29.04.2024: Annual consolidated (audited) financial statements of First Investment Bank AD as at 31 Dec 2023

Translation from Bulgarian

To:

Financial Supervision Commission

Investment Activity Supervision Department

16 Budapest Str.

Sofia

Cc:

Bulgarian Stock Exchange - Sofia AD

6 Tri Ushi Str.

Sofia

29 April 2024

Re: Annual consolidated (audited) financial statements of First Investment Bank AD as at 31 Dec 2023

Dear Sirs,

In compliance with the requirements of the Public Offering of Securities Act (POSA) and the regulations for its implementation, in our capacity as public company and issuer of bonds admitted for trading at a regulated market, we hereby submit the audited consolidated financial statements of First Investment Bank AD as at 31 December 2023, containing

• Audited consolidated financial statements as at 31.12.2023 and notes thereto, accompanied by the auditors' report as per Art. 100m, para. 4(1) of POSA;
• 2023 Consolidated Annual Report of First Investment Bank pursuant to Art. 100m, Para. 4(2) of POSA;
• Declaration under Art. 100о, para. 4(4) of POSA;

	Sincerely,
(signed)	(signed)
Nikola Bakalov	Svetozar Popov
Chief Executive Officer	Executive Director
Chairman of the MB	Member of the MB

FIRST INVESTMENT BANK AD

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

WITH INDEPENDENT AUDITORS' REPORT THEREON

Consolidated statement of profit or loss and of other comprehensive income for the year ended 31 December 2023

in BGN '000	Note	2023	2022
Interest income		452,554	342,537
Interest expense		(45,793)	(46,328)
Net interest income	6	406,761	296,209
Fee and commission income		203,083	180,150
Fee and commission expense		(44,022)	(35,188)
Net fee and commission income	7	159,061	144,962
Net trading income	8	25,045	20,473
Other net operating income	9	(26,981)	14,306
TOTAL INCOME FROM BANKING OPERATIONS		563,886	475,950
Administrative expenses	10	(238,282)	(217,852)
Other income/(expenses), net	12	(3,363)	(7,739)
Profit before impairment		322,241	250,359
Allowance for impairment	11	(144,479)	(140,230)
PROFIT BEFORE TAX		177,762	110,129
Income tax expense	13	(19,477)	(12,139)
GROUP PROFIT AFTER TAX		158,285	97,990
Other comprehensive income

Items which should or may be reclassified as profit or loss Exchange rate differences from translation of foreign operations

Revaluation reserve of investments in securities

Total other comprehensive income

TOTAL COMPREHENSIVE INCOME

Net profit attributable to:

Ordinary equity holders

Non-controlling interest

Total comprehensive income attributable to:

Ordinary equity holders

Non-controlling interest

8,454	3,776
11,510	(27,162)
19,964	(23,386)
178,249	74,604
157,573	97,241
712	749
177,537	73,855
712	749

Basic and diluted earnings per share (BGN)

14

1.06

0.65

The statement of profit or loss and of comprehensive income is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 5 to 80.

The financial statements have been approved by the Management Board on 25 April 2024 and signed on its behalf by:

Nikola Bakalov	Chavdar Zlatev	Svetozar Popov
Chief Executive Officer	Executive Director	Executive Director
Ralitsa Bogoeva		Ianko Karakolev
Executive Director		Chief Financial Officer

Audited as per the auditors' report dated 26/04/2024:

Athanasios Petropoulos	Mazars OOD	Iva Slavkova
procurator		Registered auditor
		responsible for the audit
Georgi Trenchev, manager	ECOVIS AUDIT BULGARIA OOD
Registered auditor
responsible for the audit

1

2

2022

2,042,858

2,819,193

221,900

6,823,003

108,376

16,611

1,609

-

3,948

423,585

750,324

171,638

115,937

13,498,982

13,152

11,454,906

123,846

8,488

19,410

256,861

27,823

645

171,217

23,012

12,099,360

149,085

250,017

39,865

(18,047)

4,500

6,368

962,805

1,394,593

5,029

1,399,622

13,498,982

Consolidated statement of the financial position as at 31 December 2023

in BGN '000	Note	2023
ASSETS
Cash and balances with Central Banks	15	2,462,073
Investments in securities	16	2,883,067
Loans and advances to banks and other financial institutions	17	227,327
Loans and advances to customers	18	7,674,705
Property and equipment	19	110,839
Intangible assets	20	25,318
Derivatives held for risk management		1,765
Current tax assets		229
Deferred tax assets		3,470
Repossessed assets	22	414,365
Investment Property	23	756,767
Rights of use assets	24	172,967
Other assets	25	131,341
TOTAL ASSETS		14,864,233
LIABILITIES AND CAPITAL
Due to banks	26	8,387
Due to other customers	27	12,316,348
Liabilities evidenced by paper	28	447,314
Financial liabilities at fair value through profit and loss		3,165
Subordinated term debt	29	19,410
Hybrid debt	29	257,871
Deferred tax liabilities	21	27,603
Current tax liabilities		2,388
Lease liabilities	24	171,743
Other liabilities	30	36,622
TOTAL LIABILITIES		13,290,851
Issued share capital	31	149,085
Share premium	31	250,017
Statutory reserve	31	39,865
Revaluation reserve of investments in securities		(6,537)
Revaluation reserve on property		4,500
Reserve from translation of foreign operations		14,822
Other reserves and retained earnings	31	1,116,028
TOTAL SHAREHOLDERS' EQUITY		1,567,780
Non-controlling interest		5,602
TOTAL GROUP EQUITY		1,573,382
TOTAL LIABILITIES AND GROUP EQUITY		14,864,233

The statement of the financial position is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 5 to 80

The financial statements have been approved by the Management Board on 25 April 2024 and signed on its behalf by:

Nikola Bakalov	Chavdar Zlatev	Svetozar Popov
Chief Executive Officer	Executive Director	Executive Director
Ralitsa Bogoeva		Ianko Karakolev
Executive Director		Chief Financial Officer
Audited as per the auditors' report dated 26/04/2024:
Athanasios Petropoulos		Iva Slavkova
procurator	Mazars OOD	Registered auditor
Georgi Trenchev, manager		responsible for the audit
Registered auditor	ECOVIS AUDIT BULGARIA OOD
responsible for the audit

Consolidated statement of cash flows for the year ended 31 December 2023

in BGN '000	2023	2022
Net cash flow from operating activities
Net profit	158,285	97,990
Adjustment for non-cash items
Allowance for impairment	144,479	140,230
Net interest income	(406,761)	(296,209)
Depreciation and amortization	14,296	12,959
Tax expense	19,477	12,139
(Profit)/loss from sale and write-off of tangible and intangible fixed assets, net	33	21
Profit/(Loss) from sale of other assets, net	(7,742)	535
(Positive) revaluation of investment property	-	(14,769)
	(77,933)	(47,104)
Change in operating assets
Decrease/(Increase) in financial assets at fair value through profit or loss	32,575	(2,977)
(Increase)/decrease in financial assets at fair value in other comprehensive income	(653,063)	525,578
Decrease in loans and advances to banks and financial institutions	7,511	2,177
(Increase) in loans to customers	(1,111,264)	(402,207)
Net (increase) in other liabilities	(322)	(55,591)
	(1,724,563)	66,980
Change in operating liabilities
Increase/(decrease) in deposits from banks	(3,617)	4,830
Increase in amounts owed to other depositors	859,780	1,487,692
Net increase in other liabilities	(4,282)	80,959
Interest received	851,881	1,573,481
531,606	425,014
Interest paid	(42,385)	(60,197)
Dividends received	2,348	633
Paid profit tax, net	(18,990)	(8,333)
NET CASH FLOW FROM OPERATING ACTIVITIES	(478,036)	1,950,474
Cash flow from investing activities
(Purchase) of tangible and intangible fixed assets	(29,490)	(42,001)
Sale of tangible and intangible fixed assets	231	25
Sale of other assets	39,363	46,128
Decrease/(increase) of investments	578,109	(1,702,166)
NET CASH FLOW FROM INVESTING ACTIVITIES	588,213	(1,698,014)
Financing activities
Increase in borrowings	321,484	4,077
(Decrease)/Increase in subordinated liabilities	1,028	(47,402)
NET CASH FLOW FROM FINANCING ACTIVITIES	322,512	(43,325)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS	432,689	209,135
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD	2,226,780	2,017,645
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD (See Note 33)	2,659,469	2,226,780

The cash flow statement is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 5 to 80.

The financial statements have been approved by the Management Board on 25 April 2024 and signed on its behalf by:

Nikola Bakalov	Chavdar Zlatev	Svetozar Popov
Chief Executive Officer	Executive Director	Executive Director
Ralitsa Bogoeva		Ianko Karakolev
Executive Director		Chief Financial Officer

Audited as per the auditors' report dated 26/04/2024:

Athanasios Petropoulos	Mazars OOD	Iva Slavkova
procurator		Registered auditor
		responsible for the audit
Georgi Trenchev, manager	ECOVIS AUDIT BULGARIA OOD
Registered auditor
responsible for the audit

3

Consolidated statement of shareholders' equity for the year ended 31 December 2023

						Reserve
			Other		Revaluati	from
			Revaluation	translatio
	Issued	Share	reserves	on	n of	Statutor	Non-
	and	reserve of	reserve	foreign
	share	premiu	retained	investments	on	operation	y	controlling
BGN '000	capital	m	earnings	in securities	property	s	reserve	interest	Total
Balance at 01 January
2022	149,085	250,017	860,339	9,115	4,500	2,592	39,865	4,329	1,319,842
Total comprehensive
income for the period
Net profit for the year ended
31 December 2022	-	-	97,241	-	-	-	-	749	97,990
Other comprehensive
income for the period
Revaluation reserve of
investments in securities	-	-	-	(27,162)	-	-	-	-	(27,162)
Reserve from translation of
foreign operations						3,776			3,776
Effect of consolidation of
significant subsidiary			1,096						1,096
Effect from de consolidation
of subsidiaries	-	-	4,129	-	-	-	-	(49)	4,080
Balance as at 31	149,085	250,017	962,805	(18,047)	4,500	6,368	39,865	5,029	1,399,622
December 2022
Total comprehensive
income for the period
Net profit for the year ended
31 December 2022	-	-	157,573	-	-	-	-	712	158,285
Other comprehensive
income for the period
Revaluation reserve of
investments in securities	-	-	-	11,510	-	-	-	-	11,510
Reserve from translation of
foreign operations	-	-	-	-	-	8,454	-	-	8,454
Dividend paid by subsidiary	-	-	(1,956)	-	-	-	-	-	(1,956)
Effect from de consolidation
of subsidiaries	-	-	(2,191)	-	-	-	-	-	(2,191)
Effect from the application of
IFRS 9	-	-	(203)	-	-	-	-	(139)	(342)
Balance as at 31
December 2023	149,085	250,017	1,116,028	(6,537)	4,500	14,822	39,865	5,602	1,573,382

The statement of changes in equity is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 5 to 80.

The financial statements have been approved by the Management Board on 25 April 2024 and signed on its behalf by:

Nikola Bakalov	Chavdar Zlatev	Svetozar Popov
Chief Executive Officer	Executive Director	Executive Director
Ralitsa Bogoeva		Ianko Karakolev
Executive Director		Chief Financial Officer

Audited as per the auditors' report dated 26/04/2024:

Athanasios Petropoulos	Mazars OOD	Iva Slavkova
procurator		Registered auditor
		responsible for the audit

Georgi Trenchev, manager

Registered auditorECOVIS AUDIT BULGARIA OOD responsible for the audit

4

Notes to the financial statements

1. Basis of preparation

(a) Statute

First Investment Bank AD (The Bank) was incorporated in 1993 in the Republic of Bulgaria and has its registered office in: Sofia, 111P, Tsarigradsko Chaussee Blvd..

The Bank has a general banking license issued by the Bulgarian National Bank (BNB) according to which it is allowed to conduct all banking transactions permitted by Bulgarian legislation.

Following the successful Initial Public Offering of new shares at the Bulgarian Stock Exchange - Sofia, on June 13th 2007 the Bank was registered as a public company in the Register of the Financial Supervision Commission pursuant to the provisions of the Law on the Public Offering of Securities.

The Bank's management has a dual board structure, with the Managing Board and the Supervisory Board having the following members:

• Managing Board

• 1. Mr Nikola Bakalov - Chief Executive Officer
  1. Mr Svetozar Popov - Executive Director
  1. Mr Chavdar Zlatev - Executive Director
  1. Ms Ralitsa Bogoeva - Executive Director
  1. Mr Ianko Karakolev - Managing Board member
  1. Ms Nadya Koshinska - Managing Board member
• Supervisory Board
• 1. Mr Evgeni Lukanov - Supervisory Board chairperson
  1. Ms Maya Georgieva - Supervisory Board member
  1. Mr Jordan Skortchev - Supervisory Board member
  1. Ms Radka Mineva - Supervisory Board member
  1. Mr Jyrki Koskelo - Supervisory Board member

At 31 December 2023 the total number of employees was 2,408 (31 December 2022: 2,454). The Bank's beneficial owners are disclosed in Note 31 below.

The consolidated financial statements of the Bank as at and for the year ended 31 December 2023 comprise the Bank and its subsidiaries (see note 36), together referred to as the "Group".

The Group has foreign operations in Cyprus (Cyprus Branch) and Albania (subsidiary). The Group has not changed its name during the year ending 31 December 2023

(b) Statement of compliance

The financial statements were drawn up in accordance with the International Financial Reporting Standards (IFRS) endorsed by the European Commission.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or

5

Notes to the financial statements

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

(c) Presentation of the financial statements

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

The financial statements are prepared in accordance with the fair value principle of derivative financial instruments, financial instruments recognised at fair value in profit or loss, investment properties, as well as assets recognised at fair value in other comprehensive income. Other financial assets and liabilities and non-financial assets and liabilities are stated at amortised cost or historical cost convention.

(d) New standards, amendments and interpretations effective as of 01 January 2023

The following amendments to the existing standards issued by the International Accounting Standards Board and adopted by the EU are effective for the current period:

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

IFRS 17 replaces IFRS 4 "Insurance Contracts". It requires a current measurement model where estimates are re-measured each reporting period. Contracts are measured using:

• discounted probability-weighted cash flows
• an explicit risk adjustment, and
• a contractual service margin ("CSM") representing the unearned profit of the contract which is recognised as revenue over the coverage period

The standard allows a choice between recognising changes in discount rates either in the income statement or directly in other comprehensive income. The new rules will affect the financial statements and key performance indicators of all entities that issue insurance contracts.

Amendments to IFRS 17 Insurance Contracts: Deferred Tax related to Assets and Liabilities arising from a Single Transaction effective from 1 January 2023 adopted by the EU

The amendment is a transition option relating to comparative information about financial assets presented on initial application of IFRS 17. The amendment is aimed at helping entities to avoid temporary accounting mismatches between financial assets and insurance contract liabilities, and therefore improve the usefulness of comparative information for users of financial statements.

IFRS 17 and IFRS 9 Financial Instruments have different transition requirements. For some insurers, these differences can cause temporary accounting mismatches between financial assets and insurance contract liabilities in the comparative information they present in their financial statements when applying IFRS 17 and IFRS 9 for the first time.

The amendment will help insurers to avoid these temporary accounting mismatches and, therefore, will improve the usefulness of comparative information for investors. It does this by providing insurers with an option for the presentation of comparative information about financial assets.

The Management expects that the adoption of IFRS 17 and the amendments to IFRS 9 have no significant impact on the Group's financial results or financial position.

• IAS 1 Presentation of Financial Statements - the amendments change the requirements in IAS 1 with regard to disclosure of accounting policies. The amendments replace all instances of the term 'significant accounting policies' with 'material accounting policy information'. Accounting policy information is material if, when considered together with other information included in an entity's financial statements, it can reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements.
  The supporting paragraphs in IAS 1 are also amended to clarify that accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material.
• IAS 8 Accounting policies, Changes in Accounting Estimates and Errors - the amendments replace the definition of a change in accounting estimates with a definition of accounting estimates.

6

Notes to the financial statements

Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". The definition of a change in accounting estimates was deleted.

1. • IAS 12 Income taxes: the amendments introduce a further exception from the initial recognition exemption. Under the amendments, an entity does not apply the initial recognition exemption for transactions that give rise to equal taxable and deductible temporary differences. Depending on the applicable tax law, equal taxable and deductible temporary differences may arise on initial recognition of an asset and liability in a transaction that is not a business combination and affects neither accounting nor taxable profit. For example, this may occur after the recognition of a lease liability and the respective right-of-use asset upon the application of IFRS 16 on the lease commencement date. Following the amendments to IAS 12, an entity is required to recognise the related deferred tax asset and liability, with the recognition of any deferred tax asset being subject to the recoverability criteria in IAS 12.

   The IASB amends the scope of IAS 12 to clarify that the Standard applies to income taxes arising from tax law enacted or substantively enacted to implement the Pillar Two model rules published by the OECD, including tax law that implements qualified domestic minimum top-up taxes described in those rules.

   The amendments introduce a temporary exception to the accounting requirements for deferred taxes in IAS 12, so that an entity would neither recognise nor disclose information about deferred tax assets and liabilities related to Pillar Two income taxes.

   Following the amendments, the Company is required to disclose that it has applied the exception and to disclose separately its current tax expense (income) related to Pillar Two income taxes.

   The adoption of these amendments to the existing standards has not led to any changes in the Group's accounting policies.

2. Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company
3. • 
     The following standards, amendments and interpretations, which have also been issued but are not yet effective, are not expected to have a material impact on the Group's financial statements.
   • IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current, effective as of 01 January 2024, adopted by the EU.
     The amendments to IAS 1 affect only the presentation of liabilities as current or non-current in the statement of financial position and not the amount or timing of recognition of any asset, liability, income or expenses, or the information disclosed about those items, adopted by the EU on 19 December 2023, published in the Official Journal on 20 December 2023
     The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of 'settlement' to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.
   • IFRS 16 Leases: Lease Liability in a Sale and Leaseback, effective as of 1 January 2024.

The amendments require a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognise any amount of the gain or loss that relates to the right of use it retains. The new requirements do not prevent a seller-lessee from recognising in profit or loss any gain or loss relating to the partial or full termination of a lease.

A seller-lessee applies the amendments retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to sale and leaseback transactions entered into after the date of initial application.

• Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability, effective 1 January 2025, adopted by the EU.
  The amendments:
  Specify when a currency is exchangeable into another currency and when it is not - a currency is exchangeable when an entity is able to exchange that currency for the other currency through markets

7

Notes to the financial statements

or exchange mechanisms that create enforceable rights and obligations without undue delay at the measurement date and for a specified purpose; a currency is not exchangeable into the other currency if an entity can only obtain an insignificant amount of the other currency.

Specify how an entity determines the exchange rate to apply when a currency is not exchangeable - when a currency is not exchangeable at the measurement date, an entity estimates the spot exchange rate as the rate that would have applied to an orderly transaction between market participants at the measurement date and that would faithfully reflect the economic conditions prevailing.

Require the disclosure of additional information when a currency is not exchangeable - when a currency is not exchangeable an entity discloses information that would enable users of its financial statements to evaluate how a currency's lack of exchangeability affects, or is expected to affect, its financial performance, financial position and cash flows.

The amendments also extend to conforming amendments to IFRS 1 which previously referred to, but did not define, exchangeability.

• Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements, effective 1 January 2024.
  The amendments add a disclosure objective to IAS 7 stating that an entity is required to disclose information about its supplier finance arrangements that enables users of financial statements to assess the effects of those arrangements on the entity's liabilities and cash flows. In addition, IFRS 7 was amended to add supplier finance arrangements as an example within the requirements to disclose information about an entity's exposure to concentration of liquidity risk.
  To meet the disclosure objective, an entity will be required to disclose in aggregate for its supplier finance arrangements:
  - The terms and conditions of the arrangements
  - The carrying amount, and associated line items presented in the entity's statement of financial position, of the liabilities that are part of the arrangements
  - The carrying amount, and associated line items for which the suppliers have already received payment from the finance providers
  - Ranges of payment due dates for both those financial liabilities that are part of a supplier finance arrangement and comparable trade payables that are not part of a supplier finance arrangement
  - Liquidity risk information

2. Material information on the accounting policy

(a) Income recognition

(i) Interest income

Interest income and expense is recognised in the profit or loss as it accrues, taking into account the effective yield of the asset (liability) or an applicable floating rate. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability to the carrying amount of the financial asset or liability. When calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of the financial instrument but not future credit losses.

The calculation of the effective interest rate includes all fees paid or received as well as discount and premiums which are an integral part of the effective interest rate. Transaction costs include incremental costs that are directly attributable to the acquisition or issue of a financial asset or liability.

Interest income is calculated by applying the effective interest rate on the gross value of the financial asset, except for impaired assets for which the effective interest rate is applied ot the amortised cost of the financial asset.

(ii)Fees and Commissions

Fee and commission income arises on financial services provided by the Group and is recognised in profit or loss when the corresponding service is provided.

8