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Consolidated Financial Statements and

Independent Auditor’s Report

[ABC Bank Group]

31 December 2020

CONTENTS

Independent Auditor’s Report

• Consolidated Statement of Financial Position Consolidated Financial Statements
• Consolidated Statement of Profit or Loss and Other Comprehensive Income
• Consolidated Statement of Changes in Equity
• Consolidated Statement of Cash Flows
• 1 Introduction Notes to the Consolidated Financial Statements
• 2 Operating Environment of the Group
• 3 Significant Accounting Policies
• 4 Critical Accounting Estimates, and Judgements in Applying Accounting Policies
• 5 Adoption of New or Revised Standards and Interpretations
• 6 New Accounting Pronouncements
• 7 Cash and Cash Equivalents..............................................................................................................
• 8 Due from Other Banks
• 9 Investments in Debt Securities
• 10 Investments in Equity Securities
• 11 Loans and Advances to Customers
• 12 Repurchase Receivables
• 13 Investment Properties
• 14 Investment in Associates
• 15 Other Financial Assets
• 16 Other Assets
• 17 Goodwill
• 18 Premises, Equipment and Intangible Assets
• 19 Right of Use Assets and Lease Liabilities
• 20 Non-Current Assets Classified as Held for Sale (or Disposal Groups)...........................................
• 21 Due to Other Banks
• 22 Customer Accounts
• 23 Debt Securities in Issue [Promissory Notes Issued]
• 24 Other Borrowed Funds
• 25 Provisions for Liabilities and Charges
• 26 Other Financial Liabilities
• 27 Other Liabilities
• 28 Subordinated Debt
• 29 Share Capital
• 30 Perpetual Bonds..............................................................................................................................
• 31 Other Comprehensive Income Recognised in Each Component of Equity
• 32 Interest Income and Expense
• 33 Fee and Commission Income and Expense
• 34 Other Operating Income
• 35 Administrative and Other Operating Expenses
• 36 Income Taxes..................................................................................................................................
• 37 Dividends
• 38 Reconciliation of Liabilities Arising from Financing Activities
• 39 Earnings [Loss] per Share
• 40 Segment Analysis
• 41 Financial Risk Management............................................................................................................
• 42 Management of Capital
• 43 Contingencies and Commitments
• 44 Offsetting Financial Assets and Financial Liabilities
• 45 Non-Controlling Interest
• 46 Interests in Structured Entities
• 47 Transfers of Financial Assets..........................................................................................................
• 48 Derivative Financial Instruments
• 49 Fair Value Disclosures

Consolidated Statement of Financial Position [Alternatively may use ‘Balance Sheet’]* The notes set out on pages [ ] to [ ] form an integral part of these consolidated financial statements. 1 In thousands of Russian Roubles Note 31 December 2020 31 December 2019 * ASSETS Cash and cash equivalents 7 Mandatory cash balances with the Central Bank of Russian Federation Due from other banks 8 Investments in debt securities 9 Investments in equity securities 10 Loans and advances to customers 11 Repurchase receivables 12 Investment properties 13 Investment in associates 14 Current income tax prepayment 36 Other financial assets 15 Other assets 16 Deferred income tax asset 36 Goodwill 17 Premises and equipment 18 Intangible assets 18 Right of use assets** 19 Non-current assets held for sale (or disposal groups) 20 TOTAL ASSETS LIABILITIES Due to other banks 21 Customer accounts 22 Debt securities in issue [Promissory notes issued] 23 Other borrowed funds 24 Lease liabilities** 19 Other financial liabilities 26 Current income tax liability 36 Deferred income tax liability 36 Provisions for liabilities and charges 25 Other liabilities 27 Subordinated debt 28 Liabilities directly associated with disposal groups held for sale 20 TOTAL LIABILITIES EQUITY Share capital 29 Retained earnings [Accumulated deficit] Other reserves 31 Net assets attributable to the Bank’s owners Non-controlling interest 45 TOTAL EQUITY TOTAL LIABILITIES AND EQUITY Approved for issue and signed [on behalf of Management Board] on __________ 2021.

(name) (name) President Chief Accountant

• Note: as an alternative, the statement may be called ‘balance sheet’. The default names of the primary statements used by IAS 1 are not mandatory. ** Right-of-use assets (except those meeting the definition of investment property) and lease liabilities do not need to be presented as separate line items in the balance sheet provided they are disclosed separately in the notes. Where right-of-use assets are presented within the same line item as the corresponding owned assets are presented, the lessee should identify which line items in the balance sheet include those right of-use assets. Lease liabilities can be aggregated with other financial liabilities or other borrowed funds in the balance sheet.

Consolidated Statement of Profit or Loss and Other Comprehensive Income The notes set out on pages [ ] to [ ] form an integral part of these consolidated financial statements. 2 In thousands of Russian Roubles Note 2020 2019 [(restated)] Interest income calculated using the effective interest method 32 Other similar income 32 Interest expense 32 Other similar expense 32 Net margin on interest and similar income Credit loss allowance* Net margin on interest and similar income after credit loss allowance Fee and commission income 33 Fee and commission expense 33 Gains less losses on derecognition of financial assets measured at amortised cost Gains less losses from modification of financial assets measured at amortised cost, that did not lead to derecognition** Gains less losses from [securities] [financial assets] at fair value through profit or loss Gains less losses from financial derivatives Gains less losses from trading in foreign currencies Gains less losses on revaluation of investment properties 13 Foreign exchange translation gains less losses Impairment of debt securities at fair value through other comprehensive income [Consider including into the line “Credit loss allowance”] - Provision for credit related commitments Gains less losses from reclassification of financial assets from amortised cost to financial assets at fair value through profit or loss *** - Gains less losses from reclassification of debt instruments at fair value through other comprehensive income to debt instruments at fair value through profit or loss*** - Other operating income 34 Gains/(losses) arising from early retirement of debt Sale of assets previously leased to customers Cost of assets sold and previously leased to customers Administrative and other operating expenses 35 Share of result of associates 14 Profit/(loss) before tax Income tax (expense)/credit 36 PROFIT/(LOSS) FOR THE YEAR Other comprehensive income / (loss): Items that may be reclassified subsequently to profit or loss: Debt securities at fair value through other comprehensive income: 9,

• Gains less losses arising during the year -
• Gains less losses reclassified to profit or loss upon disposal - Translation of financial information of foreign operations to presentation currency Share of other comprehensive income of associates 14 Income tax recorded directly in other comprehensive income 36 Items that will not be reclassified to profit or loss:

Consolidated Statement of Profit or Loss and Other Comprehensive Income The notes set out on pages [ ] to [ ] form an integral part of these consolidated financial statements. 4 (c) impairment losses on financial assets, including reversals of impairment losses or impairment gains (d) gains and losses recognised as a result of a reclassification of financial assets from measurement at amortised cost to fair value through profit or loss (e) gains and losses reclassified from OCI as a result of a reclassification of financial assets from the fair value through OCI measurement category to fair value through profit or loss.] [Note: ‘Interest income calculated using the effective interest method’ line represents interest income on financial assets carried at amortised cost and debt instruments carried at FVOCI. The ‘Other similar income’ line represents interest on debt instruments at FVTPL, unless such interest is presented as part of the fair value gains or losses. The presentation policy selected by the entity should be disclosed. Refer to IFRS 7.B5(e)] [Note: Interest income relating to finance lease receivables should be presented in ‘Other similar income’ or on a separate line because it is not calculated using the effective interest method.] All significant categories of assets, liabilities, income and expenses (use 10% as a general limit) must be disclosed on the face of the balance sheet or statement of comprehensive income / income statement. Refer to Appendix C if the Bank is a Russian OOO company.] [Note: In accordance with IFRS 7.8 the carrying amount of each of the following categories of financial assets and liabilities: FVTPL (mandatory), FVTPL (designated), FVOCI, and AC shall be disclosed either in the consolidated statement of financial position or in the notes. For the purposes of this ABC Bank all financial instruments were aggregated in the lines of the consolidated statement of financial position in accordance with their nature rather than measurement categories. The disclosure of measurement categories for those instruments are provided in Note 50]. [If the Group has publicly traded ordinary shares or potential ordinary shares, they should disclose (loss)/earnings per share on the face of the consolidated statement of profit or loss and other comprehensive income and details of the calculation in the notes. If basic EPS is different from diluted EPS, then both need to be presented on the face of the consolidated statement of profit or loss and other comprehensive income / income statement. If the Group has discontinued operations, they should also disclose on the face of the P&L – EPS for profit from continuing operations – refer to IAS 33.66] [Note: The bank may choose to present the statement of profit or loss and other comprehensive income as two separate statements following each other: (a) statement of profit or loss and (b) statement of other comprehensive income.] [Note: Fair value gains and losses are shown before current or deferred tax effects within other comprehensive income. Income tax on transactions recorded in other comprehensive income is presented in a separate line ‘Income tax recorded in other comprehensive income’. Alternatively components of other comprehensive income may be presented net of related tax effects, e.g. “Revaluation, net of tax”, rather than showing one amount for the aggregate amount of income tax relating to those components. Additional disclosure of the tax effects should be in the notes. IAS 1. requires disclosure of the amount of income tax relating to each component of other comprehensive income. See Note 36.]

Consolidated Statement of Changes in Equity The notes set out on pages [ ] to [ ] form an integral part of these consolidated financial statements. 5 Attributable to owners of the Bank Non- con- troll- ing Inte- rest Total equity In thousands of Russian Roubles No- te Share ca- pital Share pre- mium [Perpe- tual bonds] Reva- luation reserve for secu- rities at FVOCI Reva- luation of financial liabilities attri- butable to own credit risk Reva- luation reserve for pre- mises Cur- rency trans- lation reserve Re- tained ear- nings [Accu- mulated deficit] Total Balance at 1 January 2019 Voluntary changes in accounting policies 3 Balance at 1 January 2019 (restated) Profit / (loss) for the year Other comprehensive income 31 Total comprehensive income for 2019 Share issue 29 Treasury shares:

• Acquisitions 29
• Disposals 29 Business combinations 52 Acquisition of non- controlling interest in subsidiaries Disposal of non- controlling interest in subsidiaries Transfer of revaluation surplus on premises [and equipment] to retained earnings 31 Dividends declared 37 Balance at 31 December 2019 [Voluntary changes in accounting policies] Effects of adoption of new or revised standards 5 Restated balance at 1 January 2020 Profit / (loss) for the year Other comprehensive income 31 Total comprehensive income for 2020

Consolidated Statement of Changes in Equity The notes set out on pages [ ] to [ ] form an integral part of these consolidated financial statements. 7 of one or more entities in the Group: Note that normal practice is for all equity components (e.g. share capital, retained earnings), except for non-controlling interest, to be presented at historic rates in the respective columns of the statement of changes in equity and notes thereto. Any effects of translating equity components from the functional currency to the presentation currency are recognised within the currency translation reserve movement for the year, except for those effects relating to non-controlling interest. As an alternative all components of equity may be translated using the closing rate as of each end of the reporting period. However, effects of translation of equity components should not be recognised in other comprehensive income but as a reclassification within equity below total comprehensive income.]

Consolidated Statement of Cash Flows The notes set out on pages [ ] to [ ] form an integral part of these consolidated financial statements. 8 In thousands of Russian Roubles Note 2020 2019 Cash flows from operating activities Interest income calculated using the effective interest method received Interest income received on investments at fair value through profit or loss Interest paid calculated using the effective interest method Other similar income paid Fees and commissions received Fees and commissions paid Income received from trading in trading securities Income received from financial derivatives Income received from trading in foreign currencies Other operating income received Proceeds from sale of assets previously leased to customers Staff costs paid Administrative and other operating expenses paid [Consider further breakdown by major types of costs] Income tax paid Cash flows from/(used in) operating activities before changes in operating assets and liabilities Net (increase)/decrease in:

• investments in debt securities at fair value through profit or loss -
• investments in equity securities at fair value through profit or loss -
• due from other banks
• loans and advances to customers
• repurchase receivables
• other financial assets
• other assets Net increase/(decrease) in:
• due to other banks
• customer accounts
• debt securities in issue [promissory notes issued] [Movements in long-term debt securities in issue should be reported within cash flows from financing activities]
• other financial liabilities
• provisions for liabilities and charges and other liabilities [Delete increase/decrease as appropriate] Net cash from/(used in) operating activities Cash flows from investing activities Acquisition of debt securities at fair value through other comprehensive income 9 - Acquisition of equity securities at fair value through other comprehensive income 10 - Proceeds from disposal [and redemption] of debt securities at fair value through other comprehensive income 9 - Proceeds from disposal of equity securities at fair value through other comprehensive income 10 - Acquisition of investments in debt securities carried at amortised cost 9 - Proceeds from redemption of debt securities carried at amortised cost 9 - Acquisition of premises and equipment 18 Proceeds from disposal of premises and equipment 18, 20 Dividend income received Acquisition of subsidiaries, net of cash acquired 52 Proceeds from disposal of subsidiary, net of disposed cash 20, 52 Acquisition of associates 14 Proceeds from disposal of associates 14, 20 Acquisition of investment properties 13

1 Introduction Notes to the Consolidated Financial Statements

10 1 Introduction These [consolidated] financial statements have been prepared in accordance with International Financial Reporting Standards for the year ended 31 December 2020 for ABC Bank (the “Bank”) and its subsidiaries (the “Group”). The Bank was incorporated and is domiciled in the Russian Federation. The Bank is a joint stock company [or state the appropriate civil code classification] limited by shares and was set up in accordance with Russian regulations. [As of 31 December 2020 and 2019 the Bank’s immediate [and ultimate] parent company was _____, and the Bank was ultimately controlled by Mr _____.] [The disclosure of ownership should be made here or in the related party note.Tailor the above wording or include additional wording such that the Bank’s ultimate parent company is disclosed under IAS 1.138(c) and ultimate controlling party under IAS 24.13.] Principal activity. The Group’s principal business activity is [commercial and retail] banking operations within the Russian Federation. The Bank has operated under a full banking licence issued by the Central Bank of the Russian Federation (“CBRF”) since _____. The Bank participates in the state deposit insurance scheme, which was introduced by Federal Law #177-FZ “Deposits of individuals insurance in Russian Federation” dated 23 December 2003. The State Deposit Insurance Agency guarantees repayment of 100% of individual deposits up to RR 1 400 thousand per individual in the case of the withdrawal of a licence of a bank or a CBRF imposed moratorium on payments. The Bank has ____ (2019: ____) branches within the Russian Federation and ____ (2019: ____) branches overseas in ____. Additionally, the Bank has representative offices in _____. [The Group had _____ employees at 31 December 2020 (2019: _____ employees).] Registered address and place of business. The Bank’s registered address is: _________, Russian Federation. [The Bank’s principal place of business is ____ .] [Note: the principal place of the Bank’s activity should be disclosed only where it is different from the registered address of the Bank.] Presentation currency. These [consolidated] financial statements are presented in Russian Roubles ("RR"), unless otherwise stated. Abbreviations. A glossary of various abbreviations used in this document is included in Note 54.

2 Operating Environment of the Group

Russian Federation. The Russian Federation displays certain characteristics of an emerging market. Its economy is particularly sensitive to oil and gas prices. The legal, tax and regulatory frameworks continue to develop and are subject to frequent changes and varying interpretations (Note 43). The Russian economy continues to be negatively impacted by ongoing political tension in the region and international sanctions against certain Russian companies and individuals. On 12 March 2020, the World Health Organisation declared the outbreak of COVID-19 a global pandemic. In response to the pandemic, the Russian authorities implemented numerous measures attempting to contain the spreading and impact of COVID-19, such as travel bans and restrictions, quarantines, shelter-in-place orders and limitations on business activity, including closures. The above measures were gradualy relaxed during 2020 and 2021 [disclose the actual status of the restrictions as of the reporting date]. These measures have, among other things, severely restricted economic activity in Russia and have negatively impacted, and could continue to negatively impact businesses, market participants, clients of the Group, as well as the Russian and global economy for an unknown period of time.

Notes to the Consolidated Financial Statements – 31 December 2020 11 2 Operating Environment of the Group (continued) Management is taking necessary measures to ensure sustainability of the Group’s operations and support its customers and employees [consider listing the measures taken, for example:

• Maintenance of operations (closed offices, % of employees working from home, etc.);
• Increase in the capability of digital services (% of increase in transactions performed without offices visits);
• Offering payment holidays on consumer loans of up to xx months and reduction of interest rate on credit card facilities;
• Customer support programmes implemented (including those sponsored by the government) and their scale (i.e. number of loans restructured); The above list is not exhaustive and should be tailored to the specific situation]. The future effects of the current economic situation and the above measures are difficult to predict and management’s current expectations and estimates could differ from actual results. For the purpose of measurement of expected credit losses (“ECL”) the Group uses supportable forward- looking information, including forecasts of macroeconomic variables. As with any economic forecast, however, the projections and likelihoods of their occurrence are subject to a high degree of inherent uncertainty and therefore the actual outcomes may be significantly different from those projected. Notes 4 and 41 provide more information of how the Group incorporated forward-looking information in the ECL models. [In March 2020, the International Accounting Standards Board (the IASB) emphasised in its educational materials that an appropriate judgment has to be applied when determining the effects of COVID-19 on expected credit losses under IFRS 9, given the significant uncertainty that exists, in particular when assessing future macroeconomic conditions. Deteriorating economic forecasts have caused and are likely to continue to cause an increase in expected credit losses and hence greater volatility of profit or loss.] [Note: This note serves as an illustrative example and should be adjusted for the facts and circumstances relevant to the Group.] [Note: Consider adding information about situation in Ukraine if the Group has material operations in Ukraine. If the Group will be affected by Brexit, consider including appropriate wording.]

3 Significant Accounting Policies

Basis of preparation. These [consolidated] financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) under the historical cost convention, as modified by the initial recognition of financial instruments at fair value, and by the revaluation of [premises and equipment, investment properties,] financial instruments categorised at fair value through profit or loss (“FVTPL”) and at fair value through other comprehensive income (“FVOCI”). The principal accounting policies applied in the preparation of these [consolidated] financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. Refer to Note 5. [Going concern. Management prepared these [consolidated] financial statements on a going concern basis. Refer to Note 4 for uncertainties relating to events and conditions that may cast a significant doubt upon the Group’s ability to continue as a going concern.] [Include this paragraph only if there is doubt about going concern].

Notes to the Consolidated Financial Statements – 31 December 2020 13 3 Significant Accounting Policies (Continued) Purchases of subsidiaries from parties under common control. Purchases of subsidiaries from parties under common control are accounted for [in accordance with the acquisition method of accounting] [using the predecessor values method. Under this method, the [consolidated] financial statements of the combined entity are presented as if the businesses had been combined from the beginning of the earliest period presented or, if later, the date when the combining entities were first brought under common control. The assets and liabilities of the subsidiary transferred under common control are at the predecessor entity’s carrying amounts. The predecessor entity is considered to be the highest reporting entity in which the subsidiary’s IFRS financial information was consolidated. Related goodwill inherent in the predecessor entity’s original acquisitions is also recorded in these [consolidated] financial statements. Any difference between the carrying amount of net assets, including the predecessor entity's goodwill, and the consideration for the acquisition is accounted for in these [consolidated] financial statements as an adjustment to [other reserve / merger reserve] within equity]. Associates. Associates are entities over which the Group has significant influence (directly or indirectly), but not control, generally accompanying a shareholding of between 20 and 50 percent of the voting rights. Investments in associates are accounted for using the equity method of accounting, and are initially recognised at cost. The carrying amount of associates includes goodwill identified on acquisition less accumulated credit losses, if any. Dividends received from associates reduce the carrying value of the investment in associates. Other post-acquisition changes in Group’s share of net assets of an associate are recognised as follows: (i) the Group’s share of profits or losses of associates is recorded in the consolidated profit or loss for the year as share of result of associates, (ii) the Group’s share of other comprehensive income is recognised in other comprehensive income and presented separately, (iii); all other changes in the Group’s share of the carrying value of net assets of associates are recognised in profit or loss within the share of result of associates. However, when the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The Group applies the impairment requirements in IFRS 9 to long-term loans, preference shares and similar long-term interest that in substance form part of the investment in associate before reducing the carrying value of the investment by a share of a loss of the investee that exceeds the amount of the Group’s interest in the ordinary shares.. Disposals of subsidiaries, associates or joint ventures. When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity, are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are recycled to profit or loss. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss, where appropriate. Financial instruments – key measurement terms. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The best evidence of fair value is price in an active market. An active market is one in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Fair value of financial instruments traded in an active market is measured as the product of the quoted price for the individual asset or liability and the quantity held by the entity. This is the case even if a market’s normal daily trading volume is not sufficient to absorb the quantity held and placing orders to sell the position in a single transaction might affect the quoted price. [The price within the bid-ask spread that is most representative of fair value in the circumstances was used to measure fair value, which management considers is [the last trading price on the reporting date] [the average of actual trading prices on the reporting date]. [The quoted market price used to value financial assets is the current bid price; the quoted market price for financial liabilities is the current asking price.]

Notes to the Consolidated Financial Statements – 31 December 2020 14 3 Significant Accounting Policies (Continued) [A portfolio of financial derivatives or other financial assets and liabilities that are not traded in an active market is measured at the fair value of a group of financial assets and financial liabilities on the basis of the price that would be received to sell a net long position (ie an asset) for a particular risk exposure or paid to transfer a net short position (ie a liability) for a particular risk exposure in an orderly transaction between market participants at the measurement date. This is applicable for assets carried at fair value on a recurring basis if the Group: (a) manages the group of financial assets and financial liabilities on the basis of the entity’s net exposure to a particular market risk (or risks) or to the credit risk of a particular counterparty in accordance with the entity’s documented risk management or investment strategy; (b) it provides information on that basis about the group of assets and liabilities to the entity’s key management personnel; and (c) the market risks, including duration of the entity’s exposure to a particular market risk (or risks) arising from the financial assets and financial liabilities is substantially the same.] Valuation techniques such as discounted cash flow models or models based on recent arm’s length transactions or consideration of financial data of the investees, are used to measure fair value of certain financial instruments for which external market pricing information is not available. Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two measurements are valuations techniques with all material inputs observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level three measurements are valuations not based on solely observable market data (that is, the measurement requires significant unobservable inputs). Transfers between levels of the fair value hierarchy are deemed to have occurred at the end of the reporting period. Refer to Note 49. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial instrument. An incremental cost is one that would not have been incurred if the transaction had not taken place. Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisors, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include debt premiums or discounts, financing costs or internal administrative or holding costs. Amortised cost (“AC”) is the amount at which the financial instrument was recognised at initial recognition less any principal repayments, plus accrued interest, and for financial assets less any allowance for expected credit losses. Accrued interest includes amortisation of transaction costs deferred at initial recognition and of any premium or discount to maturity amount using the effective interest method. Accrued interest income and accrued interest expense, including both accrued coupon and amortised discount or premium (including fees deferred at origination, if any), are not presented separately and are included in the carrying values of related items in the statement of financial position. The effective interest method is a method of allocating interest income or interest expense over the relevant period, so as to achieve a constant periodic rate of interest (effective interest rate) on the carrying amount. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts (excluding future credit losses) through the expected life of the financial instrument or a shorter period, if appropriate, to the gross carrying amount of the financial instrument. The effective interest rate discounts cash flows of variable interest instruments to the next interest repricing date, except for the premium or discount, which reflects the credit spread over the floating rate specified in the instrument, or other variables that are not reset to market rates. Such premiums or discounts are amortised over the expected life of the instrument. The present value calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate. For assets that are purchased or originated credit impaired (“POCI”) at initial recognition, the effective interest rate is adjusted for credit risk, i.e. it is calculated based on the expected cash flows on initial recognition instead of contractual payments. Financial instruments – initial recognition. Financial instruments at FVTPL are initially recorded at fair value. All other financial instruments are initially recorded at fair value adjusted for transaction costs. Fair value at initial recognition is best evidenced by the transaction price. A gain or loss on initial recognition is only recorded if there is a difference between fair value and transaction price which can be evidenced by other observable current market transactions in the same instrument or by a valuation technique whose inputs include only data from observable markets. After the initial recognition, an ECL allowance is recognised for financial assets measured at AC and investments in debt instruments measured at FVOCI, resulting in an immediate accounting loss.

Notes to the Consolidated Financial Statements – 31 December 2020 16 3 Significant Accounting Policies (Continued) Financial assets impairment – credit loss allowance for ECL. The Group assesses, on a forward- looking basis, the ECL for debt instruments measured at AC and FVOCI and for the exposures arising from loan commitments and financial guarantee contracts. The Group measures ECL and recognises credit loss allowance at each reporting date. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions. Debt instruments measured at AC are presented in the consolidated statement of financial position net of the allowance for ECL. For loan commitments and financial guarantees, a separate provision for ECL is recognised as a liability in the consolidated statement of financial position. For debt instruments at FVOCI, changes in amortised cost, net of allowance for ECL, are recognised in profit or loss and other changes in carrying value are recognised in OCI as gains less losses on debt instruments at FVOCI. The Group applies a three stage model for impairment, based on changes in credit quality since initial recognition. A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1. Financial assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that results from default events possible within the next 12 months or until contractual maturity, if shorter (“12 Months ECL”). If the Group identifies a significant increase in credit risk (“SICR”) since initial recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until contractual maturity but considering expected prepayments, if any (“Lifetime ECL”). Refer to Note 41 for a description of how the Group determines when a SICR has occurred. If the Group determines that a financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL. The Group’s definition of credit impaired assets and definition of default is explained in Note 41. For financial assets that are purchased or originated credit-impaired (“POCI Assets”), the ECL is always measured as a Lifetime ECL. Note 41 provides information about inputs, assumptions and estimation techniques used in measuring ECL, including an explanation of how the Group incorporates forward-looking information in the ECL models. As an exception, for certain financial instruments, such as credit cards, that may include both a loan and an undrawn commitment component, the Group measures expected credit losses over the period that the Group is exposed to credit risk, that is, until the expected credit losses would be mitigated by credit risk management actions, even if that period extends beyond the maximum contractual period. This is because contractual ability to demand repayment and cancel the undrawn commitment does not limit the exposure to credit losses to such contractual notice period. Financial assets – write-off. Financial assets are written-off, in whole or in part, when the Group exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event. [Indicators that there is no reasonable expectation of recovery include… specify]. The Group may write-off financial assets that are still subject to enforcement activity when the Group seeks to recover amounts that are contractually due, however, there is no reasonable expectation of recovery. Financial assets – derecognition. The Group derecognises financial assets when (a) the assets are redeemed or the rights to cash flows from the assets otherwise expired or (b) the Group has transferred the rights to the cash flows from the financial assets or entered into a qualifying pass-through arrangement while (i) also transferring substantially all risks and rewards of ownership of the assets or (ii) neither transferring nor retaining substantially all risks and rewards of ownership, but not retaining control. Control is retained if the counterparty does not have the practical ability to sell the asset in its entirety to an unrelated third party without needing to impose restrictions on the sale. Financial assets – modification. The Group sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The Group assesses whether the modification of contractual cash flows is substantial considering, among other, the following factors: [any new contractual terms that substantially affect the risk profile of the asset (eg profit share or equity-based return), significant change in interest rate, change in the currency denomination, new collateral or credit enhancement that significantly affects the credit risk associated with the asset or a significant extension of a loan when the borrower is not in financial difficulties.]

Notes to the Consolidated Financial Statements – 31 December 2020 17 3 Significant Accounting Policies (Continued) If the modified terms are substantially different, the rights to cash flows from the original asset expire and the Group derecognises the original financial asset and recognises a new asset at its fair value. The date of renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes, including determining whether a SICR has occurred. The Group also assesses whether the new loan or debt instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset derecognised and fair value of the new substantially modified asset is recognised in profit or loss, unless the substance of the difference is attributed to a capital transaction with owners. In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the originally agreed payments, the Group compares the original and revised expected cash flows to assets whether the risks and rewards of the asset are substantially different as a result of the contractual modification. If the risks and rewards do not change, the modified asset is not substantially different from the original asset and the modification does not result in derecognition. The Group recalculates the gross carrying amount by discounting the modified contractual cash flows by the original effective interest rate (or credit-adjusted effective interest rate for POCI financial assets), and recognises a modification gain or loss in profit or loss. Payment holidays granted by the Group in response to COVID-19 pandemic are treated as contractual modifications of the respective loans and advances. Their impact on the gross carrying amount (modification loss) is presented in profit or loss within [specify the line item]. [Where relevant, additional accounting policy should be included for derecognition of revolving credit facilities, such as credit cards or overdrafts. Such assets may be subject to numerous contractual modifications and their derecognition assessment is a complex area, requiring judgement specific to the entity’s circumstances.] Financial liabilities – measurement categories. Financial liabilities are classified as subsequently measured at AC, except for (i) financial liabilities at FVTPL: this classification is applied to derivatives, financial liabilities held for trading (e.g. short positions in securities), contingent consideration recognised by an acquirer in a business combination and other financial liabilities designated as such at initial recognition and (ii) financial guarantee contracts and loan commitments. Financial liabilities – derecognition. Financial liabilities are derecognised when they are extinguished (i.e. when the obligation specified in the contract is discharged, cancelled or expires). An exchange between the Group and its original lenders of debt instruments with substantially different terms, as well as substantial modifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. [In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered.] If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability. Modifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative catch up method, with any gain or loss recognised in profit or loss, unless the economic substance of the difference in carrying values is attributed to a capital transaction with owners.