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05/11/2010 PPF banka a.s.: Results for the third quarter of 2010 - CZK 552.5 million net profit for the first 3Q 2010 confirms the bankk´s stable profitability on a high level

PPF banka a.s. (“PPF banka”), 92.96% of which is owned by PPF Group N.V., is posting its results for the period ending on 30 September 2010 in accordance with Czech Accounting Standards (CAS).

“The profit of CZK 550 million for the first 3 quarters of 2010 has confirmed the trend of the previous periods, indicating that the chosen strategy allows PPF banka to achieve above-standard results even during the economic crisis.”
Petr Milev, Chairman of the Board of Directors and Chief Executive Officer

SUMMARY

PPF banka’s total assets grew by 24.7% (CZK +10.7 billion) for Q3 2010 to CZK 53.9 billion from CZK 43.3 billion at the end of 2009.
The bank’s equity has grown 18% year-on-year to more than CZK 4 billion, with a 16% growth rate since the beginning of 2010.
The bank’s profitability ratio measured as return on equity (RoE, 24.7%) and the capital adequacy ratio (CAR, 12.20%) remain high.


COMMERCIAL RESULTS
PPF banka continued its strategy of providing solutions “tailored” to financial institutions and selected commercial and municipal clients including PPF Group companies. Despite the continuing economic crisis, PPF banka benefited from the quality of its credit portfolio and from the revenue on capital and finance markets with an increasing percentage of revenue from charges and commissions in the first three quarters of 2010. PPF banka’s total assets grew from CZK 43.3 billion at the end of 2009 to CZK 53.9 billion on 30 September 2010 (a 24% increase). The total liabilities vis-à-vis clients grew 20% from CZK 29.6 billion at the end of 2009 to CZK 35.3 billion as of 30 September 2010.

The amount of credit provided to clients has decreased slightly in year-on-year terms from CZK 14.9 billion to CZK 13.9 billion and remains stabilised. Despite a relative drop in profit on financial operations and a reduction of net interest revenue, the increasing net earnings from charges and dissolution of provisions for repaid credit allowed very solid results.

Despite the ongoing economic crisis, PPF banka has reduced the rate of classified credit in total client credit to 7.08% on 30 September 2010 as opposed to 12.21% on 31 December 2009, thanks to active work with clients with classified credit, so that the percentage of bad and non-performing loans for Q3 2010 decreased from 7.17% to just 4% of the amount of all credit provided to clients.

With stable total assets, PPF banka’s capital adequacy ratio ranges around 12% (11.81%) and the return on average equity ratio (ROAE) for the first 3 quarters has been a very good 24.8%.

FINANCIAL RESULTS
As of 30 September 2010, PPF banka had generated a net profit of CZK 552.5 million, a decrease of 26.5% compared with CZK 751.4 million for the third quarter of 2009. The principal reasons for this result are as follows:

The profit from financial operations dropped to CZK 169.1 million, a year-on-year decrease of CZK 332.2 million from CZK 501.3 million, i.e., down to one-third. This is CZK 350.5 million more than for Q3 2008.
Net revenue from charges and commissions has doubled year-on-year from CZK 85.6 million to CZK 173.1 million.
Net interest revenue decreased 14.2% year-on-year to CZK 679.8 million.
PPF banka prepares and presents its financial results in accordance with Czech Accounting Standards (CAS) and the International Financial Reporting Standards (IFRS). Financial results based on the CAS may differ from the financial results prepared in accordance with the IFRS.


Important:
This report is not an offer to sell or a solicitation of an offer to buy any security in any jurisdiction in which such an offer would be unlawful under the securities legislation in force, and is not an offer to sell or a solicitation of an offer to buy any security intended for or made by any persons in respect of whom such an offer would be unlawful under the securities legislation in force.
This report does not constitute a public offer of securities or any public offer announcement in any jurisdiction, nor does it constitute an offer or invitation to offer or buy any securities in any jurisdiction.
The information contained in this material is not for release, publication or distribution to persons in the United States of America. This information should not be forwarded or transmitted within or to the United States of America. The securities to which this material refers are not and will not be registered in accordance with the US Securities Act of 1933, as amended (hereinafter the “Securities Act”) and may not be offered or sold without registration under the Securities Act or pursuant to an available exemption therefrom.
These materials are not intended for direct or indirect distribution in the United States of America (including its territories and possessions, all US States and the District of Columbia). These materials do not constitute an offer or invitation to buy or subscribe to securities in the United States of America. The stock referred to herein is not and will not be registered under the Securities Act.
This announcement is not an invitation and is not meant as an intention to pursue investment activities within the meaning of Section 21 of the Financial Services and Markets Act of 2000 (hereinafter the “FSMA”). To the extent as this announcement does not represent an intention to engage in investment activities, it is intended solely for: (i) persons outside the United Kingdom, (ii) persons in the United Kingdom to whom the definition of professional investors applies within the meaning of Section 19 (5) of the FSMA (Financial Promotion) Order 2005; and (iv) any other persons to whom such an announcement may legally be made under Section 21 of the FSMA (hereinafter all such persons referred to as “relevant persons”). Any person who is not a relevant person should not act in accordance with this announcement or rely on it.
This document is not a prospectus, and to the extent that it may constitute an advertisement, it does not represent an offer to sell or buy any securities. Investors should not subscribe to any securities with reference to this document, except the information contained in the prospectus of the security offering.

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