 31 Dec 31 Dec of financial position Property and equipment Adjustment to retained earnings Statement of profit and loss and other comprehensive income 2014 Depreciation and amortization (24) Adjustment before income tax (24) C) Leases Bank Equipment (the Bank as a lessee) In CZ GAAP leased assets are typically not recognized on the balance sheet and the rental payment due is recognized in the profit or loss as the expense is incurred. Under CZ GAAP, the similar accounting treatment and classification of operating or finance leases is applied. In IFRS leases must be classified as either operating leases or finance leases depending on the substance of the lease contract. Operating leases are treated in a similar manner to that in CZ GAAP however, leases classified as finance leases are recognized on the Bank s statement of financial position as at 1 January 2013 at the fair value. The asset is recorded in Property and Equipment or Intangible assets, and the corresponding liability to the lessor is included in Other liabilities (refer to note 5.9. and 5.10.). The Bank has conducted a review of its leases and determined that contracts relating to the lease of certain banking equipment should be classified as a finance lease. The Bank has recognized the leased asset and corresponding liability in the statement of financial position.

81 158 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 159 Statement 1 Jan 31 Dec 31 Dec of financial position Property and equipment Other liabilities Adjustment to retained earnings (2) (4) (5) Statement Jan 31 Dec 31 Dec of financial position Deferred tax assets Adjustment to retained earnings Statement of profit and loss Statement 1 Jan 31 Dec 31 Dec of financial position Provisions Adjustment to retained earnings (45) (43) (60) Statement of profit and loss IFRS requires all share based payment transactions in which share options are granted to employees must be reflected in the financial position of the company. The Bank has recognized the outstanding share options and shares as liabilities in the financial statements adjusting share based payment reserve in the equity. and other comprehensive income 2014 and other comprehensive income 2014 Statement of profit and loss Taxes on income 12 Other operating expenses (17) Statement 1 Jan 31 Dec 31 Dec and other comprehensive income 2014 Adjustment after income tax 12 Adjustment before income tax (17) of financial position Depreciation and amortization (7) Other administrative expenses 6 F) Other assets rent incentives H) Long service award Provisions Share based payments reserve 4 2 (2) Adjustment before income tax (1) D) Asset Retirement Obligation Certain rental contracts entered into by the Bank as a lessee contain lease incentives from the lessor. The Bank provides its employees with a long service award program (LSA). Adjustment to equity (6) (3) 1 Statement of profit and loss and other comprehensive income 2014 The Bank has a number of leased premises where modifications have been made. As per the lease contract such premises must be returned to the property s original state upon expiration of the lease. In CZ GAAP, the Bank did not recognize restoration provision. IFRS requires an initial estimate of the costs of restoring the property to its original condition to be included in the asset value. The Bank has adjusted its asset value to reflect the cost of restoration. Statement 1 Jan 31 Dec 31 Dec of financial position Property and equipment Provisions In CZ GAAP the Bank did not defer and amortise the lease incentive over the period of the lease. IFRS: Lease incentives are to be recognized on a straightline basis over the life of the lease even if payments under a lease are non-linear in nature due to the lessor providing discounts or receiving a premium. An adjustment was made in the IFRS statements recognizing the lease incentive on a straight line basis over the term of the lease. Statement 1 Jan 31 Dec 31 Dec of financial position Other assets (7) (8) (9) Adjustment to retained earnings (7) (8) (9) Under CZ GAAP the Bank has not recognized the provision for LSA in Following a review of the terms and conditions of the awards the Bank has determined that the LSA program as currently offered meets the definition of other long-term employee benefits as defined in IAS 19 Employee Benefits. The Bank has a present legal or constructive obligation to make payments as a result of past events and a reliable estimate can be made of the amount payable. As such, the Bank has recognized an amount for the estimated LSA it considers will likely be paid. Statement 1 Jan 31 Dec 31 Dec of financial position Provisions Personnel expenses 4 Adjustment before income tax 4 J) Share premium reserve In 2010, as a result of acquiring company under common control the Bank recorded a negative valuation difference of CZK 24.1 million recognized and presented by the Bank as share premium reserve under CZ GAAP. The share premium reserve of CZK 24.1 million represented the difference between the acquisition costs of the investment of the Bank in GE Money into which GE Money Multiservis made a contribution in kind of the loan portfolio before and the fair value of the relevant loan portfolio. Adjustment to retained earnings (11) (12) (14) Statement of profit and loss Statement of profit and loss and other comprehensive income 2014 Other administrative expenses (1) Adjustment to retained earnings (17) (17) (4) Statement of profit and loss and other comprehensive income 2014 The share premium reserve was recognized by the Bank upon the upstream merger between the Bank and its 100% subsidiary GE Money. and other comprehensive income 2014 Depreciation and amortization (2) Adjustment before income tax (2) E) Taxation As of 1 January 2013 the Bank has recognized the additional deferred tax asset of CZK 225 mil. arising from a temporary and timing differences between the tax based assets and liabilities and their IFRS carrying amounts in the Bank s separate financial statements. Adjustment before income tax (1) G) Provisions - off-balance sheet exposures The Bank provides certain financial guarantees and loan commitments to its customers. In CZ GAAP and in accordance with CNB decree the Bank was required to create provisions for off balance sheet exposures using a coefficient prescribed by the CNB decree. IFRS requires a provision to be recorded when it is more likely than not that a present obligation exists at balance sheet date. The Bank has reviewed its off balance sheet exposures and it has determined that an additional provision was required. New methodology was applied as described in note Personnel expenses 13 Adjustment before income tax 13 I) Shared based payments General Electric Company, the ultimate parent of the Bank offers various long-term incentive compensation awards to employees. The types of share-based incentive compensation awards that have recently been issued include stock options and restricted stock units ( RSU ). In CZ GAAP the Bank has not expensed the fair value of the share awards to employees over its vesting period. An expense for such awards to employees was recognized by the Bank only if and when it received a recharge from General Electric Company. In CZ GAAP the valuation difference was recognized and presented as a share premium reserve. However, the amount in the share premium reserve for IFRS it was adjusted against retained earnings. Statement 1 Jan 31 Dec 31 Dec of financial position Share premium (24) (24) (24) Adjustment to retained earnings

82 160 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 161 K) Financial guarantees The Bank provides its customer with financial guarantees. Premium represents regular fee and is paid by customer on the quarterly basis. CZ GAAP: Premium is recognized as fee income once is paid. IFRS: Financial guarantee shall be initially recognized at fair value. If there is no evidence of the contrary present value of future premiums is deemed as fair value. Respective asset of future premiums payments receivable is also recognized. Subsequently financial guarantee is measured at initially recognized amount less cumulative amortization or the amount determined in accordance with IAS 37 whichever is higher. Statement 1 Jan 31 Dec 31 Dec of financial position Other Assets Other Liabilities M) Taxation In CZ GAAP deferred tax assets and liabilities are reported in Other assets and Other liabilities. IFRS requires deferred tax assets and liabilities to be reported separately. The Bank has reclassified its current tax and its deferred tax assets/liabilities to reflect this requirement. In terms of current tax assets, there was a reclassification between the line Other assets and the line Current tax assets. In terms of deferred tax assets, there was a reclassification between the line Other assets and the line Deferred tax assets. In terms of current tax liability, there was a reclassification between the line Provisions and Current tax liability. N) Loyalty program O) Recognition of fees related to collection of impaired loans The Bank uses collection agencies to collect loans and receivables to clients in arrears. The Bank pays a fee for such services, this fee is then re-charged to the Bank s client. In CZ GAAP the Bank recognized the collection fee income in the profit or loss when the collection fee is paid by the customer. At the same time the Bank recognized the expense and liability to collection agency. The income and expenses were reported on net basis. In IFRS netting is permissible when, and only when, an entity currently has a legally enforceable right of set-off and intends either to settle on a net basis or to realize the financial asset and settle the financial liability simultaneously with the same counterparty. The fees charged by the third party collection agency do not meet the IFRS definition for netting. An adjustment has been made to income and expense to gross up the amounts previously netted. R) VAT Under CZ GAAP current tax assets and VAT receivable are recognized as a one receivable towards the local tax authorities. Under IFRS the disclosure requirements require the current tax asset to be recognized separately from the VAT receivable. The VAT receivable is a credit balance, so the VAT receivable was reclassified from Other assets to Other liabilities. Reclassification between line Other assets and Other liabilities in the statement of financial position. S) Other employee costs Under CZ GAAP the Bank only presented expenses related to salaries, bonuses, social and health insurance in Personnel expenses. All other employee expenses were presented by the Bank in Other administrative costs. Adjustment to retained earnings Notes to FS caption CZ GAAP-IFRS reclasses L) Derivatives Under CZ GAAP the Bank reported the positive fair value of derivatives in Other assets and negative fair value of derivatives in Other liabilities. At the date of transition to IFRS the Bank is required to classify all financial assets/liabilities into one of the four categories as outlined in the Bank s accounting policies (note ). The Bank classifies all derivatives as either a financial asset at fair value through profit or loss or a financial liability at fair value through profit or loss. Financial assets/liabilities classified as at fair value through profit or loss must be disclosed separately. The Bank has reclassified its derivatives to reflect the separate disclosure requirements. Reclassification between the line Financial assets at fair value through profit or loss and the line Other assets in assets and between the line Financial liabilities at fair value through profit or loss and the line Other liabilities in liabilities. The Bank provides credit cards to its customers with a type of loyalty program. The loyalty program requires the Bank to refund cardholders a certain % of the turnover realized when the cardholder uses the card at specified business partners (retailers). In CZ GAAP the Bank currently recognizes an expense (i.e. amount paid to the cardholder) and an income (i.e. amount received from the retailer). The Bank currently does not net this amount. In IFRS credit card providers who grant loyalty credits to cardholders and receive consideration for doing so from vendors accepting payment by credit card are required to follow the guidance in IFRIC 13. This guidance requires the Bank to recognize the income from the vendors net of any payments made to the credit cardholders. This has resulted in a reclassification of the income and expenses recognized under previous GAAP. Reclassification between the line Fee and commission income, the line Fee and commission expense and the line Other operating income in the profit or loss. Reclassification between line Other operating income and Other operating expenses in the Profit or loss. P) Cash in transit reclass Under CZ GAAP, the bank recognized cash in transit under Other assets. Under IFRS cash in transit is recognized in Cash and balances with the central bank. Reclassification between line Other assets and Cash and balances with the central bank in the statement of financial position. Q) Commission income and insurance income The Bank charges commission for 3rd party products to customers (e.g. credit insurance taken by the borrowers). Under CZ GAAP the related income is recognized in Other operating income. Under IFRS commission is recognized in Fee and commission income. Reclassification between line Other operating income and Fee and commission income in the profit or loss. Under IFRS all other employee expenses were reclassified to Personnel expenses. Reclassification between line Other administrative costs and Personnel expenses in the profit or loss. T) Other provisions Under CZ GAAP all provisions were presented in the profit or loss item Creation/Release of other provisions. Under IFRS all provisions were reclassified according to the substance of transaction to Other operation expense and Personnel expenses. Reclassification to lines Other operating expenses and Personnel expenses in the profit or loss. U) Receivables and liabilities due to mutual funds Under CZ GAAP receivables and liabilities due to mutual funds and due to customers investing in mutual funds were recognized in line Other liabilities. Under IFRS receivables due to mutual fund are shown in line Other assets. Reclassification from line Other liabilities to Other assets.

83 162 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements NET INTEREST INCOME 10. NET INCOME FROM FINANCIAL OPERATIONS 13. OTHER ADMINISTRATIVE EXPENSES CZK m CZK m CZK m * The decrease in Net impairment of loans and receivables from CZK mil. Interest income from financial Net gain on available-for-sale IT and software expense (231) (262) (270) for 2014 to CZK 622 mil. for 2015 is due to a positive trend occuring in assets measured at amortised cost 8,365 8,955 9,702 financial assets Rent expense (442) (401) (480) consumer portfolio relating to the strong performance of the Czech economy, Loans to customers 8,359 8,949 9,690 Net income from financial assets Rent-related services (132) (143) (143) leading to improvement in Probability of Defaults (PDs) and Loss Given Loans to banks and liabilities at FVTPL (8) Advisory services (29) (14) (13) Defaults (LGDs), which resulted in a decrease in Allowances for Loan Losses Cash and deposit with the central bank Expense on currency derivative Audit fees (8) (6) (6) (ALLLs). Moreover, consumer loan portoflio (in gross) has been decreasing Interest income from instruments (120) (49) (123) Marketing (188) (221) (256) in the last few years (incl. 2015). These decreases have been compensated available-for-sale financial assets Income from currency derivative Travel cost (24) (26) (27) by the increases in commercial loan portfolio (incl. 2015). As consumer Interest icome and similar income 8,453 9,061 9,800 instruments Other expenses (635) (807) (651) loan portfolio is uncollateralized and thus is covered by allowances more Interest expense from financial Exchange rate differences out of that: services provided than commercial loans, the shift of the portfolio mix towards commercial liabilities measured at amortised cost (215) (288) (559) Deposit from customers (215) (288) (557) Deposit from banks 0 0 (2) Interest expense and similar expense (215) (288) (559) Net interest income 8,238 8,773 9,241 Interest income from loans to customers includes interest income from impaired loans of CZK 247 million in 2015 (2014: CZK 298 million, 2013: CZK 361 million). 8. NET FEE AND COMMISSION INCOME CZK m Fees and commissions income from lending activities Fees and commissions income from payment processing 1,458 1,573 1,688 Fees and commissions income from intermediary of insurance Other fees and commissions income Fee and commission income 2,446 2,888 3,373 Net income on financial operations OTHER OPERATING INCOME CZK m Service revenues Rent income Other collection income Other income Total other operating income PERSONNEL EXPENSES The average recalculated number of employees during the period* 2,811 2,812 2,874 out of which: Board of Directors out of which: Supervisory Board out of which: other executives CZK m by GE companies (289) (391) (282) Total other administrative expenses (1,689) (1,880) (1,846) 14. DEPRECIATION AND AMORTISATION CZK m Depreciation of property and equipment (231) (202) (234) Amortisation of intangible assets (295) (273) (291) Total depreciation and amortisation (526) (475) (525) 15. OTHER OPERATING EXPENSES CZK m Deposit insurance (156) (146) (149) Trademark GE (165) (177) (165) Trademark GE - withholding tax (18) (19) (18) Damages (24) (92) (48) Unrecoverable VAT (248) (378) (292) Other collection costs (106) (138) (58) loans was another factor influencing lower Net impairment of loans and receivables. At each financial statement date financial assets not measured at fair value through profit or loss are assessed for impairment. The Bank has to determine whether as a result from event or events occurred alone or in a combination an impairment loss should be recognized and in which amount. For loans and receivables managed on an individual basis the judgment is required to determine if there is an objective evidence of the impairment. The identification of the evidence of the impairment is based on the analysis of the financial status, payment history, collateral value, industry conditions and other relevant factors. For impaired loans the estimate needs to be done by determining future amount and timing of expected recovery cash flows. These estimates are done by taking into the account the range of factors like prospects of the business model, the collateral fair value, expected proceeds from a bankruptcy or liquidation and other relevant factors. Fees and commissions expense on payment processing (164) (175) (202) Other fees and commissions (120) (152) (159) Fee and commission expense (284) (327) (361) Net fee and commission income 2,162 2,561 3, DIVIDEND INCOME CZK m Dividends from equity instruments Dividend income Salaries and bonuses (1,414) (1,301) (1,499) Salaries and bonuses actuals (1,241) (1,231) (1,450) Salaries and bonuses accruals (173) (70) (49) Social security and health insurance (470) (441) (496) Other employee related expenses (143) (136) (159) Total personnel expenses (2,027) (1,878) (2,154) * The average recalculated number of employees during the period is an average of the figures reported to Czech Statistical Authority (CSA) on a monthly basis in accordance with Article 15 of Czech Act No. 518/2004. The figures reported to CSA equal to quotient of the following nominator and Other expenses (154) (61) (86) Total other operating expenses (871) (1,011) (816) 16. NET IMPAIRMENT OF LOANS AND RECEIVABLES CZK m Additions and release of loan loss allowances (647) (1,619) (2,349) Use of loan loss allowances 1,621 2,253 1,607 Income from previously Pool managed loans and receivables are subject to estimation uncertainty as the identification of the impairment on the individual contract level is not practical due to the large amount of such exposures. The loss is measured using the statistical models with inputs based on historically observed data by the Bank such as historical credit losses and default rates. The judgment is required to determine whether the current macroeconomic situation are in line with the historical loss experience. For further detail see the Risk management section (note 41). the following denominator. The nominator is defined as all hours worked by all employees, their related leaves/holidays and their related sickdays. The denominator represents a standard working hours per a employee and a month written-off receivables Write offs of uncollectable receivables (1,621) (2,253) (1,607) Change in allowances to operating receivables 17 (12) 4 Net impairment of loans and receivables* (622) (1,624) (2,339) If loss given by default (LGD) (in the either individual assessment or statistical models) changes by -/+10% in relative terms, then the loan loss allowances would change +/- CZK 333 mil. as at 31 December 2015, +/- CZK 421 mil. as at 31 December 2014, resp. +/- CZK 515 mil. as at 31 December 2013.

84 164 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements TAXES ON INCOME Tax expense from the Bank's profit before tax can be analysed as follows: CZK m Current income tax for the year (799) (877) (1,019) Income tax related to prior years 3 (11) 1 Change in deferred tax recognised in profit or loss (290) (160) (58) Taxes on income (1,086) (1,048) (1,076) The chart below shows the reconciliation of actual tax charge and the tax charge based on applying standard corporate income tax rate according to Czech Republic income tax law: Income before taxes Theoretical income tax accounted for into expenses, calculated with the rate of 19% (979) (959) (985) Income tax related to the prior years 3 (11) 1 Impact of the tax non-deductible expenses (115) (108) (121) Impact of the tax non-deductible income Taxes on income (1,086) (1,048) (1,076) Effective income tax rate 21% 21% 21% 18. EARNINGS PER SHARE Earnings per share amounts are calculated by dividing the net profit for the year after tax attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year. CZK m Profit for the year after tax attributable to the equity holders 4,072 3,999 4,106 Weighted average of ordinary shares (number of shares) Basic earnings per share As the Bank has not issued any potentially dilutive instruments, the basic earnings per share equals to diluted earnings per share. The Bank discloses earnings per share on voluntarily basis. 19. CASH AND BALANCES WITH THE CENTRAL BANK 31 Dec 31 Dec 31 Dec CZK m Cash and cash in transit 3,778 4,120 3,610 Balances with the central bank other than mandatory minimum reserves 9,700 5,740 3,890 Mandatory minimum reserve requirement with the central bank 1,997 1,886 1,872 Total cash and balances with central bank 15,475 11,746 9,372 The Bank includes mandatory minimum reserve with Czech National Bank into Cash and balances with the central bank. The Bank may draw funds from the mandatory minimum reserve at any point in time provided that the average balance over the relevant period meets the minimum levels require according to the regulations of the Czech National Bank. 20. CASH AND CASH EQUIVALENTS For the purposes of a statement of cash flows, cash and cash equivalents comprise the following balances with maturities from the acquisition of less than 3 months: 31 Dec 31 Dec 31 Dec CZK m Cash and deposits with the central bank 15,475 11,746 9,372 Loans and receivables to banks ,104 Total cash and cash equivalents 15,592 12,266 10, LOANS AND RECEIVABLES TO BANKS Loans and receivables to banks include: 31 Dec 31 Dec 31 Dec CZK m Current accounts at banks Term deposits in banks payble within 3 months Included in cash equivalents ,104 Total loans and receivables to banks ,104 The Bank has not created any allowances on loans and receivables to banks as no impairment has been identified. 22. LOANS AND RECEIVABLES TO CUSTOMERS a) Loans and receivables to customers by sector CZK m 31 December December December January 2013 Financial organisations* 10,637 9, Non-financial organisations 31,186 28,821 27,240 25,874 Government sector Non-profit organisations Entrepreneurs 7,475 7,633 7,822 7,618 Resident individuals 59,563 63,203 67,460 71,904 Non-residents individuals Gross loans and receivables to customers 109, , , ,887 Loss allowances for loans and advances to customers** (9,944) (11,165) (12,097) (11,716) Net loans and receivables from clients 99,350 98,497 91,724 95,171 Gross loans and receivables to customers without impairment 97,417 96,371 89,108 92,270 * The balance includes exposures to GE Money Leasing, s.r.o., of CZK 10,091 mil. as at 31 December 2015 (as at 31 December 2014 CZK 8,917 mil., as at 31 December 2013 and 1 January 2013: nil). ** Total allowance to non-impaired loans and receivables to customers amounts to CZK 705 mil. as at 31 December 2015 (as at 31 December 2014 CZK 978 mil., as at 31 December 2013 CZK 1,271 mil. and as at 1 January 2013 CZK 1,486 mil.). b) Loans and receivables to customers by product (net of loss allowances) CZK m 31 December December December January 2013 Consumer authorised overdrafts and credit cards 5,407 6,398 7,363 7,971 Consumer loans 30,526 30,408 31,805 33,418 Mortgages 15,387 16,850 17,640 19,693 Commercial loans* 47,603 44,222 34,124 32,688 Other loans ,401 Retail ,401 Net loans and receivables to customers 99,350 98,497 91,724 95,171 * The balance includes exposures to GE Money Czech Republic group of CZK mil. as at 31 December 2015 and CZK mil. as at 31 December 2014 (as at 31 December 2013 and 1 January 2013: nil). c) Loss allowances for loans and receivables to customers CZK m Individual Portfolio Total Individual Portfolio Total Individual Portfolio Total allowances allowances allowances allowances allowances allowances allowances allowances allowances 1 January ,265 11, ,314 12, ,951 11,716 Additions and release of allowances ,406 1, ,133 2,349 Effect of written off receivables (71) (1,550) (1,621) (65) (2,188) (2,253) (159) (1,448) (1,607) Interest income from impaired loans (22) (225) (247) (31) (267) (298) (39) (322) (361) Net movement of allowances 91 (1,312) (1,221) 117 (1,049) (932) December 991 8,953 9, ,265 11, ,314 12,097

85 166 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 167 d) Loss allowances for loans and receivables to customers by asset class 24. FINANCIAL ASSETS/LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS Financial Non-financial Non-profit Resident Non-residents CZK m organisations organisations organisations Entrepreneurs individuals individuals Total 1 January , ,165 Net change of allowances (2) Effect of written off receivables 0 (150) (4) (101) (1,361) (5) (1,621) 31 December , , ,944 The portfolio of financial assets at fair value through profit or loss includes positive fair value of Over the Counter ( OTC ) derivatives classified as held for trading. The Bank enters into such derivates to hedge its risks and not for speculative purposes. However it does not apply hedge accounting under IAS 39. The portfolio of financial liabilities at fair value through profit or loss only includes negative fair value of OTC derivatives held for trading. Financial Non-financial Non-profit Resident Non-residents CZK m organisations organisations organisations Entrepreneurs individuals individuals Total 1 January , ,097 Net change of allowances ,169 (8) 1,321 Effect of written off receivables 0 (59) 0 (5) (2,189) 0 (2,253) 31 December , ,165 Financial Non-financial Non-profit Resident Non-residents CZK m organisations organisations organisations Entrepreneurs individuals individuals Total 1 January , ,716 Net change of allowances (1) ,727 (4) 1,988 Effect of written off receivables 0 (156) 0 (26) (1,425) 0 (1,607) 31 December , , FINANCIAL ASSETS AVAILABLE FOR SALE Nominal value Fair value CZK m Assets Liabilities Assets Liabilities 31 December 2015 CURRENCY DERIVATIVES Currency swaps 3,283 3, Currency forwards Total derivatives for trading 3,593 3, Nominal value Fair value CZK m Assets Liabilities Assets Liabilities 31 December 2014 CURRENCY DERIVATIVES Currency swaps 3,849 3, Currency forwards Total derivatives for trading 3,946 3, Assets available for sale acquired by the Bank represent investment securities, Czech government bonds, treasury bills and bonds with fixed or variable coupon issued mainly by financial institutions. 31 Dec 31 Dec 31 Dec CZK m Treasury bills 1,557 11,811 15,787 Treasury bonds 11,563 8,559 7,017 Equity investments Total available-for-sale financial assets 13,255 20,401 22,835 By listing: - listed 12,874 20,094 22,120 - unlisted In 2015 and 2014 no impairment of available-for-sale assets has been recognized. In 2013 Bank recognized the impairment loss of minority interest in MOPET CZ a.s of CZK 6.5 million. Based on the analysis of the new financial plan of the company, the Bank decided to write down the asset. Equity investments include inverstments in Prague Stock Exchange, SWIFT and VISA Europe Limited. Nominal value Fair value CZK m Assets Liabilities Assets Liabilities 31 December 2013 CURRENCY DERIVATIVES Currency swaps Currency forwards Total derivatives for trading

86 168 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements INTANGIBLE ASSETS 26. PROPERTY AND EQUIPMENT CZK m Software Other intangibles Intangibles not in use Total At cost As at 1 January , ,072 Additions to assets Disposals/transfers of assets (17) (121) (300) (438) As at 31 December , ,181 Additions to assets Disposals/transfers of assets (17) (3) (244) (264) As at 31 December , ,204 Additions to assets Disposals/transfers of assets (13) 0 (116) (129) As at 31 December , ,271 Accumulated amortisation As at 1 January 2013 (2,863) (277) 0 (3,140) Additions to accumulated amortisation (274) (17) 0 (291) Release of accumulated amortisation As at 31 December 2013 (3,121) (173) 0 (3,294) Additions to accumulated amortisation (249) (24) 0 (273) Release of accumulated amortisation As at 31 December 2014 (3,365) (195) 0 (3,560) Additions to accumulated amortisation (266) (29) 0 (295) Disposals As at 31 December 2015 (3,619) (224) 0 (3,843) Remaining book value As at 31 December As at 31 December As at 31 December As at 31 December 2015 cost of purchased Software was of CZK 476 mil. and the related net book value was of CZK 65 mil. (2014: CZK 471 mil., CZK 97 mil. and 2013: CZK 453 mil., CZK 116 mil.) As at 31 December 2015 cost of purchased Other intangibles was of CZK 171 mil. and the related net book value was of CZK 2 mil. (2014: CZK 170 mil., CZK 7 mil. and 2013: CZK 167 mil., CZK 10 mil.) Capital improvements Equipment Fixtures and Tangibles not CZK m of leased assets and machinery other tangibles in use Total At cost As at 1 January , ,658 Additions to assets Disposals/transfers of assets (30) (110) (2) (82) (224) As at 31 December , ,583 Additions to assets Disposals/transfers of assets (7) (120) (3) (122) (252) As at 31 December , ,601 Additions to assets Disposals/transfers of assets (70) (116) (5) (109) (300) As at 31 December , ,560 Accumulated depreciation As at 1 January 2013 (513) (1,241) (41) 0 (1,795) Additions to accumulated depreciation (78) (149) (7) 0 (234) Release of accumulated depreciation As at 31 December 2013 (570) (1,284) (47) 0 (1,901) Additions to accumulated depreciation (76) (119) (7) 0 (202) Release of accumulated depreciation As at 31 December 2014 (641) (1,288) (53) 0 (1,982) Additions to accumulated amortisation (97) (129) (5) 0 (231) Disposals Impairment As at 31 December 2015 (688) (1,307) (54) 0 (2,049) Remaining book value As at 31 December As at 31 December As at 31 December Net book value of assets leased under finance lease is CZK 15 million as at 31 December 2015 (2014: CZK 23 million, 2013: CZK 31 million).

87 170 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES 31 December 2015 CZK m Registered Business Equity as at Share of Share Book Name office activity 31 Dec 2015 voting rights in equity Cost value Inkasní Expresní Servis s.r.o. Vyskočilova 1422/1a, Debt recovery % 100% Prague 4 services AgroConsult Bohemia s.r.o. Vyskočilova 1422/1a, Technical advisory 3 100% 100% 4 0 in liquidation* Prague 4 in agriculture and woodcraft industry GE Money Auto, s.r.o. Vyskočilova 1422/1a, Auto financing 8, % 100% 6,787 6, Prague 4 (Loans and Leases) GE Money Leasing Services, s.r.o. Holandská 1006/10, Lease and rental % 100% Brno, Štýřice of movables GE Money Leasing, s.r.o. Holandská 1006/10, Financing of loans 3, % 100% 2,938 2, Brno, Štýřice and leasing CBCB Na Vítězné pláni 1719/4 Banking Credit 1 20% 20% Czech Banking Credit Bureau, a.s Prague 4 Register Total investments in subsidiaries and associates as of 31 December ,771 9,767 * The company was deregistered from the commercial register on 25 January December 2014 CZK m Registered Business Equity as at Share of Share Book Name office activity 31 Dec 2014 voting rights in equity Cost value Inkasní Expresní Servis s.r.o. Vyskočilova 1422/1a, Debt recovery % 100% Prague 4 services AgroConsult Bohemia s.r.o. Vyskočilova 1422/1a, Technical advisory 3 100% 100% 4 4 in liquidation Prague 4 in agriculture and woodcraft industry GE Money Auto, s.r.o. Vyskočilova 1422/1a, Auto financing 7,874* 100% 100% 6,787 6, Prague 4 (Loans and Leases) GE Money Leasing Services, s.r.o. Heršpická 813/5, Lease and rental % 100% Brno of movables GE Money Leasing, s.r.o. Heršpická 813/5, Financing of loans 2,524* 100% 100% 2,938 2, Brno and leasing CBCB Na Vítězné pláni 1719/4 Banking Credit 1 20% 20% Czech Banking Credit Bureau, a.s Prague 4 Register Total investments in subsidiaries and associates as of 31 December ,771 9, December 2013 CZK m Registered Business Equity as at Share of Share in Book Name office activity 31 Dec 2013 voting rights equity Cost value Inkasní Expresní Servis s.r.o. Vyskočilova 1422/1a, Debt recovery % 100% Prague 4 services AgroConsult Bohemia s.r.o. Vyskočilova 1422/1a, Technical advisory 3 100% 100% 4 4 in liquidation Prague 4 in agriculture and woodcraft industry GE Money Auto, s.r.o. Vyskočilova 1422/1a, Auto financing 7, % 100% 6,787 6, Prague 4 (Loans and Leases) CBCB Na Vítězné pláni 1719/4 Banking Credit 1 20% 20% Czech Banking Credit Bureau, a.s Prague 4 Register Total investments in subsidiaries and associates as of 31 December ,823 6,823 Changes in investments in subsidiaries and associates in 2015 CZK m Book value Book value 1 January 2015 Additions Disposal 31 December 2015 Inkasní Expresní Servis s.r.o AgroConsult Bohemia s.r.o. in liquidation GE Money Auto, s.r.o. 6, ,787 GE Money Leasing Services, s.r.o GE Money Leasing, s.r.o. 2, ,938 CBCB - Czech Banking Credit Bureau, a.s Total 9, ,767 Changes in investments in subsidiaries and associates in 2014 CZK m Book value Book value 1 January 2014 Additions Disposal 31 December 2014 Inkasní Expresní Servis s.r.o AgroConsult Bohemia s.r.o. in liquidation GE Money Auto, s.r.o. 6, ,787 GE Money Leasing Services, s.r.o GE Money Leasing, s.r.o. 0 2, ,938 CBCB - Czech Banking Credit Bureau, a.s Total 6,823 2, ,771 * Based on the audited FS In November 2014 GEMB acquired two companies VB Leasing CZ, spol. s r.o. and VB Leasing Services, spol. s r.o. In January 2015, both companies were rebranded to GE Money Leasing, s.r.o., and GE Money Leasing Services, s.r.o., respectively. There were no additions or dispositions of subsidiaries or associates during 2013.

88 172 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements CURRENT TAX ASSETS Following table shows the movement of the net tax assets: 32. DEPOSITS FROM CUSTOMERS 31 Dec 31 Dec 31 Dec CZK m Income tax receivable Total current tax asset Amount of the income tax receivable, which is expected to be claimed by the Bank in no longer than 12 months DEFERRED TAX ASSETS AND LIABILITIES Deferred tax is determined based on all temporary and timing differences between the tax bases of assets and liabilities and their carrying amounts in the Bank s financial statements. Deferred tax is determined using tax rate enacted by balance sheet date. The applicable rate is 19%. The recognition of deffered tax assets relies on an assessment of the probability and sufficiency of future taxable profits, future reversals of existing taxable temporary differences and ongoing tax planning strategies. Deferred tax assets and liabilities consist of following differences: 31 Dec 31 Dec 31 Dec CZK m Deferred tax liabilities (113) (133) (40) Difference between remaining book value and tax remaining book value of long-lived assets 0 (25) (30) Revaluation of available-for-sale financial assets (113) (84) 0 Other temporary variances 0 (24) (10) Deferred tax assets 1,057 1,396 1,547 Loans allowances 950 1,318 1,450 Difference between remaining book value and tax remaining book value of long-lived assets Other temporary variances Net deferred tax asset/liability 944 1,263 1,507 CZK m Net deferred tax assets at the beginning of period 1,263 1,507 1,518 Change of the net deferred tax total profit and loss impact (290) (160) (58) Loss allowances for loans and receivables to customers (368) (132) (139) Difference between remaining book value and tax remaining book value of long-lived assets Change of the net deferred tax other temporary variances 34 (33) 76 Change of the net deferred tax equity impact (29) (84) 47 Revaluation of available-for-sale financial assets (29) (84) 47 Net deferred tax receivable at the end of period 944 1,263 1, OTHER ASSETS 31 Dec 31 Dec 31 Dec CZK m Accounts receivables Advances and gurantees for rent related services Receivables to finance authorities Other receivables net of allowances Prepayments Other accruals Total other assets DEPOSITS FROM BANKS The Bank has following liabilities to other banks: 31 Dec 31 Dec 31 Dec CZK m Deposits on demand Total deposits from banks Type of rate: Floating interest rate Structure of deposits from customers is as follows: CZK m 31 December December December January 2013 Financial organisations 4,170 3,389 3,066 2,862 Non-financial organisations 23,982 19,700 18,644 18,764 Insurance organisations , Government sector 6,243 5,256 2,861 2,836 Non-profit organisations 2,111 1,116 1,056 1,178 Entrepreneurs 9,402 8,885 7,718 7,817 Resident individuals 63,992 60,225 60,772 63,468 Non-residents Deposits from customers 111,515 99,655 95,927 98,614 Rate type: Fixed interest rate 5,933 3,049 5,974 8,188 Floating interest rate 105,422 96,468 89,782 90,197 Non-interest bearing Deposits from customers 111,515 99,655 95,927 98,614 Structure of deposits from customers according to the type is as follows: CZK m 31 December December December January 2013 Deposits on demand 105,422 96,470 89,784 90,199 Savings accounts with notice period Term deposits 5,639 2,658 5,528 7,689 Other liabilities towards customers Total amounts owed to customers 111,515 99,655 95,927 98,614

89 174 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements PROVISIONS 34. OTHER LIABILITIES The shareholders of the Bank as at 31 December 2015 was as follows: 31 Dec 31 Dec 31 Dec CZK m Provisions for undrawn loan commitments 1 January Additions to provisions Use of provisions Release of unused provisions (13) 0 (2) 31 December Provisions for legal claims 1 January Additions to provisions Use of provisions (10) (57) 0 Release of unused provisions 0 0 (5) 31 December Other provisions 1 January Additions to provisions Use of provisions 0 0 (9) Release of unused provisions (88) (1) (1) 31 December Total provisions Provisions for undrawn loan commitments are created for irrevocable loan commitments (see note ). The provision created for anticipated settlement in Agrobanka Praha, a.s. v likvidaci is included in line provisions for legal claims. The balance as at 31 December 2015 of CZK 230 mil. (2014: CZK 188 mil., 2013: CZK 240 mil.) should be used to complete the settlement. In the past, three lawsuits against the Bank as a defendant were filed, each of which contested the validity of the agreement on the sale of a part of the enterprise of Agrobanka Praha, a.s. from 22 June In 2015, based on the settlement agreement concluded with the involved parties on 1 July 2010, the settlement conditions were further fulfilled and this process is still continuing. The Bank created other provisions for legal obligation of the Bank associated with the retirement of the premises leased for operation, for the long-term employee benefit that entitles employees to receive award after specific year of service, for legal costs associated with claims of solicitors related to collection of the bad debts, and for onerous contracts resulting from rental contracts. 31 Dec 31 Dec 31 Dec CZK m Trade payables Payables for deposit insurance Payables to the state Payables for social and health insurance Other accruals Clearing technical account Deferred income and accrued expenses Other liabilities* Total other liabilities 2,167 2,688 2,240 * As at 31 December 2014 and 2013 the line Other liabilities included mainly received funding from GE Capital International Holdings Corporation at CZK 327 million. As at 23 November 2015, these funds were used to increase the share capital and share premium of the Bank (see note 35) by debt capitalization at request of debt holder. 35. EQUITY Share capital and share premium In order to establish the Bank GE Capital International Holdings Corporation subscribed 500 shares of original capital with a nominal value of CZK 1 million per share and paid CZK 2,000 million for such shares. No authorized shares are incorporated under the Czech law. In 1998 the Bank issued 10 ordinary shares with a nominal value of CZK 1 million each and in ordinary share with the same nominal value. The increase in registered capital was recorded in the Commercial Register on 25 March 2003 and on 23 November 2015, respectively. All of the Bank's shares are freely transferable. The common shares carry a right to participate in the General Meeting of the Bank through voting rights (one vote per share) and the right to share in profits. As at 23 November 2015 the registered capital of the Bank was CZK 511 million which has been paid up and is presented as Share capital in the statement of financial position. Since then, the Bank has not issued any ordinary shares. The share premium amounts to CZK million (2015 debt capitalization resulted in increase of CZK 326 million). Name Registered office Number of shares Ownership in % GE Capital International Holdings The Ark, 201 Talgarth Road, W68BJ, Limited London, United Kingdom of Great Britain and Northern Ireland No person with a special relationship to the Bank held any shares of the Bank as at 31 December 2015, 2014 or The shareholder of the Bank as at 31 December 2014 and as at 31 December 2013 was as follows: Name Registered office Number of shares Ownership in % GE Capital International Holdings 1209 Orange Street, Wilmington, Corporation Legal and statutory reserve Delaware, USA In accordance with the Bank s statutes the Bank created a non-distributable reserve fund from profit or from shareholders' contributions. The reserve fund is allocated 5% of profit after tax until it reaches the level of 20% of the share capital. The reserve fund at CZK 102 million as at 31 December 2015 (2014: CZK 102 million, 2013: CZK 102 million) are presented as Legal and statutory reserve in the statement of financial position. Further information on equity is provided in the statement of changes in equity. 36. BONUSES TIED TO THE EQUITY AND STOCK OPTION PLAN General Electric Company, the ultimate parent of the Bank offers various long-term incentive compensation awards to employees 1. The types of share-based incentive compensation awards that have recently been issued include stock options and restricted stock units ( RSU ) Stock option outstanding Fair value of each stock option at the date of grant is calculated using Black-Scholes option pricing model. The weighted average grant-date fair value of options granted during 2015 was CZK (2014: CZK ; 2013: CZK 89.92). The following assumptions were used in arriving at the fair value of options granted during 2015: risk-free interest rate 2.8% (2014: 2.3%, 2013: 2.5%); dividend yields 3.7% (2014: 3.1%,2013: 4.0%); expected volatility of 33% (2014: 26%, 2013: 28%); and expected live of 7.0 years (2014: 7.3, 2013: 7.5). Expected volatilities are based on implied volatilities from traded options and historical volatility of GE stock. Stock option expense recognized in net earnings in 2015 amounted to CZK 8.8 mil. (2014 and 2013: CZK 3 mil.). The fair value of received services is valued based on value of granted shares. 1 In 2007 Board of directors of GE Corporation approved the 2007 Long Term Incentive Plan

90 176 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements Stock options outstanding Following table summarizes information about stock options outstanding at 31 December 2015: in CZK Outstanding Exercisable Excercise price range Shares Average Average Shares Average life exercise price exercise price , , Total 148, , Following table summarizes information about stock options outstanding at 31 December 2014: in CZK Outstanding Exercisable Excercise price range Shares Average Average Shares Average life exercise price exercise price , , Total 215, , Following table summarizes information about stock options outstanding at 31 December 2013: in CZK Outstanding Exercisable Excercise price range Shares Average Average Shares Average life exercise price exercise price , , Total 196, , Stock options activity in CZK Shares Weighted average Weighted average Agregate excercise remaining contractual intrinsic price term (in years) value Outstanding at 1 January , ,459,566 Granted 8, ,231,270 Excercised 70, ,560,190 Forfeited 2, ,403 Expired 3, ,057 Outstanding at 31 December , ,862,545 Excercisable at 31 December , ,747,246 in CZK Shares Weighted average Weighted average Agregate excercise remaining contractual intrinsic price term (in years) value Outstanding at 1 January , ,143,392 Granted 59, Excercised 28, ,435,878 Forfeited 4, ,249 Expired 6, ,447 Outstanding at 31 December , ,578,945 Excercisable at 31 December , ,186,840 in CZK Shares Weighted average Weighted average Agregate excercise remaining contractual intrinsic price term (in years) value Outstanding at 1 January ,384,202 Granted ,240,562 Excercised ,310,439 Forfeited ,819,528 Canceled vested Outstanding at 31 December ,974,715 Excercisable at 31 December ,862, Restricted stock units (RSU) Legal disputes The fair value of each restricted stock unit is the market price of GE stock on the date of grant. Number of outstanding RSUs at 31st December 2013 equals to zero. During 2014 and 2015 no new RSU were granted. Claims against the Bank were filed by customers in connection with providing banking products and services. Given the current legislation changes in the Czech Republic and evolving environment especially after implementation in CZK Shares Weighted average grant date fair value of New Civil Code, the Bank cannot reliably estimate new interpretation of legal provisions nor the results of court proceedings. Ongoing litigations relating to various specific Outstanding at 1 January claims that are not published by the Bank are not expected Granted 0 0 to have a significant impact on the Bank s financial situation Vested as of reporting date. Forfeited Outstanding at 31 December LEASING Excercisable at 31 December CONTINGENT LIABILITIES Operating lease the Bank as a Lessee The Bank leases mainly office or branch property and Loan commitments and issued guarantees personal cars. Property leases are both for indefinite 31 Dec 31 Dec 31 Dec and definite period (usually 5 years). Personal cars are leased at maximum for 5 years. CZK m Irrevocable loan commitment 15,025 14,961 12,981 Following table summarizes non-cancellable operating lease Issued guarantees 1,044 1,051 1,241 commitments not provided for in the financial statements: Credit limits on issued guarantees* Issued letter of credit Non-cancellable operating lease commitments Total issued loan commitments 16,492 16,597 14, Dec 31 Dec 31 Dec * This line represents commited limits on quarantees that can be withdrawn CZK m by customers. No later than one year Later than one year but not later than five years Later than five years Total minimum lease payments 822 1,103 1,203

91 178 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 179 Expense resulting from non-cancellable operating leases recognized in the statement of total comprehensive income: CZK m Lease payments expensed within the period Less received sub-lease payments (9) (9) (12) Total expense for period Sub-lease payments represent rent charge to companies affiliated to General Electric Company. Such leases do not have non-cancellable lease term. Finance lease the Bank as a Lessee The Bank leases various banking equipment such as bill counters with lease term of 5 years. Such leases are classified as finance leases on inception. Lessor is legal owner of the leased asset during the lease term according to Czech law, after the end of the lease term legal ownership is transferred to the Bank. Minimum Lease Payments - Finance lease 31 Dec 31 Dec 31 Dec CZK m No later than one year Later than one year but not later than five years Total minimum lease payments Less finance charges (1) (8) (13) Total outstanding liability TRANSACTIONS WITH RELATED PARTIES The ultimate parent company of the Bank is General Electric Company, a company incorporated in the United States of America. As at the reporting, the immediate parent of the Bank was GE Capital International Holdings Corporation. The Bank s related parties include the parent, fellow subsidiaries, associates, joint ventures, key management personnel, close family members of key management personnel. Transactions provided by the Bank to the related parties are mainly bank services, including loans, interest bearing deposits, overdrafts, current accounts and other services (see the table below). The transactions provided to the Bank are mainly related to using of trademark, collection and administrative services. The ultimate parent irrevocably and unconditionally guarantees the due and punctual payments due to the landlord under the terms and conditions of lease agreement of the Bank s headquarter buildings. Transactions with related parties are carried out in the normal course of business operations. Transactions with related parties are conducted under normal market conditions. The balances at year end are unsecured. The Bank did not create any provisions for doubtful receivables to related parties (2014: 0 CZK, 2013: 0 CZK). The following transactions were done between related parties in 2015: Membership of the Board and Parent Other related CZK m Subsidiaries Associates other managers company parties Total Loans and receivables to customers 10, ,102 Financial assets at fair value through profit or loss Intangible assets Property and equipment Other assets Deposits from customers 2, ,487 Financial liabilities designated at fair value through profit or loss Other liabilities Interest expense and similar charges (3) (1) (4) Interest and similar income Fee and commission expense (1) (1) Operating expenses (36) (15) 0 (54) (505) (610) Dividend income Other operating income The following transactions were done between related parties in 2014: Membership of the Board and Parent Other related CZK m Subsidiaries Associates other managers company parties Total Loans and receivables to customers ,935 Financial assets at fair value through profit or loss Other assets Deposits from customers 2, ,316 Financial liabilities designated at fair value through profit or loss Other liabilities Interest expense and similar charges (3) (1) (4) Interest and similar income Fee and commission expense Operating expenses (50) (16) 0 (26) (666) (758) Dividend income Other operating income

92 180 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 181 The following transactions were done between related parties in 2013: Membership of the Board and Parent Other related CZK m Subsidiaries Associates other managers company parties Total Loans and receivables to customers Financial assets at fair value through profit or loss Other assets Deposits from customers 2, ,942 Financial liabilities designated at fair value through profit or loss Other liabilities Interest expense and similar charges (2) (1) (3) Interest and similar income Fee and commission expense (3) (3) Operating expenses (50) (18) 0 (34) (536) (638) Dividend income Other operating income Loans and reveivables to customers of CZK 10,091 mil. represents an intercompany loan to Bank s subsidiary (GE Money Leasing s.r.o.) provided in 2015 (2014: CZK 8,917 mil.). Line Operating expenses includes services provided to the Bank based on master service agreement by GE Capital EMEA Services in the amount of CZK 234 million (2014: CZK 313 mil., 2013: CZK 232 mil.). The Bank received from GE Capital International Holdings Corporation the credit lines in the amount of CZK 3,000 mil. (2014: CZK 500 mil., 2013: CZK 500 mil.). This credit line was not disbursed by the Bank at the financial statement date Remuneration paid to key members of management The following bonuses were paid to the key members of the management during the year: 40. SEGMENT REPORTING The segment reporting is prepared in accordance with IFRS 8 operating segments. CZK m Operating segments are reported in a manner consistent Short-term employee benefits, there of: with reporting to Board of Directors and senior management team, which is responsible for allocating resources and Members of the Board of Directors assessing performance of operating segments. Other executives Other long-term employee benefits, there of: Bank s operating segments are following: Commercial Members of the Board of Directors Retail Other executives Other/Treasury Pay-outs from stock option plans Members of the Board of Directors Commercial segment consists from deposits, investment Other executives loans, revolving products, financing of real estate, finance Severance pay lease and other services related to transactions with small Other executives and medium entrepreneurs, corporate clients, financial Total remuneration institutions, public sector institutions. Service is provided through branch network or external sales channel. Retail segment focuses on deposits, loans, revolving products, credit cards, mortgages and other transactions with retail customers. Retail comprise from private individuals, Bank s employees and employees of Bank s The Bank has no client or group of related parties for which the proceeds of realized transactions exceeded 10% of the income of the Bank. Below segment reported revenues represent only revenues realized with external customers. partners. This segment provides service to citizens through branch network, online and external sales channel. Cross-funding among operating segments is not material, because most of the liabilities are represented by customers Other/Treasury segment includes primarily treasury function. current accounts which bear no interest or only 0.1% p.a. Focus of the segment is on foreign exchange transactions, investment in debt securities, equity investments, other non interest bearing assets and other operations that Most of the Bank's income is generated within the territory of the Czech Republic and there are no intersegment revenues. cannot be associated with above mentioned segments. CZK m Commercial Retail Other/Treasury Total 31 December 2015 Interest and similar income 1,631 6, ,453 Interest expense and similar charges (52) (163) 0 (215) Net fee and commission income 450 1,715 (3) 2,162 Dividend income Net income from financial operations Other operating income Personnel expenses (414) (1,606) (7) (2,027) Other administrative expenses (277) (1,369) (43) (1,689) Depreciation and amortisation (121) (334) (71) (526) Other operating expenses (188) (654) (29) (871) Net impairment of loans and receivables (245) (394) 0 (639) Net impairment of other receivables Profit for the year before tax 798 4, ,158 Taxes on income (168) (858) (60) (1,086) Profit for the year after tax 630 3, ,072 Total assets of the segment 55,348 60,167 24, ,474 Net value of loans and receivables to customers 47,603 51, ,350 Total liabilities of the segment 46,213 68, ,506 CZK m Commercial Retail Other/Treasury Total 31 December 2014 Interest and similar income 1,588 7, ,061 Interest expense and similar charges (64) (224) 0 (288) Net fee and commission income 494 2,074 (7) 2,561 Dividend income Net income from financial operations Other operating income Personnel expenses (458) (1,414) (6) (1,878) Other administrative expenses (406) (1,412) (62) (1,880) Depreciation and amortisation (116) (346) (13) (475) Other operating expenses (247) (720) (44) (1,011) Net impairment of loans and receivables (224) (1,388) 0 (1,612) Net impairment of other receivables 0 (12) 0 (12) Profit for the year before tax 590 4, ,047 Taxes on income (123) (845) (80) (1,048) Profit for the year after tax 467 3, ,999 Total assets of the segment 52,119 63, ,126 Net value of loans and receivables to customers 44,222 54, ,497 Total liabilities of the segment 38,240 64, ,980

93 182 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements Risk Management Organisational Structure CZK m Commercial Retail Other/Treasury Total 31 December 2013 Interest and similar income 1,630 8, ,800 Interest expense and similar charges (90) (469) 0 (559) Net fee and commission income 519 2, ,012 Supervisory Board CRO Dividend income Net income from financial operations Commercial Risk Consumer Risk Other operating income Personnel expenses (525) (1,622) (7) (2,154) Other administrative expenses (372) (1,431) (43) (1,846) Depreciation and amortisation (118) (401) (6) (525) Other operating expenses (212) (555) (49) (816) Net impairment of loans and receivables (356) (1,987) 0 (2,343) Management Board Reserving and credit models Collection commercial and valuation Risk infrastructure Collection consumer Net impairment of other receivables Impairment of investments in subsidiaries and associates (2) (5) 0 (7) Profit for the year before tax 500 4, ,182 Enterprise Risk Management Taxes on income (105) (879) (92) (1,076) Profit for the year after tax 395 3, ,106 Total assets of the segment 39,742 67,084 28, ,429 Net value of loans and receivables to customers 34,124 57, ,724 Total liabilities of the segment 33,794 64, ,633 Enterprise Risk Management Committee (Risk Management Framework, Corporate Governance, Operational Risk, Model Risk and Capital Allocation) Capital Allocation Operational Risk Model Risk 41. RISK MANAGEMENT Credit Committee (Credit Risk) Credit Risk The aim of the Bank is to achieve competitive yields at an acceptable risk level as part of its business activities. Risk management covers the control of risks associated with all business activities in the environment in which the Bank operates and ensures that the risks taken are in compliance with regulatory limits. The level of risk is measured in terms of its impact on the value of assets and/or capital and the profitability of the Bank. In this respect, the Bank evaluates potential effects of changes in political, economic, market and operational conditions and changes of clients creditworthiness on its business. When managing risks, the Bank relies on the qualifications and experience of its employees, the organisational segregation of duties, and the use of sophisticated analytical instruments and technologies. This combination of analytical skills and technologies, together with adherence to procedural measures, has supported the Bank s economic results. Asset & Liability Committee (Asset & Liability Management, Market Risk and Liquidity Risk) The Bank has three main committees for risk management: the Enterprise Risk Management Committee (ERMC) for risk management framework, internal control system, internal capital adequacy assessment process and capital planning, the Asset & Liability Committee (ALCO) for asset and liability management, market risk and liquidity risk management and the Credit Committee (CRCO) for credit risk management issues. The members of these committees include the members of the Board of Directors and other senior managers of the Bank. The committees are responsible for, inter alia: Market Risk (incl. FX risk and Interestrate risk) Liquidity Risk Asset & Liability Management Approval of the overall risk management framework including the basic methods, limits, scenario assumptions and any other parameters used in the risk management process; Monitoring the development of relevant risks, including the observance of limits, approval of remedial measures in the case of exceeded limits or unfavourable development trends; and Monitoring the adequacy, reliability and efficiency of risk management s internal regulations, processes and limits.

94 184 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 185 Other committees that are appointed by the Bank s Chief Risk Officer (CRO) and who manage individual risks include: The Credit Monitoring and Management Committee (CMMC) monitors and manages the credit risk of the commercial credit portfolio not in work-out process. Members of the committee are comprised of employees of the Bank s Risk Division, the Commercial Banking Division and the Finance Division. The CMMC reports to the CRCO. The Problem Loan Committee (PLC) monitors and manages the credit risk of the Bank s commercial credit portfolio in the early work-out process for commercial individually managed loans and its members are employees of the Risk Division and the Legal Division. The PLC reports to the CRCO. The New Product Introduction Council (NPIC) manages and coordinates development and implementation of new or changes of current products. The Model Risk Oversight Committee (MROC) monitors the model risk. Its members are employees of the Risk Division and the Finance Division. The MROC reports to the ERMC. The Risk Division is responsible for risk management. The Risk Division is headed by the CRO, who is also a member of the Board of Directors of the Bank. The Risk Division primarily: Monitors, measures and reports credit, market, operational and liquidity risks and proposes remedial measures in the case of limits being exceeded, or unfavourable trends; Sets terms and conditions for granting loans and line of credits including their subsequent approval; Assesses the adequacy of collateral given by borrowers to the Bank as security for extending loans and lines of credit; Manages the loans portfolio; Executes controls in the area of credit deals; Administers the data infrastructure and analytical systems supporting risk management; Ensures the model risk management; Maintains and develops credit, Treasury, collections, provisioning, management of operational risks and capital allocation models; Monitors indicators of fraudulent operations at credit portfolio and is involved in the prevention of fraud; and Collects amounts due from borrowers. The Enterprise Risk Management Department (ERM) is a part of the Risk Division. ERM is responsible for the critical aspects of the key parts of credit, market, operational, model, and liquidity risk management, in particular in the area of methodology, monitoring and measurement. ERM performs the following key tasks: Coordinating all activities so that Bank s risks are managed reliably and efficiently; Ensuring assets and liabilities are appropriately managed with a view to preserving the value of capital; Developing and maintaining the methodology for assessing operational risk including identification and classification models and key risk indicators; Implementing and maintaining the processes and infrastructure for recording and analysing operational risk data; Maintaining and developing the methodology of calculating and allocating regulatory and economic capital; and Preparing risk reports for the ALCO, CRCO, ERMC, NPIC, and MROC. The Bank s business activities involve the provision of: deposit accounts, loans and lines of credit to retail customers; and providing funding to entrepreneurs, as well as small to medium sized businesses in the Czech Republic. The Bank takes steps to avoid risks that are not associated with its main line of business and to minimise all other risks. Principal objectives in the management of risks and tolerance of individual types of risks are defined in the Risk Appetite Statement document approved by the ERMC Capital Management The framework used for capital management involves monitoring and complying with the capital adequacy limit in In accordance with applicable regulations, the Bank manages capital both above the level of the regulatory accordance with the Basel III rules codified in Regulation (EU) capital requirement (Pillar I) and the internal capital No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit requirement (Pillar II or also the Internal Capital Adequacy Assessment Process). institutions and investment firms and amending Regulation (EU) No. 648/2012, as amended. In order to calculate the regulatory capital requirement for credit risk, the Bank uses the standardised STA approach. The Bank manages its capital in order to meet the regulatory capital adequacy requirements prescribed in Basel III and allow the Bank to continue its operations on a going concern basis while maximising the return to shareholders through the optimisation of the debt and equity balance. The minimum regulatory capital requirement was equal To calculate the capital requirement for operational risk, the Bank uses the alternative standardised approach (ASA). In order to calculate the internal capital requirement, the Bank applied methods similar to advanced approaches according to regulatory Pillar 1. to 8% of risk weighted assests for periods 2012 and Since 2014 the minimum amount of capital required by regulation is equal to 10.5% of risk weighted assets, of which 8% is the principal requirement and 2.5% is the capital conservation buffer applied by the Czech National Bank. Pursuant to the assessment of the information on the internal capital adequacy assessment process, the Czech National Bank informed the Bank (in November 2014) that it expects that the Bank will meet the capital requirement, on a consolidated basis, by achieving a 14% from This expectation implicitly means that the Bank has to hold at individual basis more capital than required by regulation on The Bank s capital primarily consists of share capital, share premium and unallocated profit from prior years, that is, the highest quality common equity Tier 1 capital. In line with announcement on the 10th April 2015 that GE will create a simpler, more valuable company by reducing the size of GE Capital through the sale of most of GE Capital s assets the Board of Directors of the Bank approved on the 30th June 2015 a dividend distribution to its sole Shareholder in the amount of CZK 19.7 billion.the Bank met all regulatory requirements regarding capital adequacy in 2013, 2014 and 2015, even after the payment of the dividend in individual basis. Regulatory capital and its components*: CZK m 31 December December December January 2013 Core Capital (Tier 1) Subscribed share capital Share premium 5,028 4,702 4,702 4,702 Retained earnings and Other reserve funds 15,877 31,581 27,473 23,657 Items deductible from the capital (404) (604) (846) (884) Regulatory Capital 21,012 36,189 31,839 27,985 Total Risk Exposure 130, , , ,345 Regulatory capital adequacy requirement 10.5% 10.5% 8.0% 8.0% Capital requirement 13,653 13,386 9,599 9,868 Capital adequacy ratio 16.2% 28.4% 26.6% 22.7% * Calculated based on IFRS which differ from reported figures based on CZ GAAP as at 31 December 2014, 31 December 2013 and 31 December 2012.

95 186 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 187 CZK m 31 December December 2014** 31 December 2013** 1 January 2013** Core Capital (Tier 1) Subscribed share capital Share premium 5,028 4,726 4,726 4,726 Retained earnings and Other reserve funds 15,877 32,013 28,403 24,586 Items deductible from the capital (404) (604) (887) (932) Supplementary capital (Tier 2) Regulatory Capital 21,012 36,645 32,753 28,897 Total Risk Exposure 130, , , ,540 Regulatory capital adequacy requirement 10.5% 10.5% 8.0% 8.0% Capital requirement 13,653 13,993 10,998 11,243 Capital adequacy ratio 16.2% 27.5% 23.8% 20.6% ** Based on reported figures according to CZ GAAP Internal Capital Requirement on a One-year Three-Year Capital Outlook Horizon In addition to the assessment of the internal capital The internal capital requirement represents the stock of capital which is needed to cover unexpected losses in the following 12 months at the chosen confidence level. requirement, the Bank annually prepares a three-year capital outlook which includes the anticipated development of the base case scenario of the economic environment and at least one downside scenario. The capital outlook includes To determine the internal capital requirement, the Bank currently uses the ECAP model. This model covers all regular risks that are defined for the Bank as being material and the Bank decided to hold capital to cover them: Credit risk including concentration risk; the outlook of the regulatory capital requirement, outlook of the internal capital requirement, outlook of capital sources and outlook of economic results. The downside scenario assumes the worsening of the most significant risk factors that may occur once in a 25 year period. Interest rate risk in the banking book; Operational risk; and Recovery Plan Business risk: the risk that the Bank does not achieve the planned profit level due to the volatility in business volumes. Given the regulatory requirements, the Bank also prepares a recovery plan on a consolidated basis. The recovery plan includes stress scenarios for an unfavourable market The ECAP model is calibrated in order to respect General Electric s credit rating. situation with a proposal of relevant measures to ensure it is possible to respond to the developing situation in a timely and proper manner as and when needed. Other risks, that could be material for the Bank in the following reporting period, are identified annually during Credit Risk a workshop with the Bank s top managers. Pursuant to an expert analysis, the ERMC subsequently decides on additional internal capital requirements. Credit risk is the risk of loss for the Bank resulting from the failure of a counterparty to meet its obligations arising from the terms and conditions of the contract under which the Capital sources to cover the internal capital requirement are the same as the capital sources to cover the regulatory capital requirement. Bank became the creditor of this counterparty. The Bank is exposed to credit risk in particular in the case of credits granted, non-approved debits, guarantees provided, letters of credit issued, and interbank deals Credit Risk Management Credit risk management is organised along approval process: Individually managed exposures represent exposures to enterpreneurs and SME where loans and lines of credit, are approved based on an individual assessment of the borrower s credit worthiness due to the loan size. Portfolio managed exposures include exposures to natural persons, natural persons acting as entrepreneurs, and small and medium-sized enterprises (SME) where loans and lines of credit are approved using an automated credit scoring process. Mortgages has a specific position as mortgages form part of the retail exposures (usually portfolio managed), but a number of the processes and methods used fall within the category of individually managed exposures. The exposures to counter-parties on the financial market include the exposures to banks and governments. These exposures primarily arise as part of the liquidity management (interbank deposits, highly liquid securities) and market risks management (derivatives). The credit risk of these exposures is managed through limits to countries and counter-parties approved based on external ratings. Individually managed exposures a) Internal Rating The Bank uses an internal statistical rating model, which uses the most recent available qualitative and quantitative information, to estimate the probability that a commercial borrower will default in the following 12 months. The rating calculation is based on an assessment of ratios of two types. First type ratios (financial) are derived from financial statements and reflect the financial strength of a customer. Second type ratios (non-financial) are used to assess the customer based on qualitative information, which reflect non-financials attributes of the customer s business. The rating model assigns a rating grade of zero to eight to borrowers who are not in default. Clients in default are given internal rating grade nine. The predictive power of the rating tool is reviewed annually and changes in the model, if any, are approved by the CRCO. b) Approval Process The approval process is based on an individual evaluation of a borrower with approval required from two authorised staff members of the Bank one of the Commercial Banking Division and one of the Risk Division. Approval authorities are set on an individual basis and are determined by combining the level of exposure, the debtor s internal rating, maturity, product and collateral. As part of the approval process, the Bank assesses the financial situation of the prospective borrower, the persons economically related to the borrower and the collateral being offered using external data sources, including credit registers. The Bank has implemented its own IT solution supporting the process of SME credit approval and administration facilitating the preparation of credit applications, the linking thereof with data warehouses, document storage and the subsequent production of contract documentation. The system enables access to financial analysis tools including internal ratings. c) Monitoring All SME clients are monitored both individually and on a portfolio basis. Individual monitoring and any potential remedial measures are dealt with by the CMMC, which also decides on categorisation changes according to CNB Decree No. 163/2014 Coll. Reports on the quality of the commercial portfolio are discussed by the CRCO each month. And, if necessary, or required by the CRCO, the CRCO will also review individual loan exposures. d) Recovery of Debtors Receivables In order to achieve maximum recovery, the Remedial & Collection Department of the Risk Division manages loans where recoverability of the exposure is not reasonable assured. The department engages affected borrowers with a view to recovering the Bank s exposure; this may involve taking legal action against the borrower, restructuring the loans, taking relevant legal steps to realise collateral or debt sale and represents the Bank in creditors committees in the event a borrower declares bankruptcy.

96 188 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 189 Portfolio managed exposures Counter-parties in the Financial Market Receivables without Borrower Default b) Doubtful Receivables a) Scoring Instruments When approving portfolio managed exposure, internal scoring models are used. These statistical models classify individual borrowers into categories of homogeneous exposures using socio-demographic and behavioural data. The development of these scoring models and approval strategies and monitoring of their predictive power is completed by the Planning, Reserving & Models Department of the Risk Division. In order to ensure methodological and factual accuracy, models are validated on a yearly basis. b) Approval Process With the exception of mortgages, the approval process is based on the use of internally-developed scoring models and access to external data sources (in particular credit registers). Approval strategies are set by the Risk Division. Risk Division underwriters may approve individual exposures that do not pass the automatic approval process. Mortgages are approved based on an individual assessment of the prospective borrower with approval required from an authorized underwriter from the Risk Division. c) Monitoring The Risk Division regularly monitors segments of the portfolio managed exposures, which are reported to the CRCO. d) Collection The Collections & Recovery Department of the Risk Division is in charge of the initial phase of collection. Loans are transferred to the Remedial & Collection Department for: Commercial loans that were originally approved through an automated process and which are 120 days past due; Mortgage loans that are 90 days past due. Other receivables are managed by the Collections & Recovery Department of the Risk Division with the aim of maximising recoveries. The Bank uses external agencies and/or sales of receivables in the collection process. a) External Rating The main tool for measuring the credit risk of countries and counter-parties (institutions) with respect to transactions in financial markets is the rating of international rating agencies: Standard & Poor s, Moody s, and Fitch. The Bank sets individual limits for individual countries and institutions, for which it requires a minimum short-term rating of A 1 / P 1 / F1. b) Approval Process The approval of limits is based on an individual assessment with approval required from an authorised approver from the Risk Division. The approval levels are determined individually and are based primarily on the combination of the limit, external rating, maturity and product. In selected cases, the prior approval of the CRCO is required. The limits for counter-parties are additionally approved by GE as part of the integrated management of credit risk for financial institutions and sovereigns in GE. c) Monitoring All counter-parties and countries with a determined limit are monitored individually. The subject of the monitoring is primarily the external rating and key indicators of risks individually approved for each country. Remedial measures (decrease/cancellation of the limit, categorisation of receivables) are approved by an authorised approver from the Risk Division. The ERM prepares regular monthly reporting for the ALCO as part of the reports on liquidity and market risks. The Bank additionally monitors compliance with limits. A potential breach of limits is escalated to the CRO and the ALCO Categorisation of receivables The Bank assigned receivables to individual categories in compliance with CNB Decree No. 163/2014 Coll., on the performance of the activity of banks, credit unions and investment firms, as amended ( CNB Decree No. 163/2014 Coll. ). The categorisation is used for regulatory reporting, impairment testing and calculation of loan loss allowances. The categorisation is as follows: The receivables without borrower default are classified as performing and without impairment. The Bank assigns receivables without borrower default to the following subcategories: a) Standard Receivables A receivable is regarded as standard if there is no reason to doubt that it will be repaid in full. The Bank includes in this category receivables where the principal, interest and fees are being duly paid, with none of them being more than 30 days past due and they are not in work-out process. None of the receivables from the borrower have been forborne in the last two years due to the deterioration in the borrower s financial situation. In case of individually managed commercial receivables the current value of the borrower's internal rating is better than 7. b) Watch Receivables A receivable is regarded as watch if, given the borrower s financial and economic situation, it is likely to be repaid in full. The Bank includes in this category receivables where the principal or interest and fees are being paid with some problems, but none of them are more than 90 days past due. None of the receivables from the borrower have been forborne in the last six months due to the deterioration in the borrower s financial situation. In addition, this category includes individually approved commercial receivables with the borrower's internal rating of 7 or 8. Receivables with Borrower Default Receivables where the borrower has defaulted are classified as non-performing and impaired and assigned to one of three categories: a) Sub-standard Receivables A receivable is regarded as sub-standard if, given the borrower s financial and economic situation, its full repayment is uncertain, although its partial settlement is highly likely. The Bank includes in this category receivables where the principal, interest or fees are being paid with problems, but with none of them more than 180 days past due. In addition, sub-standard receivables include receivables that were forborne in the past 6 months due to the deterioration in the borrower s financial situation, and a commercial individually approved receivable with the borrower s internal rating of 9. A receivable is regarded as doubtful if, given the borrower s financial and economic situation, its full repayment is highly unlikely, although its partial settlement is possible and likely. The Bank includes in this category receivables where the principal, interest or fees are being paid with problems, but with none of them being more than 360 days past due. A receivable is also considered doubtful if a competent court has issued a decision on settling the borrower s bankruptcy via a discharge from debts or reorganisation. c) Loss Receivables A receivable is regarded as loss if, given the borrower s financial and economic situation, its full repayment is impossible. The expectation is that such receivable will not be repaid or will only be repaid in part in a very small amount. The Bank involves in this category receivables where principal, interest or fees are more than 360 days past due. A receivable from a borrower who is subject to bankruptcy or settlement proceedings is also considered to be a loss receivable. For the categorisation on a daily basis, the Bank automatically assesses: The fulfilment of the debt service (not assessed in non-approved debits on current accounts up to CZK 2 thousand); Borrower s internal rating (in respect of individually approved commercial receivables); Completed/not completed forbearance of the debt; and Announcement of the bankruptcy or allowed discharge from debt or reorganisation or settlement to the borrower s assets Collateral Assessment The Bank determines the nature and extent of collateral that is required either by individually assessing a prospective borrower creditworthiness or as an integral part of the given credit product. The Bank considers the following types of collateral acceptable for minimising the credit risk on a loan or line of credit: C a s h; Securities; Account receivables; Bank guarantees; Guarantee of a reliable third party; Real estate properties; and Movable assets (machinery, equipment, breeding stock).

97 190 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 191 To determine the realisable value of collateral, the Bank uses external expert appraisals or internal assessments made by the Collateral Management Department of the Risk Division, a department operating independently of the Bank s sales probability of a transfer to default are used to determine the PD, and discounted anticipated cash flows from collection where the effective interest rate is used as the discount rate are used to derive the LGD. departments. The ultimate realisable value of collateral is then set by applying the collateral acceptance ratios reflecting the Bank s ability to realise the collateral in case of default. The Bank has its own rules and methodology for the collateral assessment and regularly reviews the values of collateral acceptance ratios, which are approved by the CRCO. Allowances for the impaired part of the portfolio are split into individual and portfolio allowances. Individual allowances are determined for impaired commercial manually approved exposures by calculating the discounted future cash flows. Portfolio allowances based on the LGD statistical approach are determined for remaining portfolios. For these, the LGD is adjusted to correspond to remaining anticipated cash flows Allowances Calculation A provision is recognised for irrevocable loan commitments Allowances are determined in accordance with International Financial Reporting Standards. using CCF (credit conversion factor) coefficients that determine which part of the loan commitment is brought onto the balance sheet until the receivable impairment In order to calculate allowances, the portfolio is divided into moment. unimpaired receivables and impaired receivables, which are further segmented into commercial and retail exposures by product. Back testing is performed no less than annually; it assesses the adequacy of the volume of recognised allowances given the actual losses in the portfolio. The calculation of allowances for the non-impaired portfolio is based on statistical models. These models are used for Credit Concentration Risk calculation of probability of default (PD) and loss given default (LGD), further for retail exposures the cure rate is determined. The PD and LGD for commercial manually approved exposures are calculated directly from statistical models. For other receivables (i.e. commercial automatically approved and retail exposures) models based on the As part of managing credit risk, the Bank regularly monitors and actively manages the credit concentration risk (41.4.) through the limits to countries, counter-parties and economic sectors. Regional concentration is not relevant as most income is generated within the territory of the Czech Republic (see note 40). a) The exposures to top 10 groups of customers CZK m 31 December December December January 2013 Top 10 exposures* 4,134 3,379 3,230 3,737 * Exposure includes gross loans and receivables, unused commitments including credit lines, and guarantees. b) The structure of the Bank s commercial credit portfolio by economic sectors 31 December 2015 Sector CZK m* % 31 December 2013 Sector CZK m* % 1 Agriculture 16,635 43% 1 Agriculture 15,628 44% 2 Mining 9 0% 2 Mining 104 0% 3 Food industry 1,649 4% 3 Food industry 1,763 5% 4 Textile industry 353 1% 4 Textile industry 336 1% 5 Wood processing industry 459 1% 5 Wood processing industry 462 1% 6 Chemical industry 857 2% 6 Chemical industry 858 3% 7 Metal processing industry 1,439 4% 7 Metal processing industry 1,155 3% 8 Electric and optical equipment 46 0% 8 Electric and optical equipment 69 0% 9 Manufacturing of equipment, including transportation 1,165 3% 9 Manufacturing of equipment, including transportation 1,122 3% 10 Construction industry and construction modifications 2,074 5% 10 Construction industry and construction modifications 2,242 6% 11 Wholesale 3,452 9% 11 Wholesale 3,432 10% 12 Retail sale 2,030 5% 12 Retail sale 1,904 6% 13 Transport and telecommunication 523 1% 13 Transport and telecommunication 482 1% 14 Finance 455 1% 14 Finance 702 2% 15 Services 6,624 17% 15 Services 3,829 11% 16 Public sector 61 0% 16 Public sector 84 0% 17 Health industry 615 2% 17 Health industry 756 2% 18 Power sector 750 2% 18 Power sector 606 2% Total 39, % Total 35, % 31 December 2014 Sector CZK m* % 1 January 2013 Sector CZK m* % 1 Agriculture 16,026 44% 1 Agriculture 14,000 41% 2 Mining 89 0% 2 Mining 101 0% 3 Food industry 1,592 4% 3 Food industry 1,897 6% 4 Textile industry 281 1% 4 Textile industry 314 1% 5 Wood processing industry 450 1% 5 Wood processing industry 379 1% 6 Chemical industry 854 2% 6 Chemical industry 717 2% 7 Metal processing industry 1,355 4% 7 Metal processing industry 1,029 3% 8 Electric and optical equipment 58 0% 8 Electric and optical equipment 105 0% 9 Manufacturing of equipment, including transportation 1,102 3% 9 Manufacturing of equipment, including transportation 1,136 3% 10 Construction industry and construction modifications 2,158 6% 10 Construction industry and construction modifications 2,318 7% 11 Wholesale 3,618 10% 11 Wholesale 3,399 10% 12 Retail sale 1,928 5% 12 Retail sale 1,956 6% 13 Transport and telecommunication 483 1% 13 Transport and telecommunication 515 2% 14 Finance 541 1% 14 Finance 843 3% 15 Services 5,022 14% 15 Services 3,884 11% 16 Public sector 66 0% 16 Public sector 104 0% 17 Health industry 607 2% 17 Health industry 672 2% 18 Power sector 665 2% 18 Power sector 701 2% Total 36, % Total 34, % * The amounts represent the relevant gross loans and receivables to customers excluding the exposures to Bank s subsidiaries. Exposures of Other loans excluded.

98 192 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 193 c) Maximum credit exposures 31 December 2015 Statement Off-balance Total credit Available CZK m of financial position sheet risk exposure collateral* Cash and balances with the central bank 15, ,475 0 Financial assets at fair value through profit or loss Currency swaps Currency forwards Financial assets available for sale 13, ,255 0 Treasury bills 1, ,558 0 Treasury bonds 11, ,563 0 Investment securities Loans and receivables to banks Current accounts at banks Term deposits at banks payable within 3 months Loans and receivables to customers 99,350 15, ,375 35,660 Consumer authorized overdrafts and credit cards 5,407 6,231 11,638 0 Consumer loans 30, ,675 0 Mortgages 15, ,864 15,227 Commercial loans 47,603 8,168 55,771 20,433 Other loans Commercial Retail Issued guarantees and credit limits on guarantees 0 1,450 1,450 0 Letter of credit Other assets 12, , December 2013 CZK m Statement Off-balance Total credit Available of financial position sheet risk exposure collateral* Cash and balances with the central bank 9, ,423 0 Financial assets at fair value through profit or loss Currency swaps Currency forwards Financial assets available for sale 22, ,835 0 Treasury bills 15, ,787 0 Treasury bonds 7, ,017 0 Investment securities Loans and receivables to banks 1, ,104 0 Current accounts at banks Term deposits at banks payable within 3 months Loans and receivables to customers 91,724 12, ,705 37,275 Consumer authorized overdrafts and credit cards 7,363 5,658 13,021 0 Consumer loans 31, ,805 0 Mortgages 17, ,401 17,625 Commercial loans 34,124 6,570 40,686 19,650 Other loans Commercial Retail Issued guarantees and credit limits on guarantees 0 1,977 1,977 0 Letter of credit Other assets 10, , December 2014 CZK m Statement Off-balance Total credit Available of financial position sheet risk exposure collateral* Cash and balances with the central bank 11, ,746 0 Financial assets at fair value through profit or loss Currency swaps Currency forwards Financial assets available for sale 20, ,401 0 Treasury bills 11, ,811 0 Treasury bonds 8, ,559 0 Investment securities Loand and receivables to banks Current accounts at banks Term deposits at banks payable within 3 months Loans and receivables to customers 98,497 14, ,458 36,583 Consumer authorized overdrafts and credit cards 6,398 6,138 12,536 0 Consumer loans 30, ,408 0 Mortgages 16, ,466 16,799 Commercial loans 44,222 8,207 52,429 19,784 Other loans Commercial Retail Issued guarantees and credit limits on guarantees 0 1,635 1,635 0 Letter of credit Other assets 12, ,950 0 * Available collateral represents realisable value of collateral relevant for each loan exposure. The realisable value of collateral is capped up to the Total exposure presented in the statement of financial position on loan-by-loan basis for the purpose of the presentation in these breakdowns Credit Portfolio and its Quality a) Loans and receivables to banks and customers according the categorisation Loans and receivables to banks and customers according the categorisation can be summarised as follows: CZK m 31 December December 2014 Loans and Loans and Receivables receivables to Receivables receivables to to banks clients Total to banks clients Total Not-impaired before due date ,985 94, ,277 92,797 Not-impaired past due date 0 3,432 3, ,094 4,094 Total not-impaired ,417 97, ,371 96,891 Total impaired 0 11,877 11, ,291 13,291 Gross loans and receivables , , , ,182 Allowances 0 (9,944) (9,944) 0 (11,165) (11,165) Net loans and receivables ,350 99, ,497 99,017 Individual allowances 0 (991) (991) 0 (900) (900) Portfolio allowances 0 (8,953) (8,953) 0 (10,265) (10,265) Total allowances 0 (9,944) (9,944) 0 (11,165) (11,165)

99 194 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 195 CZK m 31 December January 2013 Loans and Loans and Receivables receivables Receivables receivables to banks to clints Total to banks to clients Total Not-impaired before due date 1,104 84,144 85,248 3,838 86,203 90,041 Not-impaired past due date 0 4,964 4, ,067 6,067 Total not-impaired 1,104 89,108 90,212 3,838 92,270 96,108 Total impaired 0 14,713 14, ,617 14,617 Gross loans and receivables 1, , ,925 3, , ,725 Allowances 0 (12,097) (12,097) 0 (11,716) (11,716) Net loans and receivables 1,104 91,724 92,828 3,838 95,171 99,009 Individual allowances 0 (783) (783) 0 (765) (765) Portfolio allowances 0 (11,314) (11,314) 0 (10,951) (10,951) Total allowances 0 (12,097) (12,097) 0 (11,716) (11,716) b) Gross loans and receivables to customers that are not impaired according to the probability of default The quality of the credit portfolio in respect of gross loans and receivables that are not impaired, can be analysed according to the probability of default as follows: CZK m Retail Commercial Authorized overdrafts Credit Probability & credit Consumer Other Commercial Other quality of default cards loans Mortgages loans loans loans Total 31 December (PD<=1.3%) 2,742 10,122 13, , ,716 2 (1.3%<PD<=3.2%) 1,166 12, , ,376 3 (3.2%<PD<=7.7%) 679 4, ,883 4 (7.7%<PD<=15.6%) 367 1, , ,503 5 (PD>15.6%) 388 1, ,815 unrated , ,124 Total loans and receivables 5,346 29,689 14, , , December (PD<=1.3%) 3,565 9,448 14, , ,229 2 (1.3%<PD<=3.2%) 1,250 9, , ,876 3 (3.2%<PD<=7.7%) 741 6, ,813 4 (7.7%<PD<=15.6%) 399 2, , ,916 5 (PD>15.6%) 359 1, ,589 unrated , ,948 Total loans and receivables 6,314 29,859 16, , ,371 CZK m Retail Commercial Authorized overdrafts Credit Probability & credit Consumer Other Commercial Other quality of default cards loans Mortgages loans loans loans Total 31 December (PD<=1.3%) 3,806 8,836 15, , ,209 2 (1.3%<PD<=3.2%) 1,569 10, , ,104 3 (3.2%<PD<=7.7%) 879 7, ,808 4 (7.7%<PD<=15.6%) 517 2, , ,798 5 (PD>15.6%) 471 2, ,108 unrated Total loans and receivables 7,242 30,960 17, , ,108 1 January (PD<=1.3%) 4,310 8,929 17, , ,237 2 (1.3%<PD<=3.2%) 1,770 10, , ,702 3 (3.2%<PD<=7.7%) 857 7, , ,085 4 (7.7%<PD<=15.6%) 487 3, ,180 5 (PD>15.6%) 458 2, ,577 unrated Total loans and receivables 7,882 32,347 19,044 1,110 31, ,270 c) Gross loans and receivables to customers that are not impaired according to due dates As of 31 December 2015, 31 December 2014, 31 December 2013 and 1 January 2013 the Bank reported the following gross loans and receivables to customers with their due dates that are not individually impaired: 31 December 2015 CZK m Retail Commercial Authorized overdrafts Consumer Other Commercial Other and credit cards loans Mortgages loans loans loans Total Not past due 5,055 27,893 14, , , days past due 232 1, , days past due days past due Total 5,346 29,689 14, , , December 2014 CZK m Retail Commercial Authorized overdrafts Consumer Other Commercial Other and credit cards loans Mortgages loans loans loans Total Not past due 5,916 27,761 15, , , days past due 295 1, , , days past due days past due Total 6,314 29,859 16, , ,371

100 196 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements December 2013 CZK m Retail Commercial Authorized overdrafts Consumer Other Commercial Other and credit cards loans Mortgages loans loans loans Total Not past due 6,708 28,308 16, , , days past due 403 2, , , days past due days past due Total 7,242 30,960 17, , ,108 1 January 2013 CZK m Retail Commercial Authorized overdrafts Consumer Other Commercial Other and credit cards loans Mortgages loans loans loans Total Not past due 7,338 29,521 18,370 1,051 29, , days past due 402 2, , , days past due days past due Total 7,882 32,347 19,044 1,110 31, ,270 d) Loans and receivables to customers that are individually impaired As of 31 December 2015, 31 December 2014, 31 December 2013 and 1 January 2013, the Bank reported the following amounts of loans and receivables to customers that are individually impaired and to which individual allowances are created (commercial individually managed loans): CZK m 31 December December December January 2013 Gross individually impaired loans and receivables, to which an individual loss provisions is created 1,417 1,477 1,539 1,592 Individual allowances (991) (900) (783) (765) Net individually impaired loans and receivables to wich an individual loss provisions is created Collateral The Bank applies the following general principles for the forbearance: Customer demonstrably lost ability to repay loan according to original loan contract, Customer demonstrates willingness and ability to pay his debts, Specific product/customer criteria must be met, Loan was not restructured more than once in last 12 months and more than twice during last 5 years. Commercial loans If the customer is willing and able to resolve its situation (caused mainly by temporary reasons) and continue under original product conditions, it is possible to restructure the business case. For customers who are temporarily unable to meet their financial obligations, Bank uses a tool in the form of a temporary reduction/postponing of the customer s repayments. In cases where there is a long-term reduction in income, an extension of the repayment period is used. Restructuring may be combined with improvement of creditors s collateral position (new collateral, use of notarial deed, which enables quicker and lower cost sale of collateral). Only instalments not past due are subject of rescheduling. Customer is obliged to repay all past due payments in full and delinquency status is calculated according the oldest unpaid instalment. Interest rate is not changed. As impairment is driven by categorization (see note ), in compliance with categorization rules forborne receivables are treated as impaired at least 6 consecutive months after forbearance. They become non-impaired if their categorization improve to watch or standard. a) All gross loans and receivables with forbearance Mortgages The main situations for forbearance are lost/decrease of income (unemployment/salary decrease), long term illness, invalidity, death of partner, natural disaster. Ability to pay is checked according to Income/expenditure analysis model. Willingness to pay is tested during period when customer demonstrates ability to pay according modified conditions. The customer may be granted with relief if he is not in personal bankruptcy and the mortgage is at least 9 months in the books. Forbearance is offered in the form of a temporary reduction of the client s repayments and/or an extension of the repayment period. Only instalments not past due are subject of rescheduling. Customer is obliged to repay all past due payments in full and delinquency status is calculated according to the oldest unpaid instalment. Interest rate is not changed. Impairment classification is the same as for commercial loans. Retail products Situations, ability and willingness to pay checks are similar to those for mortgages. Product/customer criteria include mainly the following: customer is not in personal bankruptcy, none of customer s loan is terminated, loan is at least 9 months in the books, loan is past due less than 30 days. If customer proves his willingness and ability to pay (through 3 consecutive payments), Bank offers him conclusion of new loan contract. Customer s original (delinquent) loans are, by signature of this new contract, repaid and closed and new (restructured) loan with different monthly instalment, interest rate and maturity is opened as non-delinquent (current). Impairment classification is the same as for commercial loans Forborne Receivables Forborne receivables are receivables for which the Bank provided the debtor with relief as it assessed that it would likely incur a loss if it did not do so. For economic or legal reasons associated with the debtor s financial position, the Bank granted it with relief that it would not otherwise have granted. These primarily include the reworking of the repayment plan, decrease in the interest rate, waiver of default interest, deferral of principal or accrued interest repayments. Forborne receivables do not include receivables arising from the roll-over of a short-term loan for current assets if the debtor met all of its payment and non-payment obligations arising from the loan contract. The forbearance is reflected in the categorisation of receivables in accordance with the receivables categorisation rules (see note ). As categorisation rules also trigger impairment, allowances for forborne receivables are calculated accordingly. For commercial and mortgage receivables, the same methods as for receivables without forbearance are used. For other retail receivables, forborne receivables with impairment allowances are created up to the value of an estimated life time loss. 31 December 2015 CZK m Mortgage loans Consumer loans Commercial loans Total Forborne receivables ,144 Total , December 2014 CZK m Mortgage loans Consumer loans Commercial loans Total Forborne receivables 144 1, ,439 Total 144 1, , December 2013 CZK m Mortgage loans Consumer loans Commercial loans Total Forborne receivables 158 1, ,792 Total 158 1, ,792

101 198 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements January 2013 CZK m Mortgage loans Consumer loans Commercial loans Total Forborne receivables 170 1, ,927 Total 170 1, ,927 b) Impaired loans out of all gross loans and receivables with forbearance 31 December 2015 CZK m Mortgage loans Consumer loans Commercial loans Total Forborne receivables Total December 2014 CZK m Mortgage loans Consumer loans Commercial loans Total Forborne receivables Total December 2013 CZK m Mortgage loans Consumer loans Commercial loans Total Forborne receivables Total January 2013 CZK m Mortgage loans Consumer loans Commercial loans Total Forborne receivables ,132 Total ,132 c) Number of incrementally gross loans and receivables with forbearance 31 December 2015 Mortgages Personal loans Commercial loans Number of incrementally forborne receivables within the reporting year Balance of the incrementally forborne gross receivables at the end of the reporting year CZK m December 2014 Mortgages Personal loans Commercial loans Number of incrementally forborne receivables within the reporting year Balance of the incrementally forborne gross receivables at the end of the reporting year CZK m Risk of Concentration The risk of concentration means the risk arising from the concentration of exposures with respect to a person, an economically-related group of persons (see note 39), sector (see note ), region (see note 40), activity, or commodity. The Bank manages the risk of concentration within individual risks, primarily the credit risk (see note ) and liquidity risk (see note 41.7.). Activity and commodity concentrations are not relevant Interest Rate Risk Interest rate risk is the risk of a loss arising from changes in interest rates on financial markets. The Bank is exposed to interest rate risk as interest bearing assets and liabilities have different maturity periods or interest rate readjustment periods. The Bank strives to minimise interest rate risk by setting limits and keeping positions with these limits. Its activities in the area of interest rate risk management are aimed at reducing the risk of losses. To monitor and measure interest rate risk, a model of interest rate sensitivity is used, which serves to determine the sensitivity of the Bank to changes in the market interest rates. The model is based on the inclusion of interestsensitive assets and liabilities into relevant time bands. The Bank prefers to use behavioural features of cash flows rather than those that are purely contractual. All behavioural assumptions are approved by the ALCO. The model works with 1-month time bands up to the 10 year period and a time band exceeding 10 years. Simultaneously, the Bank carries out stress testing based on the parallel shift of the yield curve by 200 basis points for all currencies that account for more than 5% of the Bank s assets. In 2015, only the portfolio denominated in Czech Koruna exceeded 5% share of the Bank s assets. To manage the interest rate risk, the Bank uses a limit for the impact of the stress test on the total capital and annual net interest income. The results of stress testing are presented to ALCO on a monthly basis. To manage the discrepancy between the interest sensitivity of assets and liabilities, interest rate derivatives are used in most cases. During 2015 (2014) the Bank did not need to use any interest rate derivatives due to natural offsets between assets and liabilities. % change in annual 31 Dec 31 Dec 31 Dec net interest income Impact of the interest rate shock +200 basis points (1.28)% 1.64% 0.37% Impact of the interest rate shock -200 basis points 0.11% (0.25)% (0.18)% change in economic value 31 Dec 31 Dec 31 Dec of equity as a % of capital Impact of the interest rate shock +200 basis points (3.13)% (2.06)% (3.37)% Impact of the interest rate shock -200 basis points 0.56% 0.38% 1.80% 31 December 2013 Mortgages Personal loans Commercial loans Number of incrementally forborne receivables within the reporting year 8 1, Balance of the incrementally forborne gross receivables at the end of the reporting year CZK m

102 200 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 201 The below table summarises the Bank s exposure to interest rate risk. Balances are allocated to the buckets based on the following parameters: for assets the next repricing date or principal payment dates, whichever occurs earlier, for non maturity deposits the expected maturity/repricing behaviour and for term deposits the maturity date. 31 December 2015 Within More than CZK m 1 month months months years 5 years Unspecified Total Cash and balances with the central bank 15, ,475 Financial assets at fair value through profit or loss Financial assets available for sale ,040 6,130 2,400 1,635 13,255 Loans and receivables to banks Loans and receivables to customers 32,640 2,453 10,828 36,880 7,948 8,601 99,350 Other assets ,270 12,270 Total assets 47,981 2,453 13,868 43,010 10,348 22, ,474 Deposits from banks Deposits from customers 50,856 5,671 13,551 27,887 9,841 3, ,515 Financial liabilities through profit or loss Other liabilities (without equity) ,127 2,694 Total liabilities 51,596 5,676 13,569 27,928 9,853 5, ,506 Net interest rate exposure (3,615) (3,223) , ,930 25, December 2014 Within More than CZK m 1 month months months years 5 years Unspecified* Total Cash and balances with the central bank 11, ,746 Financial assets at fair value through profit or loss Financial assets available for sale 1,300 2,500 9,772 2,300 3,050 1,479 20,401 Loans and receivables to banks Loans and receivables to customers 31,255 2,677 12,250 36,533 7,592 8,190 98,497 Other assets ,950 12,950 Total financial assets 44,087 5,177 22,022 38,833 10,642 23, ,126 Deposits from banks Deposits from customers 40,307 3,913 14,236 29,399 8,576 3,224 99,655 Financial liabilities through profit or loss Other liabilities (without equity) ,377 3,062 Total financial liabilities 41,065 3,920 14,260 29,450 8,590 5, ,980 Net interest rate exposure 3,022 1,257 7,762 9,383 2,052 17,670 41, December 2013 Within More than CZK m 1 month months months years 5 years Unspecified* Total Cash and balances with the central bank 9, ,372 Financial assets at fair value through profit or loss Financial assets available for sale 2,508 4,064 10, ,500 1,367 22,835 Financial assets held to maturity Loans and receivables to banks ,102 1,104 Loans and receivables to customers 26,691 2,732 12,172 39,329 6,864 3,936 91,724 Other assets ,388 10,388 Total financial assets 38,381 6,796 23,168 39,729 10,364 16, ,429 Deposits from banks Deposits from customers 42,788 3,548 14,171 25,797 7,211 2,412 95,927 Financial liabilities through profit or loss Other liabilities (without equity) ,994 2,578 Total financial liabilities 43,405 3,551 14,183 25,825 7,220 4,449 98,633 Net interest rate exposure (5,024) 3,245 8,985 13,904 3,144 12,542 36,796 * Loans and receivables to customers presented under Unspecified category as at 31 December 2015 at CZK 8,601 mil. (31 December 2014: CZK 8,190 mil., 31 December 2013: CZK 3,936 mil.) represent mainly exposures in foreign currencies (the loan portfolio denominated in CZK represent the majority of the whole loan portfolio) and accrued interest (i.e. exposure other than principal). This is a reason why they are presented in this category for the purposes of interest rate risk breakdown Foreign Exchange Risk Foreign exchange risk covers the risk of a loss due to changes in exchange rates. The Bank is exposed to the foreign exchange risk primarily due to the provision of foreign exchange loan products to commercial borrowers and foreign exchange deposits. To measure foreign exchange risk, the Bank uses, on a daily basis, net currency positions and a VaR (Value at Risk) model based on historical data. The Bank strives to minimise foreign exchange risk. For this purpose, the Bank maintains a balance of assets and liabilities in foreign currencies (by using a mix of FX spots and forwards/swaps transactions) and uses the following limits: Ratio of the absolute value of the net currency position to capital for each foreign currency; Ratio of the absolute value of the net currency position in Czech Koruna to capital; Ratio of the absolute value of the total net currency position to capital; Absolute value of the net currency position for each foreign currency; and VaR (maximum expected loss per business day at the 99% confidence level) for the foreign currency portfolio).

103 202 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 203 a) VaR of currency instruments 31 December Average in 31 December Average in 31 December Average in CZK VaR of currency instruments b) The exposure of the Bank to foreign exchange risk 31 December 2015 Other CZK m CZK EUR USD currencies Total CZK Cash and balances with central bank 15, ,475 Financial assets at fair value through profit or loss Financial assets - available for sale 12, ,255 Loans and receivables to banks Loans and receivables to customers 93,499 5, ,350 Other assets 12, ,270 Total assets 133,956 6, ,474 Deposits from banks Deposits from customers 107,871 3, ,515 Financial liabilities at fair value through profit or loss Other liabilities (including equity) 28, ,662 Total liabilities 136,684 3, ,474 Net exchange rate balance sheet position (2,728) 3,036 (279) (29) 0 Receivables from spot and derivatives 3, ,612 Liabilities from spot and derivatives 412 3, ,612 Net exchange rate off-balance sheet position 2,725 (3,034) Net exchange rate position (3) December 2014 Other CZK m CZK EUR USD currencies Total CZK Cash and balances with the central bank 11, ,746 Financial assets at fair value through profit or loss Financial assets - available for sale 20, ,401 Loans and receivables to banks Loans and receivables to customers 93,212 5, ,497 Other assets 12, ,950 Total assets 137,812 6, ,126 Deposits from banks Deposits from customers 96,514 2, ,655 Financial liabilities at fair value through profit or loss Other liabilities (including equity) 44, ,208 Total liabilities 140,893 2, ,126 Net exchange rate balance sheet position (3,081) 3,397 (309) (7) 0 Receivables from spot and derivatives 3, ,989 Liabilities from spot and derivatives 449 3, ,992 Net exchange rate off-balance sheet position 3,078 (3,392) (3) Net exchange rate position (3) 5 (7) 2 (3) 31 December 2013 Other CZK m CZK EUR USD currencies Total CZK Cash and balances with the central bank 9, ,372 Financial assets at fair value through profit or loss Financial assets - available for sale 22, ,835 Loans and receivables to banks ,104 Loans and receivables to customers 91, ,724 Other assets 10, ,388 Total assets 133,000 1, ,429 Deposits from banks Deposits from customers 93,569 1, ,927 Financial liabilities at fair value through profit or loss Other liabilities (including equity) 39, ,374 Total liabilities 133,011 1, ,429 Net exchange rate balance sheet position (11) (1) Receivables from spot and derivatives Liabilities from spot and derivatives Net exchange rate off-balance sheet position 24 (3) (18) (2) 1 Net exchange rate position 13 (4) (8) Liquidity risk Liquidity risk represents the risk of inability to meet financial liabilities when due or to finance assets. The Bank has access to diversified sources of financing, which include deposits, loans taken, as well as the Bank s equity. The bond and money markets are used to further The daily measurement of liquidity risk in key currencies (share of the total assets exceeding 5%) includes: Calculation of the liquidity position based on the liquidity gap model, which measures net cash flows in set time diversify sources of liquidity and to deposit excess cash. The Bank also has a credit line within the GE Capital Corporation, which, together with sources to other financing, gives the Bank flexibility regarding liquidity. bands; Calculation of the Liquidity Coverage Ratio (ratio of highlyliquid assets to net outflow in 30 days); and Calculation of Early Warnings Indicators. For the purpose of liquidity management under extraordinary circumstances, the Bank has a contingency plan containing measures for recovering liquidity. The ERM regularly reviews the contingency plan and liquidity management scenarios, The monthly measurement of liquidity risk includes: Assessment of the impact of liquidity management stress which are based on the analysis of historical data, and forwards them to the ALCO for approval. scenarios on the Bank s liquidity position; and Measurement of concentration in deposits. The liquidity coverage ratio of the Bank in 2015 is 140% (2014: 187% and 2013: 236%). To manage liquidity risk for key currencies, the Bank applies a system of the following limits: Liquidity positions in selected time buckets; Liquidity Coverage Ratio; Structure of the portfolio for liquidity management; and Concentration in deposits and monitors a chosen set of Early Warning Indicators.

104 204 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 205 a) The below table summarises the remaining maturity of carrying amounts of assets, liabilities and equity according to their contractual maturity. a) The below table summarises the remaining maturity of carrying amounts of assets, liabilities and equity according to their contractual maturity. 31 December 2015 Within More than CZK m 1 month months months years 5 years Unspecified Total Cash and balances with central bank 15, ,475 Financial assets at fair value through profit or loss Financial assets - available for sale ,793 6,629 3, ,255 Loans and receivables to banks Loans and receivables to customers 7,450 3,361 12,947 43,936 27,669 3,987 99,350 Investments in subsidaries and associates ,767 9,767 Current tax assets Deferred tax assets Other assets ,327 1,409 Total Assets 23,253 3,374 15,741 50,565 31,335 16, ,474 Deposits from banks Deposits from customers 106,690 2,901 1, ,515 Financial liabilities at fair value through profit or loss Provisions Other liabilities 1, ,167 Equity ,968 25,968 Total Liabilities 108,801 2,905 2, , ,474 Net liquidity position of assets and liabilities (85,548) ,515 50,408 31,320 (10,164) 0 Issued guarantees and credit limits on guarantees 1, ,450 Loan commitments*** 2, , December 2014 Within More than CZK m 1 month months months years 5 years Unspecified* Total Cash and balances with the central bank 11, ,746 Financial assets at fair value through profit or loss Financial assets - available for sale 1,440 2,637 9,304 2,496 4, ,401 Loans and receivables to banks Loans and receivables to customers 8,765 1,994 14,657 42,359 25,496 5,226 98,497 Investments in subsidiarries and associates ,771 9,771 Current tax assets Deferred tax assets ,263 1,263 Other assets ,626 1,757 Total assets 22,607 4,638 23,961 44,855 29,989 18, ,126 Deposits from banks Deposits from customers 97, ,655 Financial liabilities at fair value through profit or loss Provisions Other liabilities 2, ,688 Equity ,146 41,146 Total liabilities and equity 100, , , ,126 Net liquidity position of assets and liabilities** (77,393) 4,330 22,745 44,148 29,989 (23,819) 0 Issued guarantees and credit limits on guarantees 1, ,635 Loan commitments*** 2, ,146

105 206 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 207 a) The below table summarises the remaining maturity of carrying amounts of assets, liabilities and equity according to their contractual maturity. 31 December 2013 Within More than CZK m 1 month months months years 5 years Unspecified* Total Cash and balances with the central bank 9, ,372 Financial assets at fair value through profit or loss Financial assets - available for sale 2,782 4,244 11, , ,835 Loans and receivables to banks 1, ,104 Loans and receivables to customers 10, ,304 33,644 25,144 6,847 91,724 Investments in subsidiaries and associates ,823 6,823 Current tax assets Deferred tax assets ,507 1,507 Other assets ,992 2,054 Total assets 24,171 5,150 25,451 34,111 29,342 17, ,429 Deposits from banks Deposits from customers 91, ,715 1, ,927 Financial liabilities at fair value through profit or loss Provisions Other liabilities 1, ,240 Equity ,796 36,796 Total liabilities and equity 92, ,273 1, , ,429 Net liquidity position of assets and liabilities** (68,563) 4,670 22,178 32,731 29,342 (20,358) 0 Issued guarantees and credit limits on guarantees 1, ,977 Loan commitments*** 2, ,295 * Loans and receivables to customers presented under Unspecified category as at 31 December 2015 at CZK mil. (31 December 2014: CZK mil., 31 December 2013: CZK mil.) represent loans and receivables that are overdue more than 1 month. ** Net liquidity position of assets and liabilities within 1 month as at 31 December 2015 at CZK mil. (31 December 2014: CZK mil., 31 December 2013: CZK mil.) is primarily due to the fact that contractual maturity of current accounts falls within 1 month. *** The loan commitments represent irrevocable loan commitments only relating to commercial investment loans and mortgages. Total undrawn commitments on credit cards are not included in the table above as, historically, average limit usage is below 100% and this behaviour is expected to continue. b) The below table shows the remaining contractual maturity of non-derivative financial liabilities and issued financial guarantees and loan commitments held for the Bank s liquidity management purposes. The presented amounts include contractual nondiscounted cash flows. 31 December 2015 Within More than CZK m 1 month months months years 5 years Unspecified Total Deposits from banks Deposits from customers 106,690 2,904 1, ,528 Provisions Other liabilities 1, ,167 Total non-derivative financial liabilities 108,797 2,904 2, ,511 Issued guarantees and credit limits on guarantees 1, ,450 Loan commitments* 2, , December 2014 Within More than CZK m 1 month months months years 5 years Unspecified Total Deposits from banks Deposits from customers 97, ,690 Provisions Other liabilities 2, ,688 Total non-derivative financial liabilities 99, , ,999 Issued guarantees and credit limits on guarantees 1, ,635 Loan commitments* 2, , December 2013 Within More than CZK m 1 month months months years 5 years Unspecified Total Deposits from banks Deposits from customers 91, ,747 1, ,024 Provisions Other liabilities ,240 Total non-derivative financial liabilities 92, ,303 1, ,725 Issued guarantees and credit limits on guarantees 1, ,977 Loan commitments* 2, ,295 * The loan commitments represent irrevocable loan commitments only relating to commercial investment loans and mortgages.

106 208 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 209 c) The remaining maturity of derivative financial liabilities reported as derivatives for trading by remaining contractual maturity as of 31 December 2015, 31 December 2014 and 31 December 2013 is as follows: 31 December 2015 Within More than CZK m 1 month months months years 5 years Total Currency derivatives Currency swaps Currency forwards Total trading derivatives December 2014 Within More than CZK m 1 month months months years 5 years Total Currency derivatives Currency swaps Currency forwards Total trading derivatives December 2013 Within More than CZK m 1 month months months years 5 years Total Currency derivatives Currency swaps Currency forwards Total trading derivatives d) The below table shows the remaining expected maturity of financial assets and liabilities as follows: 31 December 2015 Within More than CZK m 1 month months months years 5 years Unspecified Total Cash and balances with central banks 15, ,475 Financial assets at fair value through profit or loss Financial assets available for sale ,793 6,629 3, ,255 Receivables to banks Loans and receivables to clients 7,450 3,361 12,947 43,936 27,669 3,987 99,350 Equity investments in subsidiaries and associates ,767 9,767 Income tax receivable Deferred tax assets Other assets ,327 1,409 Total financial assets 23,253 3,374 15,741 50,565 31,335 16, ,474 Deposits from banks Deposits from clients 24,446 9,164 24,872 43,076 9, ,515 Financial liabilities at fair value through profit or loss Provisions Other liabilities 1, ,167 Equity ,968 25,968 Total financial liabilities 26,338 9,189 25,470 43,189 9,853 26, ,474 Net liquidity position (3,085) (5,815) (9,729) 7,376 21,482 (10,229) 0 31 December 2014 Within More than CZK m 1 month months months years 5 years Unspecified Total Cash and balances with central bank 11, ,746 Financial assets at fair value through profit or loss Financial assets - available for sale 1,440 2,637 9,304 2,496 4, ,401 Loans and receivables to banks Loans and receivables to customers 8,765 1,994 14,657 42,359 25,496 5,226 98,497 Investments in subsidaries and associates ,771 9,771 Current tax assets Deferred tax assets ,263 1,263 Other assets ,626 1,757 Total financial Assets 22,607 4,638 23,961 44,855 29,988 18, ,126 Deposits from banks Deposits from customers 24,430 6,118 21,370 39,037 8, ,655 Financial liabilities at fair value through profit or loss Provisions Other liabilities 2, ,688 Equity ,146 41,146 Total financial Liabilities 26,584 6,143 21,712 39,127 8,590 41, ,126 Net liquidity position (3,977) (1,505) 2,249 5,728 21,398 (23,893) 0

107 210 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements December 2013 Within More than CZK m 1 month months months years 5 years Unspecified Total Cash and balances with central bank 9, ,372 Financial assets at fair value through profit or loss Financial assets available for sale 2,782 4,244 11, , ,835 Loans and receivables to banks 1, ,104 Loans and receivables to customers 10, ,304 33,644 25,144 6,847 91,724 Investments in subsidiaries and associates ,823 6,823 Current tax assets Deferred tax assets ,507 1,507 Other assets ,992 2,054 Total financial assets 24,171 5,150 25,451 34,111 29,342 17, ,429 Deposits from banks Deposits from customers 23,015 6,133 22,503 36,952 7, ,927 Financial liabilities at fair value through profit or loss Provisions Other liabilities 1, ,240 Equity ,796 36,796 Total financial liabilities 24,347 6,141 23,085 36,994 7,221 37, ,429 Net liquidity position (176) (991) 2,366 (2,883) 22,121 (20,437) Operational Risk Operational risk represents the risk of a loss resulting from inadequate or failed internal processes, people and systems, or from external events, including the risk of loss due to a breach or failure to comply with a legal or regulatory requirement or threat to the Bank s good reputation. It also covers legal and outsourcing risk. Within the scope of operational risk management, the Bank uses identification and classification models to identify and describe events, risk factors, the organisational structure, risk classification, and indicators. The ERM maintains models. The ERMC approves the risk classification model; other models are approved by the head of the ERM. Individual To mitigate the operational risk, the Bank produces and maintains: A business continuity plan for critical situations and operations recovery, with the aim of ensuring business activities at a backup workplace; and IT disaster recovery plans for key IT applications; and uses the following methods: Mitigation of risk by means of process improvements, process and organization changes, introduction of limits and controls, and use of technologies; Transfer of risk via outsourcing or insurance; and Avoidance of risk by terminating risk-inducing activities. organisational units have operational risk coordinators who provide employees with methodological support in the area Model Risk of operational risk management and cooperate with the ERM in activities relating to operational risk. Model risk is defined as a potential loss or other negative impact, which might emerge from decisions based on the The operational risk measurement uses the Loss Data Collection (LDC) process. Events whose impact exceeded the limit (CZK 10 thousand) are subject to data collection. Key results of an incorrect model or an incorrect use of model outputs and/or reports (linked to errors in the development, implementation or use of the models). risk indicators are monitored regularly. The basic limit for operational risk management is the limit for the size of the losses from the operational risk events. Losses stemming from events with low frequency and adverse impact are not included in this limit. The limit is approved by the ERMC on the basis of both the outcomes of the annual RCSA process (Risk Control Self-Assessment) and the LDC process. The Bank manages the model risk mainly by a correct setup of processes and controls in individual phases of the model life cycle, among others by imposing requirements on: Standards for model development and implementation; Model documentation; Model validations and revisions; Model use; and Model approvals. In the area of model risk management the Bank uses GE rules and principles. The ERMC is responsible for the general setup of the model risk management process. The MROC mainly: Monitors compliance of model risk management in the Bank with regulatory requirements and requirements of corresponding GE rules; Monitors model performance on a regular basis, ensures that the model performance is in compliance with model complexity and importance, escalates potential issues to the ERMC; and Submits quarterly a holistic report on model risk management to the ERMC for acknowledgement. 42. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES The following table shows the carrying values and fair values of financial assets and liabilities that are not presented in the Bank s balance sheet at fair values. The fair value includes anticipated future losses while the carrying value (amortised cost and related impairment) includes only losses arising at the end of the reporting period. The Bank uses the following inputs and techniques to estimate the fair value: Cash and balances with the central bank The carrying value of cash and balances with the central bank approximates their fair value. Loan and receivables to banks The carrying value of receivables to banks approximates their fair values due to the short maturity of those receivables. Loans and receivables to customers Fair values of loans are estimated on the basis of discounted future expected cash flows using the interest rate common for loans with similar credit risk and interest risk conditions profile and maturity dates (discounted rate technique according to IFRS 13). For impaired loans the present value of future expected cash flows including the expected proceeds from a collateral foreclosure, if any. Deposits from banks The carrying value of deposits from banks in principle approximates their fair values due to the short maturity of those deposits. Deposits from customers Fair values of deposits repayable on demand at request and term deposits bearing a variable interest rate are equal to their carrying value as of the balance sheet date. Fair values of term deposits with a fixed interest rate are estimated on the basis of discounted cash flows using the market interest rates. CZK m Carrying value Fair value FINANCIAL ASSETS Cash and balances with the central bank 15,475 11,746 9,372 15,475 11,746 9,372 Loans and receivables to banks , ,104 Loans and receivables to customers 99,350 98,497 91, , ,183 94,232 FINANCIAL LIABILITIES Deposits from banks Deposits from customers 111,515 99,655 95, ,515 99,655 95,927 Cash and balances with the central bank, Loans and receivables to banks and Deposits from banks are classified as level 2, all other fair values presented above are classified as level 3 as the data used for the estimation of the discount rate are not based on the data from the active market. There are assumptions applied for the estimation of the cash flows used for discounting taking into account expected repayment profile of the particular pool or product. The discount rates used for discounting are based on the rates of the major competitors or other benchmark rates for similar type of assets.

108 212 GE Money Bank, a.s., Consolidated annual report 2015 Notes to Separate Financial Statements 213 The following table summarises the hierarchy of fair values of financial assets and financial liabilities that are carried at fair value in the statement of financial position: CZK m Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 FINANCIAL ASSETS Financial assets at fair value through profit or loss Financial assets available for sale 11,315 1, ,282 12, ,332 16, FINANCIAL LIABILITIES Financial liabilities at fair value through profit or loss There were no transfers between level 1 and 2 during the year 2015 (2014: 0 CZK, 2013: 0 CZK). transactions taking into account market inputs like FX spot and forwards rates, benchmark interest rates, swap rates, etc. The fair value of T-Bills is calculated as the present value The Bank uses the following inputs and techniques of cash flows using the benchmark interest rates. to determine the fair value under level 2 and level 3: The level 3 assets include equity instruments not traded The level 2 assets include mainly financial derivatives and T-Bills. For derivative exposures the fair value is estimated on the market where the fair value is calculated using the valuation techniques including expert appraisals. using the present value of the cash flows resulting from the 43. MANDATORY PUBLISHED INFORMATION The Bank publishes the mandatory information according to Part 8 of Regulation of the European Parliament and the Council (EU) No. 575/2013 of 26 June 2013 on its website in the section Mandatory information at the following address: SUBSEQUENT EVENTS The Bank is currently being prepared for exit from GE structure with respect to GE announcement on the 10th April 2015 that it will create a simpler, more valuable company by reducing the size of GE Capital through the sale of most of GE Capital s assets. As part of this it is GE s intention to sell the GE Money Bank (and all its subsidiaries) as a going concern within the next 12 months. Movement analysis of level 3 financial assets and liabilities: Total gains and losses Total gains and losses in the period recognised in the period recognised CZK m As at 1 January 2015 in the income statement in OCI As at 31 December 2015 Available for sale Equity investments Signature of statutory representatives Total gains and losses Total gains and losses in the period recognised in the period recognised CZK m As at 1 January 2014 in the income statement in OCI As at 31 December 2014 Available for sale Equity investments Total gains and losses Total gains and losses in the period recognised in the period recognised CZK m As at 1 January 2013 in the income statement in OCI As at 31 December 2013 Available for sale Equity investments 35 (6) 2 31 Tomáš Spurný Chairman of the Board of Directors Philip Holemans Member of the Board of Directors * In 2013 impairment loss of minority interest in MOPET CZ a.s. was recognized in Profit or Loss (see note 23). * In 2015 GEMB was offered to sell its holding of Visa Europe Limited, what had been previosly valuated at cost. Therefore, revaluation gain of CZK 104 mil. was recognized in OCI.

109 214 GE Money Bank, a.s., Consolidated annual report 2015 Social Responsibility 215 Social responsibility

110 216 GE Money Bank, a.s., Consolidated annual report 2015 Social Responsibility 217 SOCIAL RESPONSIBILITY OF THE GE MONEY GROUP Social responsibility is an inseparable part of all our business activities. We are governed by its principles in our approach to the community in which our employees and clients live and work and to the environment in general. We treat customers and suppliers responsibly. For our employees we create a work environment that helps them in their personal development and respects their individual options. Our CSR (Corporate Social Responsibility) strategy is based on the vision of the GE Money Bank, a.s. (the Bank ) and is part of its strategic priorities. It is created locally in accordance with the basic framework defined by the parent company. It therefore reflects the conditions and needs of the Czech market. ETHICS AND PRINCIPLES OF OUR BUSINESS In relation to clients, we are governed by the ethical codes of the Czech Banking Association and the internal ethical code of Bank. As a part of these codes our employees undergo mandatory training every year and hand over declarations related to the prevention of risky activities, ethics and conflicts of interests. Each of our suppliers receives the integrity document. As a Bank we base our actions on compliance with rules related to unlawful payments and the prevention of money laundering. We comply with the principles of responsible lending and risk management. We are actively interested in our clients opinions. In accordance with their feedback we adjust our products and services so that they are comprehensible and simple. We have created the position of ombudsman, who is involved in dealing with proposals made by clients dissatisfied with the previous handling of their complaint. His task is to assess a client s proposal independently of the company s previous opinion and find the best possible solution for both parties. Our social responsibility is reflected in the range of special products. We offer these products, for example, to municipalities, entrepreneurs in agriculture and ecoenergy and also foundations. CSR ACTIVITIES IN 2015 We continued to interlink CSR activities that support local communities. A number of our volunteers endorsed their organizations in front of the grant committee while a number of grant applicants turned into volunteers. Thanks to the GE Diversity initiative we managed to improve our company s diversity. We co-operate with Mamma HELP, an association of patients with breast cancer, and our clients still have the chance to contribute any amount to the association s activities at more than 600 ATMs. The contribution is free for clients, the bank pays the transaction costs. The Bank also pays for the application s development and maintenance. The three main topics for our corporate social responsibility are: Diversity for Employees, Financial Education and Support for Local Communities. Diversity for Employees GE Diversity 2015 Our responsible approach to employees is based on the integrity obligation, meritocracy principle and equal opportunities in hiring, as well as career and succession planning. Employees are encouraged to come up with innovations and proposals to improve processes and the working environment. We understand that each person is unique, so we are attempting to provide equal opportunities. As a part of the comprehensive GE Diversity program, we are primarily focusing on emphasizing gender issues, supporting the employment of disabled persons, promoting age diversity as well as continuously offering high range of flexibility. In 2015 we signed the European Diversity Charter, in which the top employers uphold the commitment to develop a tolerant working environment. It follows up on the Diversity Memorandum, in which, in 2014, we committed to ensuring equal working opportunities for women. We increased the number of part-time working opportunities, both at our branches and at the Head Office. We prepared a number of educational activities for parents on maternity and parental leave and we re offering them the opportunity to easily communicate with the HR department and get involved in the Bank s affairs via a closed group on a social network. For students we have prepared workshops and lectures by managers dedicated to career advising to help them succeed in recruitment process. In 2015, our employees used up nearly 5,062 days of sick leave over the statutory holidays. They worked 9,801 days from home. New fathers used up 334 days of paid leave over the statutory framework. Our employees with children up to 15 years of age spent 713 days over the statutory framework with them at home 8,66 % of our employees work part time We have 181 members of the In Contact portal and 189 members of a closed group GE Parents on a social network. Financial Education Understanding Money 2015 The Understanding Money project came into being so that our clients and the general public could understand what we say and were able to navigate correctly in different banking products and services. The unique form of this project is helping raise a financially literate generation. The project s basic idea is to try everything for yourself. Pupils from grades 5 to 9 learn to understand finance as members of model households that deal with practical situations linked to ordinary life (household budget, acquiring accommodation, buying a car, holiday, investment, etc.). Pupils from grades 1 to 4 deal with pocket money of a fictive friend from the text book. Teaching takes place in day-long workshops or in individual lessons during the school year. GE Money Bank, a.s., volunteers are also actively involved in the project, in particular as specialist consultants and leaders of workshops for teachers or parents. Understanding Money is a recognized project that is accredited by the Ministry of Education, Youth and Sport of the Czech Republic and that trains basic and nursery school teachers to effectively acquaint pupils with the principles of managing money and how to deal with specific financial situations in the household. The project s exceptionality consists, in particular, in its teaching methodology, where financial education is first obtained, interactively, through teachers, who then pass the information on to children. A trained teacher maintains project continuity in future years. This project is launched in co-operation with the civic association AISIS and it is supported by the European Social Fund. 132 schools were involved last year, 310 in 14 regions since the beginning of the project including 69 kindergartens More than 26,141 children, 3,269 teachers and a team of about 94 specialist trainers who are Bank employees have gone through the project since it started saw the successful end of the pilot financial literacy for kindergartens. The book Aflatot Personal and Financial Education for Kindergartens was released and 29 teachers were trained. 13 lectures for parents of the pupils who learn according to Understanding money at school were organized. Understanding money Collection of Exercises combining mathematical, financial and reading literacy was released. The sixth Understanding Money Summer School took place. The third meeting of club schools was organized. Support for Local Communities At GE Money Bank, a.s., we are aware of how important it is to respect our environment and be beneficial to the society we live in. Support for communities is covered, in particular, by the Program to Support the Needy and the activities of our voluntary organization GE Volunteers. Both initiatives have four areas on which they focus: children and education, the environment, senior citizens and disadvantaged fellow citizens. We place great emphasis on sustainable and strategic cooperation with individual organizations and target groups. Each of them has its guarantor (grant program) or coordinator (volunteering) who is in regular contact with them. We can therefore respond to specific and current problems of organizations and plan over the long term. Building a close relationship with local communities is enabled by a wide branch network and our employees active approach. They are involved, in particular, as volunteers, as well as guarantors of grants submitted and members of the grant commission. Proposals for new activities or a nonprofit organization also come from Bank employees. They naturally select organizations that are close to their values. There is therefore a harmony between employees personal values and the Bank s social responsibility. This supports employees high involvement in the various activities. Support for the Needy Program supported projects submitted by forty-six organizations; CZK 2,000,000 distributed. The organizations we supported: ADAM - Autistické děti a my (Autistic Children And Us), ALKA o.p.s., AMA - společnost onkologických pacientů, jejich rodinných příslušníků a přátel, o.s. (Society for Oncology Patients, their Family Members and Friends), Arkáda v.z., Asistence, o.p.s., Auticentrum, o.p.s. Klub PAPRSEK,Borůvka Praha o.p.s., Černobílý svět Cinema cafe club, Člověk v tísni, o.p.s (People in Need), Dětský domov, Jablonné v Podještědí (children s home), Zámecká 1, příspěvková organizace, Dílna Eliáš, z.s., Domov pro seniory, Domov Sue Ryder, o.p.s. (retirement home), DOTYK II, o.p.s., Dům Tří přání, Helppes Centrum výcviku psů pro postižené o.p.s. (Assisstant dogs training facility), Hospic sv. Jana N. Neumanna, o.p.s., Hospicová péče sv. Zdislavy, o.p.s., Chráněné dílny Fokus Vysočina s.r.o., InBáze z.s., Klub přátel tělesně postižených dětí Opava (handicapped children freinds club), Lékořice z.s., Mateřská škola a základní škola pro děti s kombinovaným postižením PINK CROCODILE SCHOOL, o.p.s. (nursery and basic school for children with

111 218 GE Money Bank, a.s., Consolidated annual report 2015 Report on relations between related parties combined handicap), MŠ, ZŠ a praktická škola Daneta, s.r.o. (nursery, basic and practical school), Občanské sdružení Bílá holubice Oblastní charita Červený Kostelec (local charity organization), středisko: Hospic Anežky České, Orlíček Přední Chlum, o.p.s. (children s home), Parkinson Help z.s., Pomocné tlapky, o.p.s. (Assisstence dog training facility), REHAFIT, o.p.s., SANREPO o.p.s., Sdružení "Piafa" ve Vyškově, Sdružení postižené dítě, o.s. (Association for Handicapped Children), Sjednocená organizace nevidomých a slabozrakých ČR, odbočka Kladno (Associated Organisation of Blind and Partiallysighted of the Czech Republic, Kladno branch), Soukromý dětský domov Korkyně SOS 92, o.p.s. (private children s home), Speciální pedagogické centrum EDA, Společnost E /Czech Epilepsy Association, o.s., Sportovní klub vozíčkářů Pardubice NEZLOMENI z.s. (Sports club for people on wheelchairs), Středisko rané péče SPRP Ostrava (Early care center), Studio Oáza, kulturní centrum pro lidi s mentálním postižením (cultural centre for mentally handicapped people), TŘI, o.p.s., Výchovný ústav, dětský domov se školou, střední škola, základní škola a školní jídelna Počátky, horní 617 (Educational center, Children s home with school, high school, basic school and school canteen), Vzájemné soužití o.p.s., Základní škola Moravská Třebová, Palackého 1351, okres Svitavy (basic school), Základní škola praktická a Základní škola speciální, Pod Dubíčkem 647 (Practical Basic School and Special Basic School), ZŠ a SZŠ Velká Bíteš (Basic and special school). GE Volunteers 2015 More than 10,200 voluntary hours worked. More than 200 events. 56 co-operating organizations. 590 volunteers involved (out of which 454 GE Money employees). The organizations we helped: AISIS o.s., ALKA o.p.s., Armáda spásy Ostrava (Salvation Army), ASLIDO - Akční skupina s lidmi bez domova, z.s. (Action group with homeless people), Asociace rodičů a přátel nevidomých a slabozrakých dětí (Association of Family and Friends of Blind and Partiallysighted Children), Bílá holubice o.s. (White Dove), Český nadační fond pro vydru (Czech fundation for otter), CENTROM, o.s., Člověk v tísni (People in Need) Nízkopravohý klub Nový svět, Čtyřlístek centrum pro osoby se zdravotním postižením Ostrava (center for handicapped people), Dětské centrum Čtyřlístek (children s center), Dětské Centrum Domeček (children s center), Dětské centrum v Sulické ulici (children s center), Dětský domov a Školní jídelna, Radkov Dubová 141 (children s home), Dětský domov Ostrava-Hrabová (children s home), Dětský domov Korkyně (children s home), Dětský domov Semily (children s home), Dětský domov v Jablonném v Podještědí (children s home), Denemark občanské sdružení, Domov důchodců sv. Zdislavy, Červená Voda 253 (Ústí nad Orlicí District--Retirement Home), Domov pod Vinnou horou, příspěvková organizace, Domov pro seniory Štíty (retirement home), Domov se zvláštním režimem Jedlí, Domov s pečovatelskou službou pro seniory, Heřmanická 19, Ostrava (assisted housing for old people), Domov s pečovatelskou službou pro seniory, Hladnovská 119a, Ostrava (assisted housing for old people), Domov Sue Ryder o.p.s., Dům tří přání, Dům s pečovatelskou službou Divišov (assisted housing), Hospic Dobrého Pastýře, Hospic sv. Alžběty, Kamenná 36, Brno, Charita Ostrava (Hospic sv. Lukáše, Charitní středisko sv. Lucie, Tréninkové centrum sv. Lucie, Charitní dům sv. Zdislavy, Charitní dům sv. Františka), Charita Otrokovice (charity houses), Chráněná krajinná oblast Beskydy (protected natural area), InBáze, o.s., Krkonošský národní park (national park), Lékořice z.s., Mamma Help sdružení pacientek s nádorovým onemocněním prsu o.p.s. (association of patients with breast cancer), Národní park Šumava (national park), Náš svět, příspěvková organizace, Nadační Fond Rozum a Cit (Sense and Sensibility Foundation Fund), Children's Psychiatry Ward at Thomayer Hospital, Pediatric Ward at Thomayer Hospital, Protection of Fauna of the Czech Republic, Orlíček Přední Chlum, o.p.s. (Children s home), foster family, Filipova 492, Řepiště, Vratimov, Pink Crocodile School o.p.s., Raná péče EDA, o.p.s. (Early care), SANREPO, o.p.s., Sdružení postižené dítě, o.s. (Handicapped Children s Association), Sdružením zdravotně postižených občanů a jejich přátel (Association of Handicapped People and Their Friends), Společnost E, Studio Oáza, Cultural Centre for People with Mental Handicap, ZOO Dvůr Králové, ZOO Hluboká nad Vltavou, ZOO Liberec, ZOO Ostrava, Život dětem, o.p.s. (Life to Children), Special Basic School Velká Bíteš. AWARDS FOR 2015 In 2015 we received the following awards: TOP Responsible Company category (main competition) silver medal Top place in Business for Company Awards in Diversity 2015 Category silver medal Bank Without Barriers 3rd place REPORT ON RELATIONS BETWEEN RELATED PARTIES 2015

112 220 GE Money Bank, a.s., Consolidated annual report 2015 Report on relations between related parties GE Money Bank, a.s. 1. INTERCONNECTION OF PARTIES In accordance with Section 82 of Act No. 90/2012 Coll., the Corporations Act, as amended, a report was compiled on relations between GE Capital International Holdings Limited, (hereinafter referred to as the Controlling Party ), as the Controlling Party, and GE Money Bank, a.s., (hereinafter referred to as the Controlled Party or Bank ) as the Controlled Party and between the Controlled Party and other parties controlled by the Controlling Party for the accounting period from 1 January December In 2015, corporate restructuring of the GE Capital group was implemented which resulted in following changes in the ownership structure of the Bank: From 3 December 2015, GE Capital International Holdings Limited is the sole shareholder of the Bank. This report was compiled in order to meet the information duty under Section 82 of Act No. 90/2012 Coll., the Corporations Act, as amended. General Electric Company 100% GE Capital Global Holdings, LLC. 100% GE Capital International Holdings Limited on 19 October 2015, transfer of 100% of shares in the Bank from GE Capital International Holdings Corporation (hereinafter referred to as the Controlling Party ), a company organized and existing under the laws of the State of Delaware, USA, to GE Capital UK Holdings LLC (hereinafter referred to as the Controlling Party ), a company organized and existing under the laws of the State of Delaware, USA, was registered in the central register of securities; on 21 October 2015, transfer of 100% of shares in the Bank from GE Capital UK Holdings LLC to General Electric Capital Corporation (hereinafter referred to as the Controlling Party ), a company organized and existing under the laws of the State of Delaware, USA, was registered in the central register of securities; on 2 December 2015, transfer of 100% of shares in the Bank from General Electric Capital LLC (hereinafter referred to as the Controlling Party ) to GE Capital Sub 3, Inc. (hereinafter referred to as the Controlling Party ), a company organized and existing under the laws of the State of Delaware, USA, was registered in the central register of securities including prior conversion of legal form of General Electric Capital Corporation to a limited liability company existing under the laws of the State of Delaware, USA, with a new business name General Electric Capital LLC; on 3 December 2015, transfer of 100% of shares in the Bank from GE Capital Sub 3, Inc. to GE Capital International Holdings Limited, a company organized and existing under the laws of England and Wales, was registered in the central register of securities; 100% GE Money Bank, a.s. 20% CBCB Czech Banking Credit Bureau, a.s. 100% % % 100% 100% 100% GE Money Auto, s.r.o. Ge Money GE Money Leasing Inkasní Expresní AgroConsult Bohemia s.r.o. Leasing, s.r.o.* Services, s.r.o.* Servis s.r.o. v likvidaci * With effect 31 October 2014 GE Money Bank, a.s., became the member of VB Leasing CZ, spol. s r.o., and VB Leasing Services, spol. s r.o., pursuant to the Transfer Agreement. In January 2015 both companies were renamed GE Money Leasing, s.r.o., and GE Money Leasing Services, s.r.o., respectively. GE Capital International Holdings Limited owns 100 % of shares and voting rights of the Controlled Party. GE Money Bank, a.s., is part of the GE Capital Group, a multinational GE corporation, which focuses on providing financial services, mainly to retail and medium-sized clients. The Bank co-operates most closely with its affiliated companies within the GE Group of companies, which use each other s distribution networks to provide their products at arms-length business conditions.

113 222 GE Money Bank, a.s., Consolidated annual report LIST OF CONTRACTS AND LEGAL ACTS The Bank concluded a contract with companies in the GE Group pertaining to the realisation of transactions on the (a) List of contracts money market according to the Bank s instructions and on the Bank s account. Another type of contract, from which Liabilities from contracts liabilities ensue, is the contract on the use of GE s logo and trademark. The Bank concluded the contracts listed below with companies in the GE Group, under which liabilities ensue The Bank has also concluded contracts on receiving support to it. These are namely mandate contracts with companies services from GE in Dublin, London and Stamford, which having their registered offices in the Czech Republic and they provide to the departments at the headquarters and the Slovak Republic, on the basis of which those companies management of the Bank. invoiced a proportional part of the costs to the Bank. Contracts with subsidiaries of GE Group GE Money Bank, a.s. GE Money Auto, s.r.o. Contract on the Provision of Services: operation Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4, and supervision over IBS90 and SWIFT, SB GE Money Bank, a.s. GE Money Auto, s.r.o. Contract on the Provision of IT Services Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4, in connection with AS 400 SB GE Money Bank, a.s. GE Money Auto, s.r.o. Contract on the Provision of IT Services Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4, SB GE Money Bank, a.s. Inkasní Expresní Servis s.r.o. Mandate contract claiming of debtors Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4, receivables SB GE Money Bank, a.s. AgroConsult Bohemia, s.r.o. Contract on Cooperation, Training, Promotion. Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4,.As of , SB GE Money Bank, a.s. GE Money Leasing s.r.o. Lease agreement business premises Hradec Králové, Vyskočilova 1422/1a, Prague 4 Holanská 1006/10, Brno Wolkerova. As of , SB GE Money Bank, a.s. GE Money Auto, s.r.o. Contract on the cooperation Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4, within VAT Group GE Money Bank, a.s. Inkasní Expresní Servis s.r.o. Contract on the cooperation Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4, within VAT Group GE Money Bank, a.s. GE Money Leasing, s.r.o. Contract on the cooperation Vyskočilova 1422/1a, Prague 4 Holandská 1006/10, Brno within VAT Group GE Money Bank, a.s. GE CAPITAL SHARED SERVICES EUROPE Contract on the cooperation Vyskočilova 1422/1a, Prague 4 LIMITED, org. složka 201 Talgarth within VAT Group Road 201, London W6 8 BJ - The Ark Contracts with other companies within the GE Group GE Money Bank, a.s. GE Money Brokers, a.s. Mandate contract Vyskočilova 1422/1a, Prague 4 Bottova 7, Bratislava, Slovakia GE Money Bank, a.s. GE Money, a.s. Mandate contract Vyskočilova 1422/1a, Prague 4 Bottova 7, Bratislava, Slovakia GE Money Bank, a.s. GE Money, a.s. Contract on the Provision of IT Services Vyskočilova 1422/1a, Prague 4 Bottova 7, Bratislava, Slovakia SB GE Money Bank, a.s. GE Austria GmbH, Donaucity Strasse Service arrangement contract Vyskočilova 1422/1a, Prague 4 6/8th Floor, A-1220 Vienna, Austria SB GE Money Bank, a.s. GE Capital Corporation, 260 Long Ridge Contract on Treasury Services Vyskočilova 1422/1a, Prague 4 Road, Stamford, USA SB GE Money Bank, a.s. GE Capital Corporation, 260 Long Ridge Use of GE networks Vyskočilova 1422/1a, Prague 4 Road, Stamford, USA-Gl. Cons. Finance SB and GE International Incorporated, 777 Long Ridge Road, Stamford, USA GE Money Bank, a.s. GE Capital Registry, Inc., 260 Long Use of trademarks Vyskočilova 1422/1a, Prague 4 Ridge Road, Stamford, USA SB GE Money Bank, a.s. GE Corporate Computer Service Fees for the mediation of the V+ services Vyskočilova 1422/1a, Prague 4 Limited Europe Station Road, SB Kingswood, Bristol, England GE Money Bank, a.s. Global Consumer Finance Contract on the Provision of support to HQ GEMB Vyskočilova 1422/1a, Prague 4 Summer Street 1600, Stamford, USA SB GE Money Bank, a.s. Global Consumer Finance Contract on the Provision of Support to HQ GEMB Vyskočilova 1422/1a, Prague 4 Summer Street 1600, Stamford, USA IT services SB GE Money Bank, a.s. General Electric Company, services Vyskočilova 1422/1a, Prague Easton Turnpike, Fairfield SB Connecticut 06431, USA GE Money Bank, a.s. GE Capital Global Financial Contract on the Use of SW (licensing fee) Vyskočilova 1422/1a, Prague 4 Restructuring, 201 High Ridge Road, SB Stamford CT 06927, USA GE Money Bank, a.s. GE Capital Corporation, Global Contract Between GE and INDUS Vyskočilova 1422/1a, Prague High Ridge RD, Stamford, USA Contract on Software Use INDUS and INDUS Software Private Limited SB Chinar Heights, Model Colony, India GE Money Bank, a.s. General Electric Service, Global Contract Between GE and Telindus Vyskočilova 1422/1a, Prague 4 Summer Street 1600, Stamford, USA SB and Telindus, B.V., Utrecht, Netherlands GE Money Bank, a.s. GE Consumer Finance, Summer Contract on the Maintenance of Telecommunication Vyskočilova 1422/1a, Prague 4 Street 1600, Stamford, USA and and Security Equipment for Data Transmission Global exchange Service, Inc (Telindus), SB Savannahweg 19, Utrecht, Netherlands GE Money Bank, a.s. GE Capital Corporation, Summer Implementation Flexcube@connect Vyskočilova 1422/1a, Prague 4 Street 1600, Stamford, USA and i-flex SB change to SB solutions, ltd., SDF1, United Nos , Andherl (East),Mumbai , India GE Money Bank, a.s. GE Capital Corporation, Summer Implementation Flexcube Vyskočilova 1422/1a, Prague 4 Street 1600, Stamford, USA and i-flex WORKFLOW Management SW solutions, ltd., SDF1, United Nos , SB Andherl (East), Mumbai , India

114 224 GE Money Bank, a.s., Consolidated annual report 2015 Report on relations between related parties Contracts with other companies of GE Group GE Money Bank, a.s. GE Capital International Holdings Corp. Revolving Credit Agreement Vyskočilova 1422/1a, Prague Long Ridge Road, Stamford, USA SB GE Money Bank, a.s. General Electric Company, Fairfield, Global Contracts Between GE Vyskočilova 1422/1a, Prague 4 USA, CT06828 and Chubb Insurance and Chubb Insurance Company Company of Europe S.A. (Insurance for people travelling abroad). SB GE Money Bank, a.s. GE Capital Corporation, Global Contracts Between GE and Vyskočilova 1422/1a, Prague High Ridge RD, Stamford, USA Actimize Anti-Money Laundering System, SB GE Money Bank, a.s. General Electric Company, 3135 Easton Contract on the Provision Vyskočilova 1422/1a, Prague 4 Turnpike, Fairfield Connecticut, USA Information Technology. SB GE Money Bank, a.s. GE Capital Corporation, Master Services Agreement Vyskočilova 1422/1a, Praha High Ridge RD, Stamford, USA SB GE Money Bank, a.s. GE Capital Europe Limited Provision of Financial Services and Vyskočilova 1422/1a, Prague 4 Tempus House, 2200 Century House Maintenance for Oracle Thorpe Park, Leeds LS15 8ZB, UK SB GE Money Bank, a.s. GE Money, a.s. Co-operation agreement (as of ) Vyskočilova 1422/1a, Prague 4 Bottova 7, Bratislava, Slovakia management of credit cards (cash withdrawals) GE Money Bank, a.s. GE Money Brokers, a.s. Mandate contract as of Vyskočilova 1422/1a, Prague 4 Bottova 7, Bratislava, Slovakia OPS Services GE Money Bank, a.s. GE Money, a.s. Mandate contract as of Vyskočilova 1422/1a, Prague 4 Bottova 7, Bratislava, Slovakia OPS Services GE Money Bank, a.s. GE Capital (Czech) Holdings, s.r.o. Contract on the Provision Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4 Information Technology as of SM GE Money Bank, a.s. GE Money Brokers, a.s. Contract on the Provision Vyskočilova 1422/1a, Prague 4 Bottova 7, Bratislava, Slovakia Information Technology as of SM GE Money Bank, a.s. GE Money, a.s. Contract on the Provision Vyskočilova 1422/1a, Prague 4 Bottova 7, Bratislava, Slovakia Information Technology as of SM GE Money Bank, a.s. GE Money Multiservis, s.r.o. Contract on the Provision Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4, Information Technology as of SM GE Money Bank, a.s. GE Capital EMEA SERVICES LIMITED Contract on the Provision Vyskočilova 1422/1a, Prague 4 30, Berkeley Square, London W1J EW Information Technology AS 400 Velká Británie Receivables from contracts The Bank also provided services in the non-retail area to the area of IT project management (information technology). The Bank also provides traditional banking services to its affiliated companies under arms-length conditions, e.g. the keeping of current accounts and overdraft accounts. GE companies in the Czech Republic and the Slovak Republic. These services were rendered under arms-length business conditions. The Bank has also concluded a contract with Global Consumer Finance Ltd. on the provision of services in Contracts with subsidiaries of GE Group GE Money Bank, a.s. VB Leasing CZ, spol s r.o. Disposition to Contract for Banking products Vyskočilova 1422/1a, Prague 4 Heršpická 813/5, Brno and services - Current Accounts as of GE Money Bank, a.s. VB Leasing CZ, spol s r.o. Revolving Credit Agreement as of Vyskočilova 1422/1a, Prague 4 Heršpická 813/5, Brno GE Money Bank, a.s. VB Leasing CZ, spol s r.o. Term Loan Agreement as of Vyskočilova 1422/1a, Prague 4 Heršpická 813/5, Brno GE Money Bank, a.s. GE Money Leasing, s.r.o. Loan Agreement as of Vyskočilova 1422/1a, Prague 4 Holandská 1006/10, Brno GE Money Bank, a.s. GE Money Leasing, s.r.o. Loan Agreement as of Vyskočilova 1422/1a, Prague 4 Holandská 1006/10, Brno GE Money Bank, a.s. GE Money Leasing, s.r.o. Loan Agreement as of Vyskočilova 1422/1a, Prague 4 Holandská 1006/10, Brno GE Money Bank, a.s. GE Money Leasing, s.r.o. Loan Agreement as of Vyskočilova 1422/1a, Prague 4 Holandská 1006/10, Brno GE Money Bank, a.s. GE Money Auto, s.r.o. Contract on the Provision as of Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4 SB GE Money Bank, a.s. GE Money Auto, s.r.o. Contract on the Provision Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4 Information Technology as of SM GE Money Bank, a.s. Inkasní Expresní Servis s.r.o. Contract on the Provision Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4 Information Technology as of SM GE Money Bank, a.s. GE Money Auto, s.r.o. Contract on the Provision of services as of Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4 application use of GE Money E-servicing, SA GE Money Bank, a.s. GE Money Auto, s.r.o. Mandate contract Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4 SA GE Money Bank, a.s. GE Money Leasing, s.r.o. Contract on the Provision as of Vyskočilova 1422/1a, Prague 4 Holandská 1006/10, Brno SB GE Money Bank, a.s. VB Leasing CZ, spol s r.o. Framework Ageement Vyskočilova 1422/1a, Prague 4 Heršpická 813/5, Brno as of G Lease contracts receivables The Bank concluded lease contracts with companies in the GE Group, which have their headquarters in the BB Centre building in Vyskočilova Street. The Bank reinvoices the costs associated with the lease at the BB Centre building proportionally to these companies on a monthly basis. The Bank concluded lease contracts with GE Money Auto, s.r.o., which uses a part of the Bank s premises located in regional cities for the sale of its products. As consideration, it pays the Bank an arms-length rent, including the proportional associated costs for the operation of the commercial locations. GE Money Bank, a.s. GE Capital (Czech) Holdings, s.r.o. Lease contract in the BB Centre Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4 building, Vyskočilova 1422/1a, Prague 4 GE Money Bank, a.s. GE Medical Systems Česká republika, Lease contract in the BB Centre Vyskočilova 1422/1a, Prague 4 s.r.o., Vyskočilova 1422/1a, building, Vyskočilova 1422/1a, Prague Prague 4 GE Money Bank, a.s. GE Money Auto, s.r.o. Lease contract Jaroměř, Vyskočilova 1422/1a, Prague 4 Vyskočilova 1422/1a, Prague 4 Ve Sladovnách 37. SA GE Money Bank, a.s. General Electric International, Inc., Lease contract in the BB Centre Vyskočilova 1422/1a, Prague 4 org. složka, Bucharova 2641/14, valid from Prague 5 GE Money Bank, a.s. GE Money Leasing, s.r.o. Lease agreement business premises Vyskočilova 1422/1a, Prague 4 Holandská 1006/10, Brno České Budějovice as of GE Money Bank, a.s. GE Money Leasing, s.r.o. Lease agreement business premises Vyskočilova 1422/1a, Prague 4 Holandská 1006/10, Brno Liberec as of GE Money Bank, a.s. GE Money Leasing, s.r.o. Lease agreement business premises Vyskočilova 1422/1a, Prague 4 Holandská 1006/10, Brno Plzeň as of VB Leasing Services, spol. s r.o. GE Money Leasing, s.r.o. Lease agreement business premises Heršpická 813/5, Brno, Holandská 1006/10, Brno Zlín as of

115 226 GE Money Bank, a.s., Consolidated annual report 2015 Report on relations between related parties (b) List of other legal acts During the course of the accounting period no legal acts, other than the ones mentioned above, were made in favour of the Controlling Party and the controlled parties over and above the framework of the normal legal acts by the Controlling Party as part of the performance of its rights as a shareholder of the Controlled Party. 3. OTHER MEASURES, PERFORMANCE RENDERED AND COUNTER-PERFORMANCE ACCEPTED During the course of the accounting period no other measures, performance or counter-performance were adopted or made in the interest, or on the urging of, the Controlling Party, and its controlled parties on the part of the Controlled Party, over and above of the framework of the normal measures, performances and counter-performances of the Controlled Party in relation to the Controlling Party as a shareholder of the Controlled Party. 4. EVALUATION The Bank declares that it has not incurred any loss as a result of the conclusion of the above-mentioned contracts, the performance of the other legal acts and other measures mentioned above, or the performances rendered or counterperformances accepted. Prague, 25 February 2016

116 Information line GE Money Bank, a.s., Vyskočilova 1422/1a, Praha 4 Michle, IN ,registered by the MC in Prague, Section B, Entry No tel.: