During its successful 25-year history, Center-invest Bank has established an ecosystem comprising its shareholders, employees, customers and partners. The ecosystem works together to implement its programmes for sustainable, innovative and responsible development. It has proved resilient and effective irrespective of the transformations underway.

Center-invest Bank’s Ecosystem
1500000
customers
1
million
dollars
1
trillion
rubles
invested in southern Russia’s
economy
1.2
trillion
rubles
in SME loans
1
billion
rubles
invested in social and
educational projects
840
billion
rubles
in loans to retail customers
125
billion
rubles
in loans to agribusiness
14
billion
rubles
invested in energy
efficiency

Letter to Shareholders

Dr. Vasily V. Vysokov

Doctor of Economics, Professor
Chairman of the Board of Directors

Center-invest Bank: was, is and will be the best!

In 2017 Center-invest Bank celebrated an important anniversary: it was 25 years since the Rostov region’s first privatised enterprises founded the new financial institution, which became known as a “reform laboratory” in southern Russia. At all stages of reform, the bank has:

together with its customers, found solutions for new tasks and challenges
offered innovative products and services for retail customers, agribusiness, communal infrastructure and energy efficiency
introduced best international practice with respect to environmental and social responsibility and corporate culture
set up and run social and educational projects for schoolchildren, students, entrepreneurs and government bodies
developed its information system, and automated and digitalised transactions and technologies
nurtured its skilled and creative employees
developed a strong corporate culture

As noted by the participants in an anniversary foresight session, these qualities together with the 25 years’ experience of working creatively, accumulated within the bank’s ecosystem, mean that it is ready and able to respond to any transformations in the economy, regulation, and the competitive environment, and also to technological challenges.

In 2017 Center-invest Bank achieved recognition in the socially responsible investments market when responsAbility Investments AG (Zurich, Switzerland) became one of its shareholders.

In 2017, 89 children were born to Center-invest Bank employees.

Ratings and achievements

Center-invest Bank was the first Russian bank to have its pre-crisis rating restored by Moody’s: Ba3, positive outlook.

Center-invest Bank is one of the top 30 banks in Central and Eastern Europe. We rank 29th for assets growth, 130th for profits, and 165th for asset size. Rating of Central and Eastern Europe’s Leading Banks – 2017.

Expert RA rating agency Ranking of leading Russian banks as at 01.01.2018

40 - Profits

42 - Capital adequacy (CAR)

48 - Return on equity (ROE)

49 - Return on assets (ROA)

51 - Cost/Income ratio

55 - Tier 1 and net assets

Ba3 Bank credit rating

31 - Reliability rating of Russian banks

4 - Value of loans issued to individuals

12 - Value of loans issued to SMEs

34 - Retail loan portfolio

39 - Retail customer deposits

54 - Business loan portfolio

56 - Total loan portfolio

69 - Assets

Key Financial Indicators

Sergey Smirnov

PhD in Economics
Chairman of the Executive Board

In 2017 Center-invest Bank celebrated its 25th anniversary. This was an excellent opportunity to reflect on our history and to look to the future with confidence. On the eve of this anniversary, the bank welcomed a new shareholder: responsAbility Investments AG, a leading Swiss fund, acquired a 10% share in Center-invest Bank. The fund was attracted by our focus on developing the local economy: small business, agribusiness and energy efficiency.

For the past 25 years, Center-invest Bank has focused on sustainable development and responsible business practices based on ESG principles. Last year was no exception.

The key indicators demonstrate the bank’s ability to operate in a complex financial and economic environment and to evolve in a rapidly changing situation.

In 2017 Center-invest Bank increased its market share and demonstrated sustainable growth in a fairly challenging macroeconomic environment.

The key financial indicators for 2017 are presented below:

Center-invest Bank’s key indicators,
RUBm
Assets
Deposits
Net loans and leasing
Capital
Profits

Thanks to its stable, sustainable and balanced asset structure, in 2017 Center-invest Bank achieved strong returns on equity and assets.

In 2017 Center-invest Bank’s profits calculated under IFRS were up by 42%, to RUB1.4bn, while net assets increased by just 6.3%.

Customer accounts as a percentage of total liabilities continued to increase (by 8.4% in 2017), which confirms that the bank enjoys a high level of trust among the population of southern Russia.

The bank’s loan portfolio increased by RUB7bn (+9%) in 2017, to a record RUB86bn. The stable growth in the loan portfolio is attributable to the bank’s constantly updated loan programmes, low rates for retail loans, and comprehensive support for entrepreneurs. Growth in the loan portfolio was driven by retail lending.

Structure and dynamics of the loan portfolio

on 31.12.2017

Retail loans,
RUBbn
33983
36672
42380
49864
SME
loans,
RUBbn
30467
30582
28729
28103
Corporate
customers,
RUBbn
2015
11101
2016
9659
2017
7671
2018
8083

Retail Lending

The retail loan portfolio increased by RUB7.5bn (+17.7%) in 2017 to RUB49.9bn at year end (2016: RUB42.4bn) and comprised 140,413 loan agreements (104,852 in 2016).

Structure and dynamics of retail lending

Mortgages
14495
20371
27035
+
32.7
%
Consumer
loans
19722
19563
20835
Car loans
2016
2455
2017
2446
2018
1994

Retail lending is based on our sustainable banking business model, thorough assessment of borrower risks and the management of these risks. This allows Center-invest Bank to provide loans at low rates.

In 2017 Center-invest Bank issued 49,518 loans for a total of RUB27.3bn (2016: 44,493 loans for a total of RUB23.5bn). The growth in the number of mortgage loans is particularly notable: in 2017, 6,739 loans were issued for a total of RUB12bn, an increase of more than 19% on 2016.

We do not engage in the practice of providing express loans in retail outlets. Instead, we give preference to customers with a good credit history, our own depositors, and participants in Center-invest Bank payroll programmes.

Center-invest Bank
ranked 18th among Russia’s largest banks for volume of mortgage lending in 2017.

In 2017 the bank continued to participate in government loan programmes. For example, we made 146 mortgage loans for a total of RUB239m to borrowers receiving government subsidies towards interest and capital repayments. This included mortgage lending under the Young Teachers programme.

Bank Cards

Center-invest Bank is the only bank in southern Russia to have its own modern processing centre and three card personalisation centres (in Rostov-on-Don, Krasnodar and Volgograd). This allows us to systematically expand our services based on bank cards and to introduce innovative products and services quickly and effectively.

In 2017 Center-invest Bank issued 151,990 VISA International, MasterCard Worldwide and Mir cards. At FYE 2017 there were 396,686 cards in circulation. Center-invest Bank cardholders carried out 120 million transactions in 2017 (+23.7%).

The bank’s acquiring network comprises 11,266 ATMs, payment terminals and POS terminals.

Number of transactions, million
2016
97
2017
120
+
23.7
%
Number of active cards, thousand
2016
323
2017
397
+
22.7
%
Number of payroll programmes
2016
2617
2017
2928
+
11.9
%
Number of ATMs
2016
476
2017
497
+
4.4
%
Number of goods
and services providers
using the bank’s payment
processing centre
2016
3149
2017
5065
+
60.8
%
Number of self-service terminals
2016
278
2017
357
+
28.4
%
Number of
POS-terminals
2016
2617
2017
2928
+
42.5
%

As well as the convenience of card payments, Center-invest Bank offers its customers the added benefit of a loyalty programme which provides access to discounts when paying by card for various types of products (www.promo.centrinvest.ru). Customers can also take part in various promotions run by the payment systems. The bank is continually expanding the list of companies participating in this programme.

Center-invest Bank was one of the first banks in Russia to participate in the Mir payment system. We continue to be actively involved in issuing Mir cards and developing their functionality to meet customer needs.

Center-invest Bank’s “People’s” card was ranked by the Banki.ru portal as the best free Mir card in 2017.

Retail Deposits and Services

In 2017 retail customer deposits and accounts increased by RUB3.5bn to RUB64.2bn at year end. This increase was accompanied by a decrease in the cost of the funding in line with the overall market trend: the weighted average interest rate fell by 2% in 2017 to 7.4%. These results show that our deposit accounts and account servicing options are attractive, and that we are achieving broad coverage of all sectors of the population and retaining customer trust.

In 2017 the bank continued to improve its payment and cash services for retail customers. Payments for various services are made in real time and do not require customers to complete payment requests. To speed up the process, the bank’s system reads the barcodes and QR codes on bills.

In 2017 the bank accepted RUB14.5bn in bill payments from retail customers (including utility bills), and 63% of these payments were made using self-service terminals, ATMs and Internet banking, an increase of 18% on 2016.

The bank processed USD12.5m, EUR0.6m and RUB1220.7m in Western Union and Zolotaya Korona money transfers. Cash foreign exchange transactions totalled USD49.9m, EUR25.8m, GBP2.2m, CHF1m and CNY0.8m.

Business Lending

Center-invest Bank introduced its first programme for SMEs back in 1997 and working with SMEs has remained a priority ever since. Today we have over 67,000 SME customers.

Center-invest Bank is one of the top five Russian banks by volume of SME lending. We rank in third place for size of SME loan portfolio and in fourth place for our sole trader loan portfolio (RAEX rating).

In 2017 lending to SMEs, sole traders and start-ups remained strong, with over 5,000 customers receiving a total of RUB87bn in finance. We reduced the interest rates for our SME loan programmes twice during the year.

The bank participates in government programmes to support SMEs. For over eight years, we have been working effectively with the SME loan guarantee funds in the regions where we operate. These funds can guarantee all types of loan, and such guarantees are one of the most liquid types of security.

As in previous years, agribusiness lending accounted for a considerable proportion of the bank’s business loan portfolio: 25%. The bank works with the best agricultural companies in southern Russia. The sector accounts for a quarter of Russia’s agricultural output.

In 2017, the bank issued 1,341 loans for a total of RUB9.4bn to agricultural companies. One quarter of these loans were for investment purposes. The agribusiness loan portfolio is RUB9.1bn.

Agribusiness loan
portfolio, RUBbn

4.2

2008

3.8

2009

5.2

2010

7

2011

7.9

2012

9.5

2013

9.7

2014

8.6

2015

9.7

2016

9

2017

On 6 September 2017 Center-invest Bank was included in the list of credit institutions authorised to participate in the government’s preferential agricultural lending programme. This programme provides loans with a maximum interest rate of 5% per annum for working capital and investment purposes. The list of authorised credit institutions is approved by the Russian Ministry of Agriculture. The bank’s inclusion in this programme confirms its status as one of southern Russia’s leading banks for agricultural lending and support.

Guided by best international practice, the bank finances investment projects in all agricultural sectors. These include projects to improve soil quality and crop production and to increase livestock productivity. The bank’s customers include leading fertiliser dealers, grain producers, grain traders and agricultural equipment dealers.

Unique Loan Products

To date, Center-invest Bank has lent a total of RUB716m on preferential terms to 619 new entrepreneurs. As well as offering preferential loan terms, we run various financial literacy training events and seminars for start-ups, and they can open a bank account with us free of charge. We also have a mentoring scheme whereby experienced business people advise start-ups. This scheme is mutually beneficial and rewarding for both the mentee and the mentor. In 2017 we had ten mentors working with fourteen new entrepreneurs.

These services are not philanthropic or a marketing ploy; they are a practical approach to managing entrepreneurial risk.

Under its special loan programme for women in business, Center-invest Bank has made loans on preferential terms for a total of RUB710.6m to 469 businesswomen. There have been no defaults on these loans.

In 2017 we launched a new business development loan programme for social enterprises in the following sectors: educational services, health and wellbeing, revival of cultural and historical traditions, domestic tourism, and the environment. Under this “Social Responsibility” programme, the bank has financed 16 projects with loans totalling RUB47.5m.

Number
of projects
Start-up
419
535
619
+
15.7
%
Loans
for businesswomen
2016
250
2017
353
2018
469
+
32.9
%
Social
responsibility
0
0
16
Total amount,
RUBm
Start-up
544.4
544
626,9
626
715.9
715
+
14.2
%
Loans
for businesswomen
310
310
481.1
481
710.6
710
+
47.5
%
Social
responsibility
2016
0
2017
0
2018
47

Focus on Energy Efficiency

The bank’s success in financing energy efficiency projects is attributable to a fundamentally new approach: sustainable lending. This approach combines technical, financial and social engineering. All projects are financed in accordance with the bank’s Environmental and Social Policy, which is approved by the Board of Directors and agreed with the leading financial institutions that are Center-invest Bank’s partners.

The bank finances projects to introduce energy efficient technologies in industry, agriculture, the service sector, the public sector, utilities, and the private residential sector. At FYE 2017, Сenter-invest Bank’s total investment to date in energy efficiency projects was RUB17.1bn (FYE 2016: RUB13.7bn). We have financed 22,000 projects.

The modernisation financed by the bank has reduced annual CO2 emissions by 179,000 tonnes (equivalent to the emissions produced or absorbed by 105,000 light vehicles, 513,000 barrels of oil, or 7m trees).

Center-invest Bank remains the only bank in Russia that provides homeowners with finance to renovate multifamily residential buildings.

To date, we have financed over 100 successful projects. In 2017, as part of a subsidised loan programme being piloted by the government, we made 25 loans to homeowners’ associations, for a total of RUB42.5m. The interest rate on our loans for housing renovations is 11% per annum. With the government subsidy (equivalent to the Russian Central Bank’s refinancing rate), the rate is 2.5-3% per annum.

Innovation and Technology

Yuriy Bogdanov

Member of the Executive Board
Director of innovations

Besides the changes taking place in the external environment, Center-invest Bank is in the process of digital transformation. This entails restructuring internal processes, external solutions and the customer offering. When developing models for IT transformation, Center-invest Bank draws on best international practice.

In terms of technological development, remote banking and the provision of financial solutions are priority areas for the bank. We made good progress in these areas in 2017, introducing new remote banking options for both retail and business customers.

In 2017 the number of current accounts increased by 24% to 69,600 at FYE 2017. This can be attributed to an increase in entrepreneurial activity in the regions where Center-invest Bank operates, our attractive terms and conditions, and simpler account opening procedures resulting from a change in the law.

Number
of current accounts
2012
48500
2013
50000
2014
52300
2015
54250
2016
56300
2017
69600

Remote banking services are used by 73% of the bank’s business customers. In 2017 we expanded the number of services available through business online banking. For example, customers can now pay taxes on behalf of third parties, and they can now send both payment orders and payment requests electronically.

Once again, Center-invest Bank won Federal Treasury tenders to service bank accounts and debit cards for public sector organisations in Krasnodar Krai and the Volgograd region. The bank continued to be a reliable partner for the Federal Treasury, servicing the accounts used to make payments to public sector organisations in the Rostov and Volgograd regions and Krasnodar Krai.

In 2017 the bank implemented a number of particularly important IT projects. For example, we launched a new “Mobile Bank” app, which allows customers to use online banking to manage their accounts and deposits, make loan repayments, pay into deposits, make P2P transfers to any card, and pay bills for utilities and communications services. The app includes fingerprint authorisation. In addition, customers can use the app to find their nearest Center-invest Bank ATM, and to view current exchange rates. It also has an analytics function giving customers a breakdown of their spending by various categories (e.g. shopping, health, services), across all of their accounts, and for different time periods.

Center-invest Bank became the Payment Systems Development Agency’s first partner. The agency is a new transport payment system operator in Rostov-on-Don. Residents can now top up their transport cards at Center-invest Bank’s self-service terminals.

A new front office solution (“operational front office”) was developed to establish a single standard for all service channels. This solution has been piloted at Head Office and in our Krasnodar branches. It has made transactions considerably less labour intensive, increased the speed of transactions, and improved service.

To encourage increased use of online banking, we have introduced a number of new functions and useful options. For example, we have introduced a “Securities” module for the management of brokerage accounts and securities accounts held with the bank. We have also introduced a single interface for universal ruble payments, making the process quicker and simpler for customers.

Customers with a Center-invest Bank payroll card can now access a new loan product online. In terms of simplicity and accessibility, the “007 loan” is comparable to a microloan, but the credit risk is low. This popular loan product was previously only available via the bank’s ATMs.

A team from the bank’s processing centre and IT Department were involved in several pilot projects with the National Payment Cards System, which operates the Mir national payment system. We were the first in Russia:

to enable Mir cardholders to use the ATMs of the Armenian national payment system, ArCa, and ArCa cardholders to use any of Center-invest Bank's ATMs and terminals
to be certified as an acquirer and issuer for the Mir card loyalty programme
to make it possible to connect Mir cards to the Samsung Pay mobile service
to achieve certification as part of the government’s project to set up payments from the Russian Social Insurance Fund to Mir cards
to introduce for its customers safe online payments using Мir Accept 2.0 technology

In early 2017 Center-invest Bank was the first in Russia to introduce campus cards based on the Mir payment system for the leading southern Russian universities. At FYE 2017 more than 20,000 cards had been issued. The card acts as a pass to the university campus; it is integrated with the university’s information system; and it is an “access key” for the electronic diary. It can also be used to keep a record of entitlement to free meals in the canteen and to receive other welfare payments. For students at Southern Federal University, the campus card is also an electronic library card, while at Don State Technical University the card includes a transport app for contactless payments for public transport in Rostov-on-Don.

Center-invest Bank is an active participant in start-up events, hackathons and investment sessions. We work with various IT start-ups and help to develop financial technologies in the region.

We were a strategic partner for the first ever FinTech Youth Day, held as part of the 2017 Finopolis Forum of Innovative Financial Technologies. We also put forward a student team from the Southern Federal District for the youth projects competition.

We have been a strategic partner for the Southern IT Park’s hackathons since the competition first began. In 2017 the bank established a special prize for the team that submits the most interesting fintech prototype by the end of the event. The “Clever Money Box” project won the RUB300,000 prize to create a minimum viable product (MVP) together with Center-invest Bank.

Center-invest Bank’s experience has been brought to the attention of the wider professional community. Our IT projects based on SAP SE software solutions were shortlisted for the prestigious SAP Value Award 2017. Center-invest Bank entered three projects for the award: accelerated introduction of new deposit products using SAP BS software; accelerated and lower cost generation of reporting forms using SAP BW; and increased productivity of the human resources department using SAP HCM.

Financial Markets

Lidia Simonova

Member of the Executive Board

Center-invest Bank’s sensible approach and transparency at a time of market volatility have strengthened customer trust in the bank. The increase in retail customer accounts in 2016 and 2017 allowed the bank to reduce more expensive borrowings from the financial markets. At FYE 2017, the total par value of Center-invest Bank bonds in circulation was RUB675.1m.

For its 25th anniversary, as part of its bond programme, the bank issued bonds for retail customers.

There were three bond issues in 2017 for a total of RUB1.3bn.

We considered the market conditions to be right for a bond issue, as rates on deposits were continuing to fall and customers were becoming interested in more profitable instruments.

The investment appeal of bonds compared to the traditional bank deposit is obvious. Interest on the Center-invest Bank bonds is paid four times during the term of the bond, allowing bondholders maximum flexibility in managing their capital.

Buying a bond is just as easy as opening a deposit with Center-invest Bank. In all our branches, the necessary documents will be drawn up free of charge. The bank covers all of the costs associated with the sale of the bonds. The customer receives the interest income in full, as under Russian law, private individuals are exempt from paying tax on this income.

Cooperation with IFIs

Since 2002 Center-invest Bank has raised funds from both the domestic Russian market and the international capital markets. The trust shown by Russian and foreign investors is due to the bank’s high standards of corporate governance and financial transparency. The funds raised are used for SME lending, financing post-crisis development projects in various economic sectors, and increasing consumer lending.

In May 2017 the Black Sea Trade and Development Bank (BSTDB) undertook to provide Center-invest Bank with a three-year RUB1bn loan to finance SMEs. This was the BSTDB’s first Russian ruble loan. The signing of this loan agreement marked the continuation of the relationship between Center-invest Bank and BSTDB which began in 2007.

International Payments and Trust Management

In 2017, transactions through correspondent accounts totalled USD391m. Trade finance totalled USD4.72m.

Center-invest Bank manages two bank-managed mutual funds (BMMF) and three endowment funds. At FYE 2017 the total value of assets under management was RUB177m, an increase of 7.8% over the year.

BMMF Center-invest 1 is managed in accordance with the “Russian Shares” Standard Management Strategy.

Increase in value of nominal share in BMMF Center-invest 1 compared to MICEX index as at FYE 2017

1 year3 years5 years10 years
BMMF Center-invest 1+4.62%+79.87%+95.00%+13.93%
MICEX index-4.38%+47.23%+43.06%+11.69%

BMMF Center-invest 2 is managed in accordance with the "Ruble Bonds" Standard Management Strategy for which the benchmark is the RUX-Cbonds index.

Increase in value of nominal share in BMMF Center-invest 2 compared to Rux-Cbonds index as at FYE 2017

1 year3 years5 years10 years
BMMF Center-invest 23.01%39.21%43.37%116.84%
Rux-Cbonds index12.43%49.92%62.12%151.80%

Experts from Center-invest Bank manage the assets of three endowment funds.

FundValue of net assets at FYE 2017, RUBm
Education and Science in the Southern Federal District Endowment Fund105.7
Southern Federal University Endowment Fund34.6
Don State Technical University Endowment Fund10.3

Return (percent per annum) from endowment fund assets management:

Fund20072008200920102011201220132014201520162017
Education and Science in the Southern Federal District Endowment Fund9.34.05.211.27.39.810.17.115.911.08.4
Southern Federal University Endowment Fund19.614.97.98.310.710.26.317.110.69.6
Don State Technical University8.07.78.216.49.59.7

International Trade Services

The volume of transactions under our customers’ international trade contracts in 2017 was: USD237m, EUR44m, RUB7bn, CNY24m.

Center-invest Bank is continually working to boost southern Russia’s import and export trade. We also help our customers to comply with Russian currency law. In 2017 the bank held a series of seminars on the changes to Russian currency control regulations for our customers who are engaged in international trade.

Branch Network

Sergey Yukilevich

PhD in Economics
Member of the Executive Board

At FYE 2017 Center-invest Bank’s branch network comprised 127 branches located in the Rostov and Volgograd regions, Krasnodar Krai, Stavropol Krai, Moscow and Nizhny Novgorod. Our extensive branch network in southern Russia gives us a definite competitive advantage in implementing our development strategy. It allows us to replicate our unique bank products and solutions, which are competitive in all of the regions in which we operate.

The bank’s branches provide a full range of modern banking services and products. Irrespective of their geographical distance from Head Office, all our branches adhere to the same high standards of customer service and the same work principles, and internal procedures are consistent throughout the branch network.

In conjunction with the introduction of new technologies and business process optimisation, our branch network continually delivers high-quality growth for key indicators.

At FYE 2017 our branches accounted for 75.8% of the bank’s loan portfolio and 67.6% of deposits.

Growth within the branch network has been driven by retail lending. In 2017 the retail loan portfolio increased by RUB6.9bn (+20%). The highest growth was seen in Krasnodar Krai: RUB2.8bn (+39%). SME lending has also been an important growth area for the branch network, as has agribusiness lending for our rural branches.

The bank has been expanding its branch network in Nizhny Novgorod. Since we first began working in this region two years ago, we have established a fairly large customer base. In 2017 the loan portfolio in Nizhny Novgorod increased by 140% to RUB390m. We have issued bank cards to over 4,000 local residents. In order to offer the full range of banking services to SMEs and further develop our network, we decided to open a main branch in Nizhny Novgorod, and we also expanded two smaller branches.

The bank continues to actively develop its branch network and to modernise and update the format of its existing branches. For maximum customer convenience, based on the “one-stop-shop” principle, we opened five new branches in 2017 in partnership with multifunctional centres for central and local government services (MFC). The new branches were opened in Azov, Volgodonsk, Novoshatinsk, Kuibyshevo and Krasnodar. The bank began working with MFC in 2013 and our customers have found this comprehensive service beneficial. Ten of our branches now operate in partnership with MFC.

The bank is paying considerable attention to the use of modern equipment to deliver services. We are optimising and expanding our network of self-service terminals and ATMs and increasing their functionality. We are working to increase the number of self-service terminals that are available 24/7.

In all the regions in which the bank operates, considerable efforts are being made to develop youth business and to support new entrepreneurs. In partnership with the administration of Krasnodar Krai, we opened the region’s first co-working centre, Action Place. The residents are young entrepreneurs who were selected by a panel on the basis of their business projects.

Together with Volgodonsk city administration and the advice centre Consulting Partner, Center-invest Bank is running a project “New Entrepreneurs School”. Many of the participants have become Center-invest Bank customers and now have successful business projects.

Social report

Social report of the Center-invest Bank reflects the most significant aspects of its operations and demonstrates the Bank's contribution to socio-economic development.

All of the Center-invest Bank projects in corporate social responsibility highlight our responsible attitude to social development in the regions of presence, improvement of financial literacy among households and startup businessmen who represent the future of the Russian economy.

Over the years, the one-off actions transformed in permanent social, educational, charitable programs that cover 5 regions of the country and more than 500,000 persons now. The social investments of Center-invest Bank exceeded RUB 1 billion. It is important to note that such results would not be achieved without a cohesive team of like-minded persons: shareholders, partners, employees and customers of the Bank.

In 2017, Center-invest Bank celebrated its 25th anniversary. All these years, the Bank successfully introduced the best international practice in the financial services and technology to the public, business community and authorities in Southern Russia.

Center-invest Bank is a positive example of a company's social responsibility based on the sustainable banking business model. Corporate social responsibility of Center-invest Bank (hereinafter - CSR) focuses on positive changes in the society, corresponds to the Bank's strategic interests and is implemented for the benefit of the present and future generations.

In CSR development, Center-invest Bank relies on its own experience and global CSR and non-financial reporting standards, including the Guidelines for Sustainable Development Reporting of the Global Reporting Initiative (GRI) and UNESCO's Goals for Sustainable Development.

Social and charitable programs of Center-invest Bank are customized to the business development specifics and level, are reviewed regularly and modified taking into account the views of staff and shareholders. All CSR projects are being implemented at the Bank's expense and aimed at improving its reputation and image, establishment of corporate identity, expansion of fruitful partnerships with the government, business partners, local communities and civil society organizations.

The Board of Directors of Center-invest Bank determines the priority directions of support to the society and environment, in accordance with the adopted strategy, financial capacity, national priorities and local features. The priority areas include:

Financial Literacy

Socio-educational projects implemented by Center-invest Bank are aimed at raising the importance of quality education in the contemporary society, as well as the implementation and development of economic knowledge.

Entrepreneurial Education for Everybody

For the global spread of financial literacy, in March 2013, with the support of the Bank's employees and relying on Center-invest experience with businessmen in Southern Russia, a free educational web portal vseobuch.rf, that unites methodical editions and modular tests in Economics and entrepreneurship, was launched Everyone can take tests, view video lectures or self-study books about finances and receive a course completion certificate. More than 33,000 users are registered on the website, and more than 14,200 of them have already completed their training.

In January 2014, the portal's English version was launched. In 2016, Chinese, French, German and Portuguese versions appeared. Entrepreneurial Education for Everybody in Chinese was presented to the mayor of People's Government of Yantai City, Ms. Zhang Yungxia, who highly appreciated this course and by the end of 2017 the number of Chinese users on the Internet portal had exceeded 3,000.

In 2016, the free online course, Entrepreneurship Education for Everybody, was included in the compulsory program of the Smena Russian children's center. In the summer holidays, 2,000+ pupils of the Center gained knowledge on business fundamentals through the portal annually.

Financial literacy centers

The long-term experience gained by Center-invest Bank team in spreading of financial literacy was summarized in the Financial Literacy Center project.

In April 2014, the Bank in partnership with Southern Federal University opened the first Russian Financial Literacy Center in Rostov-on-Don, where everyone can get free advice and financial knowledge. In 2016, in partnership with the Krasnodar State Technological University, a similar Center was opened in Krasnodar, and in autumn of 2017, the third Financial Literacy Center was established at the Taganrog Technological Institute of the Southern Federal University (in Taganrog).

This socio-educational project consolidated the initiatives of businesses and academic community. The largest universities in the region partnered with the bank in that project. The project's main goal is to provide access to free advice and financial knowledge to the residents of Southern Russia.

The project captures new educational technologies that allow each student to gain knowledge on the contemporary financial world, risk and income, to acquire the skills of making financial decisions and to identify their consequences for himself and for others. The practical part enables to multiply the acquired knowledge and skills, providing consulting services that allow for warding off people's lending and other financing errors in the Center.

The achievements of the Financial Literacy Centers are impressive: over the three years, specialists of the Center have trained 1,210 volunteers from 15 universities. Volunteers and specialists of the Center provided 65,000+ free financial consultations. 400 FLC graduates had the internship opportunity at Center-invest Bank. 132 best inters joined the Bank's professional team, becoming young professionals.

The Financial Literacy Center consultations cover all population groups of Southern Russia. Center-invest Bank professionals teach students for volunteer work in the Centre on key financial areas, on regular basis, such as: private wealth management, business planning basics, proper loans, online banking, tax features and the basics of safe use of bank cards.

Entrepreneurs receive free-of-charge financial literacy training in the Center, via the Customer/Bank system, as well as tax, financial and accounting advice from the federal-level experts.

The success of Center-invest Bank in promoting of financial literacy among households in the regions where the Bank operates has been recognized by two Public Recognition awards given by the Krasnodar Region Public Chamber - in 2016 and 2017.

Nationwide Weeks of Savings

Center-invest Bank and the Financial Literacy Center were the key regional sites of the Nationwide Financial Literacy Week for Children and Youth and the Nationwide Week of Savings, organized by the Ministry of Finance of the Russian Federation, which take place annually in spring and autumn, respectively.

In 2017, the Bank's professionals and volunteers conducted 185 workshops, seminars and discussions as part of the Financial Literacy and Savings Weeks. 10,000+ citizens received advice on managing personal finances and family budget.

This year, Nizhny Novgorod, a new region of the Bank's presence, joined the Bank's financial education development project, which has been rolled out in Rostov and Volgograd Regions, Krasnodar and Stavropol Regions. The volunteers conducted workshops for children of younger and school age. During the lessons, experts discussed the right approach to making the first financial decisions, the choice of a safe bank, shared their lifehacks in web shopping.

In Krasnodar, in an effort to improve financial accessibility for the population with disabilities, a workshop with sign language interpreter on the Family Budget and Caring Consumption was held in a boarding school for disabled children.

University for Seniors

In October 2017, Center-invest Bank, the Pension Fund of Russia's Department in the Rostov Region and the Rostov-on-Don Regional Branch of the Russian Retirees' Union (a Russian public organization) signed an agreement to implement the joint project - University for Seniors.

As part of the Project, employees of Center-invest Bank and the Financial Literacy Center volunteers conduct free educational workshops for people of pre-retirement and retirement age on how to pay utility bills from home, through Internet banking, how to identify a reliable bank for deposits, how to use a bank card to receive the retirement benefit without queues, and to find answers to other questions relating to personal finance.

The teaching methods were based on the practical experience of the volunteers who conduct workshops for retirees in the Financial Literacy Centers every Tuesday.

Financial Literacy at School

On December 1, 2017, the first scientific-practical conference, Financial Education Development in Rostov-on-Don Secondary Schools, was held in the congress center of Center-Invest Bank in Rostov-on-Don. The event was attended by 70 teachers of Rostov-based schools.

The conference participants gathered to share information on the useful initiatives aimed at financial literacy improvement: how to acquaint children with the world of finance to help the younger generation to manage their money competently and responsibly, to make sound decisions in difficult situations.

Center-invest Bank, by investing in financial literacy development in Southern Russia, supported the project launched by Rossiya Association and the Russian Ministry of Finance on the establishment of a comprehensive system of training courses on financial literacy for further education. With the financial support of Center-invest Bank, all schools based in Rostov-on-Don were supplied with teaching kits, Learn Sound Financial Behaviour, which includes books for children of different ages, as well as teaching aids for teachers and parents, for the new 2017/2018 academic year. The total of 11,000 financial literacy books were made available.

Children's Bank

Gaining a variety of financial knowledge and skills in childhood, moreover, in a funny game, helps children in their future adult life. No matter what profession a child will choose in the future, everyone will shall pay taxes, make financial decisions on lending or investments.

200,000 children have already tried themselves in the role of bank staff in KidBurg, a children's city of professions, in Rostov-on-don and Nizhny Novgorod, where special children's branches of Center-invest Bank were established. This is the most popular place of work among children. The children get acquainted with such professions as teller, cashier, senior cashier, collector and even assistant office head there. By its style, the children's bank in KidBurg is fully consistent with Center-invest offices and has all the necessary equipment.

In 2017, the Tax Inspectorate was founded near the children's bank - every child will be able to assess and obtain a tax deduction for education in different professions there. All monetary transactions take place under the careful supervision of the young cashiers from Center-invest Bank.

Education and Science

Socio-educational projects of Center-invest Bank cover all participants in the educational and scientific process — teachers, students, pupils and young professionals.

Support to students and young scientists

In 2007, shareholders and clients of Center-invest Bank established the region's first endowment fund - Education and Science SFD. This is a real and effective financial tool for legal and targeted to support by businesses of education and science in Southern Russia. In this time, the Fund's capital has increased five times, to RUB 110 million, and the income grew five times (in 2017 +8.75% p.a.), the number of program participants soared 25 times!

Every year, the Foundation holds a competition for the best students and the best young teachers gives grants to young scientists and helps talented inventors.

For 15 years the best students from South-Russian major universities receive scholarships from Center-invest Bank and Education and Science SFD endowment fund. Every year, the scholarship fund comprises over RUB 9 million. In this period, over 18,000 students took part and 4,000 students won, in the Center-Invest Bank scholarship contest.

Since 2009, together with Education and Science SFD endowment fund, the Bank is holding the Best Young Teacher competition. The winners are chosen by Center-invest Bank scholarship holders. As a result, 15 best young teachers from the leading universities of Southern Russia traditionally receive prizes of RUB 100,000. The awards ceremony is held on the eve of Day of Russian Entrepreneurship.

Teacher of the Year

Center-invest Bank has always respected and supported those with creative attitude to one's work, those introducing advanced educational technologies, in an effort to make the learning process interesting and efficient and to upbring the humane and socially adapted young generation.

Over 15 years, the Bank has supported the Teacher of the Year regional competition and awarded prizes for the best methodological developments and innovative approaches in teaching financial literacy to children.

Science Festivals

Center-invest Bank is the General Partner of the Science Festival of Southern Russia. For eight years, the Bank has supported the Festival that brings together all those professionally engaged in science and those who decided to join the scientific and educational world.

In autumn of 2017, a science festival was held in the Southern Federal University and the supporting educational institution, the Don State Technical University. Not only Center-invest Bank acted as the General Partner of the events, but also as an active participant. The site of Center-invest Bank and of the Financial Literacy Center was visited by 5,000+ persons.

At the science festival, Center-invest Bank presented an interesting and colorful educational Quest for financial literacy that included finance and entrepreneurship puzzles and tasks in combination with sports trials for participants. All of the site visitors who completed a free online course, Entrepreneurial Education for Everybody, received a certificate of entrepreneurship knowledge level.

Ms. Larisa Tutova, Deputy Chairman of the Russian State Duma's Federal Assembly Education and Science Committee, Mr. Igor Guskov, Senior Deputy Governor of the Rostov Region, and Mr. Boris Grachevsky, Art Director of Eralash children's cinema magazine, became honorary guests of the Bank's stand.

Entrepreneurship Development

Entrepreneurship support and development in Southern Russia is a priority task for Center-invest Bank. The Bank's programs in youth, women's and social entrepreneurship enable everyone to own business.

Youth startups

The Bank supports young entrepreneurs by implementing special programs, such as Startup and Youth Business in Russia. 650 new entrepreneurs of the South of Russia have already started their business with Center-invest Bank. Total funding has exceeded RUB 750 million.

In addition to soft loans for setting up business, free cash management services, the Bank offers the help of experienced mentors.

The mentors' school was established by Center-invest Bank jointly with the Forum of Business Leaders (IBLF Russia). The advice from Russian and foreign experienced entrepreneurs are free and are held individually.

Center-invest Bank's experts are honorary members of the international program of entrepreneurial student projects - Enactus. Experience in sustainable development gained by Center-invest Ban helps to determine which Enactus team was the most efficient in taking entrepreneurial actions to teach people to improve their lives in economical, social and environmentally sustainable terms.

Financial and technology initiatives, FINTECH startups, is the future of the Russian economy. Center-invest Bank helps to develop them within its own ecosystem and grow with them. On October 4, 2017, as part of Finopolis 2017, Forum for Innovative Financial Technologies, the first FinTech Youth Day took place. Center-invest Bank acted as a strategic partner of the Youth Day and presented the student team from the Southern Federal District in the contest of youth projects.

Women's Business Loan

To support business women in Southern Russia, Center-invest Bank has initiated a special program to support women entrepreneurs, including soft loans, information support and cooperation initiatives to the program participants.

At present day 480 business women have already received soft loans from Center-invest Bank, amounting to RUB 730 million, to develop their businesses. We emphasize that the failure rate on women's loans is 0%.

The program implemented by Center-invest Bank is a compliment for women entrepreneurs. Our goal is to show that women's business is special and always social. Many of the Bank customers participate in the development and support of entrepreneurs, acting as mentors. These efforts triggered a double growth in "women's business loans" in 2016/2017. Lending volumes rose 3 times.

1,000+ active and motivated women attended 45 business breakfasts of Center-invest Bank in Rostov-on-don, Krasnodar, Taganrog, Sochi, Volgograd, Pyatigorsk and Stavropol.

As a result of cooperation among participants in Center-invest Bank programs, 28 joint fundraisers were held, 7 new joint business projects emerged, 76 partnership agreements are being implemented.

Center-invest Bank is pleased to share its customers' success stories and has released 2 books with inspiring business examples (www.centrinvest.ru/publications). The English version of the books was presented to participants in the Global SME Finance Forum 2016. It was held in China and introduced the unique experience of Center-invest Bank of customers' and partners' businesses to the world community.

Social Entrepreneurship

Center-invest Bank has developed a new loan for development of social entrepreneurs' businesses in education, healthcare, culture and environment. The Bank offers a discounted interest rate and an information platform for cooperation of social initiatives in the region. The Bank's partners in this program were the guarantee funds of the Rostov Region, Volgograd Region and Krasnodar Region. As of the end of 2017, the Bank has financed 16 projects worth or RUB 47.5 million as part of that program.

To promote and multiply successful social entrepreneurship examples, Center-invest Bank jointly with the Russian Union of Journalists and the Public Chamber of the Rostov Region has been holding the contest for V.V. Smirnov Award for the media since 2015. During this time representatives from 14 Russian regions sent 430 creative works, which focus on identifying best practices in implementation of social entrepreneurship projects in this country and introducing them to their readership to the Contest Commission. Thirty-four authors became the competition winners. Aware website: dobro.centrinvest.ru.

Culture and Art

Support for culture and art is one of the socio-educational projects of Center-invest Bank. The Bank supports creative projects aimed at the regional culture development, the preservation of historical values and help to the talented youth.

With Love for Children

For cultural education of children, since 2003 Center-invest Bank has implemented several charitable programs, together with the leading museums of Southern Russia, and sponsors free visits of exhibitions and shows for schoolchildren. 250,000+ children are participating in this project.

Gold of the Don Steppes at the Rostov Regional Museum of Local History

Artistic Heritage of Southern Russia at the Rostov Regional Museum of Fine Arts

Artistic Heritage to the Children at the Krasnodar Regional Art Museum named after F. A. Kovalenko

Battle of Stalingrad in the Volgograd Museum-Panorama

Secrets of the Galaxy at the Volgograd planetarium

Quiet Don in the M. Sholokhov State Museum-Reserve in Veshenskaya stanitsa, Rostov Region

Good Theater

Support of theatre art is another step towards development of the Bank's social and charity projects.

2017 saw the launch of a new program Good Theater implemented with the Rostov State Musical Theatre. 800+ children from large families, inclusive classes and orphan asylums received theatrical season tickets from Center-invest Bank and watched the Musical Adventures of Chipollino and the exploits of the Music Galaxy Guardians during the year.

Center-invest acts as a financial partner to the Rostov Regional Theatrical Festival of Melpomene and provides a monetary award to young actors. All the theatres based in the Rostov Region are involved in the contest festival and present their best performances of the season.

In summer of 2017, Center-invest Bank became a financial partner of the unique inter-museum project, Ivan Aivazovsky. 200 Years of Triumph. It is important for us that the great painter's exhibition includes paintings from the collections of three museums based in Southern Russia: Rostov Regional Museum of Fine Arts, Taganrog Arts Museum and Krasnodar Regional Art Museum named after F.A. Kovalenko.

As part of this project, the Bank arranged for a children's drawing contest, Young Marine Painters and 25 best children works were presented at the exhibition halls next to Ivan Aivazovsky's original masterpieces by resolution of a professional jury as an award.

Green Theatre

Center-invest Bank created a corporate theatre project Green Theatre. It provides an alternative to standard team-building exercises and involves absolutely every member of staff, be it as an actor, a production assistant, or a member of the audience. The project has also taught employees how to work creatively in a team.

The premiere of Green Theatre’s first production, a play inspired by A.S. Griboedov’s «Woe from Wit», was played in November 2015 to a full house.

As part of the bank’s 25rd anniversary celebrations was held the premiere of Green Theatre’s second production, a musical directed by Evgeny Ovchinnikov inspired by V.Livanov and Yu. Entin «Town Musicians of Bremen». All the roles in the musical were performed by the bank’s employees.

All performances of the Green Theater pursue charitable purposes. During the performances Center-invest Bank organize the targeted donations are collected for children of regional shelters, orphanages and charitable foundations.

Music Festival

In 2017, Center-invest Bank became an official partner of the international contest-festival Accordion Plus. It is a platform for the development of musicians, composers, restoring artists, a place for experimentation and a good start for talented youth. Since 2010, the Harmony international music center has been holding this festival in the Don capital together with the Rostov-on-Don Culture Department.

Center-invest Bank is a permanent partner of Alliance Française and Music Festival in Rostov-on-Don. The Don Public Library is the festival's traditional venue. It is a large-scale festival that brings together musical teams of Southern Russia for a 5 hour concert, which annually attracts 2,500+ persons!

Throughout its history, the Music Festival arrangers have sought to attract increasingly more talented local musicians and to enable the wider public to get to know them. It is with great enthusiasm that the artists join the global festival movement, supporting its basic concept: to play music of all genres completely for free on open areas of the city, for own pleasure and the delight of the audience.

Center-invest Bank has taken much effort to make Southern Russia famous not only for its wonderful past, but for the glorious present. We will continue spreading the best cultural achievements.

Health & Fitness

Center-invest Bank supports the development of sport and the employees' desire to lead a healthy lifestyle. To develop children and youth sports, the Bank supports and promotes a variety of sports.

Children's Sports

Center-invest provides regular financing to Hope children's sports club where 30 hearing-impaired boys and girls born in 1995/2005 play basketball. This is the only children's basketball club working with deaf children in Southern Russia. The club focuses on basketball promotion among disabled children at the federal level and on training athletes for the Paralympic team.

Children's chess develop in the Don Region thanks to the investments of Center-invest Bank and partnership with School Chess Public Association. This intellectual sports is popular with residents of the region, with 20+ events and tournaments held in 2017. These include a game of multiboard chess, chess literature presentations, mass children's competitions.

Vladislav Sipetin (16 y.o.), a multiple champion and prize-winner of the Junior Championships of Rostov-on-Don, Rostov Region and the Southern Federal District, a prize winner in several adult tournaments, received an award from Center-invest Bank, a laptop that will enable him to participate in FIDE online games. He was one of the first Russians to receive the title of FIDE Internet grandmaster.

The first Intercontinental football tournament, ahead to the 2018 World Championship, was held in Sochi in mid-October as part of the 19th World Festival of Youth and Students. Children of the Bank's employees took part in the event - they led the participating teams to the tournament field. And parents took part in a friendly tournament of fans.

Bank tournaments

The Bank created very good conditions for going for sports for its employees in the Head Office. A sports club where you can play table tennis, kicker (table football), air hockey, darts, and exercise on the bar has been functioning since 2012. The sports equipment is regularly upgraded in the sports club. A wellness center for yoga, pilates, and fitness also operates in the Head Office. 150+ employees regularly attend training in the Bank's sports club and wellness center.

Tournament sports tradition in Center-invest Bank began taking shape in 2012, when the first football tournament for the Bank's President Cup was held between teams of various business units and the branch network at the initiative of employees and with support of the Bank's Board of Directors and Management Board. In 2017, the anniversary football tournament brought together 200+ athletes. This time it was held in an open format, with participation of team of journalists, teams of universities and of the Treasury, besides the Bank's employees.

In May 2017 our 75 employees participated in the great Rostov bicycle parade. Most of them commute to work by bike every day and participated in a citywide campaign To work by Bike with enthusiasm.

Following the sporting and ecological principles, Center-invest Bank has established 15 free bicycle parking lots near its offices for customers and employees.

In 2017, the Bank employees who love volleyball and want to learn how to play it were able to take part in training courses under the guidance of a qualified coach. As a result of efficient training, the Bank women's volleyball team played a successful series of friendly matches with teams of partners: Regional Tax Inspectorate, Federal Treasury Department, Southern Federal University, Rostov State Economic University RINKh.

By maintaining sports traditions and corporate team spirit, Center-invest Bank leases sports grounds and halls for employees. Any Bank employee can come and team up with colleagues to play basketball, volleyball or football. In 2017, the Bank staff spent more than 3,000 hours of sports training.

All this proves once again that Center-invest Bank employees are not only banking professionals but also the most active and positive people, for whom sport is a way of life. We continue to follow the motto: To new victories in work and sport!

Ecology

Environmental responsibility is a key priority for Center-Invest Bank, as much as traditional banking products and services.

The Bank seeks to conserve the environment, including through efficient consumption of resources (electricity, paper, fuel, etc.).

Center-invest supports the World Wildlife Fund (WWF) to raise awareness of the climate change and takes part in the largest environmental event - Earth Hour. The illumination of buildings and roof is switched off for one hour on the building of the Bank's head office as a sign of indifference to the future of the planet.

Despite its steady business growth, the Bank reduces energy consumption regularly and helps its customers to implement power saving technologies. Since 2005, Center-invest has implemented an energy efficiency program in Southern Russia, thereby contributing to the preservation of the region's environment annually. Over RUB 17 billion were invested in 22,000 projects of the Bank's clients.

The Bank's energy efficiency initiatives has reduced carbon dioxide emissions by 179,000 tons a year, which is equivalent of emissions from 105,000 cars or 513,000 barrels of oil.

The Bank's employees annually participate in bike rides, come to work by bike, take part in arbor festivals. We are proud to have saved 7.5 million trees.

Childhood and Family

The Bank's charity projects are primarily focused on children, the elderly, the disabled and people in trouble, and finances socially significant activities.

Center-invest Bank has traditionally funded orphanages and shelters. Funds are allocated for repair of buildings and the acquisition of the most needed items for children – clothes, food, stationery, household appliances and furniture.

Since 2010, Center-invest Bank has sponsored production and release of I AM! TV program on Russia 1 Channel. 302 out of 364 children shown in broadcasts found a family in 8 years: were taken into custodianship or adopted.

On the eve of September 1 of each new school year, 1,500+ large families in the Rostov Region receive stationery sets from Center-invest Bank.

On the eve of New Year and Christmas, the Bank is hosting a charity fair. All proceeds are channeled to large families. In 2017, three families received home appliances as a gift.

In 2017, the Bank began cooperating with the Kuban Union of Large Families.

Associations supporting veterans, the disabled and lonely elderly people get regular financing from the Bank.

Every year, on the eve of Victory Day, WWII veterans, the Bank's depositors, receive gifts.

Corporate Volunteering

Corporate volunteering is for Center-Invest Bank an effective form of team building and corporate culture development. Main corporate volunteering directions include assistance to socially disadvantaged populations, education, environment conservation and social protection services.

According to the intra-corporate survey, one in the Bank's three employees makes charitable contributions to various fund on a regular basis, and some employees are ambassadors and members of the Boards of Trustees in charitable organizations.

Volunteers of Center-invest Bank, together with the Financial Literacy Center, held 1,000+ events in 2017. Including: lectures, workshops,financial literacy lessons; educational and developmental games with the children at the mass city events, forums, festivals; Saturdays and holidays of tree plantation, congratulating veterans on Victory Day, charity sports events and others.

The Bank encourages voluntary staff participation in corporate social and charitable events and supports the employees' volunteer initiatives.

Besides its own program implementation, Center-invest Bank participates as a partner or sponsor in projects with local, regional and federal authorities; nonprofit companies; public organizations and professional associations. In its operations, the Bank relies on global corporate conduct practices and standards, focusing on high corporate governance standards.

Made with Intuition in 2018

Head office: 344000 Russia,
62 Sokolova Av., Rostov-on-Don

8 (863) 2-000-000

Information service

welcome@centrinvest.ru

General banking licence No. 2225 issued by the Central Bank of Russia of August 26, 2016.This report is presented for the 2017 calendar year as part of Center-invest Bank’s integrated IFRS reporting, and it incorporates a sustainable development report. The GRI Sustainability Reporting Standards were taken into account in the compilation of this report, to the extent to which the information is of interest to the bank’s current and potential shareholders, partners, customers and employees. The sections of the report presented in accordance with the GRI Standards are numbered accordingly. Center-invest Bank’s last integrated report was published on 6 June 2017 on its website centrinvest.ru/files/about/reports/byyear/2016.pdf.The contact person for this report is Lydia Simonova, Deputy Chairman of the Executive Board of Center-invest Bank.