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					                                                                       2002
                                                                       The authorized capital reached a
                                                                       record high for the Ukrainian
                                                                       banking system mark-500
                                                                       million. Bank entered the TOP -
                                                                       100 banks in CEE rated
                                                                       Standard & Poor's


                                                                       2003
                                                                       Magazine «Euromoney»
                                                                       called "Aval" Best Bank in
                                                                       Ukraine. Bank posted its own
                                                                       bond issue worth 80 million
                                                                       USD.

                                                                       2004
                                                                       The authorized capital reached a
                                                                       record sum of 1 billion. EBRD
                                                                       recognized Aval one of the largest

Chronology                                                             and most dynamic bank in CEE.
                                                                       Bank Tops Ranking TOP - 100
                                                                       "Investgazety in the category" Top

             15-year success                                           banks by the amount of net assets
                                                                       for 2003

1992                                international payment
Bank registered a Joint Stock       systems Visa and
                                                                       2005
                                                                       EBRD recognized Aval one
Company AKB Aval                    Europay
                                                                       of the most active banks in
                                                                       Southeastern Europe and
1993                                1997                               the former Soviet Union.
Bank received a license for         Western Union Company              93,5%
foreign exchange transactions       recognized Aval best partner in    purchased shares of the bank
                                    Eastern Europe                     group Raiffeisen International
1994
Bank as a registered bank Aval
                                    1999                               2006
Bank. Bank received permission                                         Euromoney magazine
                                    Released first in Ukraine
Ministry of Finance of Ukraine to                                      recognized the Bank "Best Bank
                                    payment card
operate as a depository for                                            in Ukraine. EBRD bank
                                    UMC - Visa - Aval
investment funds and                                                   acknowledged "most active bank
investment companies                                                   in trade finance in Ukraine in
                                    2000                               2006" program to promote trade
                                    Western Union recognized           «TFP». Bank named
                                    the bank
                                    Aval most creatively oriented
                                    agent system
                                    Bank became a member               Ukraine "Aval - Express
1995
Aval is accredited for                                                 "The most professional bank in
                                                                       2006" after the financial rating
implementation of EBRD projects     2001
                                    Bank introduced the first in       of the newspaper "Business".
                                                                       Bank received the award
                                    Ukraine pensions using a plastic
1996                                card "Onyx - retirement.
                                                                       "Choice of the Year - 2006 for
Started    own     Processing                                          the best mortgage program
                                    Implemented its own system of
Center (UPC) of the bank.
                                    urgent money transfers in
Dear friends!
The year 2006 was notable for the bank. And 2007 is even more responsible and decisive, as the bank celebrates its 15
anniversary! Perhaps in a world historical terms, especially compared to the famous West's banking system is little more
age, but for Ukraine it a lot. Let's recall that we have - almost peer independence of our country. Together with an
independent Ukraine, we have experienced difficulties early years of life increased, and proved to all and above all - our
customers that we are - solid and reliable financial partner institution you can trust, and trust. We are proud to present
the "asset" of the bank is also 120 years of experience in the Austrian Raiffeisen European banking family, to which we
joined in 2005. Developmental history of the Raiffeisen and its first institution - rayffayzenok "- that served the needs of
millions, and whose activities at the beginning of the century spread to the territory of Western Ukraine, increases the
requirements of our bank and at the same time, strengthens our confidence in our future and our joint success!

In 2007, we intend to implement our ambitious plans, including the optimization of the branch network, improve and develop
new services, improve information systems and internal procedures of the bank in order to bring the activities of Raiffeisen
Bank Aval Raiffeisen Group standards. These changes are necessary and, moreover, justified as help us maintain a
competitive position in the market for high quality service and therefore more responsive to new trends and demands of our
customers. "A large bank is even closer" also because he and his department are easier for customers.

We sincerely thank all friends and partners for their support for 15 years of our lives and assure that we will
continue to do everything possible to meet your high expectations!

Sincerely, the Management Board
of Raiffeisen Bank Aval




Dear friends,
2006 was an important year for the Bank. However, 2007 promises to be even more crucial and challenging, as in March
2007 the Bank celebrates its 15th anniversary! This may be considered a relatively short period in a historical perspective,
especially if compared with the leading internationally known banking institutions. However, in Ukraine it is an impressive
age for the nascent banking sector, if we recall but one fact that the Bank is nearly the age of the independent democratic
country named Ukraine! During this historic period, we have surmounted the hardships of emergence, we have matured
and proved to everyone, first and foremost to our clients, that we are a solid and reliable financial partner - a banking
institution which garners trust and confidence. We are proud of our current most valued «asset» - 120 years of experience
of the Raiffeisen banking family, which we joined in 2005. The centennial history of Raiffeisen Group and its first outlets -
«raiffeisenky» (Raiffeisen cooperative unions) - that served millions of people and expanded their coverage as far eastward
as West Ukraine in the early 20th century, sets the high performance standard and responsibility for our Bank. At the same
time, it reinforces our faith in our bright future and mutual success!
In 2007, we remain committed to further implementing our ambitious plans, in particular, as regards streamlining our
branch network, improving existing and developing new services, upgrading the Bank's IT systems and internal policies
aimed at hamonizing them with Raiffeisen Group's standards. These developments are both needed and justified, as
they will help us to sustain our competitive position in the marketplace, improve quality of services, and, as a result,
become more responsive to novel trends and increasing requirements of our clients. The Big Bank becomes even closer
as both the Bank and its outlets become increasingly convenient for our clients.
We greatly appreciate the valuable support our friends and partners have given us over the past 15 years.
We assure you of our commitment to grow and to do our best to meet your high expectations.


Truly yours,
Management Board of Raiffeisen Bank Aval
Annual Report
Open Joint Stock Company "Raiffeisen
Bank Aval




2006
                                                                                                                            Raiffeisen Bank Aval 2006




                      Key indicators of the bank
                      the end of 2006 *
                      Key indicators of the bank activity at the end of 2006, thousands of dollars. U.S.

                                                                                               2006                  2005         Change%
                       Balance sheet indicators
                       Assets                                                            5 384 000           3 706 038                  45,3
                       Due from credit institutions                                            7 495              17 083               (56,1)
                       Loans to customers                                                4 094 437           2 354 123                  73,9
                       Liabilities to credit institutions                                1 348 216              496 096                171,8
                       Liabilities to customers                                          3 321 464           2 827 357                  17,5
                       Subordinated debt                                                     70 590               69 908                 1,0
                       Share capital                                                       430 800              307 660                   40
                       Capital                                                             573 567              270 488                112,1
                       Income Statement
                       Net interest income after deductions                                226 429                96 290               135,2
                       Net commission income                                               142 192              117 219                 21,3
                       Net income from trading with foreign                                  35 696               31 113                14,7
                       currency and securities
                       General administrative expenses                                   (295 277)           (214 857)                  37,4
                       Profit before taxation                                              109 040                29 765               266,3
                       Net Income                                                            79 879               14 151               464,5
                       General information about the bank
                       Capital adequacy according to IFRS                                   17,33%               14,58%                 18,9
                       Capital adequacy according to NBU
                       requirements                                                         12,14%               12,96%                 (6,3)
                       Number of bank branches                                                 1 312                1 410               (7,0)
                       Employees                                                             17 395               17 132                 1,5



                      Bank Ratings
                       Moody's Investors Service
                       Forecast                                                                    stable
                       Long-term local currency deposit                                            Baa1
                       Short-term local currency deposit                                           Prime-2
                       Long-term foreign currency deposit                                          B2
                       Short-term deposits in foreign currency                                     NP
                       The financial stability                                                     D-
                       Rating for debt securities (senior unsecured)                               Baa1
                       National scale rating                                                       Aaa.ua
                     * In accordance with International Financial Reporting Standards (IFRS)




2   www.aval.ua About us                                         Market environment                         Activity Bank
Raiffeisen Bank Aval 2006




                     Summary Report
                      Address of the Chairman of the Supervisory Board                                          4

                      Chairman Message Board                                                                    6

                               Vision. Mission. Values                                                          8

                      About us                                                                                  10
                               A brief overview of the history of the bank                                      11
                               Shareholders                                                                     12
                               Body of the Bank                                                                 12
                               Organizational Structure                                                         14
                               Network of the branches                                                          16
                               The bank staff. Training & Development                                           16
                               Awards                                                                           18
                               Social responsibility of bank                                                    20
                               Membership in professional organizations and institutions                        21
                      Market environment                                                                        22
                               Macroeconomic indicators                                                         23
                               Banking system of Ukraine in 2006                                                26
                      Activity Bank                                                                             30
                               Results of the Bank                                                              31
                               Main products and services                                                       33
                               Corporate banking                                                                35
                               Services to small and medium business                                            37
                               Retail Banking                                                                   38
                               Treasury Services and work with financial institutions                           40
                      The consolidated financial statements of the Bank                                         42
                      Independent Auditors' Report «Ernst & Young»                                              43
                      Consolidated Financial Statements                                                         44

                      Subsidiaries of the bank. Background                                                      86
                               Raiffeisen Leasing Aval                                                          87
                               Private pension funds                                                            87
                      RZB Group and Raiffeisen International                                                    89

                      Glossary                                                                                  91

                      Handbook of the RZB Group and Raiffeisen International                                    92

                      Bank Guide                                                                                97




                     The consolidated financial statements of the Bank   Subsidiaries of the bank. Background        www.aval.ua 3
Address of the Chairman of the Supervisory Board                                                                          Raiffeisen Bank Aval 2006




                         Address of the Chairman of the Supervisory
                         Board
                                                     The year 2006 was crucial for "Aval, because it was the first year of its
                                                     operations as part of a new family of Raiffeisen International. It was a difficult
                                                     but interesting year for the bank introduction of new standards, new goals, re-
                                                     branding, integration and restructuring projects. He brought a lot of changes
                                                     that led to the improvement of key processes and procedures. The positions
                                                     of the bank prevailed, because reliable reputation Raiffeisen International and
                                                     the new opportunities offered by this international group, significantly
                                                     improved the image of the bank as one of the leaders of the Ukrainian
                                                     banking market.

                                                     Stable position is proof of correct strategic orientation and quality of bank
                                                     management. Quantitative indicators of growth was accompanied by qualitative
                                                     changes and important events in the Bank aimed at strengthening market positions
                                                     and competitive advantages. Raiffeisen Bank Aval timely and fully complied with all
                                                     its current obligations and all regulatory requirements of the National Bank of
                                                     Ukraine. In addition, Raiffeisen Bank Aval retained and strengthened its market
                                                     position in terms of the share capital, total assets, loan portfolio and more. In
                                                     particular, the size of the share capital, he went to first place among all banks in the
                                                     country, and total assets of the bank is the second largest bank in Ukraine. Within
                                                     the portfolio of loans to individuals increased
                         more than doubled, exceeding the 10.5 billion (or nearly 2.1 billion U.S. dollars). Rapidly
                         growing and lending to small and medium businesses and large corporate finance clients.

                         These and other achievements of the bank, its stability, reliability and strong positive dynamics have been
                         recognized nationally and internationally. The respected financial magazine Euromoney awarded
                         Raiffeisen Bank Aval "title" Best Bank in Ukraine. The bank also received several other awards, among
                         them - the title "The Most Professional Bank" according to a financial rating of the newspaper "Business"
                         and "Most Active Bank in Trade Finance in Ukraine in 2006" program to promote trade «TFP» EBRD.

                         In December 2006, the international rating agency Moody's confirmed Bank Baa1/Prime-2 rating for
                         long-term and short-term deposits in national currency. Weather on all ratings - "Stable". The national
                         scale bank agency assigned the highest rating Aaa.ua. These ratings confirm the quality of the work of
                         Raiffeisen Bank Aval and are among the highest ratings of Moody's assigned to Ukrainian banks.

                         During 2006 the Supervisory Board has worked closely with the Board and was well informed about all
                         aspects of the bank. She performed the tasks in accordance with Ukrainian law and the Charter Bank. Board
                         of Raiffeisen Bank Aval constantly informed members of the Supervisory Board of all significant steps in its
                         activities. These governing bodies of the bank conducted in an atmosphere of open discussion of all issues.

                         General meeting of shareholders, who on 8 December 2006, approved the new composition of
                         the Supervisory Board and approved amendments to the Regulations on the Supervisory
                         Board.

                         JSC «Ernst & Young Ukraudit» of the bank conducted an audit in accordance with International Financial
                         Reporting Standards. The auditor confirmed that statutory requirements are satisfied in full. The Supervisory
                         Board agreed with the report of the Board on the audit results for fiscal year 2006 and proposals on income
                         distribution. Thus, the board decided to audited financial statements of Raiffeisen Bank Aval.




4      www.aval.ua About us                                      Market environment                       Activity Bank
Raiffeisen Bank Aval 2006                                                                                    Address of the Chairman of the
Supervisory Board




                     The key to further sustainable development and growth of the bank is continuing to improve the
                     quality of its services and products, improve efficiency of the regional network, profitability of
                     banking operations. Through these efforts, we can continue to enjoy a high level of confidence in
                     the bank by depositors, investors and shareholders.

                     On behalf of the Supervisory Board, I thank everybody who contributed to the success of Raiffeisen Bank
                     Aval. I thank the Board for its support and cooperation. I am especially grateful to all Bank employees for
                     their hard work, creativity and loyalty of a large bank - as it is so necessary in times of change, we have
                     witnessed over the last year. Special thanks to our shareholders, investors and customers for their
                     confidence in the bank.




                                                                  On behalf of the Supervisory Board




                                                                         Herbert Stepic,

                                                                   Chairman of the Supervisory Board




                     The consolidated financial statements of the Bank         Subsidiaries of the bank. Background             www.aval.ua 5
Chairman Message Board                                                                                                   Raiffeisen Bank Aval 2006




                        Chairman Message Board
                                                     Dear friends!

                                                     You are holding in your hands the first annual report of Raiffeisen Bank Aval.
                                                     Last year was a year of changes for us. It 2006th brought us a new name, new
                                                     plans and new opportunities. Finally integrated into Bank Group
                                                     Raiffeisen International and began implementing a strategy of active
                                                     development of the Ukrainian banking market.

                                                     One of the most important stages in the process of reforms that were initiated by
                                                     the bank in 2006, was the name change. Bank management in summer 2006
                                                     agreed a strategy to change the name of the bank and widely inform citizens of
                                                     Ukraine about our new name. New name - Raiffeisen Bank Aval - was registered
                                                     by the National Bank of Ukraine in September 2006 and embodies the heritage
                                                     and traditions of two leading financial institutions - Bank Aval and Raiffeisen. The
                                                     word "Raiffeisen" It reflects our commitment in the near future to bring standards
                                                     of quality banking services to the European level. The word "Aval" in our name is
                                                     evidence of respect for the history of the bank, its customers and partners, and
                                                     commitment to continue the best traditions of Aval Bank - the flagship of the
                                                     banking market of Ukraine. Great advertising campaign to promote the new brand
                                                     was completed a number of presentations in all regional centers of Ukraine. Re-
                                                     branding and will continue in 2007.
                        So we look forward to further high level of awareness of our clients about the new name and
                        bank activities and the growing confidence of Raiffeisen Bank Aval.

                        In 2006 the bank launched a number of changes and started serious processes of transformation, to improve
                        the quality of services, improving information systems and internal procedures, costs and bringing the
                        standards of the bank with the standards of Raiffeisen International Bank - Holding AG. These reforms,
                        favorable macroeconomic conditions and, most importantly, a dedicated professional work of the bank
                        employees and customers trust achieved the outstanding results of the Bank in 2006. By international
                        standards of financial reporting bank profits after tax increased almost five times, assets increased by 45%,
                        and capital - more than doubled. This enabled Raiffeisen Bank
                        Aval hold leading market positions to become the largest bank in terms of statutory capital
                        and second largest bank in Ukraine by total assets.

                        One of the main driving forces of the bank is striving to improve our services to the population and
                        increase loans to private customers. The large competitive
                        benefits - an extensive network of offices - allowed the bank to significantly increase the volume of
                        transactions in retail lending and retain second place in this market segment. Last year was extremely
                        successful for the direction of the bank. The client base of private clients in 2006 increased by nearly 1
                        million people, and the size of loans in this segment increased more than 1,2 billion dollars. U.S. 2.1
                        billion. U.S. at the end of 2006 compared with 0.87 billion dollars. U.S. at the end of 2005. At the turn -
                        the restructuring of departments and major changes in their work to further improve the quality of
                        customer service.

                        Among the priorities of the bank in 2006 was to improve the quality of service to our corporate clients and
                        small and medium enterprises (SMEs). In 2006 it created a separate SME Department designated its
                        representatives in the regional directorates. Also introduced a range of innovative products for this segment of
                        customers. The Bank continues




6     www.aval.ua About us                                      Market environment                       Activity Bank
Raiffeisen Bank Aval 2006                                                                                        Chairman Message Board




                     maintain leadership position in lending agricultural enterprises in Ukraine and even
                     increasing its market share.

                     After receiving a new status - a member of Europe's leading international banking group -
                     Raiffeisen Bank Aval is working hard to improve its services for corporate clients, as Group
                     Standards is an additional incentive for foreign partners, who choose our bank among others.
                     As a result, in 2006 the Bank managed to attract new corporate customers, including
                     multinational companies.

                     In 2006, the Board decided to leave the international debt markets, which is extremely
                     welcomed by market participants. The volume of applications for purchase of our corporate
                     bonds exceeded the amount of emissions by half. For 2007, we plan the revitalization of the
                     Treasury Department of the Bank and with financial institutions that will be reflected in new
                     projects and initiatives.

                     2006 was also crucial for our initiatives in the area of staff development, which is a prerequisite
                     to further growth of the bank. The bank has formed a team of true professionals of Ukrainian
                     and foreign experts who are the driving force of change. For training the bank created a
                     separate department of education and development, designed to coordinate curriculum bank.

                     Change for the better that have occurred in 2006, would have been impossible without the support of
                     initiatives by regional directorates of the bank. All successful projects - to improve collection rates,
                     streamlining the work Information Center, the new mortgage and deposit programs - could not be
                     realized without the pilot projects, embedded with the initiative and the support directorates. It is in the
                     initiative and committed bank employees, the Board sees an endless source of energy that will move
                     and continue to Raiffeisen Bank Aval in the direction of leadership in the financial market of Ukraine.

                     This recognition, of course, obliges us all to further develop and improve services. Become a real European
                     bank - this is the "most important task, we set ourselves for 2007.
                     Modern life makes all the time for change and transformation - Raiffeisen Bank Aval is now
                     changing its face. Remains unchanged one thing - the sincere desire of our great team of
                     over 17 thousand workers to be useful for clients. In this we see the key to our successful
                     development.



                                                                    On behalf of the Board




                                                                     Vladimir Lavrenchuk,

                                                                         Chairman




                     The consolidated financial statements of the Bank         Subsidiaries of the bank. Background            www.aval.ua 7
Vision. Mission. Values                                                                                          Raiffeisen Bank Aval 2006




                          Vision. Mission. Values.
                          Vision
                          • «Raiffeisen Bank Aval is a leading bank in Ukraine


                          Mission
                          • As a leading bank, we aim to become the number one bank by assets

                          • Our goal - be the first among banks for market share in certain segments of our

                          • Profitability of equity capital benefit our shareholders and exceeds the relevant results
                          of the largest banks in the Ukrainian market

                          • We are the first bank to which you apply for financial services in Ukraine, by maintaining
                          long term relationships with its customers and the highest level of recognition of the bank's
                          market

                          • Recognition of the bank based on such factors as:
                          - General availability of our services the best in the country through a network of offices and branches
                          - Quick decisions by carefully regulated process of bank
                          - Highest quality of service is recognized as individuals
                          - Best solution for corporate customers, combining local market knowledge and advanced
                             international experience

                          • We understand our clients and strive to maintain a long term relationship with them. Relations
                          with clients are formed and maintained the highest qualification specialists who provide
                          excellent service to the best in the country through a network of offices and branches

                          • We focus on meeting customer needs and value our relationship with them. We are
                          constantly adding new list of products and services to customers and actively use the
                          method of cross-selling between business - Segment


                          Common values
                          • Focusing on customer needs
                          - We give our clients the best quality financial services
                          - We maintain the highest professional standards
                          - We exercised the flexibility to achieve rapid response to customer needs
                          - We form lasting relationships that create value for our customers, shareholders,
                             employees and society

                          • Added value for shareholders
                          - We strive for continuous steady increase of the share capital by achieving a maximum of its
                             profitability
                          - We achieve the highest performance and expand their opportunities to reach your
                             business - goals




8      www.aval.ua About us                                  Market environment                  Activity Bank
Raiffeisen Bank Aval 2006                                                                                                      Vision. Mission. Values




                     • Maintenance of common ethical values
                     - We work and develop their relations in accordance with generally
                        accepted ethical values
                     - We care about people's needs, respect the dignity and value the
                        diversity of opinions
                     - We adhere to the moral, ethical and legal norms. We manifest
                        integrity in fulfilling their promises


                     Management values:
                     • lead, motivate people and assign them responsibilities
                     - We set the strategic and tactical goals and directs staff on their successful achievement
                     - We encourage entrepreneurship and initiative and intolerant to the bureaucracy
                     - We grant authority to its employees by creating an atmosphere that
                        motivates them to achieve best results
                     - We promote the development, meeting the needs and loyalty of their employees
                     - We see teamwork as a basis for successful cooperation within the Group,
                        а also for its future development
                     - We provide equal opportunities in accordance with the achievements and reward for achievements
                     list from left to right:
                     Viktor Gorbachev, Iliyav Arthur Gerhard Bosh, Zihert Rainer, Lavrenchuk Vladimir Pokornyy Lubomyr Sheludko Gregory Volokh Games




                     The consolidated financial statements of the Bank          Subsidiaries of the bank. Background                www.aval.ua 9
Raiffeisen Bank Aval 2006                                                                                    A brief overview of the history of the
bank




                     A brief overview of the history of the bank
                     The Bank was established and registered by the National Bank of Ukraine as an Open Joint "Joint
                     Stock Commercial Bank" Aval "in March 1992. In 1994, the Bank was reregistered in Joint-Stock
                     Post Pension Bank Aval.

                     For 15-year history of its activities the Bank to develop rapidly, expanding its scope and its activities. A
                     dynamically developing network of bank branches: if the first year of its existence, was opened 12
                     regional offices, then at the end of 1998 the network has consisted of 411 units and the end of 2006 their
                     number reached over 1300.

                     Keeping abreast of advanced banking technologies, in 1996 the bank began to issue credit cards, opened its
                     own processing center and a member of international payment systems Visa and
                     Europay.

                     For several years the activities of the bank has received high recognition at national and
                     international levels. The high quality of the bank during all these years has repeatedly noted
                     the clients and experts of the banking market.

                     Successful performance of the bank, its stability and leadership in Ukraine could not generate
                     interest in the bank from foreign investors. In August 2005 the majority shareholders of the bank
                     agreed to sell 93,5% of shares of Raiffeisen International Bank-Holding AG, a member of the RZB
                     Group in Vienna, Austria. The process of acquisition of shares worth 1.028 billion dollars. USA was
                     completed in October of that year.

                     With changes in shareholders, 25 September 2006, the National Bank of Ukraine
                     perereyestruvav Bank as Joint Stock Company "Raiffeisen Bank Aval.

                     Join a group Raiffeisen International Bank - Holding AG allowed the bank to keep a high
                     growth rate and set ambitious goals for its future development. 120 years of Austrian banking
                     group Raiffeisen International Bank - Holding AG and 15 years of successful activities of
                     Raiffeisen Bank Aval in Ukraine have created a solid foundation for future success of the
                     Bank on the Ukrainian market.

                     As a result of 2006, the bank ranked first among Ukrainian banks in terms of paid-up share capital. Despite
                     the rapid growth of assets of the banking sector of Ukraine and increasing competition in the financial
                     services market, Raiffeisen Bank Aval steadily holds second place in terms of assets and takes the leading
                     position among Ukrainian banks in lending to individuals, small and medium enterprises in different sectors.
                     Bank lending is elusive leader of agricultural enterprises. The Bank at the end of 2006 used more than 3.9
                     million individual clients and over 240 thousand corporate clients.

                     In October 2006, the international rating agency Moody's has assigned ratings of Bank of
                     Baa1/Prime-2 for long-term and short-term deposits in national currency. Weather on all
                     ratings - "Stable". At the same time, national scale rating agency assigned the Bank the
                     highest rating Aaa.ua.




                     The consolidated financial statements of the Bank        Subsidiaries of the bank. Background               www.aval.ua 11
 Shareholders of the Bank                                                                                                       Raiffeisen Bank Aval 2006




                          Shareholders of the Bank
                          In October 2005, Raiffeisen International Bank - Holding AG, which is part of the leading Austrian banking
                          group, acquired a controlling stake in Aval Bank (93,5%).

                          General Shareholders Meeting of 11 August 2006, adopted a subscription results of the Bank 22 th issue of
                          a total about 600 million. Which is December 22 this year, was registered by the State Commission on
                          Securities and Stock Market. So at the end of 2006 paid share capital of Raiffeisen Bank Aval was almost
                          2.1 billion.
                          (415 million U.S. dollars). Total Bank was released nearly 21 billion shares of par value 0,10 UAH.
                          Individuals had to 0,36% of shares, legal persons - 99.54%.

                          Shareholders of the Bank at the end of 2006


                                                                         Shareholders of
                                                                         the Bank


                                          Legal entities                   Individuals                 Bank Properties
                                             99,54%                           0,36%                         0,1%


                                Raiffeisen                  Other legal
                          International Bank-                person
                              Holding AG
                                95,73%                        3,81%

                                                  Bank
                          Bodies                  management
                          The supreme governing body of the bank is the General Meeting of Shareholders, the Supervisory Board
                          and the Board. In its activity the bank authorities are governed by law and the Charter Bank.



                          Supervisory Board
                          Due to changes in the bank's shareholders, shareholders meeting in 2006 made
                          changes in the composition of the Supervisory Board and the Supervisory Board of
                          Raiffeisen Bank Aval.
                          In particular, the Supervisory Board members were introduced:

                          Herbert Stepic                                                  Hans Vidner
                          Chairman of the Supervisory Board of Raiffeisen                 Member of the Supervisory Board of Raiffeisen Bank
                          Bank Aval, chairman of the holding company                      Aval, a member of the holding company Raiffeisen
                          Raiffeisen International Bank-Holding AG                        International Bank-Holding AG


                          Martin Hryul                                                    Peter Lennk
                          Member of the Supervisory Board of Raiffeisen                   Member of the Supervisory Board of Raiffeisen Bank
                          Bank Aval, a member of the holding company                      Aval, a member of the holding company Raiffeisen
                          Raiffeisen International Bank-Holding AG                        International Bank-Holding AG


                          Iris Bohdaneris
                          Member of the Supervisory Board of Raiffeisen Bank
                          Aval, a member of the holding company Raiffeisen
                          International Bank - Holding AG




12      www.aval.ua About us                                         Market environment                         Activity Bank
Raiffeisen Bank Aval 2006                                                                                                Body of the Bank




                     Board
                     In 2006, the bank resumed the composition of the Board, which was caused by the change of
                     shareholders. The composition of the Board in 2006 consisted of experienced professionals with
                     years of experience
                     in the banking institutions in Ukraine and abroad, particularly in banks Raiffeisen.




                                          Vladimir Lavrenchuk
                                          Chairman


                                          Viktor Gorbachev
                                          deputy head of corporate business, Ukrainian
                                          companies



                                          Iliyav Arthur
                                          deputy head of corporate business, multinational
                                          corporations


                                          Bosh Gerhard
                                          Deputy Chairman of the Board of Treasury
                                          & Investment Banking



                                          Zihert Rainer
                                          Deputy Chairman of the Board the issue of
                                          transformation and strategy




                                          Sheludko Gregory
                                          Deputy Chairman of the Board
                                          of Security and Legal Protection



                                          Lubomir Pokornyy
                                          Deputy Chairman of the
                                          Board of retail banking



                                          Volokh Games
                                          Deputy Chairman of the Board of information
                                          technology and operational support




                     The consolidated financial statements of the Bank            Subsidiaries of the bank. Background        www.aval.ua 13
 Organizational Structure                                                         Raiffeisen Bank Aval 2006




                            Bank structure




14      www.aval.ua About us                 Market environment   Activity Bank
Raiffeisen Bank Aval 2006                                                                                               Organizational Structure




                     Bank managements. Raiffeisen Bank Aval clearly separates front - office functions and back - office,
                     which enhances the quality of customer service and helps to reduce risks.
                     Organisational structure of the bank is constantly being improved in order to continue to provide quick decision
                     making, optimize costs and improve customer service across Ukraine.




                     The consolidated financial statements of the Bank       Subsidiaries of the bank. Background             www.aval.ua 15
 Network of the branches                                                                                                 Raiffeisen Bank Aval 2006




                           Network of the branches
                           High quality customer service provides a nationwide network of Raiffeisen Bank Aval, which as of
                           December 31, 2006 consisted of 1 312 outlets throughout Ukraine. The vast majority of these units are
                           fully functional units that provide a wide range of standard and advanced banking services in major
                           cities, provincial and district capitals and cities of regional subordination and villages throughout the
                           regions of Ukraine.

                           In addition, Raiffeisen Bank Aval continues to develop the self-service centers, which now has over 90. These
                           centers of bank customers - cardholders can perform bank transactions independently without involvement of
                           people in offices to save time and provides maximum comfort care.

                           Further development of the branch network remains a major priority in the work of
                           Raiffeisen Bank Aval. In 2006 the bank began re-branding projects and network
                           optimization: it opened 11 new branches in 1951 reorganized department. Network
                           optimization project involves implementation of a new typology of offices to maximize the
                           effectiveness of their work.


                           The bank staff. Training & Development
                           In Raiffeisen Bank Aval is a great team of professionals. As at 31 December 2006, the total
                           number of staff the bank has made 17 395 people.

                           Raiffeisen Bank Aval, as one of the largest employers of Ukraine pays great attention to developing its
                           employees to meet modern demands, as highly qualified and well motivated staff is the main guarantee
                           of all bank advances.




16      www.aval.ua About us                                      Market environment                     Activity Bank
Raiffeisen Bank Aval 2006                                                                                The bank staff. Training & Development




                     After pryyedannya to Raiffeisen International Bank - Holding AG, the bank began implementing new
                     approaches to management and staff development, initiated development of a new system of
                     assessment and motivation of personnel, consistent with international practice and policy of the
                     Group. On the basis of the agreed vision, mission, values and strategy of the Bank defined and new
                     management values that provide direction, motivation and giving workers authority.

                     Fast dynamics of the banking system, accompanied by constant improvement and
                     expansion of banking products, the introduction of new technology requires constant
                     training and staff development.

                     In May 2006, Raiffeisen Bank Aval was organized Training - Center and later at its base the building of
                     training and staff development. The main objectives of this division is upgrading and improving the
                     effectiveness of training and development personnel as well as the introduction of European standards of
                     customer service bank. For a brief period of its existence the Department of Training and Development
                     Manager has prepared new effective training program for employees. Prepared by 110 business - coaches,
                     who in 2007 will create a foundation for a regional system of personnel training and development throughout
                     Ukraine. During 2006, 88% of the bank employees became participants of educational seminars and special
                     events. First steps in implementing e-learning system: started "Introductory course for new employees.
                     Moreover, the bank's employees via Intranet can get the latest information on Raiffeisen International and
                     Raiffeisen Bank Aval, and the products, services and service standards in the bank. In the future we plan to
                     create "the Financial Academy of the bank, which will be the main training center and will
                     to train the bank employees on new technology and in accordance with the standards of Raiffeisen
                     International and recognized international standards of banking.

                     The efficiency and implementation of international precedents bank employees to share experiences with
                     colleagues from the Raiffeisen Group in Ukraine and in Austria as well as attending international
                     seminars and conferences abroad. During 2006, 335 of the bank employees were trained in various
                     areas of banking activities in the basic facilities of Raiffeisen International Bank - Holding AG in Vienna
                     (Austria). They had the opportunity to experience other groups of banks in Central and Eastern Europe.




                     The consolidated financial statements of the Bank      Subsidiaries of the bank. Background             www.aval.ua 17
 Recognition of our achievements                                                                                         Raiffeisen Bank Aval 2006




                          One of the components of the development of management was the Bank's cooperation with
                          leading business schools and, in particular, the Kyiv-Mohyla Business School. For 280 key
                          managers started the program "Leadership and Management. Five managers have started
                          learning MBA program in Kyiv - Mohyla Business School and the Vienna University of Economics
                          and Business Administration.


                          Recognition of our achievements
                          Reaching the bank during the entire period of our activities have been repeatedly
                          praised both the national and international levels.

                          Ukraine leading business publication - the newspaper "Business" and "Investgazeta Magazine Companion -
                          in different years, the bank noted among the best banks in Ukraine according to different indicators: total
                          assets (the rating" TOP - 100. Best Companies of Ukraine "), the level of customer confidence (rating of the
                          Bank where you place your deposit), professional management (rating of" Top - 100 - Management "," Top -
                          100. Top top - managers in the banking sector "," Banker of the Year and top 10 top managers of Ukraine "),
                          the dynamics of development (rating of 20 companies that inspire"), for brand awareness in the market and
                          other indicators. In 2006 the newspaper "Business" of the financial rating of the bank recognized the "most
                          professional bank Ukraine.

                          The famous British magazine Euromoney has recognized our Bank "Best Bank in Ukraine» («Best
                          Bank in Ukraine») within the rating «Awards for Excellence 2003". Journal also recognized "Aval" Best
                          Bank in Ukraine in 2006. Then, the second time, the magazine Euromoney named Raiffeisen
                          Zentralbank Osterreich AG (RZB) "Best Bank in Austria, together with its subsidiaries in Central and
                          Eastern Europe (CEE), Raiffeisen International Bank-Holding AG -" Best Bank in Central and Eastern
                          Europe. "

                          Reliability and professionalism of the bank note and our business partners. In particular, company
                          Western Union first recognized the Bank Aval best partner in Eastern Europe in 1997. In
                          subsequent years, the active cooperation of the bank with this company zasvidchuvalasya
                          repeatedly; bank from year to year are among the best agents of Western Union in the framework
                          of the "Club 500", conducted by the best among the 500 departments - partners in Europe, the
                          Middle East in Africa and South Asia.

                          Agreement between the Aval », Deutsche Bank AG London (Deutsche Bank), Raiffeisen Zentralbank
                          Österreich AG (RZB) and Raiffeisenbank Ukraine to organize in 2004 a syndicated loan amounting to $ 45
                          million. U.S. magazine named Global Trade Review «The best agreement of 2004".




18      www.aval.ua About us                                     Market environment                      Activity Bank
Raiffeisen Bank Aval 2006                                                                                             Recognition of our
achievements




                     EBRD in 2005 recognized the bank one of the most active banks in the South - Eastern Europe and the
                     former Soviet Union in the framework of the Trade (TFP). The same bank won the award in
                     2006.

                     In January 2006 the Bank as one of the main participants in the Ukrainian interbank market, the third time
                     received a certificate of Reuters for the best broker activity in Ukraine in 2005.

                     According to the International Festival-competition "Choice of the Year - 2006 Bank
                     received the award" Mortgage Program of the Year.

                     The best at regional levels has repeatedly recognized and regional boards, and branches of
                     the bank. In particular, only in 2006 was named the best again Vinnytsia Oblast Directorate
                     of Aval in the category "financial supermarket" in the framework of the names, trust, and the
                     fourth in a row - the best banking facilities in the region in the shares "People's Brand".

                     Within the action "People's Brand" in 2006 was named among the best and other regional
                     directorate of the bank, including in Zhytomyr and Ternopil regions.




                     The consolidated financial statements of the Bank         Subsidiaries of the bank. Background          www.aval.ua 19
 Social responsibility of bank                                                                                               Raiffeisen Bank Aval 2006




                           Social responsibility of bank
                           Raiffeisen Bank Aval is a socially responsible institution. This is manifested in many respects. First of
                           all, the bank carefully to their more than 17 thousand employees, providing them good working
                           conditions and adequate compensation. The Bank is also responsible towards its customers, offering
                           them the best quality service that is constantly being improved.

                           Since its foundation, the Bank Aval has always paid great attention to another aspect of social
                           responsibility - charity.

                           After changing the major shareholders and the renaming of "Aval charity did not stop - Bank
                           Aval continues a long tradition in this direction. In addition, the strategy is built on the
                           principles of charity, which Austrian shareholders of the bank developed and implemented
                           for many decades.

                           One of the charity projects initiated by the bank last year, a project to support students of economic institutions.
                           Raiffeisen Bank Aval, founded a scholarship named after Hetman students IV-V rates of Kyiv National
                           Economic University (MBK) and Kyiv-Mohyla Academy (KMA). Six scholarships were the best students MBK
                           and 4 scholarships - students KMA. The Bank also provided a monthly grant to two professors of the Faculty of
                           Economic KMA, who also engaged in more teaching and research. Such a project - an investment in Ukraine's
                           future as it promotes the development of science and education. Among other projects - funding construction of
                           a playground for the institution in which children are autistic. Bank made this project with a charitable
                           organization "Modus Vivendi".

                           Regional Directorate of Raiffeisen Bank Aval is carrying out its own charitable and sponsorship
                           activities in the regions. For example: Cherkasy Oblast Directorate provides financial assistance
                           Pirogov Museum-Estate, Odessa OD funded reconstruction Saviour - Transfiguration Cathedral,
                           Kirovohrad oblast directorate provides financial support ambulance station, social service centers
                           and the Center for Senior Citizens Youth Education. Sevastopol branch allocates substantial funds
                           for the maintenance of Orphanage. Similar charitable projects implementing each of the 26
                           regional branches of the bank.

                           Moreover, the bank makes a large patronage activities aimed at preserving and developing
                           Ukrainian national culture and art. In 2006, Raiffeisen Bank Aval was one of the sponsors of the
                           festival of ethno - music "Dreamland", has sponsored a series of CD "Masterpieces of Ukrainian
                           music. Bank traditionally is title sponsor of the National Academic Drama Theater named after Ivan
                           Franko and others.




20       www.aval.ua About us                                       Market environment                       Activity Bank
Raiffeisen Bank Aval 2006                                                                                Membership in professional organizations, institutions




                     Membership in professional
                     organizations and institutions
                      In particular, the bank participates in the following institutions:

                     - The Association of Ukrainian Banks (AUB)

                     - Ukrainian Credit-bank Union (UCBU)

                     - Ukrainian Union of Industrialists and Entrepreneurs (USPP)

                     - Association First Securities Trading System (PFTS)

                     - "Ukrainian Interbank Currency Exchange (Interbank Currency Exchange)

                     - "Ukrainian Stock Exchange (USE)

                     - The National Depository of Ukraine (NDU)

                     - OJSC "Interregional Stock Union" (MFS)

                     - Ukrainian National Mortgage Association (UNIA)

                     - Association member banks payment systems (EMA)

                     - First Credit Bureau

                     In 2006 the bank became a member of the European Business Association and continues
                     to actively participate in the Chamber.

                     According to the legislation of Ukraine is a member of the Bank Deposit Guarantee, which was founded in
                     1998 to protect the interests of investors - individuals.

                     Bank cooperates with many foreign banks and is an active participant loan programs financed by
                     international financial organizations, including the European Bank for Reconstruction and Development
                     (EBRD) and International Finance Corporation (IFC).




                     The consolidated financial statements of the Bank           Subsidiaries of the bank. Background                 www.aval.ua          21
Raiffeisen Bank Aval 2006                                                                                             Macroeconomic indicators




                     Macroeconomic indicators
                                                                                  Indicators of Economic Development of Ukraine
                                                                              in 2006 exceeded the most optimistic
                                                                                  Expectations and forecasts of Ukrainian and
                                                                                  international experts. GDP grew
                                                                             7,1% compared to last year (2,7%
                                                                              GDP growth in 2005), despite
                                                                             difficult political conditions related to the
                                                                             elections to the Verkhovna Rada of Ukraine, the process
                                                                            forming the ruling coalition, which lasted as
                                                                            also significantly higher prices for gas imports to
                                                                            beginning of the year.

                                                                             Over the past five years GDP
                                                                                  increased by an average of 7,3% per year,
                                                                             higher than the growth of many countries
                                                                            and create a favorable macroeconomic conditions
                                                                             for further financial sector development
                                                                           Ukraine, foreign direct investment
                                                                         and increasing the level and quality of life
                                                                                  Ukraine.

                     The main factors of economic growth in Ukraine in 2006 were primarily favorable
                     market situation on world commodity markets for Ukrainian exports of goods (including
                     metallurgy) and to stimulate consumer demand and further increase investment and
                     increasing of the volume of production in metallurgy and metalworking, machinery, food
                     and pulp and paper industry, construction.

                     Some macroeconomic indicators, 2002-2006

                      Indicators                                                     2002        2003        2004     2005     2006
                      Real sector
                      GDP, bln. UAH                                                 225,8       267,3       345,1     441,5   537,7
                      GDP, billion dollars. U.S.                                     42,4         50,2        64,9     86,2   106,5
                      GDP changes compared with the previous
                      period,%                                                         5,2         9,6        12,1      2,7      7,1
                      Consumer Price Index,%                                          -0,6         8,2        12,3     10,3     11,6
                      Price index of industrial production,%                           5,7        11,1        24,1      9,5     14,1
                      Private consumption% change                                      9,0        10,7        12,5     19,8     13,8
                      Government consumption,% change                                 -6,7         6,9         1,8      2,9      2,8
                      The pace of income growth,% change                             17,1         16,5        27,2     39,1     25,7
                      Compared with the previous period




                     The consolidated financial statements of the Bank         Subsidiaries of the bank. Background           www.aval.ua    23
 Macroeconomic indicators                                                                                                      Raiffeisen Bank Aval 2006




                         Some indicators of foreign trade and fiscal positions, 2002-2006

                           Indicators                                                          2002     2003        2004           2005      2006
                           External sector
                           Balance on goods                                                     1,86    1,29         4,87           0,67     -3,07
                           and services, billion. USD
                           Current account balance, billion. USD                                  3,2    2,9           6,8           2,5       -1,6
                           Foreign direct investment, billion. USD                                0,7    1,4           1,7           7,5        5,3
                           Consolidated Budget
                           Revenues,% GDP                                                       27,4    28,2         26,5           32,0      32,0
                           Expenditure% of GDP                                                  26,7    28,4         29,7           33,8      32,7
                           Balance,% GDP                                                          0,7   -0,2          -3,1          -1,8       -0,7
                           Public debt, bln. USD                                                14,2    14,5         16,1           15,5      15,9
                           Public debt,% GDP                                                    33,5    30,9         24,8             18        15
                           Domestic debt, bln. USD                                                4,0    3,8           3,9           3,8        3,3
                           External Debt, billion. USD                                            8,1    8,5           8,8           8,7        9,8
                           External debt service ratio,% of GDP                                 12,0    11,8         10,7           14,7      17,3
                           Source: USCS, the National Bank of Ukraine, Ministry of Finance of Ukraine


                          The rapid growth in lending to individuals and to increase consumption and imports cars, among
                          other things was caused by the increase in social benefits and increase minimum wage and
                          pensions during 2004 - 2006 рр. In 2006, the nominal income of the population of Ukraine
                          increased by 28,2% compared with 2005, and real income (adjusted for price changes) increased
                          by 26,6%. For comparison: in 2005, nominal earnings increased by 39,1%, and real - 23,9%. The
                          inflation rate in 2006 exceeded the corresponding figure in 2005 (10,3%) and amounted to 11,6%.
                          Price index of industrial production amounted to 14,1% at the end of 2006.




24      www.aval.ua About us                                         Market environment                        Activity Bank
Raiffeisen Bank Aval 2006                                                                                                    Macroeconomic indicators




                                                                                                 In 2006, Ukraine for the first time in many years
                                                                                    reported on the balance of trade deficit
                                                                               and services. However, the negative balance
                                                                              The current account was a significant
                                                                               appreciable extent balanced inflow of direct
                                                                              foreign direct investment (FDI) for the second year running,
    and
                                                                                namely in the amount 4.7 billion. USA (4,4% of GDP)
                                                                                2006 and 7,8 billion. USA (8,7% of GDP)
                                                                               2005. The level of FDI per capita was
                                                                                about $ 450. USA.

                                                                                   Prudent fiscal policy, moderate
                                                                                       level of public debt growth
                                                                             volume of international reserves and transparent
                                                                           and predictable monetary policy
                                                                              National Bank of Ukraine provide
                                                                          additional reassurance to Ukrainian and foreign
                                                                         investors to further sustainable development
                                                                                     Ukrainian economy.


                     Monetary and banking

                                                                                   2002         2003          2004          2005          2006
                      Cash, bn.UAH                                                  26,4         33,1          42,3          60,2          74,9
                      Monetary base, billion.UAH                                    30,8         40,1          53,8          82,8          97,2
                      Money supply M3                                               64,9         95,0        125,8         194,1         261,1
                      International reserves of NBU, billion.
                      USD                                                             4,4          6,9          9,5          19,4          22,4
                      Discount rate of NBU                                            7,0          7,0          9,0           9,5            8,5
                      The official exchange rate                                    5,33         5,33           5,3          5,05          5,05
                      end of period, UAH / USD.
                      The official exchange rate                                    5,53         6,66          7,22          5,97          6,65
                      end of period, UAH / EUR
                      According to the National Bank of Ukraine




                     The consolidated financial statements of the Bank            Subsidiaries of the bank. Background                  www.aval.ua 25
 Development of the banking system of Ukraine                                                                          Raiffeisen Bank Aval 2006




                          Banking system of Ukraine in 2006
                          Ukrainian financial sector continues to grow. Thus the banking system remains the most powerful and
                          rapidly growing segment of the private financial sector of Ukraine. At the end of 2006, total assets of 170
                          existing Ukrainian banks increased by USD 130 billion (25,7 billion) and reached 353 billion (70 billion
                          U.S. dollars) or 65,7% of GDP. Compared with 2005 assets of banks increased by 58,3%. Thus, over
                          the past five years, assets of banking system in Ukraine has risen by around 50% per year, which is one
                          of the highest growth rates in the region.


                          Main indicators of banks, 2002 - 2006

                                                                                     2002      2003        2004            2005       2006
                           Number of operating banks                                  157       157          160            165         170
                           Number of banks with foreign capital                        20        19            19             23         35
                           Number of banks with 100% foreign capital                    7          7             7             9         13
                           The share of banks with foreign capital in                13,7      11,3           9,6          19,5        27,6
                           authorized capital of banks
                           Total assets, bln.UAH                                     67,8     105,5       141,5             223       353,1
                           Total assets, billion USD                                 12,7      19,8         26,6           43,6        69,9
                           The share of assets in GDP,%                                30        39            34             53       65,7
                           Growth of assets,%                                        33,5      55,6         34,1           57,6        58,3
                           Bank loans, bn.UAH                                        46,7      73,4         97,2          156,4       269,7
                           The share of loans to GDP,%                               20,7      27,5         28,2           35,4        50,2
                           Loans to individuals, bn.UAH                               3,2        8,9        14,6           33,2        77,8
                           Loans to legal entities billion.UAH                       38,2      57,9         72,9          109,0       167,7
                           Financial depth (the share of deposits to
                           GDP),%                                                    17,2      22,5         23,6           31,5        38,5
                           The ratio of deposits to loans,%                          83,1      81,2         83,6           85,6        82,6
                           Capital of banks, bln.UAH                                   10      12,9         18,4           25,4        42,6
                           Capital of banks billion USD                              1,57      2,10         3,14           5,04          8,4
                           Net Income of banks, bln USD                              0,12      0,13         0,22           0,43        0,82
                           Source: National Bank of Ukraine



                          The rapid growth of assets of the banking system in 2006 by a number of reasons, among
                          which are the favorable macroeconomic environment, consumption boom due to increased real
                          incomes, improve access to credit and a significant increase in activity of foreign capital in
                          Ukraine's banking sector in particular. The last factor makes it much easier access for Ukrainian
                          banks and companies to international financial markets, and therefore cheaper and more long-
                          term resources.




26      www.aval.ua About us                                    Market environment                     Activity Bank
Raiffeisen Bank Aval 2006                                                                                      Development of the banking system of
Ukraine




                                                                                          Given the scarcity of alternative directions
                                                                                 investment funds and the low
                                                                               development of securities markets in Ukraine
                                                                              Ukrainian banks are actively increasing the volume
                                                                          lending, and the involvement of clients
                                                                         and financial institutions, including insurance
                                                                            companies and pension funds.
                                                                             Increase the loan portfolio of banks
                                                                            113 bln. (Almost 23 billion U.S. dollars)
                                                                                   or 72% compared to last year is one
                                                                          of the sources of growth of the banking system
                                                                           and one of the main factors of economic
                                                                             growth in Ukraine.

                                                                  At the end of 2006, the share of credit
                                                                  portfolio of assets of banks increased to 76%
                                                              compared to 70% at the end of 2005 and 63%
                                                              at the same rate at the end of 2001.
                                                           The volume of loans to the economy of Ukraine
                                                                       economic entities grew from 109 billion USD.
                                                                       (21, $ 6 billion) to 168 billion.
                     (33,3 billion U.S. dollars) or by 54% compared with 2005. Moreover, credit
                     individuals increased in 2006 to 134.5% to 77.8 billion. (15,4 billion U.S. dollars)
                     primarily due to the maintenance of high growth of mortgage lending (155% growth
                     in 2006) and further development of consumer credit. The share of mortgage loans
                     loan portfolio increased to 11.1% in 2006 from 7,5% in 2005. The share of mortgage
                     loans to GDP reached 7,6% in 2006. The share of bank loans, particularly loans to individuals
                     persons in relation to GDP increased to 50,2% and 14,5% respectively.

                     It should be noted that in 2006 the
                     rate of lengthening of credit
                     activity of banks (72%) exceeded
                     twice the rate of bank deposits
                     (38.8%). Increased ratio of loans
                     to deposits (150% in 2006
                     compared to 107% in 2001)
                     shows a significant improvement
                     of access to credit for all
                     businesses and individuals.
                     Continues a trend of diversification
                     obligations of banks and increase
                     access to additional sources of
                     financing, including to international
                     financial markets and capital
                     markets.

                     Strengthening the banking system activity occurs primarily by accelerating growth and strengthening of
                     competition among the fifteen largest banks in Ukraine, which account for 62% of total assets, 54% equity,
                     61% of loans to business entities and 74% of loans granted to individuals in 2006. The share of the rest of the
                     155 operating banks is less




                     The consolidated financial statements of the Bank          Subsidiaries of the bank. Background                 www.aval.ua 27
Development of the banking system of Ukraine                                                                         Raiffeisen Bank Aval 2006




                                                               than 38% of the assets of the banking system, and the share
                                                                             least 110 banks in the assets of the banking
                                                                      system barely exceeds 10%. Market share
                                                                         two state banks in the assets of the banking
                                                                          system decreased from 9,3% in 2005 to 8,9%
                                                                       At the end of 2006.

                                                                   However, due to increasing interest in
                                                                        Ukraine from foreign investors and buying
                                                                     In 2005 - 2006 years a number of banks (including
                                                                   sale of shares of banks to foreign investors
                                                                   Aval UkrSibbank, "Dream", "Agen"
                                                                   several medium and small banks)
                                                                   there is a steady tendency to increase
                                                                  the role of banks with foreign capital. At the end of
                                                                  2006 were registered in Ukraine
                                                                35 banks with foreign capital, 13 of which
                                                              were in the 100 - percent foreign
                                                       property. The share of banks with foreign capital
                                                                        accounted for 27,6% of the paid share capital
                       and almost 30% of the banking system. It is expected that in 2007 the share of foreign banks
                       capital increase due to strong buying interest in banks by foreign investors.

                       Despite the gradual increase in lending and borrowing in local currency deposits, the share of loans and
                       deposits in foreign currencies are still on a high level. Thus, at the end of 2006, the share of foreign currency
                       loans granted to individuals increased to 64% of the total population of Ukraine portfolio loans compared
                       with 59% in 2005. Due to the difference in cost of loans in local and foreign currencies, the vast majority of
                       borrowers - individuals prefer loans in foreign currency, particularly in mortgage and other long-term and
                       consumer
                       funding. The difference between the cost of borrowing in local and foreign currencies due to the
                       high cost of UAH resources of deposits of population on the one hand, and increasing access of
                       Ukrainian banks to international capital markets, on the other hand, allowing banks to raise more
                       long-term and cheaper resources in foreign currencies.

                       In recent years, the amount
                       attracted deposits
                       currency significantly
                       exceeds the amount of
                       deposits in
                       foreign currency.

                       In recent years,
                       a positive
                       upward trend in terms of
                       repayment of loans and
                       extension of maturity
                       borrowed funds.

                       The share of long-term
                       credits (with the term
                       maturity over 1 year) in
                       bank loan portfolios
                       increased to 65% in 2006
                       , compared with 55% in 2005




28     www.aval.ua     About us                                 Market environment                        Activity Bank
Raiffeisen Bank Aval 2006                                                                                 Development of the banking system of
Ukraine




                                                                         and 14% in 2000. The share of fixed deposits
                                                                          attracted by banks from individuals and entities
                                                                          As of the end of 2006 reached 66%.

                                                                         In recent years, much improved quality
                                                                           credit portfolio of banks. The level of overdue
                                                                            and bad loans does not exceed 2%
                                                                            credit portfolio of banks.

                                                                   General administrative costs of banks, although
                                                                   and reduced, but remains rather
                                                                   high, especially for large banks.
                                                                    This and other factors affecting the cost
                                                                  bank loans and margin. According to
                                                                 National Bank of Ukraine, the net spread
                                                                 decreased from 6.97% late 2003
                                                             to 5.78% in 2005 and 5.76% at the end
                                                                  2006. In recent years, many
                                                                     Ukrainian banks have started internal processes
                     to improve procedures and reduce costs. With increased competition and increased role
                     Foreign Banks transformation processes and activities aimed at optimizing costs and
                     improving the efficiency of banks improved.

                     The liquidity of the banking sector
                     in 2006 improved in
                     resulting decrease
                     reserve requirement
                     for banks in accordance with the requirements
                     Bank, a significant infusion of new
                     capital (increase in the authorized
                     capital by 40% only in 2006
                     year) and attracting foreign
                     credits on international markets
                     and capital markets. External
                     debt of Ukrainian banks in 2006
                     year more than doubled
                     to 70.4 billion (almost
                     14 billion U.S. dollars).

                     Evidence of successful development of the banking system in 2006 is also doubling the
                     profits of banks: net profit of banks

                     after tax in accordance with Ukrainian Accounting Standards was 4.1 billion. (821 million U.S.
                     dollars). Improved performance and return on assets and capital of banks by the end of 2006
                     amounted to 1.61% and 13.52% respectively.




                     The consolidated financial statements of the Bank     Subsidiaries of the bank. Background             www.aval.ua 29
Raiffeisen Bank Aval 2006                                                                                                    Results of the Bank




                              Results of the Bank *
                              2006 was crucial for the bank because it was the first year of its activity within
                              Austrian banking group Raiffeisen International Bank - Holding AG. Bank significantly
                              expanded
                              volume of business activity that allowed him to retain a position on the market in terms of paid
                              authorized capital and the second position in terms of assets. According to IFRS, as at the
                              end of 2006
                              total bank assets in local currency and U.S. dollars rose by 45.3% compared to
                                                                              last year and was over 27 bln. (Almost
                                                                              5.4 billion U.S. dollars).
      million. U.S.
                                                                                      Increased bank lending operations in 2006
                                                                                      73,9% allowed to Raiffeisen Bank Aval
                                                                             5384,0
                                                                                      increase its contribution to the credit economy
                                                                                      Ukraine and satisfy customers in
                                                                                      financing for small and medium business
                                                                  3706,0              needs of corporate clients and individuals.
                                                                                      Increased competition the bank is
                                                                                      second largest bank in terms of credit
                                                     2143,4                           portfolio, and in 2006 the share of bank
                                          1812,2
                                                                                      credit market in Ukraine has increased from
                                                                                      8,1% in
                      952,8   1082,4                                                  2005 to 8,5% in 2006.

                                                                                  During 2006, Raiffeisen Bank Aval
                                                                                  continued rapid growth of its business
                                                                                  lines and, in particular, services for corporate
                                                                                  clients and small and medium
                              business. The bank has achieved compelling results. Services entities were
                              singled in two business lines - corporate services and for small and medium business
                              (SMEs). As of late 2006, the amount of loans to bank clients increased by 73,9%
                              to over 21 billion. or 4.3 billion dollars (excluding reserves). This credit
                              portfolio of corporate customers rose to 11.2 billion. (2,2 billion) and individuals - to
                              10, 5 billion. (2,1 billion U.S. dollars). The Bank is a leader in lending to enterprises
                              agriculture and holds key positions in lending SMEs.




                              * Data are presented according to IFRS


                              The consolidated financial statements of the Bank       Subsidiaries of the bank. Background           www.aval.ua 31
 Results of the Bank                                                                                                Raiffeisen Bank Aval 2006




                                                                             In 2006, the bank maintained the leading
                                                                             position
                                                                             in the service of individuals,
                                                                             rapidly increasing its market share
                                                                             retail services. Having a large competitive
                                                                             advantage - the largest network of branches
                                                                             -
                                                                             rapidly increasing volume of bank lending
                                                                             population. In 2006, the number of private
                                                                             clients increased by nearly 1 million people,
                                                                             and
                                                                             loan portfolio increased by population
                                                                             138% compared with 2005. As
                                                                             end-2006 loan portfolio
                                                                             parties reached over 10.5 billion. (Over 2.1
                                                                             billion). This growth
                                                                             volume of operations of Raiffeisen Bank Aval
                                                                             in consumer lending, particularly
                                                                             mortgage lending in 2006 exceeded
                                                                             average growth of general
                                                                             in this segment. In 2006, the mortgage
                                                                             portfolio
                                                                             Bank increased by 211%, while growth
                          mortgage loans in the banking system as a whole amounted to 155%. Bank share of
                          mortgages
                          lending to individuals increased to 15,8% in 2006 compared with 12.95% in
                          2005.
                          To ensure sustainable development and expansion of bank lending activity, bank
                          shareholders
                          2006 increased the authorized capital of Raiffeisen Bank Aval by 40% compared with the
                          previous
                          year, namely 600 million. to 2.099 billion. or 430.8 million U.S. dollars. Total capital
                          Bank under IFRS increased by 112.1% to 2.9 billion. or 573.6 million U.S. dollars.

                          In 2006, Raiffeisen Bank Aval "markedly expanded customer base, enabling him
                          involve a significant amount of deposits from individuals and entities and to broaden the range
                          of service
                          clients.

                          Services Raiffeisen Bank            Paid share capital
                          Aval at the end of 2006
                          used more than                      million. U.S.

                          3.9 million individuals and
                          over 240 thousand corporate
                          clients.                                                                                              415,6


                          The amount raised from clients
                          deposits increased by 17,5%
                          and                                                                                         292,7
                          reached over 16.6 billion.
                          or 3.3 billion U.S. dollars.
                          Thus, the amount of funds                                                     188,0

                          attracted from the population                                     150,0
                          increased by 24% to 11.1
                          billion
                                                                                     93,8
                          USD. (2, 2 billion U.S. dollars).
                          Bank holds steady second                            39,6
                                                                       18,4
                          market position in terms of
                          funds raised from the public.

                          In 2006, the bank met
                          all requirements of the National Bank of Ukraine, including capital adequacy ratio,
                          liquidity and risk management. According to IFRS, capital adequacy level increased from



32      www.aval.ua About us                                  Market environment                    Activity Bank
Raiffeisen Bank Aval 2006                                                                                       Main products and services




                                                                    14.58% in 2005 to 17.33% in 2006,
                                                                    well above the recommended level of 8%.
                                                                    According to national accounting standards
                                                                    accounting and in accordance with the requirements
                                                                    of the National Bank
                                                                    Ukraine, the adequacy of bank capital is
                                                                    12.14% which is higher than the minimum standard
                                                                    indicators established by legislation of Ukraine
                                                                    at 10%.
                                                                    Successful performance of the bank introduced
                                                                    measures
                                                                    on increasing of the volume, improve
                                                                    profitability and cost optimization operations
                                                                    contributed
                                                                    substantially increase the bank's net profit
                                                                    more than tripled to 403 million USD. or 79.88 million
                                                                    dollars.
                                                                    In December 2006, the international
                                                                    rating
                                                                    agency Moody's confirmed the rating
                                                                    Bank Baa1/Prime-2 for long-term and
                     short-term deposits in national currency. Weather on all ratings - "Stable".
                     The national scale bank agency assigned the highest rating Aaa.ua. These ratings
                     confirming the good work
                     Raiffeisen Bank Aval and is
                     one of the highest ratings,
                     assigned agency
                     Moody's Ukrainian banks.

                     Improving results
                     of the bank was
                     achieved due
                     introduction of a bank in
                     2006, a number of institutional
                     reforms. This led to
                     optimize costs, increase
                     profitability of credit
                     operations and increase
                     revenues in the form of commissions
                     and
                     payments.


                     Main products and services
                     Management accounts, money transfers and work with cards
                     • Establishing and maintaining current and deposit accounts in local and foreign
                     currencies
                     • Domestic and international money transfers (Western Union, Aval - Express)
                     • Maintenance checks
                     • Receiving and making payments
                     • Cash and currency transactions
                     • issue and service cards (Visa, Master, Maestro, Oniks-retirement, card
                     Special joint programs - UMC - Visa - Aval, ISIC - Maestro, etc.)
                     • Collection, transportation and transfer of cash, night depository




                     The consolidated financial statements of the Bank   Subsidiaries of the bank. Background            www.aval.ua         33
 Main products and services                                                                                      Raiffeisen Bank Aval 2006




                          Credit and deposit services to individuals
                          •    Auto Financing
                          •    Loans to purchase real estate, consumer goods and long-term repairs
                          •    Loans for purchase of goods and services in installments
                          •    Consumer loans secured by property
                          •    Loans to pay for goods and withdraw cash on credit card account
                          •    Various deposit programs and products

                          Operations with precious metals and services using safe
                          deposit boxes
                          • Purchase - sale of bullion and coins
                          • Safe custody of bullion coins and
                          • Safe Boxes

                          Loans and other forms of business finance
                          •    Loans for working capital
                          •    Loans to upgrade and purchase of fixed assets
                          •    Project Financing
                          •    Credit lines
                          •    Overdraft interest rate differential with
                          •    Trade finance (using guarantees, letters of credit, promissory notes)
                          •    Structured Finance
                          •    Investment Banking
                          •    Long-term financing guaranteed by export credit agencies of foreign
                          •    Commercial Mortgage
                          •    Leasing
                          •    Factoring
                          Deposit products for corporate clients:
                          • Fixed deposit (with interest paid at maturity)
                          • Monthly deposit with monthly interest payments
                          • Savings deposit (with replenishment of deposit)
                          • Early deposit (with full or partial early withdrawals)
                          • Deposit Line (place on one account deposits up to 5 simultaneously - with different
                          amounts on different dates and different interest rates)
                          • Deposit on a short term (from 3 days)

                          KYC and guarantees:
                          •    Export - Import Letters of Credit
                          •    Letters "stendbay"
                          •    Documentary collections
                          •    Guarantees




34      www.aval.ua About us                                   Market environment                Activity Bank
Raiffeisen Bank Aval 2006                                                                                         Corporate banking




                     Other services for corporate clients
                     • Payroll
                     • Corporate cards and custom card programs for cardholders bank
                     • High-tech services for cash management (cost control part of the company and the allocation
                     of resources between them automatically)
                     • "Client - Bank (Online / Internet - banking and off-line)

                     Services on the money and stock markets
                     • Buying and selling securities
                     • Organization of issue of bonds in domestic and foreign markets
                     • Underwriting
                     • Custodial Services (storage, accounting, custody and other
                     information and consulting services)
                     • Purchase, sale, payment, accounting and availing of bills

                     Other services
                     •   Acquiring and Internet - acquiring
                     •   Legal and financial advice, find financial partners
                     •   Providing statements and information on the account for customer-friendly way
                     •   Providing information about transactions on mobile phone
                     •   Hour consultation Information Center
                     •   Buying electronic vouchers to mobile operators


                     Corporate banking
                     2006 was another successful year for Raiffeisen Bank Aval and its corporate clients. Bank has not only
                     kept the leading position in the market, but also introduced a number of reforms aimed at improving the
                     quality and range of services to corporate clients. The Bank is actively implementing the latest European
                     technologies, modern methods of business - processes, training and practical experience exchange with
                     more than 32 European banks and financial institutions that are members of the Raiffeisen Group.

                     Another important factor that led to significant development of this area during 2006 was the
                     reorganization of the corporate business units and bringing in a team of professionals with
                     international experience.

                     The analysis needs of different groups of clients in banking products and services, as well as the
                     amount of annual income of companies - clients, corporate business structure were successfully
                     introduced changes in organizational structure. Specifically created departments and
                     management, responsible for relations with different groups of customers:

                     - Department of large corporate clients;
                     - Corporate sales department business;
                     - Department of the public sector and trade finance;
                     - Management to work with multinational companies.




                     The consolidated financial statements of the Bank     Subsidiaries of the bank. Background                www.aval.ua 35
 Corporate banking                                                                                               Raiffeisen Bank Aval 2006




                                                                                          The bank introduced a new
                                                                                            institute - «middle office»,
                                                                                            the main purpose is to
                                                                                            accelerate the design and
                                                                                            conduct of credit
                                                                                            agreements.

                                                                                            One of the important
                                                                                             steps in the
                                                                                             decentralization of the
                                                                                             Bank was working with

                                                                                              regional corporate clients. In order
                                                                                              to expedite
                                                                                                   process of granting loans
                                                                                             regional bank's regional
                                                                                              units, including regional
                                                                                              management, have
                                                                                              increased lending limits that

                          allows you to save much time making decisions. 2006 was also the year the development and
                          introduction of new models of service, in which the principal place is given to the integrated
                          service and building long term relationships with clients. Performance in 2006 the market share
                          of corporate clients of Raiffeisen Bank Aval in terms of number of clients served by the bank
                          amounted to 17%.

                          2006 also saw the development of new corporate business banking products and adapting existing
                          products to the individual needs of corporate clients.

                          These factors allowed the bank to boost its position in lending entities. For 12 months 2006 the
                          bank increased its credit portfolio of corporate clients by 38% compared to same period of 2005.
                          Today among clients - about 240 thousand companies with Ukrainian and foreign-owned,
                          including many leading Ukrainian firms - leaders of their market segments.




36      www.aval.ua About us                                 Market environment                  Activity Bank
Raiffeisen Bank Aval 2006                                                                                                 Services SME entities




                                                                             The most successful new products for corporate
                                                                             clients, developed in 2006, is the commercial
                                                                             mortgage lending as an alternative target. As
                                                                             security for this type of loan is a commercial real
                                                                             estate. Successful innovative product is also an
                                                                             overdraft with flexible interest rate is set according
                                                                             to the period of use of this service. This new
                                                                             product line as the deposit makes it possible to
                                                                             expedite the issuance of deposit to those
                                                                             enterprises that are often fitted
                                                                             free money in the bank. Having general deposit
                                                                             contract every year, the customer during the
                                                                             year opens new deposit only by signing
                                                                             additional agreements.

                                                                          Thus, 2006 was a year of effective changes to
                     the corporate business of Raiffeisen Bank Aval. Small business has been allocated a separate
                     area of activity. Now all attention is focused on corporate business building long-term partnerships
                     with major clients and groups of customers with annual income amount is less than 5 million.


                     Services to small and medium business
                     Even in the early 90's Raiffeisen Bank Aval has been a leader in providing mikropozyk entrepreneurs across the
                     country. Today it is on small and medium enterprises (SMEs) account for the greatest number of registered
                     legal entities in Ukraine and, as the experience of Central and Eastern Europe over the next ten years this
                     segment will continue to grow rapidly.

                     Given the positive outlook on enhancing the contribution of SMEs in economic development and its
                     share in GDP, in 2006, Raiffeisen Bank Aval has provided service small and medium businesses as a
                     separate business line. In this group are all private enterprises and entrepreneurs with annual sales of
                     products and services to 5 million euros. Today more than 170 thousand small and medium-sized
                     businesses operate in 950 bank branches throughout Ukraine. Their customer service carried out 680 -
                     the managers of the bank.




                     The consolidated financial statements of the Bank      Subsidiaries of the bank. Background               www.aval.ua 37
 Retail Banking                                                                                                           Raiffeisen Bank Aval 2006




                                                                                      In 2006, the Bank adapted and introduced several
                                                                                      new products for the sector of small and medium
                                                                                      businesses, including - commercial mortgages and
                                                                                      overdrafts. These and other measures aimed at
                                                                                      SME development allowed the bank in 2006 to
                                                                                      increase the volume of loans to these enterprises,
                                                                                      62%, providing market share in this segment of the
                                                                                      bank loan market at above 10.5%. To further
                                                                                      develop services for small and medium enterprises
                                                                                      "Aval intends to develop in 2007 a number of new
                                                                                      products and start working information service for
                                                                                      SME customers.




                          Retail Banking
                          2006 was for "Aval second consecutive year of intense activity in the market of public
                          services: loan portfolio in this segment grew at nearly 140% and 130% more than in 2006
                          and 2005 respectively.


                                                                                  These figures exceed the average population growth
                                                                                  rate of loans for the banking system. Bank ranks
                                                                                  second among banks in Ukraine by total loans granted
                                                                                  to the population and the level of funds from individuals.
                                                                                  At the end of 2006, the share of bank lending to the
                                                                                  public on the market increased to
                                                                                  13,5% compared with 13,3% the previous year. The
                                                                                  rapid growth of mortgage lending has become a key
                                                                                  factor increasing the rate of lending osib.U 2006
                                                                                  Aval "presented new mortgage product that allowed
                                                                                  the bank to triple the volume of mortgage lending to
                                                                                  people in 2006. According to the Ukrainian National
                                                                                  Mortgage Association, the Bank's share in this
                                                                                  market amounted to 15,8%.

                          Given the growing demand for car sales market, one of the most popular types of consumer lending
                          remains a car loan. Raiffeisen Bank Aval is an active player in the car market and cooperates with the best
                          auto shows in Ukraine. Among the partners of the Bank - UkrAvto, AIS, "Autocapital", "Nico" and others.

                          Bank Savings and enjoy great success: the volume of savings accounts of individuals for the
                          year increased by more than 2.1 billion. (424 million U.S. dollars) or 24% and the end of 2006
                          amounted to over 11.1 billion. or 2,2 billion dollars.




38      www.aval.ua About us                                     Market environment                       Activity Bank
Raiffeisen Bank Aval 2006                                                                                          Retail Banking




                                                                                In 2006, the bank took a leading position in the
                                                                                attraction of term deposits. Years of
                                                                                experience and a balanced-conservative policy
                                                                                on deposits contribute to public confidence in
                                                                                the growth of Raiffeisen Bank Aval.

                                                                                One of the priorities of the bank is providing
                                                                                services to issue and service cards of the major
                                                                                payment systems Visa International and
                                                                                MasterCard International. At the end of 2006 the
                                                                                number of cards issued by banks, amounted to
                                                                                over 3 700 000 pcs. Of these, more than 300
                                                                                thousand cards are credit cards, 260 thousand are
                                                                                released it in 2006. Much
                                                                                increased dynamics of money on credit
                                                                                cards (almost 9 times).

                     To meet the needs of clients in 2006 it introduced several new products, namely:

                     - "Installment insurance - consumer credit up to 5 thousand.
                     - "Non-earmarked loans secured by liquid real estate"
                     - "Land loans"
                     - Auto loans with no down payment "
                     - A new kind of bank deposit "Comfortable" (flexible replenishment and withdrawal of
                        funds without terminating the current agreement, the interest rate differential, which
                        depends on the amount of deposit)
                     - Card Visa Instant - Instant card provided to customers immediately when opening an account
                        у department.

                     As part of retail business development strategy is to increase the ATM network to provide maximum
                     comfort for every client. Network of bank at end-2006 totaled more than 1800 ATMs. During the year it was
                     established more than 400 ATMs.




                     The consolidated financial statements of the Bank      Subsidiaries of the bank. Background           www.aval.ua 39
 Treasury Services                                                                                                     Raiffeisen Bank Aval 2006




                          To improve the quality of customer service and the introduction of a unified system of
                          standards of service in 2006 introduced an ongoing project "Control of purchase. The
                          inspections program "check purchases" outside the organization, in 2006 the service quality in
                          bank branches increased by 10%.

                          Bank actively implemented the concept of self-service centers, through which bank
                          customers can quickly and at a convenient time to do all basic operations: cash withdrawal,
                          replenishment of bank accounts, payment of mobile operators, utilities, loan payments,
                          money transfers, etc. . Currently, the network self-Bank has more than 90 centers. The Bank
                          plans to significantly increase this figure over the next year.

                          An integral part of business processes is the Bank Information Center. According to
                          available statistics, currently staff the center served about 98% of telephone requests
                          bank customers.


                          Treasury Services and work with
                          financial institutions
                          In 2006, the Treasury, Raiffeisen Bank Aval has continued to effectively manage the liquidity
                          position. One of the priorities of the Treasury was optimization of flows of liquidity by financing
                          costs and investment return. Bank continued to invest in government and corporate securities to
                          diversify their assets.

                          During the year the Bank has fulfilled all requirements for liquidity, the National Bank of
                          Ukraine.

                          In 2006, Raiffeisen Bank Aval was an active participant in the interbank money and foreign exchange
                          markets, the securities market. Bank maintained regular trade operations with over 140 banks Among
                          which 100 domestic and 40 foreign banks. The volume of foreign exchange transactions and activity
                          on bank money market increased in 2006, more than 30% compared to 2005 results. This overall
                          increase was due to transactions by customers and internal needs of the bank.

                          Raiffeisen Bank Aval is the leading trade cash transactions on the Ukrainian market. In 2006 nearly
                          doubled the amount of bank transactions with bank notes from the previous year (import of foreign
                          currency in cash) for its network of branches and other banks that allowed him to gain a foothold on the
                          number one position in Ukraine, with a market share of over 31%.

                          The Bank has an active policy of correspondent relations with Ukrainian and foreign banks. This policy is
                          based on the principle of mutually beneficial cooperation with banks and non-residents. One of the basic
                          services to banks - the correspondents are opening and maintaining correspondent accounts for multi 155
                          banks of Ukraine, the Baltics and the CIS. As of 1 January 2007, the banks - 245 correspondents concluded
                          general agreements.

                          Raiffeisen Bank Aval has an extensive correspondent network of 190 leading banks. NOSTRO
                          correspondent accounts opened in 12 banks of CIS and Baltic countries, and in the 25 largest banks in
                          Europe, America and other regions. Average balances on correspondent accounts in loro rate for 2006
                          increased by 50% compared with 2005.




40      www.aval.ua About us                                    Market environment                     Activity Bank
Raiffeisen Bank Aval 2006                                                                                                      Treasury Services




                     In 2006, Raiffeisen Bank Aval was considerably increased the limits on interbank operations of foreign
                     financial institutions. Currently set limits for forex transactions totaling more than 300 million euros for
                     depot operations - to 230 million euros.

                     In 2006, the Bank has also actively cooperated with international financial institutions in
                     attracting long-term loans. Overall, in 2006, the bank has attracted about 650 million long-
                     term resources.

                     Last year, Raiffeisen Bank Aval "continued to cooperate with the EBRD, signed the
                     agreement for a bank loan worth 50 million dollars. The funds were used to refinance
                     projects for small and medium businesses.




                     The consolidated financial statements of the Bank          Subsidiaries of the bank. Background                www.aval.ua 41
Consolidated Financial Statements for 2006                                                                              Raiffeisen Bank Aval




     Translated from the original English




     Independent Auditors' Report
     Shareholders and members of the Board of Open Joint
     Stock Company "Raiffeisen Bank Aval



     Management's Responsibility for Financial Reporting
     Management is responsible for the preparation and fair presentation of this consolidated financial statements in
     accordance with International Financial Reporting Standards.

     Auditor's responsibility
     Our responsibility is to express our opinion on the authenticity of the said consolidated financial
     statements based on our audit. We conducted our audit in accordance with International Standards on
     Auditing. Those standards require that we comply with ethical standards, planned and conducted the
     audit to obtain reasonable assurance about whether material misstatement of the consolidated financial
     statements.

     An audit involves performing procedures which aimed to obtain audit evidence about the amounts and information
     disclosed in financial statements. Selection procedures based on judgments of auditor, including an assessment of the risks
     of material misstatement of the financial statements due to fraud or error. In assessing this risk, the auditor considers
     internal control relevant to the preparation and fair presentation of audit to determine audit procedures that are necessary in
     the circumstances, but not for expressing an opinion on the effectiveness of internal control of the enterprise. An audit also
     includes evaluating the appropriateness of accounting policies applied and the reasonableness of accounting estimates
     used by management in preparing financial statements and overall financial statement presentation.

     We believe that the audit evidence we have obtained is sufficient and appropriate to give our opinion.

     Conclusion
     In our opinion, the consolidated financial statements in all material respects, the financial position of the Bank as
     at 31 December 2006, its financial performance and cash flows for the year then ended, in accordance with
     International Financial Reporting Standards.




     July 30, 2007.




                           The consolidated financial statements of the Bank   Subsidiaries of the bank. Background          www.aval.ua 43
Raiffeisen Bank Aval                                                                                              Consolidated Financial Statements for 2006

          Translated from the original English

          For the year ended 31 December 2006
          (in thousands of U.S. dollars)




          Consolidated Balance Sheet
                                                                                                                  December 31

                                                                                       Notes                     2006 р.                      2005      р.
         Assets
         Cash and cash equivalents                                                          5                     843 784                     953     116
         Due from credit institutions                                                       6                        7495                      17083
         Loans to customers                                                                 7                4     094437                     2 354 123
         Investment securities:                                                             8
             - At fair value                                                                                      74 232                        49 888
             - Available for sale                                                                                       262                         2 925
             - Held to maturity                                                                                         773                    120 175
         Assets for sale                                                                   10                           443                         2 138
         Fixed assets                                                                      12                     315 099                      181 153
         Intangible assets                                                                 13                       16 722                     11432
         Deferred income tax assets                                                         9                            37                             —


         Other assets                                                                      14                     30716                        14     005
         Total assets                                                                                        5    384 000                3     706 038
         Liabilities
         Due to NBU                                                                        15                           501                    13214
         Due to credit institutions                                                        16                1     348216                     496     096
         Due to customers                                                                  17                3     321464                2       827357
         Subordinated debt                                                                 18                     70590                         69 908
         Current Income tax liabilities                                                     9                       5 824                           4 135
         Deferred income tax liability                                                      9                     22238                             1 958
         Other liabilities                                                                  14                     39 303                           21962
         Reserves                                                                           P                        1 869                             920
                                                                                                                                                     43555
         Total liabilities                                                                                       4810005                 3               0

         Capital
         Share capital                                                                                            430800                       307 660
         Share premium                                                                                              14 143                              —


         Revaluation reserve                                                                                      111 192                       24 116
         Retained earnings / accumulated deficit {)                                                                17432                      (61288)
         Total capital, due to the shareholders of the Bank                                19                     573 567                     270488
         Minority interest                                                                                              428
         Total         capital                                                                                    573 995                     270488

         Total         Liabilities and & £ ttal country''IA

                  From the Board                        and granted permission to publish
                                                                                                                                Chairman of the
                  Vladimir Lavrenchuk                                                                                           Board
                  Ludmila Makarenko                                                                                             Chief Accountant

                  July 30, 2007

                  Note that dodayutsya pages 48 - 85, is an integral part of these consolidated financial statements.


    44            www.aval.ua            About us                                 Market environment                          Activity Bank
      Translated from the original English

      For the year ended 31 December 2006
      (in thousands of U.S. dollars)




      Consolidated Statement of Income
                                                                                              For the year ended 31 December
 Interest income

 Loans to customers                                                                                          521       811           320 077
 Due from credit institutions                                                                                   7445                        9443
 Investment securities                                                                                          6 752                  10 833
 NBU Debt                                                                                                               102                       —


                                                                                                             536        110           340353
 Interest expenses

 Due to customers                                                                                        (181          313)          (148       565)
 Due to credit institutions                                                                                  (43        520)         (16        343)
 Subordinated debt                                                                                            (7555)                  (3        893)
 Due to NBU                                                                                                        (963)              (3        158)
 Dividends paid on preferred shares                                                                                (137)                       P37)
                                                                                                         (233488)                    (172096)
  Net interest income                                                                                        302622                    168257
 Impairment of interest earning assets                                                       11              (76        193)         (71        967)
  Net interest income after                                                                                  226429                   96290
 impairment of interest earning
 assets
 Fees and commissions received                                                                               157255                  130         357
 Fee and commission expense                                                                                  (15        063)         (13        138)
 Fees and commissions, net income                                                           21               142        192            117219
 Result from dealing in foreign currencies:
      - Trading income, net                                                                                   27928                   31         624
      - Translation differences, net                                                                               1     968                (903)
  Net income from securities transactions                                                                               439                 (266)
 Revaluation of financial instruments                                                                           2       946           (2        309)
 Other income                                                                                                   2415                       2     967
  Net income        not associated with interest                                                              35696                   31        113
 Salaries and remuneration                                                                  22           (148           132)         (107321)
 Depreciation and amortization                                                          12,13                (29263)                 (23        460)
 Other operating and administrative expenses                                                22           (113           602)         (81        233)
 Impairment of other assets and security                                                     11               (4        280)          (2        843)
 Expenses not related to interest                                                                        (295277)                    (214 857)
 Profit before     taxation                                                                                  109040                    29765
 Income tax expense                                                                           9              (29        161)         (15614)
 Profit for the year                                                                                          79879                    14        151
 Due to:
      - Shareholders of the Bank                                                                              79        921            14        151
      - Minority interests                                                                                              (42)
                                                                                                              79879                         14 157




      Note that dodayutsya pages 48 - 85 , is an integral part of these consolidated financial statements.


The consolidated financial statements of the Bank           Subsidiaries of the bank. Background                       www.aval.ua          45
Raiffeisen Bank Avalonsolidated Financial Statements for 2006

        Translated from the original English

        For the year ended 31 December 2006
        (in thousands of U.S. dollars)




        Consolidated statement of changes in equity

                                                                         Treasury                              Retained
                                                                                         Revaluati
                                                                                               on
                                          Share               Share                       Reserve                earnings
                                                                                                            Accumulated                  minority    Total
                                                                                                                                           interest
                                          capital    premium                  shares                              deficit        Total     s        Capital
       December 31,                                                                                                                                 —
           2004                        203731                 473            (4575)       24192                 (60280)       163541                        163541
        Exchange differences                    TI    747               16            (240)         1208            (2 612)         10   119                    10 119
        Increased equity
                                                97567                                                                               97567                       97567
        capital of ordinary shares
        Registered, but not
        paid shares                                     (1)                                                                              (1)                          P)

        Purchase of own shares                                      (489)       (13 203)                                           (13 692)                    (13    692)
        Sale of own shares                                                       12 634                            (13 898)         (1264)                      (1 264)
        Depreciation of
        revaluation reserve,                                                                        (126)                 126
        net of taxes
        Disposal of revalued                                                                  (1 158)                1      158          —                            —

        fixed assets
        Change in fair
        value of securities
                                                                                                                            67           67                           67
        available for sale,
        net of taxes
        Net income for the year                                                                                     14      151     14   151                    14    151
      December 31,                                                  —                                                                           —
      2005                             313044                                (5384)       24116                 (61 288) 270488                             270488
        Increased equity
                                               118 800                                                                             118   800            -      118 800
        capital of ordinary shares
        Purchase of own shares                                      (399)         (1 044)                                 (26)      (1 469)             —       (1 469)
        Sale of own shares                                          14542         5 384                                             19   926            —       19 926
        Revaluation of fixed
        assets, net of                                                                        88     110                            88   110            -       88 110
        taxes
        Depreciation of
        revaluation reserve,                                                                        (958)                 958               -           -             -

        net of taxes
        Disposal of revalued
                                                                                                     (76)                   76              -           -             -
        fixed assets
        Change in fair
        value of securities
                                                                                                                     (2209)         (2209)              -       (2209)
        available for sale,
        net of taxes
        Deductions for share
                                                                                                                                                    470              470
        minority
        Net income for the year                                                                                     79      921     79   921        (42)        79    879
            December 31, 2006                  431   844        14 143          (1044)        111    192             17432         573567           428        573    995


        Note that dodayutsya pages 48 - 85, is an integral part of these consolidated financial statements.


46      www.aval.ua            About us                                               Market environment                            Activity Bank
Translated from the original English

For the year ended 31 December 2006
(in thousands of U.S. dollars)




Consolidated Statement of Cash Flows
                                                                                            For the year ended 31 December

                                                                                            Notes            2006         р.       2005      р.

Cash flow in                           operating activities
Interest and commissions received                                                                            671        677        481      786
Interest and commissions paid                                                                                (245       634)   (167497)
 Net income from operations with foreign currency and securities                                              28        367         31      163
Other operating income                                                                                              2   355           2     967
Salaries and Compensation                                                                                    (134       209)   (104        030)
Other operating and administrative expenses                                                                  (108       901)       (79     856)
Operating cash flows before changes in operating assets and                                                  213        655         164533
liabilities
 Net (increase) / decrease in operating assets
Due from credit institutions                                                                                        9   484              14517
Loans to customers                                                                                     (1     820 864)         (915        128)
Other assets                                                                                                 (15        942)          4     828
 Net increase / (decrease) in operating liabilities
Due to other credit institutions                                                                             498        222        (10     392)
Due to customers                                                                                             511        974    1      177347
Other liabilities                                                                                              (2       231)          5     790
Net (direction) / flow of funds from operating                                                              1605        702)       441      495
activities before taxation
Income tax paid                                                                                              (35        860)        (6     706)
 Net      (Direction) / flow of funds from operating activities                                              (641       562)       434      789
Cash flows from financing activities
Due to credit institutions                                                                                   380        921        261      869
Due to the National Bank of Ukraine                                                                          (12        680)   (123        750)
Issue of shares                                                                                               118       800         97566
Sale / (purchase) of treasury shares                                                                          18        457        (14     957)
Contributions from minority
interests                                                                                                               470
Repayment of debt securities issued                                                                                                        (96)
Subordinated debt                                                                                                                   69      068
Net cash flows from financing activities                                                                     505        968        289700
Cash flow in       investing activities
 Net purchase / sale of securities                                                                             97       950    (113        476)
Assets held for sale                                                                                                    218           3     191
Purchase of fixed assets and equipment                                                                       (48        324)       (34     444)
Purchase of intangible assets                                                                                  (8       086)        (8     672)
Proceeds from sale of fixed assets and equipment                                                                    4   033           8     117
 Net      (Direction) / receipts                           in investment                                       45       791    (145284)
Effect of exchange differences on cash and cash equivalents                                                  (19        529)        24      325
Net change in cash and cash equivalents                                                                     (109332)               603      530
Cash and cash equivalents at beginning of year                                                   5           953        116        349586
Cash and cash equivalents at end of year                                                         5           843        784        953      116

Notes given on pages 48 - 85 are an integral part of these consolidated financial statements.


                      The consolidated financial statements of the Bank          Subsidiaries of the bank. Background                     www.aval.ua   47
 Raiffeisen Bank Aval                                                                    Notes to the consolidated financial statements for 2006




         Translated from the original English

         (Thousands of U.S. dollars)




         1. Main activity
         Joint Stock Commercial Bank "Aval" (hereinafter - the "Bank") was registered on March 27, 1992 National Bank of
         Ukraine (NBU) as Open Joint accordance with the law
         Ukraine. In April 1994, the Bank was re-registered as Joint-Stock Post Pension Bank Aval. In 2006 the Bank was re-registered as
         Joint Stock Company "Raiffeisen Bank Aval. Currently, the Bank operates under the general banking license Bank renewed
         December 3, 2001, which allows the Bank to conduct banking transactions, including currency transactions and service accounts
         of budget organizations in Ukraine.

         Central Bank office located at: Kyiv, str. Leskov, 9. As at 31 December 2006, the Bank had 35 branches
         and directorates, and 1342 outlets throughout Ukraine (in 2005: 35 directorate and branch outlets 1375).
         As at 31 December 2006, the Bank employed 17 395 employees (in 2005: 17 132 employees).

         Bank accepts deposits from individuals and entities, and provides loans, makes payments in Ukraine and
         abroad, conducts operations through exchange, investing, provides cash management services customers
         and other banking services.

         Limited Liability Company "Raiffeisen Leasing Aval, a subsidiary of the Bank with 60% ownership share, was
         founded in 2006 and the company operates in Ukraine on leasing market.

         2. Basis of presentation

         General Information
         These consolidated financial statements have been prepared in accordance with International Financial Reporting ("IFRS").

         From the Bank and its subsidiary are required to maintain accounting records in Ukrainian hryvnia and prepare statements
         for regulatory purposes in accordance with the Regulation on organization of accounting and reporting in banks of Ukraine
         ("UAR"), the National Bank of Ukraine and according to National Accounting Standards Ukraine . This consolidated
         financial statements have been prepared based on accounting data and the Bank, as adjusted and reclassified for
         presentation in accordance with IFRS.

         The consolidated financial statements prepared under the historical cost, except as specified in the
         accounting policies below.

         The consolidated financial statements are presented in thousands of U.S. dollars (U.S. USA) unless otherwise noted.

         Changes in accounting policies
         Accounting policies applied in 2006, consistent with those of the previous financial year, excluding the application of amendments
         to IAS 39 Financial Instruments: Recognition and Measurement ": Financial guarantees, which applies for reporting years beginning
         on 1 January 2006 or after that date. The above change applies to financial guarantee contracts accounting parties that provide
         such guarantees.

         Adoption of the above changes do not have a significant impact on the consolidated financial statements of the Bank.




48      www.aval.ua About us                                        Market environment                        Activity Bank
Notes to the consolidated financial statements for 2006                                                                            Raiffeisen Bank Aval




     Translated from the original English

     (Thousands of U.S. dollars)




     IFRS and interpretations of the Committee on the
     interpretations of IFRS that are not yet effective
     Bank has not applied the following IFRSs and Interpretations of the Standing Committee of
     the interpretations of IFRS («IFRIC»), which were approved but not yet effective:

     IFRS 7 Financial Instruments: Disclosures, Amendments to IAS 1 Presentation of
     financial statements "-" Capital Disclosures ", IFRIC 8, Scope of IAS 2;
     Interpretation IFRIC 9, Reassessment of Embedded Derivatives, IFRIC 10 Interim
     Financial Reporting and Impairment ";
     Interpretation IFRIC 11, IFRS 2 - Accounting deals with its own (treasury) shares and
     instruments are all unified business structure;
     IFRIC 12 Service Concession contracts.
     The Bank expects that the application listed above will have significant impact on the consolidated financial
     statements of the Bank the period of initial application, except for new disclosures on IFRS 7. This disclosure will
     help users of consolidated financial statements to evaluate the significance of financial instruments of the Bank,
     the nature and extent of risks arising from those financial instruments and objectives, policies and processes of the
     Bank for the purpose of capital management.

     Accounting for inflation in
     Ukraine was considered a hyperinflationary economy during the ten-year period ended December 31, 2000.
     Accordingly, the Bank has applied IAS 29 "Financial reporting in hyperinflationary economies. Impact of IAS
     29 is that non-monetary items have been listed in the currency of measurement, which was in force until 31
     December 2000, using the consumer price index, and these values were listed underlying accounts in the
     following accounting periods.

     Affiliates
     The consolidated financial statements includes the following subsidiaries:

      2006
                                                           Share /                           Date of                            Date of
                                                           Participati                       Registratio
      Subsidiary                                           on%                 Country       n                  Branch          acquisition
      LLC Raiffeisen Leasing Aval                          60%                 Ukraine       June 29            Financial       June 29
                                                                                             2006               Leasing         2006

     3. Generalization of accounting principles

     Affiliates
     Subsidiaries are companies in which Bank has a share of more than half the voting rights or for other reasons has
     the right to control their operations, and are subject to consolidation. Affiliates consolidate the date from which
     transferred control of the Bank and no longer consolidated from the date of expiry of such control. All intra-group
     transactions, balances and not profits from transactions between group companies are excluded in full; unrealized
     losses are also eliminated if the transaction giving evidence of the decline in asset received. Where necessary,
     accounting policies of subsidiaries has been changed to ensure the consistency of policies introduced by the Bank.




                           The consolidated financial statements of the Bank             Subsidiaries of the bank. Background          www.aval.ua 49
 Raiffeisen Bank Aval                                                                     Notes to the consolidated financial statements for 2006




         Translated from the original English

         (Thousands of U.S. dollars)




         Minority interest in this part of the subsidiaries that are not owned by the Bank. Minority interest as at the balance
         sheet date represents the share belonging to other participants in the net fair value of identifiable assets, liabilities
         and potential liabilities subsidiary at the acquisition date and changes in minority interest in equity since the date of
         purchase. Minority interest is presented separately in equity in the consolidated balance sheet, separate from the
         capital of the parent.

         Losses related to the minority share of interest payments do not exceed the minority share in equity of
         subsidiaries unless this obligation tying the minority to fund the losses. All such losses are allocated by the
         Bank.

         Financial assets
         Under the terms of IAS 39, financial assets are classified as either financial assets at fair value through profit or loss, loans
         and receivables, investments held to maturity or financial assets available for sale. On initial recognition of financial assets
         at fair value plus (in the case of investments not classified as financial assets at fair value through profit or loss) costs
         directly attributable transaction costs. During the initial recognition of financial assets The Bank determines their appropriate
         category and, where possible and appropriate, the end of each fiscal year, revising their assigned category.

         All regular way purchases or sales of financial assets are recognized on the trade date ie the date when the
         Bank undertakes to purchase the asset. Regular purchases and sales - a purchase or sale of financial
         assets that require delivery of assets within the timeframe established by regulation or convention in the
         market.

         Financial assets at fair value through profit or loss
         This category has two subcategories: financial assets held for sale and financial assets that have been attributed to this
         category on initial recognition. Financial assets classified as held for sale if they purchased for sale in the near future.
         Derivatives are also classified as
         held for sale, except if they are given the appropriate category and they are effective instruments to hedge
         risks. Gains or losses on financial assets through profit or loss are recognized in the income statement.

         Financial assets classified in this category, management of the Bank assigns this category on initial
         recognition of those in the following criteria:

         •   Assignment to this category, eliminates or significantly reduces the inconsistent assessment that otherwise would result in
             the recognition of assets or liabilities or recognizing revenues and expenses from them on another basis, or

         •   Assets are part of a group of financial assets and / or financial liabilities managed and parameters are
             determined at fair value in accordance with accepted investment strategy and risk management, or

         •   The financial instrument contains an embedded derivative, if the embedded derivative does not
             significantly influence the cash flows, or clear with limited or no analysis that it will not be considered
             separately.




50      www.aval.ua About us                                         Market environment                        Activity Bank
Notes to the consolidated financial statements for 2006                                                                           Raiffeisen Bank Aval




     Translated from the original English

     (Thousands of U.S. dollars)




     Financial assets at fair value through profit or loss because of the balance sheet at fair value. Changes in fair value reflected in
     the "revaluation of financial instruments. Interest received recorded as interest income, pursuant to the contract, and dividends
     received are displayed in "the Other income" you have received the right to receive payment.


     Investments held to maturity
     Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held to
     maturity if the Bank intends and is able to hold them to maturity. Investments that the Bank intends to hold for an
     indefinite period of time are not included in this category. Investments held to maturity, then carried at amortized
     cost, calculated as the amount initially reflected in accounting, net of principal repayments, plus / minus
     accumulated depreciation reflected the difference between the original amount and the amount of maturity that is
     calculated using the effective interest rate . The above calculation is made taking into account all payments under
     the contract between the parties, both paid and received, an integral part of the effective interest rate, and taking
     into account transaction costs and all other premiums or discounts. Gains and losses on investments, at amortized
     cost are recognized in profit or loss on disposal or impaired and the amortization process.

     Loans and receivables
     Loans and receivables - are non-derivative financial assets with fixed or determinable payments that are not quoted
     in an active market. Such assets are carried at amortized cost using the effective interest method. Gains and losses
     on such assets are recognized in profit or loss on disposal or impaired and the amortization process.

     Financial assets available for sale
     Financial assets available for sale are non-derivative financial assets classified as available for sale or not classified in any
     of the three aforementioned categories. After initial recognition, financial assets available for sale are measured at fair
     value with gains and losses are recognized as a separate component of equity until disposal or impairment. In this case,
     the cumulative gain or loss previously recorded in equity is included in profit or loss. At this interest rate calculated using
     the effective interest rates are recognized in the income statement.

     The fair value of investments that are actively traded in organized financial markets is determined by market quotations offered by
     buyers at the end of trading on the balance sheet date. The fair value of investments that have no active market is determined
     using valuation techniques that include using recent agreements on market conditions, current market value of the instrument is
     virtually identical to the instrument in question, or based on discounted cash flow analysis.


     Offsetting
     Offsetting financial assets and liabilities recognized on the balance sheet net amount occurs only if the right to make legally verified
     and is intended to offset the asset simultaneously with the implementation of commitments.


     Cash and cash equivalents
     Cash and cash equivalents include cash, due from the NBU and debts to credit institutions that mature within ninety days of
     occurrence, are not burdened by any contractual obligations.




                           The consolidated financial statements of the Bank        Subsidiaries of the bank. Background              www.aval.ua 51
 Raiffeisen Bank Aval                                                                     Notes to the consolidated financial statements for 2006




         Translated from the original English

         (Thousands of U.S. dollars)




         Contracts of sale and repurchase, reverse repo and securities lending
         Contracts of sale and purchase of securities back agreements ("repos") are treated as secured financing
         transactions. Securities sold under agreements "repo", still in the balance sheet and transferred to the category of
         securities provided as collateral under the agreements "repo", in the case of the contractor's right to sell or re-pledge
         these securities arising from the contract or codes of practice. The corresponding liability to the debt to credit
         institutions or customers. Securities purchased under reverse sale agreements (reverse repos ") are recorded as
         debts to credit institutions or loans to customers, depending on the situation. The difference between sale and
         repurchase price is treated as interest and accrued over the term of contracts "repo" for the effective yield method.

         Securities transferred under the loan contractors continue to be recognized within the financial statements. Securities involved
         in a loan, are recognized in financial statements only if realization of their third
         parties. In this case, the purchase agreement is taken into account in the income statement within net income
         losses from trading securities. Commitment to return such securities recognized at fair value in the stock
         trading liabilities.

         Notes
         Promissory notes purchased are included in the available for sale investment securities, debt to credit
         institutions or loans to customers, according to their nature and recorded in accordance with accounting
         principles for these categories of assets.

         Borrowings
         The money, including funds of the National Bank of Ukraine, credit institutions, clients' funds and subordinated debt
         are initially recognized at fair value of the assets less costs directly related to the transaction. After initial recognition,
         borrowed funds are carried at amortized cost using the effective interest method. Revenues and expenses are
         recognized in the income statement in the moment of termination liabilities, and the amortization process.

         Provisions for impairment of financial assets
         At each balance sheet date the Bank checks for objective evidence of impairment of a financial asset or
         group of financial assets.

         Assets are recorded at amortized cost
          The carrying value of the asset reduced by the amount of provision for impairment. The amount of loss recognized in the
         consolidated income statement.

         The present value of estimated future flows of a collateralised financial asset reflects the possible
         revenues from the penalty provision, net of costs associated with obtaining and selling the collateral,
         regardless of the probability of applying for a charge.

         Bank first determines whether there are individual objective evidence of impairment of financial assets, each of which is essential,
         and individual or cumulative evidence of impairment of financial assets, each of which is not essential. If objective evidence of
         impairment of financial assets (significant or) are missing,




52      www.aval.ua About us                                         Market environment                        Activity Bank
Notes to the consolidated financial statements for 2006                                                                         Raiffeisen Bank Aval




     Translated from the original English

     (Thousands of U.S. dollars)




     This asset is included in a group of financial assets with similar credit risk characteristics. This group of financial assets is
     considered to assess impairment as a totality. Assets are considered to assess impairment, individually and in respect of which
     continues to be recognized or recognized impairment loss is not included in the total assessment for impairment.

     If the next period is smaller losses in connection with an event occurring after the recognition in accounting for the amount of
     impairment loss, the amount of the loss previously recognized is reversed. Any further
     reversal amount of impairment loss is recognized in the consolidated income statement, provided that the date of
     restoration of the carrying value of an asset does not exceed its amortized cost.

     If the asset is considered uncollectible, it is written off against the related allowance. Bad assets are written
     off after all necessary procedures and determine the amount of damage. Return to the amounts previously
     written off further reduces the amount of provision for impairment of financial instruments reflected in the
     consolidated income statement.

     Financial assets available for sale
      Reduction of reserve for shares available for sale is not recognized in the consolidated income statement. Decrease in reserve for
     debt instruments is recognized in the consolidated income statement, if the increase in fair value of instruments related objectively
     to an event that occurred after the reserve was recognized in the income statement.


     Termination of financial assets and liabilities

     Financial assets
     A financial asset (or, if applicable, part of a financial asset or part of a group of similar financial assets) in
     the case:

     •   the rights to receive cash flows from the asset;

     •   Bank has transferred its rights to receive cash flows from the asset or saving bank the right to receive cash flows from the asset
         while making a commitment to pay them in full to a third party without substantial delay, in accordance with the transfer
         agreements, and

     •   Bank either (a) has transferred substantially all risks and rewards of the asset, or (b) has neither transferred nor retained
         substantially all the risks and benefits associated with it, but has transferred control of the asset .

     У Where the Bank has transferred its rights to receive cash flows from the asset and thus not delivered and kept
     mostly all the risks and benefits associated with the asset, and not handed over control of the asset, the asset
     continues to be recognized in the accounting within further Bank involvement in the asset. When continuing
     involvement takes the form of bank guarantees on the transferred asset, it is assessed at the lower of the amount of
     the original carrying amount and maximum amounts that may be required from the Bank.

     У If further participation takes the form of written and / or purchased option (including options, calculations which
     occur in pure sum or similar agreements) on the transferred asset, the extent of further Bank involvement is the
     sum of the transferred asset, the Bank may redeem it. However, if the sold put option (including options,
     calculations which occur in pure sum or similar agreements) on the asset that is measured at fair value, the volume
     of the Bank's continuing involvement is limited to the lower of: the fair value of the asset transferred and option
     exercise price.




                           The consolidated financial statements of the Bank       Subsidiaries of the bank. Background             www.aval.ua 53
 Raiffeisen Bank Aval                                                                      Notes to the consolidated financial statements for 2006




         Translated from the original English

         (Thousands of U.S. dollars)




         Financial liabilities
         Derecognition of financial liabilities occurs when performance, cancellation or expiration of the liability.

         When replacing a financial liability obligations to other creditors with the same terms and conditions
         substantially different or if the changes are significant in terms of existing commitments, the original obligation
         is extinguished, and the new recognized. The difference in the carrying value of commitments is recognized in
         the consolidated income statement.

         Taxation
         Calculation of current tax expense is required by the Ukrainian tax legislation.

         Deferred tax assets and liabilities are calculated using the liability method on temporary differences. Deferred taxes are calculated
         on all temporary differences between assets and liabilities for financial accounting and cost to be taken into account in the tax
         records, except
         where the deferred income tax arises from initial recognition of goodwill, an asset or liability in a transaction that
         is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable
         profit or loss.

         Deferred tax assets are only when there is probable the future taxable profit will be available against
         temporary differences that reduce the tax base. Deferred tax assets and liabilities are measured at tax rates
         that will apply to the period of the asset or liability is settled based on that have been enacted or substantively
         enacted at the balance sheet date.
         Deferred income tax is shown for all temporary differences arising from investments in subsidiaries and
         associated companies and joint ventures, except when the time reversal of temporary differences is
         uncontrollable, and it is probable that the temporary difference will not reverse in near future.

         Ukraine also has other taxes paid by the Bank's activities. These taxes are included in the article "administrative
         and operating costs" consolidated statement of income.

         Assets for sale
         The Bank classifies as non-current assets are for sale if their carrying amount will be reimbursed primarily
         through sale rather than during their use. This non-current assets must be available for immediate sale in its
         present condition on the terms that are usual in the sale of such assets, their sale is characterized by a high
         degree of probability.

         High probability of sale means a firm intention to follow the Bank's management plan to sell non-current assets. It is
         necessary that the program was initiated action to find a buyer and implementation of such plan. In addition, the fixed
         assets has actively offered to implement at a price that is reasonable, given its current fair value. In addition, display as a
         completed sale transaction is expected within one year from the date of classification of fixed assets as available for sale.

         The Bank assesses the assets classified as being for sale, for the lower of: carrying amount or fair value less costs to sell. In
         case of occurrence of events or changes in circumstances indicate possible impairment of assets, the Bank reflects an
         impairment loss on initial and subsequent writing off their value to fair value less costs to sell.




54      www.aval.ua About us                                          Market environment                        Activity Bank
Notes to the consolidated financial statements for 2006                                                                           Raiffeisen Bank Aval




     Translated from the original English

     (Thousands of U.S. dollars)




     Fixed assets
     Fixed assets are carried at cost or restated value (for fixed assets acquired prior to 31 December 2000) net of
     accumulated depreciation and accumulated impairment. Buildings and land at fair value less depreciation and
     impairment amounts accrued after the date of revaluation.

     The carrying value of fixed assets is reviewed for impairment when events or circumstances of which would point to the
     likelihood that the carrying value of this may not be recoverable.

     After initial recognition at cost, land and buildings carried at revalued amounts, which is their fair value at the date of revaluation
     less any subsequent accumulated depreciation for buildings and subsequent accumulated impairment losses. Revaluations are
     often enough to book value not significantly different from that which would be determined using fair value at balance sheet date.

     Gains from the revaluation is recognized in the balance consisting of fixed asset revaluation reserve in equity
     excluding amounts reversal of the previous reduction of the cost of the asset is recognized in the consolidated
     income statement. In this case, the increase of the asset refers to financial performance. Decrease in asset
     revaluation is recognized in the consolidated income statement, except for direct credit of such reduction against the
     previous value growth for the same asset is recognized within the fixed asset revaluation reserve.

     The difference between the amount of depreciation calculated on the revalued carrying amount and the amount of
     depreciation calculated on the original value of the assets is transferred annually from fixed asset revaluation
     reserve to the retained earnings. In addition, the accumulated depreciation at revaluation date is eliminated against
     the gross value of the asset and the amount received net increases or decreases to the revalued amounts. In case
     of withdrawal of the asset revaluation reserve for that asset included in retained earnings.

     Accumulated depreciation fixed assets and those not entering into operation, starting from the date of such
     vehicles in operation. Depreciation is calculated using the straight-line basis over the following estimated
     useful life:


      Buildings                                                                                                                    50 years
      Furniture and other assets                                                                                                   10 years
      Equipment                                                                                                                      5 years
      Vehicles                                                                                                                       4 years




                           The consolidated financial statements of the Bank        Subsidiaries of the bank. Background               www.aval.ua 55
 Raiffeisen Bank Aval                                                                       Notes to the consolidated financial statements for 2006




         Translated from the original English

         (Thousands of U.S. dollars)




         Depreciation of leasehold improvements, plant and equipment is carried out based on the lesser: useful
         lives of the respective leased assets or the term of the respective leases.

         The carrying value of fixed assets is reviewed to assess the reduction of the useful value when events or
         changes in circumstances indicate that the carrying value may not be recoverable. If any such indication
         exists and where the carrying value exceeds the expected vidshkodovuvannya, the book value of fixed
         assets is reduced to its recoverable amount.

         Repairs and restoration of fixed assets are recognized in income in the period in which such costs were
         incurred and included in other operating and administrative costs, except where such costs are capitalized.

         Intangible assets
         Intangible assets include software and licenses.

         Software and licenses
         Intangible assets acquired separately are initially measured at cost. After initial recognition, intangible assets are carried at cost less
         accumulated depreciation and accumulated impairment losses. Intangible assets may have limited or unlimited useful lives.
         Intangible assets with finite useful life period amortized over the useful life of that is from 4 to 20 years and analyzed for impairment
         if there are signs of possible impairment of intangible assets. The terms and procedure of amortization of intangible assets with
         limited useful life period analyzed, at least annually at each financial year.

         Intangible assets with unlimited useful life period is not amortized, thus they are analyzed annually for impairment individually or
         in groups. Useful life of intangible assets with unlimited use available annually analyzed for presence of circumstances that
         confirm the accuracy of current estimates the useful life of that asset.

         Costs associated with maintaining software are recognized as part of expenses as they arise. Other development costs are
         shown in stock costs as they arise.




56      www.aval.ua About us                                           Market environment                         Activity Bank
Notes to the consolidated financial statements for 2006                                                                      Raiffeisen Bank Aval




     Translated from the original English

     (Thousands of U.S. dollars)




     Rent

     Finance - Bank as lessee
     The Bank recognizes financial leases as assets and liabilities on its consolidated balance sheet at amounts equal to the fair
     value of the leased property at inception of the lease or, if lower than fair value, according to the present value of minimum
     lease payments. In calculating the present value of minimum lease payments the discount factor is the interest rate allowed
     in the lease if it is possible to determine, and if not, the interest rate on borrowed capital. Initial direct costs are included in
     the asset. Lease payments are allocated to the financial costs and reduce outstanding obligations of the lease. Finance
     costs are recognized over the lease term so as to provide the constant periodic rate of interest on the balance of obligations
     in each period.

     Costs identified as directly attributable to activities performed by financial tenant leases are included as part
     of the amount recognized as an asset lease agreement.

     Finance - Bank as lessor
     The Bank recognizes outstanding finance lease at cost, which is equal to net investment in the lease,
     starting from the date of the lease. Finance income is based on a pattern reflecting a constant level of net
     investment return for that outstanding. Initial direct costs are included in the initial recognition of outstanding
     finance lease.

     Operating - Bank as lessee
     Lease, under which all the risks and benefits inherent in ownership of leased property remains in the lessor are classified as
     operating lease. Lease payments under operating lease agreements relating to administrative and operational costs for a
     uniform method of calculating the period of the lease.


     Operating - Bank as lessor
     The Bank presents assets provided for operating leases in the balance sheet according to the nature of the related asset.
     Lease income from operating leases is recognized in the consolidated income statement for the straight-line basis over the
     lease term as other income. The total value of discounts granted to lessees is recognized as a reduction in rental income
     during the period of lease straight-line basis. Initial direct costs incurred to earn income from operating lease are added to
     the carrying value of the leased asset.

     Reserves
     Provisions are recognized when the Bank due to certain events in the past has a legal or voluntarily accepted
     the obligation to settle with that very likely will need an outflow of resources embodying economic benefits
     and the amount that can be reliably measured.

     Liabilities for pension and other benefit
     The Bank does not have any pension arrangements separate from the State pension system of Ukraine, which
     provides for the calculation of current contributions by the employer as a percentage of current gross salary
     payments. These costs in the income statement for the period in which there are wage. In addition, the Bank
     has no additional benefits on retirement or other significant compensated benefits requiring accrual.




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         Translated from the original English

         (Thousands of U.S. dollars)




         Share capital

         Share capital
         Contributions to share capital, before 31 December 2000, recorded at cost restated according to IAS 29
         "Financial reporting in hyperinflationary economies.

         Ordinary shares and preference shares are not redeemable with uncertain dividends are classified as equity.
         The cost of third-party services directly related to the issuance of new shares, unless the business combination
         are shown in equity as a reduction of the amount received as a result of this issue. Any excess of the fair value
         of consideration received over the par value of shares issued is recognized as share premium.

         Treasury shares
         When the Bank purchases its own shares, the purchase cost, including related transaction costs, net of income tax is
         deducted from total capital until they are canceled or re-sale. The next sale or re-registration of such shares received
         amount is included in the capital. Treasury shares included in weighted average cost.

         Dividends
         Dividends are recognized as a liability and deducted from the amount of capital on the balance sheet date only if
         they are declared before the balance sheet date or the date of such balance included. Information about dividends is
         revealed in financial statements if they were offered to the balance sheet date, as well as proposed or declared after
         balance sheet date but before the date of approval to issue financial statements.

         Potential liabilities
         Potential liabilities are not recognized in the consolidated financial statements except when it is probable that a
         liability will require an outflow of resources embodying economic benefits, and thus can reliably estimate the amount
         of such obligations. Potential assets are not reflected in financial statements, with information about them is
         disclosed in the financial statements in cases where a related economic benefits is probable.

         Recognition of income and expenses
         Interest income and expenses are recognized on the accrual basis and calculated using the effective interest rate. Commission for
         providing loans to customers are deferred income, together with related direct costs and appear as an adjustment to the effective
         interest rate on loans. Fee and other income and expenses are recognized based on accrual basis at the time of delivery of
         appropriate services. Fees from asset management of investment funds is displayed during the provision of such services.


         Foreign currency
         The Bank defines separate functional and presentation currency under IAS 21 (revised) "The Effects of
         Changes in Foreign Exchange Rates."

         Bank's functional currency is the hryvnia. Transactions in foreign currencies are initially recorded in the functional currency
         using the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in




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Notes to the consolidated financial statements for 2006                                                                     Raiffeisen Bank Aval




     Translated from the original English

     (Thousands of U.S. dollars)




     foreign currency are translated into the functional currency at the rate ruling at the balance sheet. Gains and losses
     resulting from converting foreign currency transactions are shown in the consolidated statement of income as a
     result of transactions in foreign currency - foreign exchange differences. Non-monetary items that are measured at
     historical cost in foreign currency are translated at the exchange rate in force at the date of initial operations. Non-
     monetary items are carried at fair value are translated using the exchange rate in force at the date when the fair
     value.

     Differences between the contractual exchange rate of a certain transaction and the official NBU rate on the
     date of the transaction are included in trading results from operations in foreign currency. Official NBU
     exchange rates at December 31, 2006 and 2005 were 05.05 USD and 05.05 USD for 1 dollar and USD
     6.6509 and USD 5.9716 EUR 1, respectively.
     For users, the financial statements are presented in U.S. dollars. As at reporting date, assets and liabilities are
     listed in U.S. dollars at the exchange ruling at the balance sheet and statement of income listed on the average
     exchange rate for the year. Exchange differences arising from the conversion will appear in a separate equity
     item.

     Compliance values
     Certain amount of articles in 2005 have been reclassified to conform to the display in 2006.

     4. Significant accounting estimates and assumptions

                   Sum Previously reported                            Reclassified                  Comment
                  3 426 Fees and commissions                          Interest income               Reclassification of Commissions of
                        obtained                                                                    credit activity
               320 416 Arrears of                                     Cash                          Reclassification of amounts
                       credit institutions                            and cash equivalents          for contracts of 90-day
                                                                                                    term


     Assumption
     In the process of applying accounting policies, management of the Bank, made the following
     assumptions than estimates that have the most significant impact on the consolidated financial
     statements:

     Classification of securities
     Securities in bank portfolio composed of government bonds, corporate bonds and bank certificates of deposit
     issued by National Bank of Ukraine and corporate securities. On initial recognition of Bank securities classified as
     financial assets for which changes in fair value included in profit or loss, held to maturity investments and
     available for sale financial assets for which changes in fair value included in the capital.

     Discrepancy estimates
     Here are the key assumptions concerning the future and other key sources of inaccuracies in estimates of the
     reporting date, which carry a significant risk that the carrying amounts of assets and liabilities will be
     substantially corrected in the next year:




                           The consolidated financial statements of the Bank         Subsidiaries of the bank. Background         www.aval.ua 59
 Raiffeisen Bank Aval                                                                    Notes to the consolidated financial statements for 2006




         Translated from the original English

         (Thousands of U.S. dollars)




         Provision for impairment of loans and receivables
         Bank regularly reviews its loans and receivables for impairment. According to The Bank uses its judgments in assessing
         impairment losses in cases where a borrower is in financial difficulties and there sufficient evidence of similar borrowers. Bank
         similarly assesses changes in future cash flows based on observable data that indicate adverse changes in the status of
         repayment by borrowers in a group or changing national or local economic conditions that correlate with defaults on assets in the
         group. Management uses estimates based on historical loss experience for assets with similar credit risk characteristics and
         objective evidence of impairment in groups of loans and receivables. According to The Bank uses its judgments to adjust
         observable data for a group of loans or receivables to reflect current circumstances.


         Tax and other legislation
         Ukrainian tax legislation and regulatory framework, including exchange control and customs continue to evolve. Laws
         and regulations are not always clearly written and their interpretation depends on the perspective of local, regional and
         central government authorities and other government agencies. Instances of inconsistent interpretations is not unusual.
         Management believes that its interpretation of legislation regulating the activities of the Bank, the Bank is correct and
         complied with all regulations and all statutory taxes paid or accrued.

         However, there is a risk that the operations and interpretations that have not been challenged in the past, regulators will be
         challenged in the future. However, this risk is significantly reduced over time. Determination of amounts and the likelihood of
         negative consequences of possible lawsuits nepred'yavlenyh is not feasible

         5. Cash and cash equivalents
         Cash and cash equivalents

                                                                                                                         2006          2005
          Cash                                                                                                     259 442         201 885
          On the current account with the National Bank of Ukraine                                                 204 302         430 815
          The funds on current accounts with other credit institutions                                             242 666         153 369
          Term deposits with credit institutions that mature within 90 days                                        125 335         162 110
          reverse repos with credit institutions that mature within 90 days                                           12 039          4 937
          Cash and cash equivalents                                                                                843 784         953 116

         Current account with Bank represents amounts deposited with the Bank related to daily settlements and other
         transactions. The bank also must maintain a certain reserve funds on account with the NBU (reserve) in the form of non-
         interest deposit, which is calculated as a percentage of certain obligations of the Bank's net balances in cash and certain
         other specified amounts. There are no restrictions on the use of such funds in the Bank, however, if the minimum
         requirements for compulsory secondary reserve not met, then the Bank could be subject to certain penalties. The Bank
         was obliged to and maintained a minimum cumulative average reserve, which is calculated daily for a month. Daily
         average requirement for the period from 1 to December 31, 2006 was 69 159 thousand dollars. USA (2005: 193 922
         thousand dollars. USA). The Bank meets the mandatory requirements of the central bank's reserve as at 31 December
         2006 and 2005.

         As at 31 December 2006 the Bank allocated amount of 101 793 thousand dollars. USA (2005: 119 168
         thousand dollars. USA) on one bank current account OECD countries, which is a related party of the Bank.




60      www.aval.ua About us                                        Market environment                        Activity Bank
Notes to the consolidated financial statements for 2006                                                                      Raiffeisen Bank Aval




     Translated from the original English

     (Thousands of U.S. dollars)




     As at December 31, 2006 current accounts with other credit institutions included 118 102 thousand dollars. USA
     (2005: 5941 thousand dollars. USA) placed in a Ukrainian bank. At the same time, the Bank was 118 514
     thousand dollars. U.S. current account from the same Ukrainian bank (Note 16), which is not subject to netting
     (2005: 5941 thousand dollars. U.S. loans obtained from the same Ukrainian bank).

     As at December 31, 2006 current accounts with other credit institutions included the 2460 th. U.S. and time
     deposits with credit institutions included the 7200 th. USA, placed in a Ukrainian bank. At the same time, the
     Bank received the 9200 th. U.S. as interbank lending from the same Ukrainian bank (see Note 16), which is
     not subject to netting.

     As at December 31, 2006 time deposits with other credit institutions included 39 119 thousand dollars. U.S. that were
     posted in some of Ukrainian Banks (2005: 102 223 thousand dollars. USA). At the same time, the Bank received USD
     39 356 thousand. U.S. deposits from the same Ukrainian banks (see Note 16), which is not subject to netting (2005:
     102 223 thousand dollars. U.S. and placing deposits in current accounts).

     As at December 31, 2006 time deposits with other credit institutions included 15 072 thousand dollars. U.S.
     banks from three OECD countries (2005: 39 614 thousand dollars. United States from one bank of OECD
     countries). This offering is the overnight deposit and were placed under the market interest rate.

     Bank concluded an agreement of sale and redemption of several Ukrainian banks for a total of 12 039 thousand dollars.
     USA (2005: 4937 thousand dollars. USA). The subject of these agreements are corporate bonds issued by Ukrainian
     companies in the carrying amount of 12 039 thousand dollars. USA (2005: 4937 thousand dollars. USA).


     6. Due from credit institutions
     Due credit consisted of the following:

      Loans and deposits                                                                                          2006            2005
      Banks in OECD countries                                                                                    1 278            3 390
      Ukrainian banks                                                                                            5 472         13 207
      Banks of CIS and other countries                                                                                  —          486
                                                                                                                 6 750         17 083
      Other receivables from credit institutions                                                                       745           —
      Less - Provision for impairment                                                                                   —            —
      Due from credit institutions                                                                               7 495         17 083

     As at December 31, 2006 loans and deposits of credit institutions include guarantee deposits amounting to 1
     278 thousand dollars. USA, located mainly in order to ensure clients' operations, such as letters of credit,
     performance guarantees and transactions with traveler's checks (in 2005: 9474 thousand dollars. USA).

     As at 31 December 2006 loans and deposits of credit institutions included 527 thousand dollars. USA, placed in a Ukrainian
     bank, which was zabezvechenyy cash on deposit from the same Ukrainian bank.

     Bank concluded an agreement of sale and redemption of several Ukrainian banks for a total of 4146 thousand dollars. USA
     (2005: 4141 thousand dollars. USA). The subject of these agreements are corporate bonds issued by Ukrainian companies
     in the carrying amount of 4146 thousand dollars. USA (2005: 4141 thousand dollars. USA).




                           The consolidated financial statements of the Bank    Subsidiaries of the bank. Background              www.aval.ua 61
 Raiffeisen Bank Aval                                                            Notes to the consolidated financial statements for 2006




         Translated from the original English

         (Thousands of U.S. dollars)

         7. Loans to customers
         Loans to customers were:

                                                                                                  2006                         2005
          Loans to customers                                                                  4 306 442                  2 521 297
          Reverse Repo operations                                                                 2 090                        3 831
          Notes                                                                                 17 545                         2 636
                                                                                              4 326 077                  2 527 764
          Less - Provision for impairment                                                     (231 640)                  (173 641)
          Loans to customers                                                                  4 094 437                  2 354 123

         Loans granted to companies operating in Ukraine in the following areas:

                                                                                       2006        %                   2005       %
          Individuals                                                            2 100 821        49                867 724      34
          Trade                                                                    911 662        21                520 912      21
          Production                                                               633 928        15                473 798      19
          Agriculture and food processing                                          336 144          8               394 320      16
          Real estate and construction                                             141 658          3               101 122       4
          Services                                                                 124 813          3                85 002       3
          Transport and communications                                               66 892         2                77 702       3
          Other industries                                                           10 159         0                 7 184       0
                                                                                 4 326 077       100               2 527 764    100

         Receivables from finance leases consists of:

          Gross investment in finance leases, receivable:                                     2006 р                           2005
          Within one year                                                                       1 627                             —
          More than 1 year but not more than 5 years                                            3 219                             —
                                                                                                4 846                             —
          Uncollectable future financial income from finance lease                              (790)                             —
          Net investment in finance leases                                                      4 056                             —

         As at 31 December 2006, loans to customers include loans provided under the Program to Support SMEs
         EBRD, amounting to 2 390 thousand dollars. USA (2005: 13 516 thousand dollars. USA).

         As at December 31, 2006 loans to customers include loans granted within the framework of the German-
         Ukrainian Fund of $ 14 to $ 887 thousand. U.S., less allowance for impairment (2005: 8922 thousand dollars.
         USA).

         As at December 31, 2006 loans to customers amounting to 9375 thousand dollars. USA (2005: 8657
         thousand dollars. Dollars) were pledged as collateral under the loan agreement with EBRD (Note 16).




62      www.aval.ua About us                                Market environment                     Activity Bank
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     Translated from the original English

     (Thousands of U.S. dollars)




     As at 31 December 2006 the Bank had concentrations of credit risk presented by the loans amounting to 410 728 thousand
     dollars. U.S., which was given the ten largest borrowers (10% of total loan portfolio) (2005: 279 498 thousand dollars. U.S.
     11% of total loan portfolio). For these loans provision has been made for impairment of $ 6598 thousand dollars. USA
     (2005: 15 318 thousand dollars. USA).

     As at December 31, 2006 for loans under ordinary conditions of Board members amounted to 431
     thousand dollars. USA (2005: nil).

     8. Investment securities
     Investment securities through because of gains and losses were:

                                                                                                               2006                     2005
      Corporate Bonds                                                                                       14 214                     9 810
      Ukrainian government bonds                                                                            60 018                   40 078
      Investment securities at fair value                                                                   74 232                   49 888

     Nominal interest rate and maturity date for these investments as follows:

                                                                                                    2006                                 2005
                                                                                  %               Date                    %            Date
                                                                                               maturity                             maturity
      Corporate Bonds                                                          15.0%         2009-2013              14.1%                2006
      Ukrainian government bonds                                         5.9%-9.4%                  2007              5.9%               2007

     As at December 31, 2006 include corporate bonds, zero coupon bonds with a Ukrainian company. Under the terms of
     issue of these bonds, each bond can be exchanged for a certain number of square meters of apartments to be built in the
     maturity of these bonds. As at December 31, 2006 market value of these bonds is 12 218 thousand dollars. USA. These
     bonds are carried at fair value based on current prices for 1 square meter of some apartments being built.

     As at December 31, 2006 available for sale investment securities include corporate shares in the fair
     value of 262 thousand dollars. USA (2005: 2925 thousand dollars. USA).

     Held to maturity investment securities include:

                                                                                                      2006                                2005
                                                                                Nominal          Carrying              Nominal       Carrying
                                                                                  value             value                value          value
      Russian government bonds                                                         800              773                   800           756
      NBU certificates of deposit                                                                         —             108 911       109 310
      Corporate Bonds                                                                                     —               10 076        10 109
      Total investment securities                                                                       773                           120 175
      Held to maturity




                           The consolidated financial statements of the Bank           Subsidiaries of the bank. Background             www.aval.ua 63
 Raiffeisen Bank Aval                                                               Notes to the consolidated financial statements for 2006




         Translated from the original English

         (Thousands of U.S. dollars)




         Nominal interest rates and maturity of investment securities as follows:

                                                                                          2006                                  2005
                                                                            %         maturity                           %   maturity
                                                                                                 date                          date
          Russian government bonds                                      3.0%              2008                     3.0%         2008
          NBU certificates of deposit                                                        —           3.0%-8.5%              2006
          Corporate Bonds                                                                    —      12.0%-15.0%                 2006

         9. Taxation
         Income includes:

                                                                                                    2006                        2005
          Current tax charge                                                                      37 552                      10 815
          Deferred tax on revaluation of fixed assets                                            (29 370)                         —
          reflected in capital
          Deferred tax on revaluation of investment                                                     736                      (22)
          securities available for sale displayed in capital
          Deferred tax                                                                            20 243                       4 821
          Income tax expense                                                                      29 161                      15 614

         Tax assets and liabilities consisted of:

                                                                                                    2006                        2005
          Assets of the current taxation                                                                 —                        —
          Deferred tax assets                                                                            37                       —
          Tax assets                                                                                     37                       —
          Current tax liabilities                                                                  5 824                       4 135
          Deferred tax liabilities                                                                22 238                       1 958
          Tax liabilities                                                                         28 062                       6 093

         The current income tax rate differs from the statutory rate. Matching amounts of income tax
         calculated using statutory rates and tax amounts actually assessed is as follows:

                                                                                                 2006                           2005
          Profit before taxation                                                            109 040                           29 764
          Statutory rate of taxation                                                              25%                           25%
          Income tax at statutory rate                                                        27 260                           7 441
          Expenses not included in the calculation of tax                                        3 057                         2 391
          The initial estimate of loans to customers                                         (1 156)
          Adjustments to income tax for previous years                                              —                          5 782
          Income tax expense                                                                  29 161                          15 614




64      www.aval.ua About us                                   Market environment                        Activity Bank
Notes to the consolidated financial statements for 2006                                                                     Raiffeisen Bank Aval




     Translated from the original English

     (Thousands of U.S. dollars)




     The amounts of assets and liabilities of deferred tax assets and liabilities as at 31 December are:

                                                                                                           2006                  2005
      Tax effect of temporary differences
      not taxable:
      Provisions for impairment of assets and security                                                  20 584                16 377
      Estimation of investment securities                                                                     —                 3 547
      Assessment of financial instruments                                                                  1 439                       5
      Charges                                                                                              5 375                       —
      Other assets                                                                                            99                       —
      Deferred tax assets                                                                               27 497                19 929
      Tax effect of temporary differences to be
      taxed:
      Fixed assets and software                                                                       (41 810)              (14 453)
      Estimation of investment securities                                                               (7 024)                        —
      Charges                                                                                                 —               (7 384)
      Other assets                                                                                         (864)                  (50)
      Deferred tax liabilities                                                                        (49 698)              (21 887)
      Deferred tax (Liabilities) / assets                                                             (22 201)                (1 958)

     In 2006, the deferred tax of 345 thousand dollars. USA was transferred from revaluation reserve to retained earnings (2005: 428
     thousand dollars .. USA). It concerns the difference between the actual cost of depreciation on revalued fixed assets and the
     equivalent cost of depreciation, calculated on the value of fixed assets.


     10. Assets for sale
     As at 31 December 2006 the assets intended for sale, including such investments in equity instruments:

                                                                                                  2006                           2005
                                                                               Share,%             Sum           Share,%         Sum
      ZAT "First national soap company"                                        75,00%             3 295            75,00%       3 295
      ZAT "Nizhyn beer”                                                        55,53%               363            55,53%         363
      ZAT “Lany Ukrainy "                                                      89,75%               357            89,75%         358
      JSC “Transavtoservis "                                                   69,70%               340            69,70%         340
      JSC “Cherkasy packaging "                                                34,60%               179            34,60%         136
      ZAT "ODZ"                                                                 26,98%              924            26,98%         924
      JSC "Infonet"                                                             40,00%                12           40,00%           12
      Consortium “Etalkom "                                                         —                 —            77,00%         200
      ZAT Aval Invest                                                               —                 —            99,00%           18
                                                                                                  5 470                         5 646
      Less provision for impairment                                                             (5 470)                       (3 508)
      December 31, 2006                                                                               —                         2 138

     As at December 31, 2006 a building was classified as assets held for sale, the carrying amount of 443
     thousand dollars. USA.



                           The consolidated financial statements of the Bank         Subsidiaries of the bank. Background       www.aval.ua 65
 Raiffeisen Bank Aval                                                           Notes to the consolidated financial statements for 2006




         Translated from the original English

         (Thousands of U.S. dollars)

         11. Allowances for impairment and provision
         Dynamics reservation losses on assets that generate interest income, was as follows:

                                                                                             Arrears of
                                                                        Loans to                 credit
                                                                          clients          institutions                      Total
          December 31, 2004                                              119 205                       472                  119 677
          Conversion of presentation currency                              6 734                         17                   6 751
          Charges                                                         72 336                     (369)                   71 967
          Write-off                                                     (23 510)                          —                 (23 510)
          Return of Debt                                                         58                       —                      58
          Exchange differences                                            (1 182)                    (120)                   (1 302)
          December 31, 2005                                              173 641                          —                 173 641
          Conversion of presentation currency                                    —                        —                      —
          Charge / (decrease)                                             76 193                          —                  76 193
          Write-off                                                     (18 986)                          —                 (18 986)
          Return of Debt                                                        195                       —                     195
          Exchange differences                                                  597                       —                     597
          December 31, 2006                                              231 640                          —                 231 640

         Dynamics reservation losses from other assets and the creation of reserves was as follows:


                                                     Investment in            Assets
                                                   associated and           intended
                                                   unconsolidated                 for Other                Off-balance
                                                       subsidiaries             Sales assets                      risks        Total
          December 31, 2004                                    1 069              524      1 499                     360       3 452
          Conversion of presentation
          currency                                                 38                 69      70                      27         204
          Charge / (decrease)                                (1 107)             2 915       367                     668       2 843
          Write-off                                                —                  —    (715)                       —       (715)
          Renewal                                                  —                  —         1                      —             1
          Exchange differences                                     —                  —      (70)                   (135)      (205)
          December 31, 2005                                        —             3 508     1 152                     920       5 580
          Conversion of presentation
          currency                                                 —                  —        —                       —          —
          Charge / (decrease)                                      —             1 980     1 449                     851       4 280
          Write-off                                                —              (18)     (393)                       —       (411)
          Return of Debt                                           —                  —       27                       —          27
          Exchange differences                                     —                  —         1                     98          99
          December 31, 2006                                        —             5 470     2 236                    1 869      9 575
         Provisions for impairment of assets are deducted from the related assets.
         Reserves are shown as a liability.




66      www.aval.ua About us                               Market environment                       Activity Bank
Notes to the consolidated financial statements for 2006                                                           Raiffeisen Bank Aval




   Translated from the original English

   (Thousands of U.S. dollars)


   12. Fixed assets
   Movement of fixed assets were as
   follows:
                                                                       Furniture
                                                         Computers          and
                                                                                    Transportati
                                              Real             and    other fixed            on      Unfinished
                                          property       equipment        assets         means     construction       Total
    Value
    December 31, 2005                      129 811         106 000        41 796         11 233         11 308      300 148
    Receipts                                 4 061          13 501         6 237          2 330         21 688       47 817
    Disposals                               (1 364)         (2 159)       (2 314)          (666)              -      (6 503)
    Moving                                   5 577            7 627        2 130          1 327        (16 672)         (11)
    Impact of revaluation                  109 644                                                                  109 644
    December 31, 2006                      247 729         124 969        47 849         14 224         16 324      451 095
    Accumulated
    depreciation
    December 31, 2005                      (14 061)        (74 129)     (21 482)         (9 323)                   (118 995)
    Charge for the year                     (4 893)        (15 847)       (5 114)          (613)                    (26 467)
    Disposals                                        4         525           935            166                       1 630
    Impact of revaluation                    7 836                                                                    7 836
    December 31, 2006                      (11 114)        (89 451)     (25 661)         (9 770)                   (135 996)
    Residual value
    December 31, 2005                      115 750          31 871        20 314          1 910         11 308      181 153
    December 31, 2006                      236 615          35 518        22 188          4 454         16 324      315 099
    Value
    December 31, 2004                     116 831           88 426       35 407          12 061         11 027     263 752
    Result of                               5 786            8 752        4 655             720            548      20 461
    presentation currency
    conversion
    Receipts                                8 223           12 192        3 861             935          7 277      32 488
    Disposals                              (7 584)         (3 370)       (2 127)         (2 483)          (989)    (16 553)
    Moving                                  6 555               —             —              —          (6 555)         —
    December 31, 2005                     129 811          106 000       41 796          11 233         11 308     300 148
    Accumulated
    depreciation
    December 31, 2004                     (10 434)        (60 319)      (18 354)       (10 433)                    (99 540)
    Result of                               (548)          (3 306)       (1 083)          (347)                     (5 284)
    presentation currency
    conversion
    Charge for the year                    (4 353)        (13 615)       (3 528)          (429)                    (21 925)
    Disposals                               1 274            3 111        1 483           1 886                      7 754
    December 31, 2005                     (14 061)        (74 129)      (21 482)         (9 323)                  (118 995)
    Residual value:
    December 31, 2004                     106 397           28 107       17 053           1 628         11 027     164 212
    December 31, 2005                     115 750           31 871       20 314           1 910         11 308     181 153
The consolidated financial statements of the Bank   Subsidiaries of the bank. Background   www.aval.ua 67
 Raiffeisen Bank Aval                                                           Notes to the consolidated financial statements for 2006




         Translated from the original English

         (Thousands of U.S. dollars)




         As at 31 December 2006, article in the real estate included in the cost of leasehold improvements residual
         value of 12 940 thousand dollars. USA (2005: 14 688 thousand dollars. USA).

         In 2006, the Bank has re-evaluate their buildings and land. Assessment was conducted by an independent
         valuer as at 31 August 2006, and the fair value was determined based on market value of similar objects.


         13. Intangible assets
         Movement of intangible assets were as follows:

                                                      Computer software                       Licenses                       Total
          Value
          December 31, 2005                                           10 256                       5 329                   15 585
          Receipts                                                     4 425                       3 684                     8 109
          Disposals                                                      (34)                           —                      (34)
          Moving                                                           11                           —                        11
          December 31, 2006                                           14 658                       9 013                   23 671
          Accumulated depreciation
          December 31, 2005                                          (2 710)                     (1 443)                   (4 153)
          Charge for the year                                           (993)                    (1 803)                   (2 796)
          December 31, 2005                                          (3 703)                     (3 246)                   (6 949)
          Residual value:
          December 31, 2005                                            7 546                       3 886                   11 432
          December 31, 2006                                           10 955                       5 767                   16 722
          Value
          December 31, 2004                                            9 762                       1 788                   11 550
          Result of                                                       507                        140                       647
          presentation currency
          conversion
          Receipts                                                        396                      3 401                     3 797
          Disposals                                                     (409)                                                (409)
          December 31, 2005                                           10 256                       5 329                   15 585
          Accumulated depreciation
          December 31, 2004                                          (2 483)                       (358)                   (2 841)
          Result of                                                     (127)                        (36)                    (163)
          presentation currency
          conversion
          Charge for the year                                           (486)                    (1 049)                   (1 535)
          Disposals                                                       386                           —                      386
          December 31, 2005                                          (2 710)                     (1 443)                   (4 153)
          Residual value:
          December 31, 2004                                            7 279                       1 430                     8 709
          December 31, 2005                                            7 546                       3 886                   11 432




68      www.aval.ua About us                               Market environment                        Activity Bank
Notes to the consolidated financial statements for 2006                                                                Raiffeisen Bank Aval




     Translated from the original English

     (Thousands of U.S. dollars)




     14. Other assets and liabilities
     Other assets include:

                                                                                                2006                      2005
      Settlement of transactions with customers                                               14 923                        851
      Prepayments                                                                              9 810                      8 758
      Stocks                                                                                   3 409                      3 425
      Commission for financial guarantees issued                                               2 235                         —
      Other accrued income                                                                        525                       391
      Unamortised premiums                                                                          —                       482
      Other                                                                                    2 050                      1 250
                                                                                              32 952                    15 157
      Less reserve for impairment                                                            (2 236)                    (1 152)
      Other assets                                                                            30 716                    14 005

     Other commitments include:

                                                                                                           2006            2005
      Gross salary to be paid                                                                            9 551            4 628
      Other accrued expenses                                                                             8 395            1 597
      Provision of unused vacation                                                                       6 077            3 600
      Settlement of customer transactions                                                                4 216            3 390
      Other taxes payable                                                                                3 034              143
      The carrying value of financial guarantees issued                                                  2 457                —
      Payments to the Deposit Guarantee Fund                                                             2 380            1 589
      Accounts payable for equipment                                                                     1 079            4 154
      Deferred income                                                                                       878             816
      Other liabilities                                                                                  1 236            2 045
      Other liabilities                                                                                 39 304           21 962

     15. Due to Bank
     Due to Bank included:

                                                                                                   2006                    2005
      Credits received from the NBU under EBRD financing program                                     501                  4 100
      Refinancing loans from the NBU                                                                   —                  9 114
      Due to NBU                                                                                     501                 13 214

     As at 31 December 2006, arrears to the Bank include credit lines Bank under the Support Program for Small and Medium
     Business Bank. Bank line of credit and loans issued by it, denominated in U.S. dollars and the Bank bears the credit risk on
     loans that it produces. Credit lines granted at an interest rate of LIBOR plus six months 3% per annum. Arrears on these
     loans have a number of conditions and limits set out in Note 20. These loans were secured property rights on loans to
     customers of $ 438 thousands. USA.




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         (Thousands of U.S. dollars)




         16. Due to credit institutions
         Amounts due to banks are:

                                                                                                       2006                           2005
          Current accounts
          Banks of Ukraine                                                                          127 798                          11 804
          Banks of CIS and other countries                                                             5 951                          3 661
                                                                                                    133 749                          15 465
          Loans and deposits
          Banks in OECD countries                                                                1 075 150                          201 434
          Banks of Ukraine                                                                           85 114                         107 032
          Banks of CIS and other countries                                                           19 525                                —
                                                                                                 1 179 789                          308 466
          Other liabilities to credit institutions                                                         —                            62
          Loans from International Financial Institutions                                            34 678                         172 103
          Due to credit institutions                                                             1 348 216                          496 096

         As at December 31, 2006 the current accounts of banks of Ukraine include a Ukrainian bank debt amounting
         to 118 514 thousand dollars. USA. Bank provided a loan that the Ukrainian bank in the amount of 118 102
         thousand dollars. United States (see Note 6).

         As at December 31, 2006 loans and deposits of the Ukrainian banks include the amount of 49 083 thousand dollars.
         USA (2005: 102 223 thousand dollars. USA), which had been hired by several Ukrainian banks and provided with funds
         from the same most Ukrainian banks as deposits and funds placed on current accounts (see Note 5 and Note 6). Bank
         conducting these operations to control the structure of assets and liabilities.

         Credits of international financial institutions include loans to the International Finance Corporation (IFC) in the amount
         of 9414 thousand dollars. USA (2005: 13 176 thousand dollars. USA) received by the Bank in February 2005. This
         credit is nominated in U.S. dollars, has a nominal interest rate of LIBOR 3,5% maturing in 2009.
         Arrears on these loans have a number of conditions and limits set out in Note 20. The loan was secured property rights on loans
         to customers, which were issued under this agreement in the amount of 9375 th. USA.

         As at December 31, 2006 loans from international financial institutions include loans from Cargill Financial Services
         Inc. amounting to 10 430 thousand dollars. USA (2005: 144 228 thousand dollars. USA). These loans are
         denominated in U.S. dollars, with interest rate of 8.1% and maturity in 2007. Proceeds from these loans used to
         finance certain Ukrainian borrowers.

         As at December 31, 2006 loans from international financial institutions include credit provided by the European Bank for
         Reconstruction and Development to finance small and medium enterprises, amounting to 14 694 thousand dollars. USA
         (2005: 13 507 thousand dollars. USA). This credit is nominated in U.S. dollars, has maturity
         In 2010 and 2011 and the interest rate of LIBOR 3,5% and LIBOR 2,7%. Arrears on these loans have a
         number of conditions and limits set out in Note 20. One of these loans secured property rights on loans to
         customers of 9 375 thousand dollars. USA.

         As at December 31, 2006 loans and deposits from banks in OECD countries include the debt of $
         1,028,477 thousand dollars. USA (2005: 174 053 thousand dollars. USA) at another bank in the country
         OECD, which is a related party of the Bank. Loans denominated in euro and U.S. dollar have a fixed
         interest rate of 4,8% to 10,0% and maturity in 2007-2011.




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Notes to the consolidated financial statements for 2006                                                               Raiffeisen Bank Aval




     Translated from the original English

     (Thousands of U.S. dollars)




     17. Due to customers
     Due to customers was:


                                                                                                    2006                   2005
      Current accounts
           - Budget                                                                                5 176                  3 394
           - Companies                                                                         707 882                 681 829
           - Individuals                                                                       618 050                 508 878
                                                                                             1 331 108                1 194 101
      Time deposits
           - Budget                                                                              31 797                   1 791
           - Companies                                                                         328 355                 316 314
           - Individuals                                                                     1 630 384                1 315 151
                                                                                             1 990 536                1 633 256
      Due to customers                                                                       3 321 464                2 827 357
      Provision for credit and guarantees                                                          9 264                  8 481


     As at December 31, 2006 deposit received from companies that included 190 952 thousand dollars.
     USA (2005: 205 396 thousand dollars. USA) received from five companies.

     As at December 31, 2006 deposit received from individuals included 178 194 thousand dollars. USA
     (2005: 239 398 thousand dollars .. USA) obtained from ten customers.

     18. Subordinated debt
     У February 2005, the Bank received a loan of 20 000 thousand dollars. United States (as at December 31, 2006 book
     value is 21 052 thousand dollars. USA) on IFC. Loan repayable in two equal installments June 15, 2010 and 2011. The
     interest rate on the loan rate is LIBOR 5,75% per annum. Interest is payable semi-annually for the preceding period of 15
     June each year, beginning on 15 June 2005.

     У August 2005, the Bank has received another loan from IFC of 50 000 thousand dollars. United States (as at December
     31, 2006 book value is 49 538 thousand dollars. USA). Loan repayable in two equal installments December 15, 2010 and
     2011. The interest rate on the loan is 9.75% per annum. Interest is payable semi-annually for the preceding period of 15
     December of each year starting from December 15, 2005.




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         19. Capital
         As at 31 December 2006 the authorized share capital consisted of 20,949,349,754 ordinary shares and 50 million
         preferred shares (2005: 14.95 billion ordinary shares and 50 million preferred shares) USD 0.1 par value each. All ordinary
         shares have equal voting rights. Preference shares have no voting rights and are entitled to a fixed dividend. As at
         December 31, 2006 20,929,224,702 ordinary shares and 49,994,576 preferred shares were fully paid and registered
         (2005: 14,726,090,413 common shares and 1,991,767 preferred shares were fully paid and registered).

         These consolidated financial statements reflect the amount of paid-in capital set at cost, restated using the consumer price index,
         for contributions made before 31 December 2000. Equity capital was contributed in UAH and shareholders are entitled to
         dividends and capital allocation in UAH.

         Movement in shareholders' equity for the years ended December 31, 2006 and 2005 comprised:

                                                               Number of              Number of                Nominal            Restated
                                                                ordinary              privileged                 value                value
                                                                                                                                 thousand
                                                       shares thousand shares thousand                            thous.       dollars. U.S.
          December 31, 2004                                     9 707 693                   49 578              975 727              199 156
          Exchange differences                                                                                                        11 507
          Issue of shares                                       4 999 972                                       499 997               97 566
          Treasury shares                                        (629 005)                (47 586)             (67 659)             (13 203)
          Sale of own shares                                       647 430                                        64 743              12 634
          December 31, 2005                                    14 726 090                    1 992           1 472 808               307 660
          Exchange differences                                                                                                              —
          Issue of shares                                       5 999 378                        —              599 938              118 800
          Sale of own shares                                       203 757                  48 003                25 176                4 340
          December 31, 2006                                    20 929 225                   49 995           2 097 922               430 800




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   Translated from the original English

   (Thousands of U.S. dollars)




   The corresponding share of stockholders' equity of the Bank are distributed
   as follows:

                                                                                             2006                                  2005
                                                                                        Share in                               Share in
                                                                                          equity                                equity
                                                                     Number of                              Number of
                                                                       Shares              capital            Shares           capital
    Legal entities:
    Raiffeisen International Bank - Holding
    AG                                                         20 062 508 956             95,54% 14 025 603 604                 93,50%
    "Ukrtelecom"                                                              —                  —         105 500 863           0,70%
    Bank Austria Creditanstalt AG                                  205 921 211              0,98%           68 345 682           0,46%
    Julius Baer International Equity Fund                          191 865 265              0,91%                         —           —
    UIFL (Cyprus) Limited                                            77 738 179             0,37%                         —           —
    Concentra Limited                                                41 440 000             0,20%                         —           —
    Raiffeisen Zentralbank                                           40 615 815             0,19%                         —           —
    Other legal entities                                           282 556 883              1,35%          352 210 851           2,35%
                                                               20 902 645 309             99,53% 14 551 661 000                 97,01%
    Individuals:
    The Bank management                                                      100            0,00%                932 000         0,01%
    Employees                                                        11 075 175             0,05%          100 349 000           0,67%
    Other individuals                                                65 498 881             0,31%           75 168 367           0,50%
                                                                     76 574 156             0,36%          176 449 367           1,18%
    Treasury shares                                                  20 130 289             0,10%          271 889 633           1,81%
    Outstanding shares                                                        —                                 (28 180)         0,00%
    Total issued shares                                        20 999 349 754           100,00% 14 999 971 820                 100,00%

   Bank funds to be apportioned, determined by the amount of reserves, as reflected in statements prepared in accordance
   with the UAR. As at 31 December 2006 the Bank had funds to be apportioned, the amount of 355 202 thousand. (2005: 33
   541 thous.). Funds are not subject to allocation of 689 555 thousand. (2005: 239 196 thous.). They are the revaluation
   reserve held for the UAR, and the general reserve fund, which
   created for general banking risks, including future losses and other unforeseen risks or contingencies.

   20. Commitments and contingencies

   Operating environment
   Although the Ukrainian economy is market continues to display certain characteristics that are inherent in the transitional economy.
   These characteristics include, but are not limited to low liquidity of capital markets, relatively high inflation and the presence of
   exchange controls, which cause the national currency to be illiquid outside of Ukraine. On the stability of economy of Ukraine
   significantly affect politics and government actions aimed at reforming the administrative and legal systems and economies.




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         Legal Aspects
         In the ordinary course of business, the Bank is subject to litigation and disputes. Management believes that
         the ultimate liability that may arise from such actions and complaints will not have a significant negative
         impact on financial condition or results of the Bank and its subsidiaries in the future.

         Tax risks
         Ukrainian legislation on taxation and operations continue to evolve as the transition to a market economy.
         Legislation and regulations are not always clearly written and their interpretation depends on the opinions of local,
         regional and central government and other public bodies. Often different terms of a question do not match.
         Management believes that the Bank complied with all regulations and all statutory taxes were assessed and paid. In
         cases where the procedure calculating tax liability was not clear, the Bank totaled tax liabilities based on
         management's estimates.

         The Bank and its financial position will continue to be influenced by the political situation in Ukraine, including the use of
         existing and future laws and regulations. The Bank believes that such contingencies will not have greater influence on the
         Bank than on other similar enterprises in Ukraine.

         Actual and potential financial liabilities
         Actual and potential financial liabilities of the Bank include the following:


                                                                                                       2006                          2005

          Letters of credit                                                                          85 203                        15 322
          Guarantees                                                                                 69 694                        77 434
           Collateral for bills                                                                      59 294                        75 549
          Guarantees                                                                               214 191                       168 305
          Less - deposits held as security for                                                      (9 264)                       (8 481)
          the letters of credit, collateral and guarantees
          Actual and potential financial liabilities                                               204 927                       159 824

         As at 31 December 2006 the Bank formed a reserve in the amount of 1869 thousand dollars. USA (2005:
         920 thousand dollars. Dollars) in unfunded liabilities.

         As at 31 December 2006 the Bank issued credits worth EUR 75 431 thousand dollars. U.S. five Ukrainian
         companies were provided with a deposit of $ 9185 thousand dollars. USA (2005: letters of credit amounting to
         5723 thousand dollars. U.S. three Ukrainian companies without cash cover).

         As at 31 December 2006 the Bank issued guarantees amounting to 31 456 thousand dollars. U.S. five
         Ukrainian companies (2005: 39 191 thousand dollars. U.S. three Ukrainian companies).

         As at 31 December 2006 the Bank accepted bills issued at EUR 32 436 thousand dollars. U.S. five Ukrainian
         companies (2005: the amount of 42 162 thousand dollars. U.S. one Ukrainian company).




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     Insurance
     As at 31 December 2006 and 2005 the Bank's premises were not insured. Bank did not receive
     insurance coverage for obligations arising from errors and omissions.

     Financial terms of contracts
     The Bank is party to various agreements with other credit institutions, which include conditions on the financial
     performance and the overall structure of the bank's risk. These financial covenants may limit the ability of the Bank
     to follow certain business strategies and other significant transactions in the future.

     21. Fees and commissions, net income
     Fees and commissions are:


                                                                                                  2006                    2005
      Fees and commissions received
      Cash Management                                                                         134 586                 110 426
      Currency conversion                                                                       11 243                 10 727
      Fee and commission received from other banks                                               2 460                   1 167
      Off-balance sheet transactions                                                             6 131                   7 239
      Other                                                                                      2 834                     798
                                                                                              157 254                 130 357
      Fees and commissions paid
      Cash Management                                                                           (9 315)                (6 965)
      Commission for off-balance sheet transactions                                             (4 135)                (4 206)
      Commission for the credit service                                                         (1 407)                  (814)
      Other                                                                                       (205)                (1 153)
                                                                                              (15 062)                (13 138)
      Fees and commissions, net income                                                        142 192                 117 219




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         (Thousands of U.S. dollars)




         22. Salaries, administrative and operating costs
         Salaries and bonuses, administrative and operating costs include:

                                                                                                 2006                       2005
          Salaries and bonuses                                                                114 467                     84 609
          Mandatory payroll taxes                                                              33 665                     22 712
          Total wages and remuneration                                                        148 132                   107 321
          Occupancy and rent                                                                   17 538                     12 080
          Repairs and maintenance                                                              12 958                     11 036
          The costs of legal and consulting services                                           12 528                      1 598
          The cost of the deposit insurance fund                                                9 371                      5 608
          Office expenses                                                                       9 024                      6 334
          Communication costs                                                                   7 396                      5 005
          The cost of computer processing of information                                        7 174                      6 362
          Marketing and Advertising                                                             6 441                      2 239
          Assignment                                                                            3 695                      1 886
          The cost of processing transactions using cards                                       3 640                      2 571
          Expenditures on security services                                                     3 163                      2 987
          The cost of collecting cash                                                           2 622                      2 342
          Operating taxes                                                                       2 231                      2 190
          Loss on disposal of fixed assets                                                        923                        705
          Insurance expenses                                                                      732                     11 149
          Charities                                                                               496                        674
          Other                                                                                13 670                      6 467
          Other administrative and operating expenses                                         113 602                     81 233

         Total salaries and other payments to 8 members of the Board for 2006 was 2 198 thousand dollars. USA
         (2005: 7021 thousand dollars. USA - 8 members of the Board).

         23. Risk Management
         Risk management is the foundation of the banking business and an essential element of banking
         transactions. The main risks inherent in the Bank's operations are those related to credit, liquidity and
         market movements in interest rates and exchange rates. The following describes the principles applied
         by the Bank to manage these risks

         Credit risk
         Bank under the influence of credit risk, which is unable debtor defaults in full during this period. Bank controls the
         credit risk it takes by setting limits regarding the amount taken from the risks related to one borrower or group of
         borrowers or industry segments. Board and / or Credit Committee approves limits on credit risk separately by debtor
         and products. Typically, the Bank receives collateral. Monitoring these risks and they are regularly subject to annual
         or more frequent analysis.




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     (Thousands of U.S. dollars)




     In addition, the total volume of loans provided to any single debtor, including banks, limited sublimitamy
     related to the balance sheet and off balance sheet accounts, which are set by the Board and / or Credit
     Committee. The maximum credit risk, excluding the fair value of collateral, in case of default by borrowers
     of their obligations under financial instruments carrying value of financial assets, as stated in the
     consolidated financial statements and financial liabilities disclosed in the notes.

     Market risk
     Bank under the influence of market risks. Market risks arise from open positions in interest rate and currency instruments that are
     exposed to general and specific market movements. The Bank manages market risk through periodic estimation of potential losses
     arising from adverse changes in market conditions, and by setting appropriate limits and compliance in order to limit losses, and by
     setting requirements for margin and collateral. Analysis of the main components of market risk is listed below.


     Currency risk
     Bank under the influence of fluctuations of operating foreign currency exchange rates on its financial position
     and cash flows. Bank sets limits on the level of risk by currencies (primarily for U.S. dollars and euros), by
     branches and in total for the Bank. These limits also comply with the minimum requirements of the National
     Bank of Ukraine. Currency risk is the Bank are listed below:


                                                                                       2006

                                                                                   USD                              Other
                                                                 Hryvnia                            Euro         currency            Total
      Assets:
      Cash and cash equivalents                                  597 891        177 796           49 103            18 994        843 784
      Due from credit institutions                                  4 945         1 812               736                    2       7 495
      Loans to customers                                      1 739 878        2 151 567        200 328               2 664      4 094 437
      Investment securities                                       74 494            773                 —                   —      75 267
      Assets held for sale                                             443           —                  —                   —          443
      Deferred income tax assets                                        37           —                  —                   —            37
      Other monetary assets                                       23 450          3 390               277                  238     27 355
                                                              2 441 138        2 335 338        250 444             21 898       5 048 818
      Liabilities:
      Due to NBU                                                         —          501                 —                   —          501
      Due to credit                                              129 046       1 140 228          76 618              2 324      1 348 216
      institutions
      Due to customers                                        2 047 224        1 034 212        230 067               9 961      3 321 464
      Subordinated debt                                                  —       70 590                 —                   —      70 590
      Current tax liabilities                                       5 824                                                            5 824
      Deferred tax liabilities                                    22 238                                                           22 238
      Other liabilities                                           31 754          3 865            3 503                   181     39 303
      Reserves                                                         510        1 314                 45                  —        1 869
                                                              2 236 596        2 250 710        310 233             12 466       4 810 005
      Net balance sheet position                                 204 542         84 628         (59 789)              9 432




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                                                                                       2005
                                                                                  USD
                                                                                                                    Other
                                                            Hryvnia                                Euro        currencies               Total
          Assets:
          Cash and cash equivalents                         647 060            96 221           186 128                23 707        953 116
          Due from credit institutions                         8 247             6 803             2 033                       —      17 083
          Loans to customers                              1 167 405          965 102            219 354                     2 262   2 354 123
          Investment securities                             172 988                   —                —                       —     172 988
          Assets held for sale                                 2 138                  —                —                       —       2 138
          Other monetary assets                                3 424             6 695               419                      43      10 581
                                                          2 001 262        1 074 821            407 934                26 012       3 510 029
          Liabilities:
          Due to NBU                                           9 114             4 100                 —                       —      13 214
          Due to credit                                       26 370         197 420            264 270                     8 036    496 096
          institutions
          Due to customers                                1 917 621          732 562            165 106                12 068       2 827 357
          Subordinated debt                                        —           69 908                  —                       —      69 908
          Current tax liabilities                              4 135                  —                —                       —       4 135
          Deferred tax liabilities                             1 958                  —                —                       —       1 958
          Other liabilities                                   14 045             6 765               521                     631      21 962
          Reserves                                               815                  68               37                      —         920
                                                          1 974 058        1 010 823            429 934                20 735       3 435 550
          Net balance sheet position                          27 204           63 998          (22 000)                     5 277

         Bank does not enter into foreign exchange contracts to hedge currency risks, since these financial
         instruments do not exist in currencies, which, in the opinion of the Bank, there is a risk for him.

         Basic cash flow bank (income, operating expenses) is formed in Euro and U.S. dollars. As a result, future
         changes in exchange rate to other currencies will affect the carrying value of monetary assets and liabilities of
         the Bank denominated in foreign currency.

         Interest rate risk
         Interest rate risk arises from the possibility of changes in value of financial instruments or future cash flows of
         financial instruments under the influence of interest rates. Bank's policy on interest rates is reviewed and approved
         by the Management Committee, assets and liabilities of the Bank.

         Some of the credit agreements and other financial assets and liabilities of the Bank, which added interest,
         include floating rate or article contains provisions that allow you to change the interest rate at the request of
         the creditor. As discussed below, the maturity of most assets and liabilities of the Bank is relatively short.
         Bank analyzes the impact of interest rate changes on net interest income and believes that the interest rate
         risk and refinancing risk appropriate for him not significant. The Bank may revise the interest margin, which
         included a floating interest rate loan agreements concluded each time changing base interest rate.




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     (Thousands of U.S. dollars)




     The following table shows the Bank's interest rate risk as at 31 December 2006. The table contains monetary assets and
     liabilities of the Bank for carrying value, classified by date specified in the contract interest rate or maturity, depending on
     whichever is the earlier.


                                                                                      2006
                                                                                    1 to 3 months to            More than
                                                                 1 month       3 months       1 year               1 year           Total
      Assets:
      Cash and cash equivalents                                   830 836        12 948                 —                  —     843 784
      Due from credit institutions                                    2 313       1 367             3 815                  —        7 495
      Loans to customers                                          348 175       375 012       1 066 219          2 305 031      4 094 437
      Investment securities                                         74 509            —                 —                 758     75 267
                                                                1 255 833       389 327       1 070 034          2 305 789      5 020 983
      Liabilities
      Due to NBU                                                          —         501                 —                  —          501
      Due to credit                                               410 539        91 726          141 633           704 318      1 348 216
      institutions
      Due to customers                                          1 398 263       859 205          971 292             92 704     3 321 464
      Subordinated debt                                                   —           —           20 400             50 190       70 590
                                                                1 808 802       951 432       1 133 325            847 212      4 740 771
      Net position                                              (552 969)      (562 105)        (63 291)         1 458 577       280 212



                                                                                         2005
                                                                                    1 to 3 months to            More than
                                                                 1 month       3 months       1 year               1 year           Total
      Assets:
      Cash and cash equivalents                                   953 095             21                —                  —     953 116
      Due from credit institutions                                    3 189      11 511             2 383                  —      17 083
      Loans to customers                                          110 463       304 524          809 607         1 129 529      2 354 123
      Investment securities                                         53 821       71 276           47 151                  740    172 988
                                                                1 120 568       387 332          859 141         1 130 269      3 497 310
      Liabilities
      Due to NBU                                                        810       1 640           10 764                   —      13 214
      Due to credit                                               186 572        56 976          242 548             10 000      496 096
      institutions
      Due to customers                                          1 274 501       289 552       1 129 937            133 367      2 827 357
      Subordinated debt                                                   —           —           69 908                   —      69 908
                                                                1 461 883       348 168       1 453 157            143 367      3 406 575
      Net position                                              (341 315)        39 164        (594 016)           986 902        90 735




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         (Thousands of U.S. dollars)




         Bank does not enter into agreements for derivative instruments based on interest rates, because such
         agreements are not common in Ukraine.

         Interest rates on some loans and deposits based on customer defined NBU discount rate, which usually
         reviewed on a monthly basis. Accordingly, the financial instruments listed above were included in the
         category "1 month".

         As at December 31, effective weighted average interest rates of banks in terms of interest rates for
         monetary financial instruments were as follows:


                                                                                2006                                             2005
                                                                                            dollars.                                    dollars.
                                                                   Hryvnia                   USA /               Hryvnia                 USA /
                                                                                              Euro                                        Euro
          Due from credit institutions                                 15,0%                   4,3%                   7,7%                3,9%
          Loans to customers                                           16,3%                  12,1%                 17,9%                12,6%
          Interest-bearing securities                                    8,5%                  3,0%                   7,1%                N/A
          Due to NBU                                                     N/A                  8,38%                   7,0%                7,5%
          Arrears                                                      10,0%                   6,4%                   3,7%                4,6%
          to credit institutions
          Customer deposits                                            12,1%                   7,3%                 14,2%                 8,8%
          Subordinated debt                                              N/A                  10,3%                   N/A                10,3%

         In 2005, the NBU discount rate decreased from 9,5% to 8,5% (2005: increased from 9,0% to 9,5%).

         Liquidity risk
         Liquidity risk is the need to maintain the level of resources to ensure the issuance of funds from customer accounts and
         other financial obligations on financial instruments at the time they become due for repayment. In order to manage liquidity
         risk, the Bank performs daily analysis of expected cash flows on clients' operations and the operations of the Bank, and it is
         an integral part of the assets and liabilities. Board sets limits on the minimum proportion of the availability of funds, the
         repayment of which reached to ensure the issuance of funds from customer accounts and a minimum size of interbank and
         other funding sources that should exist to cover the payments at unexpected levels of demand.

         The following tables disclosed in terms of commitment of monetary assets and liabilities broken down by periods of
         balance sheet date to the maturity date under the contract.




80      www.aval.ua About us                                           Market environment                        Activity Bank
Notes to the consolidated financial statements for 2006                                                                           Raiffeisen Bank Aval




     Translated from the original English

     (Thousands of U.S. dollars)




                                                                                                   2006
                                                                                    1 to 3 3 months to            More than
                                                                 1 month          months        1 year               1 year           Total
      Assets:
      Cash and cash equivalents                                   830 836          12 948                 —                  —     843 784
      Due from credit institutions                                    2 313         1 367             3 815                  —        7 495
      Loans to customers                                          148 990         309 656       1 216 128          2 419 663      4 094 437
      Investment securities                                         74 509              —                 —                 758     75 267
      Assets held for sale                                                —             —               443                  —          443
      Deferred tax assets                                                 —             —                 37                 —            37
      Other monetary assets                                         17 434            553             8 492                 876     27 355
                                                                1 074 082         324 524       1 228 915          2 421 297      5 048 818
      Liabilities:
      Due to NBU                                                          —             —               501                  —          501
      Due to credit                                               410 539          91 726          125 303           720 648      1 348 216
      institutions
      Due to customers                                          1 398 263         859 205          971 292             92 704     3 321 464
      Subordinated debt                                                   —             —           20 400             50 190       70 590
      Current tax liabilities                                             —         5 824                 —                  —        5 824
      Deferred tax liabilities                                            —             —                 —            22 238       22 238
      Other liabilities                                             26 820          9 599             1 974                 911     39 304
      Reserves                                                            56          195             1 387                 231       1 869
                                                                1 835 678         966 549       1 120 857            886 922      4 810 006
      Net position                                              (761 596)       (642 025)          108 058         1 534 375       238 812
      Accumulated difference                                    (761 596)      (1 403 621)    (1 295 563)            238 812




                           The consolidated financial statements of the Bank         Subsidiaries of the bank. Background             www.aval.ua 81
 Raiffeisen Bank Aval                                                                    Notes to the consolidated financial statements for 2006




         Translated from the original English

         (Thousands of U.S. dollars)




                                                                                           2005
                                                                                   1 to 3 3 months to             More than
                                                               1 month           months        1 year                1 year               Total
          Assets:
          Cash and cash equivalents                             953 095                  21               —                      —     953 116
          Due from credit institutions                             3 189          11 511              2 383                      —      17 083
          Loans to customers                                    104 411          296 332           803 566         1 149 814          2 354 123
          Investment securities                                  53 821           71 275            47 151                     741     172 988
          Assets held for sale                                         —                 —            2 138                      —       2 138
          Other monetary assets                                  10 581                  —                —                      —      10 581
                                                              1 125 097          379 139           855 238         1 150 555          3 510 029
          Liabilities:
          Due to NBU                                                 810            1 640             8 702                   2 062     13 214
          Arrears                                               133 332           41 537            97 739            223 488          496 096
          to credit institutions
          Due to customers                                    1 274 501          289 552         1 129 937            133 367         2 827 357
          Subordinated debt                                            —                   -            307              69 601         69 908
          Current tax liabilities                                      —            4 135                 —                      —       4 135
          Deferred tax liabilities                                     —                 —                —                   1 958      1 958
          Other liabilities                                      21 962                  —                —                      —      21 962
          Reserves                                                     34                11             805                     70         920
                                                              1 430 639          336 875         1 237 490            430 546         3 435 550
          Net position                                        (305 542)           42 264         (382 252)            720 009           74 479
          Accumulated difference                              (305 542)         (263 278)        (645 530)               74 479

         As at 31 December 2006 of outstanding loans amounting to 17 826 thousand dollars. U.S. less allowance
         for impairment (2005: 21 955 thousand dollars. U.S. net reserves) are included in the category of loans
         that mature within a month.

         Currently in Ukraine there is no market for financial derivatives to manage liquidity risk.

         Bank's capability to perform its obligations is its ability to realize an equivalent amount of assets during the
         same period.

         Analysis of the gap in maturity does not reflect the historical stability of current accounts, payment of which
         runs for more time than indicated in the table above. The table is built based on the rights of the account holder
         to withdraw funds on demand.

         Investment securities through because of gains and losses and investment securities available for sale are
         included in the category "1 month".

         In Ukraine the considerable number of short-term loans are provided with the expectation of extension of the loan at
         maturity repayment. Accordingly, the actual loan repayment terms can




82      www.aval.ua About us                                        Market environment                        Activity Bank
Notes to the consolidated financial statements for 2006                                                                         Raiffeisen Bank Aval




     Translated from the original English

     (Thousands of U.S. dollars)




     larger than under the classification, based on the contract. In addition, the obligations specified closest date
     of their execution, although it is expected that they will actually repaid later than indicated in the relevant
     agreements.

     24. Fair value of financial instruments
     The following disclosures regarding the fair value of financial instruments is made in accordance with IAS 32 Financial Instruments:
     Disclosure and Presentation ". Fair value is defined as the amount at which the instrument could be exchanged during the current
     transactions between parties who have the necessary market information, under normal conditions, other than in situations of forced
     or liquidation sale. As no efficient market for most of Bank's financial instruments are necessary in the assumptions in assessing the
     fair value based on current economic conditions and the specific risks inherent to the instrument. These estimates do not
     necessarily reflect the amounts the Bank could have a market exchange with the full realization of all of a particular instrument.

     To estimate the fair value of each class of financial instruments used by the Bank following methods and assumptions on
     financial instruments not reflected in the balance sheet at fair value:


     Cash and cash equivalents
     These assets have a maturity of one month and their fair value approximates carrying value due to the
     relatively short-term these financial instruments.

     Due from credit institutions and to credit institutions
     The assets of up to one month fair value approximates carrying value due to the relatively short-term these financial
     instruments. For a more long-term deposits and credits
     interest rates reflect market rates at the year end and therefore fair value approximates their carrying value.

     Loans to customers
     The fair value of the loan portfolio is based on the characteristics of the credit and interest rate of individual loans in each
     sector portfolio. Estimation of for losses on loans made with regard to the risk premium applied to different types of loans
     based on factors such as the current situation in the sector, which operates the related borrower, the financial status of each
     borrower and guarantees obtained. Accordingly, the reserve for losses on loans is regarded as a balanced
     assessment of possible losses, which need to reflect the impact of credit risk.

     Generally, loans are granted at market rates and therefore current balances represent a reasonable estimate of their fair value.
     For loans on concessional terms, the fair value of compensation received has been adopted as the cost of initial recognition.
     Accordingly, book value, calculated as the amortized cost of such tools is a conservative approximation of their fair value.

     For long-term loans with fixed interest rate, fair value is determined based on discounted cash flows using
     interest rates that are inherent in new instruments with similar maturity and riskiness.

     As at 31 December 2006, the total fair value of loans granted to customers amounted
     4,094,598 th. USA (2005: 2,355,886 th. USA).




                           The consolidated financial statements of the Bank       Subsidiaries of the bank. Background                 www.aval.ua 83
 Raiffeisen Bank Aval                                                                    Notes to the consolidated financial statements for 2006




         Translated from the original English

         (Thousands of U.S. dollars)




         Investment securities
         Securities available for sale and trading securities are recorded as described in Note 4. As at December 31,
         2006 book value of securities available for sale is close to their fair value. Investment securities held to
         maturity with market interest rates and, thus, the book value is close to fair value.

         Due to Bank
         Interest rates on short-term loans from the Bank reflect market rates and, accordingly, the fair value
         approximates their carrying value.

         As at 31 December 2006, the total fair value of debt to the Bank amounted to 501 thousand dollars.
         USA (2005: 13 214 thousand dollars. USA).

         Due to customers
         Deposits with a maturity up to one month fair value approximates carrying value due to the relatively short-term these financial
         instruments. For a more long-term deposit interest rates reflect market rates and, accordingly, the fair value approximates their
         carrying value.


         Subordinated debt
         Interest rates on subordinated debt equal to the interest rates that exist in the market and thus its fair value
         corresponds to the carrying value of subordinated debt.

         25. Related Party Transactions
         According to IAS 24 Related parties, parties are considered related if one party can control the other or
         significantly affect the financial and operational decisions taken by the other side. In considering each possible
         related party relationship with, to consider the substance of the relationship, not just the legal form.

         Transactions between related parties may differ from transactions between unrelated parties at its core and
         contract conditions.




84      www.aval.ua About us                                        Market environment                        Activity Bank
Notes to the consolidated financial statements for 2006                                                                   Raiffeisen Bank Aval




     Translated from the original English

     (Thousands of U.S. dollars)




     Balances on the Bank's transactions with related parties at year end and related costs and income for the year are:

                                                                                                  2006                        2005
      Due from credit institutions                                                             103 077                    119 642
      Loans to customers                                                                              —                      1 646
      Other assets                                                                                     4                            —
      Due to credit institutions                                                              1 031 081                   174 186
      Due to customers                                                                              541                        301
      Other liabilities                                                                          1 334                         354
      Income on interest                                                                         2 989                              —
      Expenses on interest                                                                     (32 373)                             —
      Fee and commission income                                                                      59
      Commission expenses                                                                       (4 678)
      Other administrative and operating expenses                                               (2 802)                    13 801

     26. Capital Adequacy
     Bank requires banks to maintain capital adequacy at 10% (2005: 10%) on the risk-weighted assets are determined based
     on the requirements of the UAR. As at 31 December 2006, the rate the Bank's capital adequacy ratio, calculated on this
     basis, amounted to 12,14% (2005: 12.96%) and exceeded the prescribed minimum standard.

     As at 31 December 2006, the International Bank's capital adequacy ratio was 17.33% (2005: 14.58%),
     exceeding the minimum rate of 8%, which is recommended by the Basle Accord. Capital adequacy was
     assessed and calculated in accordance with the requirements and methodology established by the Basle
     Accord in July 1988.

     27. Events after the balance
     У March 2007 General Meeting of shareholders approved the decision to pay dividends on ordinary shares
     amounting to 111 032 thousand. and preferred shares amounting to 700 thousand USD. Period dividend
     was established on 1 June 2007 to 3 January 2008.

     У March 2007 General Meeting of shareholders approved the decision to increase share capital by issuing ordinary shares in the
     amount of 1.8 billion units worth 180 000 thousand. at a price of 0.85 USD. per share.

     У January-April 2007, the Bank issued government bonds in the amount of 900 000 thousand for a private
     placement. Nominal interest rates on bonds are set 13% - 13.5% per annum and repayment of bonds held
     2008-2012

     У May 2007, the Bank entered into an agreement for a syndicated loan in the amount of 500 000 thousand dollars. U.S. USED
     Standard Bank Plc (UK) with a nominal interest rate of LIBOR 1.2% maturing in 2 years. Bank received 150 000 th. U.S. in May
     2007, the remaining 350 000 thousand dollars. U.S. will be received in June 2007.




                           The consolidated financial statements of the Bank     Subsidiaries of the bank. Background         www.aval.ua 85
Raiffeisen Bank Aval 2006                                                                                               Raiffeisen Leasing Aval




                    Raiffeisen Leasing Aval
                    The volume of Ukrainian leasing market in 2006, according to experts, constituted 2.4 billion.
                    (About 475 million U.S. dollars), and he still was in its infancy. Not taking into account the lack
                    of long-term funding, the main reason for this situation was to imperfection of legislation
                    regulating leasing services.

                    Immediately after introducing the necessary legal framework RZB group decided to enter this market in
                    Ukraine and registered in June 2006 a new company - OOO Raiffeisen Leasing Aval, which shares 60%
                    owned by Raiffeisen Bank Aval, and the remaining 40% - holding Raiffeisen Leasing - International
                    GmbH, located in Austria. Leasing services for
                    Raiffeisen Zentralbank is the strategic direction - a group of RI offers them in all countries where it
                    is presented. The relevant local businesses have leading market positions.

                    After obtaining the appropriate permits and registrations, Raiffeisen Leasing Aval launched in
                    September 2006. During the first four months the company has signed 140 contracts totaling
                    about 15 million. The new leasing company aims to enter the top three market leaders in Ukraine
                    by the end of 2008 and offer the best products to the needs of customers and minimize time on all
                    necessary processes.

                    Raiffeisen Leasing Aval serves all legal entities - and small and medium enterprises and large domestic
                    industrial groups. Leasing assets include equipment for construction, trucks and trailers, passenger cars and
                    agricultural equipment. The last category of assets is strategically important, given the share of agriculture in
                    the Ukrainian economy and market position that Raiffeisen Bank Aval is in this sector. Accordingly, agricultural
                    equipment amounted at the end of the year about 40% of the total portfolio, Raiffeisen Leasing Aval.

                    Besides attracting sellers to sell their own company as well as managers of Raiffeisen Bank Aval
                    Raiffeisen Leasing Aval sells leasing products through a network of partners, vendors, relations which are
                    built according to international agreements on cooperation. In addition,
                    company plans to open offices in the regional directorates of Raiffeisen Bank Aval, which are experts in the
                    field of leasing. Latest Bank will provide advice to clients interested in leasing services. The first of these
                    offices was opened in Donetsk late
                    2006.


                    Private pension funds of
                    Raiffeisen Bank Aval
                    Raiffeisen Bank Aval is the founder of two private pension funds - Profit Company: Corporate Pension
                    Fund "Aval" (hereinafter - Corporate Fund) and the Open Pension Fund "Aval" (hereinafter - the Open
                    Fund). Both funds are registered 4 June 2004, with the implementation of private pensions under the Law
                    of Ukraine "On the private pension system.

                    Participants in the Corporate fund can be not only employees of Raiffeisen Bank Aval, but
                    employees of other companies that recognize the status of the fund and under the relevant
                    agreements are the employers - payers. Clear Fund enables any employers pay contributions for
                    their employees, and individuals - for themselves or for the benefit of close relatives (husband, wife,
                    parents, children).




                    The consolidated financial statements of the Bank         Subsidiaries of the bank. Background             www.aval.ua 87
 Private pension funds                                                                                               Raiffeisen Bank Aval 2006




                          Pension assets Open Fund as at 31 December 2006 year reached 128.734
                          thousand., Corporate Fund - 104.798 thous.

                          Investment policy to determine investment funds above declaration, approved by the funds.
                          According to these declarations, the purpose of pension assets is a growth of pension funds for
                          members' rights to learn to compulsory state pension insurance of pension benefits.

                          The main areas for investment funds is the policy of placing the funds:

                          - In securities, debt and income guaranteed by the Government of Ukraine, the Council of Ministers of the
                          Autonomous Republic of Crimea, local councils in accordance with law;

                          - In deposits and savings certificates of banks;

                          - In Ukrainian equities and corporate bonds, issuers of which are residents of Ukraine.

                          The only governing body of pension funds is the Council for Corporate and Public Funds.
                          Her decision was approved by the Council in the number five.

                          Activity funds regulated by regulations of the State Commission for Regulation of Financial Markets
                          and the State Commission on Securities and Stock Market of Ukraine. Regular audits of pension
                          funds held at least once a year. Yes, an audit of financial statements and reports of special funds for
                          2005 was held in February 2006 and the 2006 audit was conducted in January 2007.

                          Administration of both funds and management of their assets on the basis of agreements
                          concluded by the funds of the LLC Administrator Pension Fund Pension capital. Function
                          custodian of funds under a contract does Joint Stock Company The State Export - Import Bank of
                          Ukraine.




88      www.aval.ua About us                                     Market environment                      Activity Bank
Raiffeisen Bank Aval 2006                                                                                 RZB Group and Raiffeisen International




                    RZB Group and Raiffeisen International Bank - Holding AG
                     Albania                                 Raiffeisen Bank Sh.a.
                     Belarus                                 Priorbank, OAO
                     Bosnia and
                     Herzegovina                             Raiffeisen Bank dd Bosna i Hercegovina
                     Bulgaria                                Raiffeisenbank (Bulgaria) EAD
                     Croatia                                 Raiffeisenbank Austria dd
                     Czech Republic                          Raiffeisenbank as and eBanka, as
                     Hungary                                 Raiffeisen Bank Zrt.
                     Kosovo                                  Raiffeisen Bank Kosovo SA
                     Poland                                  Raiffeisen Bank Polska SA
                     Romania                                 Raiffeisen Bank SA
                     Russia                                  ZAO Raiffeisenbank Austria, OAO Impexbank
                     Serbia                                  Raiffeisen banka ad
                     Slovakia                                Tatra banka, as
                     Slovenia                                Raiffeisen Krekova banka dd
                     Ukraine                                 Raiffeisen Bank Aval, JSC
                    As noted above, Raiffeisen Bank Aval is a member of the RZB Group and subsidiary bank of
                    Raiffeisen International Bank-Holding AG. Raiffeisen International in turn is a fully consolidated
                    subsidiary of Raiffeisen Zentralbank Osterreich AG (RZB), which is located in Vienna. RZB -
                    parent company of the RZB Group and the central institution of the Austrian Raiffeisen Banking
                    Group (repair building group), the country's largest banking group by total assets and branch
                    network.

                    Founded in 1927, RZB provides the full range of services in commercial and investment
                    banking in Austria and has a reputation as pioneer in Central and Eastern Europe (CEE). He
                    is among the leading banks in the region and offers commercial, investment and retail banking
                    services in 16 markets in CEE.

                    Raiffeisen International Bank - Holding AG is a management company for all these banks,
                    which owns the majority of its shares (typically 100% or 100%). In addition, the group
                    Raiffeisen International is a lot of financial leasing companies (including companies in
                    Kazakhstan).

                    At the end of 2006, 2848 banking and leasing institutions Raiffeisen International, located in
                    Central and Eastern Europe, employing over 52 700 employees serving over 12 million
                    customers.
                    As at 31 December 2006, the total book value of capital of Raiffeisen International Bank-Holding AG amounted
                    to 55.9 billion euros, up 37% compared with December 2005. Consolidated profit for the period (after minority
                    deductions) for the international financial reporting standards has reached 594 million euros, representing
                    growth of 55% compared to same period in 2005 (excluding results from the sale of a minority stake in Kazakh
                    Bank Turan Alem and former Raiffeisenbank Ukraine) . Given these results, consolidated profit rose by 209% to
                    1.18 billion euros. Return on equity before tax, excluding the above result reached 27,3% (growth by 5,5
                    percentage points) and cost / income ratio improved by 2.5 percentage points to 59,1%.




                    The consolidated financial statements of the Bank          Subsidiaries of the bank. Background              www.aval.ua 89
 RZB Group and Raiffeisen International                                                                              Raiffeisen Bank Aval 2006




                          As at end-2006 book value of equity of the RZB Group has made 115.6 billion, a 23% increase
                          compared with December 2005. According to IFRS profit before tax in view of the above result reached
                          1882 million euros, representing an increase of 102% from last year (including the results described
                          above). Return on equity before tax increased by 2,8 percentage points to 26,7% without considering
                          these results, which is one of the best performance among large banks in Austria. Ratio of expenses to
                          revenue improved again to 56.7% (decreased by 2.2 pp). At the reporting date, the number of
                          employees of the Group in the world amounted to 55 400 people.

                          In addition to banking operations, which also carried out missions in Lithuania (Vilnius), Moldova (Chisinau)
                          and Russia (Moscow), RZB operates several companies in CEE who offer solutions in the field of mergers
                          and acquisitions, real estate, capital management, leasing and mortgage, etc. .

                          In Western Europe and the USA, RZB operates through a branch in London and offices in New York,
                          Brussels, Frankfurt, Milan, Paris and Stockholm. Financial company in New York (with representative
                          offices in Chicago and Houston) and a subsidiary in Malta complement the scale of its activities. In Asia,
                          RZB has branches in Beijing (with a presence in Shanghai) and Singapore and representative offices in
                          Ho Chi Minh City, Hong Kong, Mumbai, Tehran and Seoul. This international presence meets the bank's
                          strategy aimed at developing markets.

                          Today, RZB assigned the following ratings:


                           Standard & Poor's                          Long-term                                      A+
                           Moody's                                    Short-term                                     P-1
                           Moody's                                    Long-term                                      Aa2
                           Moody's                                    Financial stability                            C+




90      www.aval.ua About us                                     Market environment                      Activity Bank
Raiffeisen Bank Aval 2006                                                                                                                 Glossar
                                                                                                                                          y




                    Glossary
                    Decussated horse silhouettes - Raiffeisen logo - crossed horse silhouettes. It looks like two crossed
                    stylized horse head and associated with age-European folk traditions. This - a kind of charm against evil
                    and suffering of life and can still see today on the roofs of homes in Central Europe. As conceived by the
                    founders, unity and cooperation of community members Raiffeisen protect them from economic crises,
                    so they chose this stylized cross as a symbol of protection under the roof. Subsequently, the logo gained
                    international recognition and use, and a brand that evokes positive associations.

                    Raiffeisen Group - Raiffeisen Group (Raiffeisen Banking Group (RBG) is one of Austria's largest banking
                    groups in terms of total assets. As of late 2006, the consolidated profit reached 205.4 billion repair
                    building group euros. It represents a quarter of the country's banking business and has the largest
                    banking network in Austria (about 44 percent of the institutions of the country), consisting of 2250
                    branches with staff strength of 22 thousand people.

                    The structure repair building group composed of local Raiffeisen banks, regional
                    Raiffeisen banks and RZB, as the central institution.

                    Raiffeisen Bank is a private cooperative credit institutions, which operate as retail banks. Each local
                    Raiffeisen bank owns shares of the relevant regional Raiffeisen banks, and generally they own almost
                    88% of the shares of RZB.

                    Its creation, the Raiffeisen banks owe the initiative of the German social reformer Friedrich Wilhelm Raiffeisen
                    (1818 - 1888), which is creating your first cooperative banking association in 1862, laid the foundations of the
                    Raiffeisen co-operatives worldwide.

                    Even 10 years after the appearance of the first Austrian Raiffeisen banking cooperative in 1886 in the
                    country operated 600 savings and loan banks Raiffeisen system. The basic principle of self-help, which
                    professed F. Raiffeisen is that the main purpose of business
                    - To contribute fully to the interests of members of cooperative societies.

                    Raiffeisen International Bank-Holding AG - fully consolidated subsidiary of RZB. It is a management
                    company for subsidiaries of the RZB Group in Central and Eastern Europe, primarily for banks and leasing
                    companies. RZB owns controlling shares of Raiffeisen International (70%). The remaining 30% is in free
                    float is owned by institutional and private investors. Raiffeisen International's shares are traded on the Vienna
                    Stock Exchange.

                    RZB - Raiffeisen Zentralbank Osterreich AG (RZB) is the central institution of the Austrian
                    Raiffeisen Banking Group. Founded in 1927 in Vienna, RZB is the third largest Austrian
                    bank that specializes in commercial and investment banking. As the parent company of the
                    RZB Group, it ranks among the leading banking groups in Central and Eastern Europe,
                    offering a full range of commercial, investment and retail banking services to virtually the
                    entire region.

                    RZB Group - Group owns and manages RZB. Raiffeisen International is a major sub-
                    groups that acts as a holding and management company for a network of banks and
                    leasing companies in Central and Eastern Europe.

                    "Raiffeisenkas" - common name for credit unions that existed in Ukraine in late XIX - early XX
                    century. The name they owe the German economist Friedrich Raiffeisen (see above), who
                    developed the model statute such unions. There were before the arrival of Soviet rule in
                    Western Ukraine.

                    EBRD - European Bank for Reconstruction and Development - an international financial institution
                    owned by 61 countries and two intergovernmental institutions, aims to stimulate the transition from
                    administrative to market economies in Central and Eastern Europe and CIS countries.



                    The consolidated financial statements of the Bank         Subsidiaries of the bank. Background              www.aval.ua     91
 RZB Group Directory                                                                                               Raiffeisen Bank Aval 2006



                       Handbook of the RZB Group and Raiffeisen
                       International Bank - Holding AG
                       Raiffeisen                         Croatia                                  Romania
                                                          Raiffeisenbank Austria                   Raiffeisen Bank SA
                       International                      dd Petrinjska 59, 10000                  Piata Charles de Gaulle
                       Bank-Holding AG                    Zagreb Tel.: 385-1-456                   15 011857 Bucuresti 3
                                                          6466 Fax: 385-1-481                      Tel.: 40-21-306 1000 Fax:
                       Austria                            1624 SWIFT / BIC:                        40-21-230 0700 SWIFT /
                       Am Stadtpark 9 1030                RZBHHR2X www.rba.hr                      BIC: RZBRROBU
                       Vienna Tel.: 43-1-71 707-          Contact: Vesna Ciganek-Vukovic           www.raiffeisen.ro
                                                          vesna.ciganek-vukovic @ rba.hr           Contact: Steven C. van Groningen
                       0 Fax: 43-1-71 707-1715
                                                                                                   centrala@raiffeisen.ro
                       www.ri.co.at
                       investor.relations @ ri.co.at
                                                          Czech Republic
                       ri-communications@ri.co.at         Raiffeisenbank as                        Russia
                                                          Olbrachtova 2006 /                       ZAO Raiffeisenbank Austria
                                                          9140 21 Praha 4                          Leninsky Prospekt 15th
                       Network Banks in                                                            Moscow 119 071 Tel.: 7-495-
                                                          Tel.: 420-221-141 111
                       Central      and                   Fax: 420-221-142 111                     721 9900
                                                          SWIFT / BIC:                             Fax:   7-495-721    9901
                       Eastern Europe                     RZBCCZPP www.rb.cz                       SWIFT         /      BIC:
                                                          Contact: Lubor Ţ alman                   RZBMRUMM
                       Albania                            lubor.zalman @ rb.cz
                                                                                                   www.raiffeisen.ru
                       Raiffeisen Bank Sh.a.
                                                          eBanka, as Na                            Contact: Johann Jonach
                       European Trade Center,
                                                                                                   jjonach@raiffeisen.ru
                       Bulevardi «Bajram Curri», Tirana   Prkope 19
                       Tel.: 355-4-274 912 Fax:           11719 Praha 1
                                                                                                   VAT Impex
                       355-4-230 013 SWIFT /              Tel.: 222 420-222-115
                                                                                                   st. Novopeschana
                       BIC: SGSBALTX                      Fax: 420-222-115 500
                                                                                                   20/10 125 252
                       www.raiffeisen.al                  SWIFT / BIC: EBNKCZPP                    Moscow Tel.: 7-495-
                       Contact: Steven Grunerud           www.ebanka.cz                            258 3219
                       steven.grunerud @ raiffeisen.al    Contact: Pavla Pasekova                  Fax:  7-495-248             1370
                                                          ppasekova@ebanka.cz
                                                                                                   SWIFT       /                BIC:
                       Belarus                                                                     IMPERUMM
                       JSC Priorbank st. Horuzhy 31st     Hungary                                  www.impexbank.ru
                       Minsk, 220002 Tel.:                Raiffeisen Bank
                                                                                                   Contact: Pavel Lysenko
                       375-17-289 9087                    Zrt. Akademia utca
                                                                                                   pavel.lysenko @ impexbank.ru
                       Fax: 375-17-289 9191               Budapest in June
                       SWIFT / BIC: PJCBBY2X              1054
                                                          Tel.: 36-1-484 4400 Fax:
                                                                                                   Serbia
                       www.priorbank.by                                                            Raiffeisen banka ad
                       Contact: Olga Gelakhova            36-1-484 4444 SWIFT /
                                                                                                   Bulevar AVNOJ-a 64a
                       olga.gelakhova @ priorbank.by      BIC: UBRTHUHB
                                                                                                   11 070 Novi Beograd
                                                          www.raiffeisen.hu                        Tel.: 381-11-320 2100
                       Bosnia and Herzegovina             Contact: Frank Daniel
                                                                                                   Fax: - 381-11-220 7080
                       Raiffeisen Bank dd                 frank.daniel @ raiffeisen.hu
                                                                                                   SWIFT / BIC: RZBSRSBG
                       Bosna i Hercegovina
                                                                                                   www.raiffeisenbank.co.yu
                       Danijela Ozme 3 71                 Kosovo                                   Contact: Oliver Rogl oliver.roegl
                       000 Sarajevo                       Raiffeisen Bank Kosovo JSC
                                                                                                   @ raiffeisenbank.co.yu
                       Tel.: 387-33-287 100               Rruga UÇK 1951, Prishtina
                       Fax: 387-33-213 851                Tel.: 381-38-222 222 Fax: 381-
                                                                                                   Slovakia
                       SWIFT / BIC:                       38-2030 1130 SWIFT / BIC:
                                                                                                   Tatra banka, as Hodţovo
                       RZBABA2S                           RBKOCS22 www.raiffeisen-
                                                                                                   námestie 3811 06
                       www.raiffeisenbank.ba              kosovo.com                               Bratislava 1 Tel.: 421-2-
                       Contact: Michael G. Mueller        Contact: Oliver Whittle oliver.whittle
                                                                                                   5919 1111 Fax: 421-2-
                       michael.mueller @ rbb-             @ raiffeisen-kosovo.com
                                                                                                   5919 1110 SWIFT / BIC:
                       sarajevo.raiffeisen.at
                                                                                                   TATRSKBX
                                                          Poland                                   www.tatrabanka.sk
                       Bulgaria                           Raiffeisen Bank Polska
                                                                                                   Contact: Rainer Franz
                       Raiffeisenbank (Bulgaria)          SA Ul. Piekna 20                         rainer_franz@tatrabanka.sk
                       EAD 18/20 Ulica N. Gogol           00-549 Warszawa Tel.:
                       1504 Sofia                         48-22-585 2000
                                                          Fax:   48-22-585 2585
                                                                                                   Slovenia
                       Tel.: 359-2-9198 5101
                                                                                                   Raiffeisen Krekova banka
                       Fax: 359-2-943 4528                SWIFT         /    BIC:
                                                                                                   dd 18 Slomskov trg, 2000
                       SWIFT / BIC: RZBBBGSF              RCBWPLPW
                                                                                                   Maribor Tel.: 386-2-229
                       www.rbb.bg                         www.raiffeisen.pl
                                                                                                   3100 Fax: 386-2-252 4779
                       Contact: Momtchil Andreev          Contact: Piotr Czarnecki
                                                                                                   SWIFT / BIC: KREKSI22
                       momtchil.andreev @ rbb-            piotr.czarnecki @ raiffeisen.pl
                                                                                                   www.r-kb.si
                       sofia.raiffeisen.at
                                                                                                   Contact: Klemens Nowotny
                                                                                                   klemens.nowotny @ r-kb.si




92      www.aval.ua
Raiffeisen Bank Aval 2006                                                                                                               RZB Group Directory




                    Ukraine                           Croatia
                    Open Joint Stock Company          Raiffeisen Leasing doo
                    "Raiffeisen Bank Aval Street.     Radnicka cesta 43
                    Leskov, 9, 01011 Kyiv Tel.:       10 000 Zagreb
                    38-044-490 88 88 Fax: 38-         Tel.: - 385-1-6595 000
                    044-295 32 31 SWIFT / BIC:        Fax: 385-1-6595 050                     Russia
                    AVAL UA UK www.aval.ua            www.rl-hr.hr                            OOO Raiffeisen
                    Contact: Angela Prigozhina        Contact person: Miljenko Tumpa          Leasing Nikoloyamska
                    angela.prigozhina @ aval.ua       miljenko.tumpa @ rl-hr.hr               13 / 2 109 240 Moscow
                                                                                              Tel.: 7-495-721 9980
                    Leasing                           Czech Republic                          Fax: 7-495-721 9901
                                                      Raiffeisen-Leasing sro                  www.rlru.ru
                                                      Olbrachtova 2006 / 9
                    Austria                                                                   Contact: Galina Kostyleva
                                                      14 021 Praha 4                          gkostyleva@raiffeisen.ru
                    Raiffeisen-Leasing
                                                      Tel.: 420-221-51 1611
                    International GmbH
                    Am Stadtpark 9 1030 Vienna
                                                      Fax: 420-221-51 1666                    Serbia
                                                      Contact: Rastislav Kereskeni
                    Tel.: -43-1-71 707 2966 Fax:                                              Raiffeisen Leasing doo
                                                      rastislav.kereskeni @ rl.cz www.rl.cz
                    43-1-71 707 2059                                                          Bulevar AVNOJ-a 45a
                    Contact: Dieter Scheidl                                                   11 000 Beograd
                    dieter.scheidl @ rli.co.at
                                                      Hungary                                 Tel.: 381-11-201 77 00 Fax:
                                                      Raiffeisen Lízing Zrt.
                                                                                              381-11-313 0081
                                                      Váci útca 81-85
                    Albania                                                                   www.raiffeisen-leasing.co.yu
                    Raiffeisen Leasing                1139 Budapest
                                                                                              Contact: Ralph Zeitlberger
                                                      Tel.: 36-1-298 8200
                    Sh.A. 44 Tirana                                                           ralph.zeitlberger @ raiffeisen-leasing.co.yu
                                                      Fax: 36-1-298 8010
                    Rruga Kavajes
                                                      www.raiffeisenlizing.hu
                    Tel.: 355-4-274 920
                                                      Contact: Pál Antall
                                                                                              Slovakia
                    Fax: 355-4-232 524                                                        Tatra Leasing sro
                    Contact: Majlinda Hakani          pal.antall @
                                                                                              Továrenská 10
                    majlinda.hakani @ raiffeisen.al   raiffeisen.hu
                                                                                              81109 Bratislava
                                                                                              Tel.: 421-2-5919 3168
                    Belarus                           Kazakhstan
                                                                                              Fax: 421-2-5919 3048
                    SOOO Raiffeisen                   Raiffeisen Leasing
                                                      Kazakhstan LLP                          www.tatraleasing.sk
                    Leasing street. Horuzhy
                                                                                              Contact: Igor Horváth
                    31-A 220002 Minsk Tel.:           146, Shevchenko
                                                                                              igor_horvath@tatrabanka.sk
                    375-17 289 9396                   str. Office 12, 1st
                    Fax: 375-17 289 9394              floor 050 008 Almaty
                    Contact: Maksim Lisicky           Tel.: 836 7-327-2709
                                                                                              Slovenia
                    maksim.lisicky @ priorbank.by
                                                                                              Raiffeisen Leasing doo
                                                      Fax: 7-327-2709 831
                                                                                              Tivolska 30 (Center
                                                      Contact: Uwe Fisker
                    Bosnia and                        uwe.fisker @ rlkz.kz                    Tivoli) 1000 Ljubljana
                    Herzegovina                                                               Tel.: 386-1-241 6250
                    Raiffeisen Leasing                Poland                                  Fax: 386-1-241 6268
                    doo Sarajevo                      Raiffeisen-Leasing Polska               www.rl-sl.si
                                                      SA Ul. Jana Pawla II 78                 Contact: Borut Boţič borut.bozic
                    St. Branilaca Sarajeva No.
                                                      00 175 Warszawa Tel.:                   @ raiffeisen-leasing.si
                    20 71000 Sarajevo
                    Tel.: 387-33-254 340              48-22-562 3700
                    Fax: 387-33-212 273               Fax: 48-22-562 3701                     Ukraine
                    www.rlbh.ba                       www.rl.com.pl                           Raiffeisen Leasing Aval LLC
                    Contact: Belma Sekavic-Bandic     Contact: Arkadiusz Etryk                Bull. Ukrainian Lesya, 28th
                                                      arkadiusz.etryk @ raiffeisen.pl
                    belma.sekavic @ rbb-                                                      01 188 Kyiv Tel.: 38-044-
                    sarajevo.raiffeisen.at
                                                                                              590 2490
                                                      Romania
                                                      Raiffeisen Leasing IFN                  Fax: 38-044-200 0400
                    Bulgaria                                                                  www.rla.com.ua
                    Raiffeisen Leasing                SA Calea 13 Septembrie
                                                                                              Contact: Peter Oberauer
                    Bulgaria OOD                      90 Grand Offices
                                                                                              peter.oberauer @ aval.ua
                    Business Park Sofia               Marriott Grand
                    Building 11, 2nd                  Hotel Sector 5
                    floor 1715 Sofia                  76 122 Bucuresti
                    Tel.: 359-2-970 7979              Tel.: 40-21 403 3300 Fax:
                    Fax: 359-2-974 2057               40-21-403 3298
                    www.rlbg.bg                       www.raiffeisen-leasing.ro
                    Contact: Ekaterina Hristova       Contact: Robert Pintelie
                    ekaterina.hristova @ rbb-         robert.pintelie @ raiffeisen-
                    sofia.raiffeisen.at               leasing.ro




                                                                                                                                      www.aval.ua         93
 RZB Group Directory                                                                                                    Raiffeisen Bank Aval 2006




                       Leasing real estate                        Czech Republic                       Slovakia
                                                                  Raiffeisenbank as                    Tatra banka as Hodţovo
                       Czech Republic                             Olbrachtova 2006 /                   námestie 3811 06
                       Raiffeisen Leasing                         9140 21 Praha 4                      Bratislava 1 Tel.: 421-2-
                       Real Estate sro                            Tel.: 863 420-221-141                5919 1111
                       Olbrachtova 2006 /                         Fax: 420-221-143 804                 Fax: 421-2-5919 1110
                       9 14 021 Praha 4                           www.rb.cz                            www.tatrabanka.sk
                                                                  Contact: Martin Bláha                Contact: Igor Vida
                       Tel.: 608 420-221-511                      martin.blaha @ rb.cz                 igor_vida@tatrabanka.sk
                       Fax: 420-221-511 641
                       www.rlre.cz                                Hungary                              Slovenia
                       Contact: Alois Lanegger
                                                                  Raiffeisen Bank Zrt.                 Raiffeisen Krekova banka
                       alois.lanegger @ rl.cz
                                                                  Akadémia útca 6                      dd Slomškov trg 18 2000
                       Hungary                                    1054 Budapest Tel.:                  Maribor Tel.: 386-2-229
                       Raiffeisen Inglatan                        36-1-484 4400 Fax:                   3111 Fax: 386-2-252 5518
                       Rt. Akadémia utca                          36-1-484 4444                        www.r-kb.si
                       Budapest in June                           www.raiffeisen.hu                    Contact: Gvido Jemenšek

                                                                  Contact: Gábor Liener                gvido.jemensek @ r-kb.si
                       1054                                       gliener@raiffeisen.hu
                       Tel.: 36-1-484 8400                                                             Ukraine
                       Fax: 36-1-484 8404                         Poland                               Raiffeisen Investment Ltd Street.
                       www.raiffeiseninglatan                     Raiffeisen Investment Polska         Zhilyanska, 43, 01033 Kyiv Tel.:
                       .hu                                        Sp.z oo Ul. Piekna 20                38-044-490 6898 Fax: 38-044-
                       Contact: László Vancskó
                                                                  00-549 Warszawa Tel.:                490 6899
                       lvancsko@raiffeisen.hu
                                                                  48-22-585 2900                       Contact: Vyacheslav Yakymuk
                                                                                                       yakymuk@rio.kiev.ua
                       Investment Banking                         Fax: 48-22-585 2901
                                                                  Contact: Marzena Bielecka
                                                                  marzena.bielecka @ ripolska.com.pl
                                                                                                       Raiffeisen Zentralbank
                       Bosnia and Herzegovina                                                          Osterreich AG, Austria (Head
                       Raiffeisen Bank dd                         Romania                              Office)
                       Bosna i Hercegovina
                                                                  Raiffeisen Capital &                 Am Stadtpark 9 1030
                       Danijela Ozme 3 71                                                              Vienna Tel.: 43-1-71 707-
                                                                  Investment SA
                       000 Sarajevo                                                                    0 Fax: 43-1-71 707 1715
                                                                  Piata Charles de Gaulle
                       Tel.: 387-33-287 100 or 287                15 011857 Bucuresti 1                SWIFT / BIC RZBAATWW
                       121 Fax: 387-33-213 851                    Tel.: 40-21-306 1233                 www.rzb.at
                       www.raiffeisenbank.ba                      Fax: 40-21-230 0684
                       Contact: Dragomir Grgi æ dragomir.grgic
                                                                  www.rciro.ro                         China
                       @ rbb-sarajevo.raiffeisen.at
                                                                  Contact: Dana Mirela Ionescu dana-   Beijing Branch
                       Bulgaria
                                                                  mirela.ionescu @ rzb.ro              Beijing International
                       Raiffeisen Asset Management                                                     Club, Suite 200
                                                                  Russia                               21, Jianguomenwai
                       EAD 18/20 Ulica N. Gogol                   ZAO Raiffeisenbank
                       1504 Sofia                                                                      Dajie Beijing 100 020
                                                                  Austria Street. Trinity, 17 /        Tel.: 86-10-6532 3388
                       Tel.: 359-2-919 85 451                     1 129 090 Moscow Tel.: 7-
                       Fax: 359-2-943 4528                                                             Fax: 86-10-6532 5926
                                                                  495-721 9900 Fax: 7-495-             SWIFT / BIC:
                       www.rbb.bg                                 721 9901 www.raiffeisen.ru
                       Contact: Ivailo Grigorov ivailo.grigorov
                                                                                                       RZBACNBJ
                                                                  Contact: Pavel Gourine               Contact: Andreas Werner
                       @ rbb-sofia.raiffeisen.at
                                                                  pgourine@raiffeisen.ru               andreas.werner @ cn.rzb.at

                       Croatia                                    Serbia                               Malta
                       Raiffeisenbank Austria                     Raiffeisen Investment AG             Raiffeisen Malta Bank plc
                       dd Petrinjska 59, 10000                    Bulevar AVNOJ-a 64a 11               52, Il-Piazzetta, Tower
                       Zagreb Tel.: 385-1-456                     070 Novi Beograd Tel.:               Road, Sliema SLM16, Malta
                       6466 Fax: 385-1-456                        381-11-212 9220 Fax:                 Tel.: 356-2260 0000
                       6490 www.rba.hr
                                                                  381-11-212 9213                      Fax: 356-2132 0954
                       Contact: Ivan Ţ iţic
                                                                  Contact: Radoš Ilincic               Contact: Anthony C. Schembri
                       ivan.zizic @ rba.hr
                                                                  r.ilincic @ riag.co.yu               anthony.schembri @ rmb-
                                                                                                       malta.raiffeisen.at




94      www.aval.ua
Raiffeisen Bank Aval 2006                                                                                                            RZB Group Directory




                    Singapore                        France                               Representative for
                    Singapore Branch                 Paris
                                                                                          the Americas and
                    One Raffles Quay                 9-11, Avenue Franklin
                    # 38-01 North Tower              Roosevelt 75008 Paris                Asia
                    Tel.: 65-6305 6000               Tel.: 33-1-4561 2700
                    Fax: 65-6305 6001                Fax: 33-1-4561 1606                  U.S.
                    Contact: Rainer Š ilhav ý        Contact: Harald Stoffaneller         Chicago (RZB Finance
                    rainer.silhavy @ sg.rzb.at       harald.stoffaneller @ fr.rzb.at      LLC) 1910 N.
                                                                                          Martingale Road Suite
                    Great Britain                    Italy                                400
                    London Branch                    Milan                                Schaumburg, IL 60 173
                    10, King William Street          Via Andrea Costa                     Tel.: 1-847-466 1043
                    London EC4N 7TW Tel.:            2 20 131 Milano                      Fax: 1-847-466 1295
                    44-20-7933 8000                  Tel.: 39-02-2804 0646                Contact: Charles T. Hiatt
                    Fax: 44-20-7933 8099             Fax: 39-02-2804 0658                 chiatt@rzbfinance.com
                    SWIFT / BIC:                     www.rzb.it
                    RZBAGB2L                         Contact: Maurizio Uggeri             Houston (RZB Finance LLC)
                    www.london.rzb.at                maurizio.uggeri @ it.rzb.at          10 777, Westheimer, Suite
                    Contact: Ian Burns ian.burns                                          1100 Houston, TX 77 042
                    @ uk.rzb.at                      Lithuania
                                                                                          Tel.: 1-713-260 9697
                                                     Vilnius
                                                                                          Fax: 1-713-260 9602
                    U.S.                             (Raiffeisen Bank Polska              Contact: Stephen A. Plauche
                    RZB Finance LLC                  SA) A. Jaksto Street 12,             splauche@rzbfinance.com
                    1133, Avenue of the Americas     Vilnius 01 105
                    16th floor, New York             Tel.: 370-5-266 6600                 New York
                    NY 10036                         Fax: 370-5-266 6601                  1133, Avenue of the Americas
                    Tel.: 1-212-45 4100              www.raiffeisen.lt                    16th floor, New York, NY 10
                    Fax: 1-212-944 2093              Contact: Vladislovas Jancis          036 Tel.: 1-212-593 7593 Fax:
                    www.rzbfinance.com               vladislovas.jancis @ raiffeisen.pl
                                                                                          1-212-593 9870
                    Contact: Dieter Beintrexler                                           Contact: Dieter Beintrexler dieter.beintrexler
                    dbeintrexler@rzbfinance.com      Moldova                              @ rzb-newyork.raiffeisen.at
                                                     Chisinãu (Raiffeisen Bank
                    Representation in                SA) 65 Stefan cel Mare               China
                                                     blvd. Chisinãu, MD-2001              Hong Kong
                    Europe                           Tel.: 373-22-279 331                 Lippo Centre, 89
                    Belgium                          Fax: 373-22-279 343                  Queensway Unit 2001, 20th
                    Brussels                         Contact: Victor Bodiu                Floor, Tower 1 Hong Kong
                                                     victor.bodiu @ rzb.md
                    Rue du Commerce 20-                                                   Tel.: 85-2-2730 2112
                    22 1000 Bruxelles                Russia                               Fax: 85-2-2730 6028
                                                                                          Contact: Edmond Wong
                    Tel.: 32-2-549 0678              14 Prechystenskyy Lane.              edmond.wong @ hk.rzb.at
                    Fax: 32-2-502 6407               1, 119034 Moscow Tel.:
                    Contact: Helga Steinberger
                                                     7-495-721 9903                       Zhuhai
                    raiffbxl@raiffeisenbrussels.be
                                                     Fax: 7-495-721 9907                  Room 2404, Yue Cai
                                                     www.raiffeisen.ru                    Building 188, Jingshan
                    Germany
                                                     Contact: Evgheny Rabovsky            Road, Jida Zhuhai 519 015
                    Frankfurt am Main                erabovsky@raiffeisen.ru
                    Mainzer Landstrasse 51                                                Tel.: 86-756-323 3500
                    D-60 329 Frankfurt am Main       Sweden / Scandinavia                 or 323 3055
                    Tel.: 49-69-29 92 19-18          Stockholm                            Fax: 86-756-323 3321
                                                                                          Contact: Susanne Zhang-Pongratz
                    Fax: 49-69-29 92 19-22           Engelbrektsgatan 7                   susanne.zhang @ cn.rzb.at
                    Contact: Dorothea Renninger      11 432 Stockholm
                    dorothea.renninger @ rzb.at
                                                     Tel.: 46-8-4405086
                                                     Fax: 46-8-4405089
                                                     Contact: Lars Bergstr ö m
                                                     lars.bergstrom @ rzb.at




                                                                                                                                   www.aval.ua         95
 RZB Group Directory                                                                                 Raiffeisen Bank Aval 2006




                       India                               Raiffeisen Centrobank
                       Mumbai                              AG Equity
                       1987, Maker                         Tegetthoffstraße 1, 1015
                       Chamber VI                          Vienna SWIFT / BIC:
                       Nariman Point                       CENBATWW Tel.: 43-1-51
                       Mumbai 400 021                      520-0 Fax: 43-1-513 4396
                       Tel.: 91-22-663 0170 0              www.rcb.at
                       Fax: 91-22-663 2198 2               Contact: Eva Marchart
                                                           marchart@rcb.at
                       Contact: Anupam Johri
                       anupam.johri @ in.rzb.at
                                                           Raiffeisen Investment
                       Iran                                AG Advisory
                       Tehran (UNICO Banking               Tegetthoffstraße 1, 1015
                       Group) Vanak, North Shirazi         Wien Tel.: 43-1-710 5400-0
                       Avenue 16, Ladan Str., Tehran       Fax: 43-1-710 5400-39
                       19 917 Tel.: 98-21-804 6767 -2      www.raiffeisen-
                       Fax: 98-21-803 6788                 investment.com
                                                           Contact: Heinz Sernetz h.sernetz @
                       Contact: Gerd Wolf
                                                           raiffeisen-investment.com
                       unico@sayareh.com

                                                           Subsidiaries and representative offices
                       South Korea                         in Banja Luka, Belgrade, Bucharest,
                       Seoul                               Istanbul, Kiev, Moscow, Pidhorytsi,
                       Leema Building, 8th floor           Prague, Sofia and Warsaw.
                       146-1, Soosong-dong
                       Chongro-ku, 110-755 Seoul           Information as of March 1
                       Tel.: 822-398 5840 Fax:             2007
                       822-398 5807
                       Contact: Kun II Chung kun-
                       il.chung @ kr.rzb.at


                       Vietnam
                       Ho Chi Minh City
                       6, Phung Khac Khoan
                       Str., District1, Room G6
                       Ho Chi Minh City Tel.:
                       84-8-8297 934
                       Fax: 84-8-8221 318
                       Contact: Ta Thi Kim Thanh ta-thi-
                       kim.thanh @ vn.rzb.at


                       Investment Banking
                       Austria
                       Raiffeisen Zentralbank
                       Österreich AG
                       Global Markets
                       Am Stadtpark 9 1030
                       Vienna Tel.: 43-1-71 707-
                       1120 Fax: 43-1-71 707-
                       3813 www.rzb.at
                       Contact: Martin Czurda
                       martin.czurda @ rzb.at




96      www.aval.ua
Raiffeisen Bank Aval 2006                                                                                            Bank Guide




                    Bank Guide




                    Central Office                  Brovary branch                        Yagotinsky Branch
                                                                                          07700, Dnipropetrovsk
                    01011, Str. Leskov, 9           07400, Dnipropetrovsk region.         region.
                                                                                          c. Yagotin st.
                    Bank Information Center:        c. Brovary st. Gagarin, 22            Independence, 56
                    t 8-800-500-5000                tel / fax. 38 (04494) 05/01/1999      т. +38 (04475) 5-55-55,
                    fax.: 38 (044) 285-32-31                                              fax. 38 (04475) 5-56-79
                    E-mail: info@aval.ua            Antonovich Branch
                                                                                          Cherkasy Oblast
                                                    08600, Dnipropetrovsk region.         Directorate
                    Kyiv Regional Directorate       c. Vasilkov st. Gogol, 5              21001, Vinnitsa,
                    01034, Kyiv,                    т. +38 (04471) 2-11-21,               st. 50 years of Victory, 35
                    st. Pirogov, 7-7b               fax. 38 (04471) 02/11/1953            tel / fax. 38 (0432) 52-03-19
                    т. +38 (044) 590-23-20,
                       38 (044) 590-23-21,          Irpins'ka Branch                      Volyn Oblast Directorate
                    fax. 38 (044) 230-92-15,        08200, Dnipropetrovsk region.         43025, Lutsk
                       38 (044) 230-92-28           c. Irpen st. III International, 152   st. L. Ukrainian, 52,
                                                    т. +38 (04497) 6-30-45,               т. +38 (0332) 77-74-04,
                    Bilotserkivska Branch           fax. 38 (04497) 6-30-45               fax. 38 (0332) 77-74-38
                    09107, Dnipropetrovsk region.
                    c. White Church Street.
                    Loginova, 39 / 2                Obukhivs'ka Branch                    Dnepropetrovsk
                    tel / fax. 38 (04463) 5-30-60   02 720, Kiev region.                  Regional Directorate
                                                    c. Obukhov, st. Kiev, 113a            49044, Dnipropetrovsk,
                    Borispilska Branch              т. +38 (04472) 7-01-97,               st. Artem 4d
                    08300, Dnipropetrovsk region.   fax. 38 (04472) 6-60-65               т. +38 (0562) 33-49-69,
                    c. Boryspil, Kyiv path, 79                                            fax. 38 (0562) 33-49-68
                    т. +38 (04495) 6-76-55,
                    fax. 38 (04495) 6-76-53


                                                                                                                     www.aval.ua   97
 Bank Guide                                                                                    Raiffeisen Bank Aval 2006




                     Krivoy Rog branch               Lviv oblast directorate         Kherson oblast directorate
                     50042, st. Commonwealth, 13a    79000, Lviv,                    73000, Kherson,
                     t. 38 (056) 4 65-20-10,         st. Matejko, 8                  st. Chervonoflots'ka 17
                     fax. 38 (056) 4 40-06-16        т. +38 (0322) 97-29-72,         т. +38 (0552) 32-70-02,
                                                     fax. 38 (0322) 97-29-82         fax. 38 (0552) 32-70-14
                     Donetsk oblast directorate
                                                                                     Khmelnytsky oblast
                     83086, Donetsk,                 Mykolayiv oblast directorate    directorate
                     st. F. Zaitseva, 46v            54030, Nikolaev,                29000, Khmelnytsky,
                     т. +38 (062) 340-80-00,         st. Artillery, 19th             st. Hrushevsky 54
                     fax. 38 (062) 337-17-48         т. +38 (0512) 36-00-53,         т. +38 (0382) 72-05-46,
                                                     fax. 38 (0512) 35-13-57         fax. 38 (0382) 72-08-01
                     Zhytomyr oblast directorate
                     10014, Zhytomyr,                Odessa Regional Directorate     Cherkasy Oblast Directorate
                     Pl. Victory, 10a                65012, Odessa,                  18000, Cherkasy,
                     т. +38 (0412) 41-38-02,         st. Arnautskaya 20              st. Gogol, 224
                     fax. 38 (0412) 41-38-00         т. +38 (0482) 39-20-00,         т. +38 (0472) 54-05-01,
                                                     fax. 38 (0482) 34-72-57         fax. 38 (0472) 54-60-00
                     Transcarpathian Regional
                     Branch
                     88000, Uzhgorod,                Poltava oblast directorate      Chernivtsi oblast directorate
                     Square Theatre, 19              36014, Poltava,                 58022, Chernivtsi,
                     т. +38 (0312) 61-97-01,         st. Monastic 8                  st. Home, 143
                     fax. 38 (0312) 61-97-11         т. +38 (0532) 51-87-07,         т. +38 (0372) 58-37-61,
                                                     fax. 38 (0532) 51-87-42         fax. 38 (0372) 57-61-70
                     Zaporizhzhya Regional
                     Directorate
                     69063, Zaporozhye,              Rivne oblast directorate        Chernihiv oblast directorate
                     st. Turgenev, 29                33013, Rivne,                   14017, Chernihiv,
                     т. +38 (0612) 24-40-51,         st. Petliura 35                 pr Victory 21
                     fax. 38 (0612) 24-44-44         т. +38 (0362) 69-37-00,         т. +38 (0462) 65-24-48,
                                                     fax. 38 (0362) 62-08-70         fax. 38 (0462) 65-24-49
                     Ivano-Frankivsk
                     Regional Directorate            Sevastopol branch
                     76000, Ivano-Frankivsk          99011, Sevastopol,
                     st. Independence, 19            st. Suvorova, 39
                     т. +38 (0342) 55-85-00,         т. +38 (0692) 54-63-33,
                     fax. 38 (0342) 55-85-64         fax. 38 (0692) 54-63-65

                     Turkey                          Sumy oblast directorate
                     Regional Directorate            40000, Sumy,
                     25006, Kirovograd,              Pl. Independence 1
                     st. Decembrists, 2 / 14         т. +38 (0542) 21-55-04,
                     tel / fax. 38 (0522) 35-81-11   fax. 38 (0542) 21-55-05

                     Crimean                         Ternopil oblast directorate
                     Republican Directorate          46001, Ternopil,
                     95000, Simferopol,              st. Cardinal Joseph Blind, 8
                     st. Riverside 32                tel / fax. 38 (0352) 47-07-01
                     т. +38 (0652) 24-87-00,
                     fax. 38 (0652) 27-54-65         Kharkiv oblast directorate
                                                     61166, Kharkov,
                     Luhansk oblast directorate      st. Novgorod, 11
                     91016, Lugansk,                 т. +38 (057) 715-81-00,
                     st. Sovetskaya, 61              fax. 38 (057) 715-81-50
                     т. +38 (0642) 58-00-18,
                     fax. 38 (0642) 50-14-22



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