BACB Interim Management Report Q3 2025 Consolidated en-US

General information

During the nine months of 2025, Bulgarian-American Credit Bank AD (BACB, the Bank) continued to operate as a universal bank offering a full range of banking services focused on the green economy, including financing for small and medium-sized enterprises and expanding its retail banking services by offering a variety of products in the areas of housing and consumer lending and transaction banking. The Bank strives to meet customer needs by offering a comprehensive range of banking services and through modern banking technologies, and as a result, to expand its customer base.

Economic overview

External environment

The economies of the Eurozone countries recorded a combined growth of 0.7% in the first half of 2025 thanks to sustained domestic demand. Quarterly data show stronger growth in the first quarter and weaker growth in the second quarter, partly reflecting the initial strengthening of international trade ahead of the expected increase in tariffs, followed by the neutralization of this effect. Survey indicators suggest that both industrial production and the services sector continue to grow, signalling some positive underlying momentum in the economy. Consumer spending and investment are likely to be supported by the fact that previous ECB interest rate cuts continue to be reflected in financing conditions. Investment should also be stimulated by significant government spending on infrastructure and defense. Economic growth is projected at 1.2% in 2025, revised upwards by 0.9% compared to the June projections. Growth expectations for 2026 are now slightly lower at 1.0%, while the forecast for 2027 remains unchanged at 1.3%.

In July, the unemployment rate in the euro area was 6.2%, and citizens are saving a smaller portion of their income. Labor costs are gradually slowing down, as shown by incoming data on negotiated wages and available data by country on compensation per employee. The ECB's wage monitoring indicator points to a further slowdown in negotiated wage growth in 2025, while expert forecasts from June 2025 predict that wage growth will fall below 3% in 2026 and 2027.

Annual inflation remains close to the ECB's target, rising slightly to 2.1% in August 2025 from 2.0% in July. Energy price inflation is 1.9% compared to 2.4% in July, while food price inflation falls from 3.3% to 3.2%. Inflation excluding energy and food remains steady at 2.3%. Inflation in services fell slightly to 3.1% from 3.2% in July, while inflation in goods remained unchanged at 0.8%. The ECB experts' macroeconomic projections from September 2025 present a picture of inflation that is similar to that forecast in June. They expect headline inflation to average 2.1% in 2025, 1.7% in 2026, and 1.9% in 2027. As regards inflation excluding energy and food, experts expect an average level of 2.4% in 2025, 1.9% in 2026, and 1.8% in 2027.

Bulgaria

In 2024, Bulgaria's real gross domestic product growth accelerated to 2.8%, compared to 1.9% in 2023. The higher growth was due to stronger consumption growth and a positive contribution from changes in inventories. In 2025, economic growth is expected to accelerate to 3%, supported by public spending. High growth in public investment is expected, backed by European and national funds. A slight slowdown in consumption growth is expected during the year due to weaker income growth. Export growth will accelerate as a result of stronger external demand in the EU, but the contribution of net exports will remain negative.

In 2026, GDP growth will slow to 2.5% due to weaker growth in public consumption and a decline in public investment. At the same time, growth in consumption and external demand will support the growth of private investment. Export growth is expected to accelerate, driven mainly by trade in goods. In the period 2027-2028, GDP growth will slow to 2.4-2.2% due to the exhaustion of the positive effect of FDI, a slowdown in household consumption growth in line with income growth, and a slowdown in export growth in line with external demand.

In 2024, the Bulgarian economy recorded annual employment growth of 1.1%, which was mainly influenced by the increase in the number of people employed in services and construction. The forecast for the coming years is that employment will continue to grow, albeit at a slower pace than in the previous three years. For 2025- , employment growth is expected to be 0.6% and to slow to 0.3% in 2026, while in 2027 and 2028 the number of employed persons is expected to remain virtually unchanged. Despite the projected increase in employment over the forecast period, the unemployment rate is expected to undergo minimal changes. For 2025, the indicator is expected to decline to 4.1%, and by the end of the forecast period (2028) to decline minimally to 4.0%. Nominal growth in compensation per employee reached 10.4% in 2024, which was lower than expected in the autumn forecast. In 2025, the slowdown in labor income growth is expected to continue, with the nominal growth rate of the indicator estimated at 8.7%. Labour income growth will slow more significantly in 2026, to 4.3%, in line with the expected acceleration in real labour productivity growth. Real labor productivity rose to 1.7% in 2024 from 0.8% in 2023. The highest growth was observed in the industrial sector (2.1%). In services, the growth of the indicator was negative (-0.1%). The estimates

for the dynamics of the indicator in the period 2026-2028 differ from those presented in the autumn forecast, with a more significant acceleration in productivity expected in 2025, following the increase in real GDP growth.

Average annual inflation in 2024 according to the HICP was 2.6%. Services and energy goods contributed most to the observed increase in the overall index in early 2025. The exhaustion of favorable base effects in energy commodity prices (especially transport fuels) also had an impact. Given the developments observed, we expect average annual inflation to accelerate to 3.6% in 2025 (from 2.6% in 2024). The annual inflation rate will gradually slow to 2.8% at the end of the year. Services are expected to make the largest contribution, followed by food. Energy commodities will make a negative contribution given the expected decline in international crude oil prices. In 2026, year-end inflation will slow to 2.6%, and we expect average annual inflation to decline to 2.2%. The contributions of the main components of the HICP in 2026 will be similar to those in 2025. Average annual inflation will continue to slow to 2% in 2028 in line with the downward trend in international prices.

* Statistical data published up to 21 March 2025 were used in preparing the forecast. Source: ECB, NSI, BNB, IMF, WB, Bloomberg, MF

The global geopolitical situation remains unstable, with potentially significant negative effects on the economies of the European Union and Bulgaria, which creates substantial risks to the realization of the macroeconomic forecast. The risk of increased tension in global trade could hamper growth in the euro area by suppressing exports and weakening the global economy. Lower confidence could prevent consumption and investment from recovering as quickly as expected. There is a risk of supply constraints for certain commodities, which could trigger price increases or further disruptions to global supply chains. The materialisation of these risks would lead to higher inflation in the country in the medium term and weaker growth in real disposable household income, which, combined with rising credit costs, would limit consumption growth. The risks to the domestic forecast are the failure to meet public capital expenditure targets, including those under the Public Investment Program.

BACB - business presentation

At the end of the reporting period, the Bank's loan portfolio grew by a net 1.21% compared to the end of June, reaching a total of BGN 1,928.5 million. The total net growth of newly granted loans during the period was 0.91%.

In SME and corporate loans to legal entities, the Bank reported a net decrease of 1.03%, resulting in a total portfolio size in the segment of BGN 1,202.3 million. The share of this portfolio in the Bank's total loan portfolio is 64.78%, compared to 66.16% at the end of the second quarter of the year. The market share for legal entities is 2.33% as at 30 June 2025, compared to the 2.5-3% target set in the development strategy.

At the end of the period, total attracted funds from SMEs and corporate clients amounted to BGN 486.777 million, representing a decrease of 4.49% compared to the second quarter. There was a 33.14% decline in term deposits and a 1.27% increase in demand deposits. In terms of attracted resources from legal entities, BACB achieved a 2.13% market share as at 30 June 2025, compared to the 2% target set in the strategy.

In line with the Bank's strategy, the old "legacy" loan portfolio of legal entities was reduced by 1.31% for the quarter, with its share in the Bank's total portfolio decreasing from 0.71% as at 30 June 2025 to 0.69% as at 30 September 2025, reaching BGN 13.274 million at the end of September.

In a globally uncertain economic environment, influenced by inflation dynamics and geopolitical tensions, at the end of the third quarter, problem exposures of legal entities in BACB's portfolio increased by 7.2% compared to the end of the previous period. As a share of the total loan portfolio, non-performing exposures increased by 0.28% compared to June 30, 2025, to 4.97%.

The following initiatives carried out by BACB also contribute to the expansion of credit operations for corporate clients:

• Since 2018, the Bank has been implementing the agreement concluded with Bulgarian Development Bank EAD for financing small and medium-sized enterprises with guarantee facilities and counter-guarantees under the COSME Program of the European Investment Fund, with the support of the European Fund for Strategic Investments - COSME+ Program.

• BACB operates a guarantee scheme to facilitate SMEs' access to financing from commercial banks through a risk-sharing scheme between the National Guarantee Fund EAD and the Ministry of Agriculture and Food.

• BACB implements the COSME NGF Guarantee Scheme and the European Fund for Strategic Investments (EFSI).

• BACB also applies the guarantee schemes of the Municipal Guarantee Fund for Small and Medium-sized Enterprises to the Sofia Municipality.

• BACB applies a Guarantee Scheme to support SMEs affected by the Covid-19 crisis and the "Recovery" program, jointly with BBR EAD.

• BACB applies a guarantee scheme with the Fund Manager of Financial Instruments in Bulgaria - Portfolio Guarantee with a loss cap to overcome the consequences of the COVID-19 pandemic, programs "Recovery 1 and 2".

• BACB applies a guarantee scheme to support SMEs from the NGF/SME 2022, which enables BACB to provide loans amounting to over BGN 120 million. An extension of the scheme until 2031 has been agreed.

• BACB implements an Agreement to guarantee a portfolio of loans provided under the Bulgarian Development Bank EAD Program to support households by financing investments in energy from renewable sources, in implementation of the National Recovery and Sustainability Plan of the Republic of Bulgaria.

  The Retail Banking business line, which manages the retail segment at BACB, recorded very good results in lending. According to BNB data, as of June 30, 2025, low-risk mortgage loans increased by 7.61% compared to the end of the previous quarter. The growth in mortgage lending is due to the excellent pricing conditions and the Bank's individual customer-oriented approach. Consumer loans, in turn, grew by 9.51% over the same period.

  The market presence in the banking system of the two product segments at the end of June 2025 was 1.21% for mortgage loans and 0.95% for consumer loans, respectively, and the Bank expects them to continue their upward

  trend. In line with BACB's strategy, the goal in the Retail Banking business segment is to achieve further significant growth and reach a 2% market share in the coming years.

  With the high results achieved, the Bank is fulfilling another of its main objectives set out in its retail lending development strategy - to increase the share of loans to individuals in the total loan portfolio, which at the end of the third quarter of 2025 was 31.42%.

  The following initiatives also contribute to the development of the Bank's business with individuals:

• The "Clean Account" payment product for individuals with a VISA card continues to be a leading factor in attracting new customers to the Bank. There is also a functionality for opening a "Clean Account" online, without visiting a bank office.

• Offering of the "L€VROSMETKA" product, aimed at the needs and expectations of customers related to Bulgaria's upcoming accession to the eurozone, which was supported by an advertising campaign.

• The Bank focused on offering two package products for young people, "POP Card" for the age groups "14-18" and "18-25," which were very well received by customers, and with the support of various marketing activities, the popularity of the product increased significantly.During the quarter, the option to open the POP card package product for 18-25 year olds online was developed and implemented.

• In mortgage lending, the Bank is consolidating its position in an extremely competitive market by offering flexible and individual solutions for each customer.

• The development of the "Na miga" loan product continues - a fully online consumer loan that combines speed, convenience, and security thanks to automatic approval and disbursement of funds without visiting a bank office.

• Joint initiatives with POK Doverie AD continue in the Bank's office network and at BACB Express points of sale.

• BACB, in cooperation with Unica AD, offers customers attractive insurance packages when using consumer loans.

• The digital assistant "Bianca" uses the GPT language model to provide customers with complete information 24/7, which significantly increases customer satisfaction.

• The BACB Express quick consumer loan continues to be offered at specialized points of sale in large shopping centers such as malls. Customers can open a "Clean Account" at these locations, taking advantage of their extended working hours, seven days a week.

• BACB is actively working to provide loans to students under the Student and Doctoral Student Loan Act, with a total annual state guarantee limit of BGN 5 million. The credit scheme of the Ministry of Education and Science allows BACB to expand and deepen its cooperation with state institutions in the country, as well as to attract new individual customers - students and doctoral students in accordance with the Bank's development strategy.

In its efforts to be closer to its individual customers and offer them first-class service, BACB offers the option of fully online banking services - online application and opening of a "Clean Account" with a debit card, online opening of a "Everything is Right" and "Online Deposit" deposit account, online "Instant" loans, and online opening of business accounts for small enterprises. Work is underway to digitize mortgage loan applications and other customer processes, as well as to integrate AI solutions to improve the customer experience.

In the third quarter of 2025, the bank recorded a 12% increase in the number of BGN transfers processed and a 22% increase in the number of foreign currency transfers compared to the same period in 2024.

Total fees and commissions collected in the third quarter of 2025 (excluding those from loans and cards) amounted to BGN 3.2 million, representing an increase of 19% compared to the same period of the previous year.

During the reporting period, the positive net result from BACB's card activity amounted to over BGN 591 thousand. For the period, the Bank reported a total of 3,882 issued and renewed debit cards and 330 credit cards. The total turnover realized on POS terminals for the period was over BGN 32 million, which marks a 42% increase compared to the previous quarter and an 11% increase compared to the same period in 2024.

The main focus during the past quarter was the project for the introduction of the euro in the country - tests were conducted and changes were made to the systems, both in terms of the card business and the Bank's remote channels.

Review of activities in the third quarter of 2025

Capital adequacy 23.15 23.80 23.49

*As at the date of issue/publication of this report, the Bank has received permission from the regulatory authority to include the net interim profit as at 30 June 2025 in the amount of BGN 25,156 thousand in the basic Tier 1 capital (Decis ion No. 471 02.10.2025 of the Governing Council of the BNB).

Active operations

As of September 30, 2025, the Group's assets amounted to BGN 2,794,692 thousand, which, compared to the audited data for 2024, shows an increase of BGN 42.1 million, or a growth of 1.5%.

At the end of the third quarter of 2025, the Group reported an increase in its loan portfolio at carrying amount from BGN 150.1 million to BGN 1,917.3 million, or an increase of 8.5% compared to the volume at the end of 2024. Accumulated credit losses and impairment on loans in accordance with IFRS 9 amounted to BGN 72.7 million and provided coverage of 3.8% of the loan portfolio, with a volume at the end of 2024 of BGN 67.9 million, coverage of 3.8% and reported as at 30 June 2025 for the banking system 3.82%. As at 30 September 2025, loan impairments increased by BGN 4.8 million compared to the end of 2024, or an increase of 7.1%.

As at 30 September 2025, the net loan portfolio amounted to BGN 1,844.6 million, accounting for 66% of total assets.

Since the beginning of 2025, the Group has granted new loans amounting to BGN 756 million, while the amount of loans repaid during the same period is BGN 602 million. In the third quarter of 2025, loans amounting to BGN 614 thousand were written off against provisions for impairment.

As at 30 September 2025, loans overdue for more than 90 days accounted for 7.54% of total loans at carrying amount, compared to 8.01% as at 31 December 2024. The share of non-performing loans is above the average for the banking system. The main reason for the higher share is the Bank's sectoral orientation - financing projects in the construction and real estate sector before the global financial crisis. The credit policy applied in recent years and at present focuses on promising and less cyclical economic sectors, aims to achieve effective diversification in terms of sector positioning, size, and maturity, so as to ensure a sustainable basis for development and limit the impact of individual exposures in a particular sector. As a result, and due to the revival in the construction and real estate sectors, the negative effects were gradually minimized and the share of non-performing loans decreased by more than 21 percentage points in the period December 2017 - March 2025. To improve the quality of its loan portfolio, the Bank has developed and implemented a strategy for managing non-performing exposures, including a detailed three-year operational program, the implementation of which is monitored and controlled by the management bodies and adequate control procedures are applied. The strategy for managing non-performing exposures is subject to annual review and update by the Bank's management and supervisory bodies. Regular internal analyses and comprehensive stress tests contribute to the timely assessment of the effects of a possible deterioration in the business environment on the Bank's portfolio.

As at 30 September 2025 the debt and equity financial assets held at fair value through other comprehensive income amounted to BGN 172.2 million, or 6.2% of total assets of BGN 174.6 million, and a share of 6.3% at the end of 2024. The portfolio of securities reported in the consolidated financial statements consists of 63% high-quality government securities of the Republic of Bulgaria, 30% high-quality government securities of foreign governments, and 7% corporate bonds. During the reporting period, one issue with a nominal value of BGN 30.2 million of the Republic of Bulgaria, four issues with a nominal value of USD 30 million of the United States, and one issue of the Republic of France with a nominal value of EUR 5 million were purchased. During the same period, three issues of the Republic of Bulgaria with a nominal value of BGN 22.5 million, one issue of the Republic of France with a nominal value of EUR 5 million, three issues of the United States with a nominal value of USD 20 million and corporate bonds with a nominal value of EUR 2.4 million, and two issues with a nominal value of EUR 10 million of the Republic of France were sold. Capital instruments amount to BGN 4.7 million and include participation in the Bulgarian Stock Exchange for BGN 394 thousand (BGN 314 thousand as at 31 December 2024), shares in a payment services company for BGN 3,254 thousand Paynetix AD, shares in S.W.I.F.T. SC worth BGN 92 thousand, and shares in a company for the development and management of electronic systems in urban transport and parking, Tiksi AD, worth BGN 978 thousand.

As at 30 September 2025, the portfolio of debt instruments carried at amortised cost includes Bulgarian and foreign government bonds with fixed payments and maturities. During the first nine months of 2025, two issues with a nominal value of EUR 10 million of the Republic of France and five issues with a nominal value of USD 25 million of the United States and one issue of the Republic of Bulgaria with a nominal value of BGN 7.5 million mature, The portfolio is supplemented by four issues of US government securities with a total nominal value of USD 20 million, one issue of the Republic of France with a nominal value of EUR 10 million, and one issue of the Republic of Bulgaria with a nominal value of EUR 5 million. As a result, the portfolio of debt instruments reported at amortized cost reached BGN 165 million, compared to BGN 180.3 million at the end of 2024, or a decrease of 8.5%. At the end of the third quarter of 2025, the share of total assets reached 5.9%, compared to 6.6% at the end of 2024.

Since the beginning of 2020, the Bank's investment in Visa Inc. shares, acquired as a result of BACB's membership in VISA Europe, which became the property of VISA Inc., has been reported in the "Financial assets at fair value through profit or loss" item by management decision. This investment is measured at fair value with changes in profit or loss for the period. The initially acquired 560 Class C preferred shares are subject to mandatory conversion into Class A common shares (or Series A preferred shares, where applicable) within a 12-year period, at a specified

ratio, which is subject to review and adjustment over time under certain conditions. The newly issued Class A shares are not subject to restrictions and may be freely transferred. The fair value of the investment in VISA Inc. as at 30 September 2025 amounts to BGN 1,983 thousand, compared to BGN 2,018 thousand as at 31 December 2024.

As at 30 September 2025, the Bank has two subsidiaries - BACB Finance EAD and BACB Trade EAD, which it wholly owns for BGN 3,050 thousand.

As of September 30, 2025, receivables from banks amount to BGN 219.5 million, accounting for 7.9% of total assets, compared to BGN 45.3 million and a share of 1.6% at the end of 2024. The reported increase of BGN 174.2 million compared to the end of 2024 is mainly due to an increase in demand deposits of BGN 3.3 million and term deposits of BGN 171.9 million. Cash on hand and assets held at the central bank decreased by 47.4% to BGN 280.7 million at the end of September 2025. compared to BGN 533.5 million at the end of 2024, and their share in total assets amounted to 10% compared to 19.4% at the end of 2024. The reported decrease is mainly in funds in payment accounts with the BNB.

The Bank's tangible and intangible fixed assets decreased by BGN 2.6 million compared to the end of 2024 to BGN 12 million at book value, and their share in total assets amounted to 0.4%. The volume includes assets with right of use amounting to BGN 6.1 million (2024: BGN 8.2 million).

As at 30 September 2025, the acquired assets classified as "assets held for sale" and "investment properties" amounted to a total of BGN 67.1 million, or 2.4% of total assets, compared to BGN 88.1 million, or 3.2% of total assets, as at 31 December 2024. Since the beginning of the year, "investment properties" amounting to BGN 13,186 thousand and "assets held for sale" amounting to BGN 7,228 thousand have been sold. Assets worth BGN 7,046 thousand have been reclassified from "investment properties" to "assets held for sale." Since the beginning of the year, an impairment loss of BGN 571 thousand has been reported on "investment properties." The sale of the acquired assets, as well as the management and administration of related activities, is handled and managed by a specialized department within the Bank. In order to achieve the set goals for the realization of the acquired assets, the Bank has developed and implemented an asset management strategy for acquired collateral from non-performing exposures, including a detailed three-year operational program, the implementation of which is monitored and controlled by the management bodies. The strategy for managing assets acquired as collateral from non-performing exposures is subject to annual review and update by the Bank's management and supervisory bodies.

Liabilities

As at 30 September 2025, funds attracted from banks amounted to BGN 68 thousand, representing a decrease of BGN 18.2 million compared to the end of 2024 (31 December 2024: BGN 18.2 million).

Funds attracted from companies and individuals increased by BGN 27.6 million to BGN 2,305.8 million as at 30 September 2025 or a 96% share of total liabilities of BGN 2,278.1 million and a 95.1% share at the end of 2024. An increase of 1.2% was generated by growth in funds attracted from individuals and term deposits of non-bank financial institutions.

On December 23, 2022, BACB issued unsecured bonds in the amount of EUR 15 million. The bonds are issued in compliance with the requirements for own funds and eligible liabilities, in accordance with the requirements of the Law on the Recovery and Restructuring of Credit Institutions and Investment Intermediaries. The bonds are ordinary, interest-bearing, book-entry, registered, freely transferable, unsecured, and non-convertible. The issue has a maturity of seven years, with a fixed interest rate payable at 6-month intervals and principal to be repaid in a single payment at maturity.

On June 3, 2024, BACB issued a new issue of ordinary, interest-bearing, book-entry, freely transferable, unsecured, non-convertible, subordinated bonds structured to meet BACB's Tier 2 capital requirements under Article 63 of Regulation (EU) No 575/2013. The bond issue has a total nominal and issue value of EUR 15,000,000. The term of the issue is 120 months, and the principal maturity date is June 3, 2034. The bonds are interest-bearing, with a fixed annual interest rate of 8.0%, and interest is paid in annual coupon payments. The new issue is admitted to trading on a regulated market. The initial date of admission to trading on the Vienna Stock Exchange (Wiener Boerse) was June 21, 2024.

As at 30 September 2025, BACB's bond loan liabilities, including accrued interest, amounted to BGN 59,836 thousand (2024: BGN 60,064 thousand).

The item "other attracted funds" includes a credit line liability from the Bulgarian Development Bank (BDB) under the COSME+ program for targeted financing of micro, small, and medium-sized businesses with an agreed amount of EUR 10 million. As at 30 September 2025, long-term financing from the BBR amounts to BGN 4.8 million, or 0.2% of total liabilities, with a volume of BGN 6.2 million and a share of 0.3% at the end of 2024.

As at 30 September 2025, a decrease of BGN 972 thousand was reported in the "other liabilities" item, and the share of total liabilities decreased to 1.3% (2024 - 1.4%).

Equity

As at 30 September 2025, there were no changes in the share capital.

The item "reserves and retained earnings" increased by the realized profit as at 30.09.2025 in the amount of BGN 34,362 thousand.

The item "revaluation reserves" includes changes in the fair value of debt instruments in the amount of BGN 1,744 thousand and changes in equity instruments in the amount of BGN 1,306 thousand, measured at fair value through other comprehensive income, as well as the revaluation reserve formed on the bank's own buildings used in its operating activities in the amount of BGN 272 thousand. As at 30 September 2025, an increase of BGN 1,023 thousand was reported, formed by an increase in the change in the fair value of debt instruments by BGN 939 thousand and an increase in the fair value of equity instruments by BGN 84 thousand.

As at 30 September 2025, the Group achieved a positive financial result of BGN 34,362 thousand after tax, compared to a reported profit for the same period of 2024 of BGN 42,888 thousand, or a decrease of 19.9%. This is due to a decrease in net operating income before impairment of BGN 10,699 thousand and lower growth in expenses.

A comparison of core business income (interest income) for the two periods shows a decline from BGN 10,423 thousand to BGN 80,568 thousand. The main share of interest income is generated by lending activities (81.7%). Reported income from interbank deposits amounted to BGN 5,319 thousand, compared to BGN 12,703 thousand at the end of September last year. Interest income from securities portfolios increased by BGN 1,034 thousand to BGN 9,437 thousand at the end of September 2025, compared to BGN 8,403 thousand at the end of September 2024.

As at 30 September 2025, interest expenses increased by BGN 1,675 thousand compared to the same period of the previous year and amounted to BGN 14,652 thousand, compared to BGN 12,977 thousand a year ago. An increase is reported in interest expenses to customers of BGN 462 thousand, while expenses under lease agreements reported in accordance with IFRS 16 amount to BGN 205 thousand, or BGN 37 thousand more than a year ago. Interest on debt securities increased by BGN 996 thousand, while interest on other borrowings decreased by BGN 185 thousand.

As at 30 September 2025, net interest income amounted to BGN 65,916 thousand, or BGN 12,098 thousand less than reported for the same period last year, and accounted for 82.4% of total operating income before impairment (2024 - 86.0%).

As at 30 September 2025, the reported net income from fees and commissions is BGN 2,093 thousand more than the reported volume for the same period last year and amounts to BGN 11,933 thousand or 14.9% of total operating income before impairment, compared to 10.8% as at 30 September 2024. The reported increase is due to a larger increase in revenue and a more insignificant increase in fee expenses.

The Bank's shares in Visa Inc., recognized at fair value through profit or loss, generated a positive result at the end of the third quarter of 2025 in the amount of BGN 257 thousand, compared to BGN 214 thousand reported at the end of September 2024. The profit from financial assets at fair value through other comprehensive income amounted to BGN 86 thousand as at 30 September 2

The profit from financial assets at fair value through other comprehensive income amounted to BGN 86 thousand as at 30 September 2025 (2024 - BGN 0).

As at 30 September 2025, foreign exchange revaluation gains amounted to BGN 153 thousand, compared to BGN 44 thousand for the same period of the previous year.

At the end of September 2025, net income from foreign exchange transactions amounted to BGN 3,458 thousand, compared to BGN 2,688 thousand for the same period in 2024.

At the end of the third quarter of 2025, administrative expenses decreased by BGN 2,770 thousand compared to the same period last year, reaching BGN 15.4 million. Personnel expenses increased by BGN 1,614 thousand compared to the end of September last year Administrative expenses include expenses for the Bank Deposit Guarantee Fund (BDGF) and administrative fees to the BNB, the ECB, and the ESM, totaling BGN 1,926 thousand, compared to BGN 2,587 thousand as of September 30, 2024.

Depreciation expenses increased by BGN 390 thousand as at 30 September 2025, including depreciation expenses for tangible fixed assets increased by BGN 223 thousand, depreciation expenses for intangible fixed assets increase by BGN 194 thousand, and depreciation expenses for assets with right of use decrease by BGN 27 thousand.

Expenses for impairment of financial assets and modification decreased by BGN 502 thousand compared to those reported at the end of September 2024 and amounted to BGN 6,937 thousand.

Liquidity and financing of operations

The Bank follows the principles of diversification of funding sources and optimization of interest expenses in implementation of its strategy for securing its liquidity needs.

At the end of the third quarter of 2025, the Bank maintained a good deposit base, reporting a 1.2% increase in customer deposits compared to December 31, 2024. The Bank's active deposit activity contributes to reducing its dependence on external financing.

The ratio of gross loans to customers to customer deposits was 83.2% as at 30 September 2025.

The Bank's liquidity position remains stable, with liquid assets (cash on hand and in accounts with the Bulgarian National Bank, short-term loans and advances to banks, and liquid government securities) amounting to BGN 715.2 million. The ratio of these liquid assets to total deposits (from customers and banks) as at 30 September 2025 is 30.95%.

During the period from the end of 2024 to 30 September 2025, the value of the portfolio of debt instruments at fair value in the Bank's trading book decreased by 1.5% to BGN 167.5 million (2024: BGN 169.9 million). Cash in the BNB, in cash and banks decreased by BGN 252.8 million. During the reporting period, one issue with a nominal value of BGN 30.2 million of the Republic of Bulgaria, four issues with a nominal value of USD 30 million of the United States, and one issue of the Republic of France with a nominal value of EUR 5 million were purchased. During the same period, three issues of the Republic of Bulgaria with a nominal value of BGN 22.5 million, one issue of the Republic of France with a nominal value of EUR 5 million, three issues of the United States with a nominal value of USD 20 million and corporate bonds with a nominal value of EUR 2.4 million, and two issues with a nominal value of EUR 10 million of the Republic of France were sold. At the end of September 2025, the portfolio of debt instruments reported at amortized cost reached BGN 165 million, compared to BGN 180.3 million at the end of 2024, or a decrease of 8.5%.

From the beginning of 2025 to 30 September 2025, new investments in government securities amounting to approximately BGN 153 million were made in the "held for collection of contractual cash flows" portfolio and in the "held for collection of contractual cash flows and sale" portfolio.

As at 30 September 2025, the Bank's government securities portfolio had a carrying amount of BGN 317.7 million (2024: BGN 330.8 million), distributed in the portfolio "held for collection of contractual cash flows and sale" with a carrying amount of BGN 156.5 million and in the portfolio "held for collection of contractual cash flows" with a carrying amount of BGN 161.2 million.

Unrealized gains and losses from the revaluation of debt instruments at fair value in other comprehensive income are deferred in a revaluation reserve, net of taxes. In the period in which the asset is derecognized, the result of the revaluation is included in the profit or loss for the period. From the beginning of 2025 to September 30, 2025, the reported gains in connection with completed investments amount to BGN 86 thousand. Interest income from debt instruments at fair value through profit or loss is recognized on an ongoing basis in profit or loss and amounts to BGN 4,557 thousand for the period from January 1, 2025, to September 30, 2025. Interest income from debt instruments at amortized cost is recognized in profit or loss on an ongoing basis and amounts to BGN 4,880 thousand for the period from January 1, 2025, to September 30, 2025.

Capital resources

At the end of September 2025, the Group reported equity capital adequate to its risk profile and asset quality and sufficient to achieve its strategic objectives and implement its plan for the current year. As at 30 September 2025, the Group reported a total capital adequacy ratio of 23.49%* and a Tier 1 capital adequacy ratio of 21.74%*, significantly above the regulatory requirements.

*As at the date of issue/publication of this report, the Bank has received permission from the regulatory authority to include the net interim profit as at 30 June 2025 in the amount of BGN 25,156 thousand in the basic Tier 1 capital (Decis ion No. 471 / 02.10.2025 of the Governing Council of the BNB).

Information on the main risks faced by the Group is contained in the Annual Management Report for 2024, which has been submitted to the FSC and the public and is available on the Bank's website.

The information below on corporate events/inside information pursuant to Article 7 of Regulation (EU) No 596/2014 is available on the corporate website of BACB AD at the following web address: https://www.bacb.bg/bg/za-investitori/novini-za-investitorite

1. On January 30, 2025, BACB published preliminary unaudited individual and consolidated financial statements as of December 31, 2024, together with the relevant interim management reports and a letter to shareholders.

2. On March 28, 2025, BACB published audited annual financial statements for 2024 on a separate and consolidated basis, together with information on the Bank's financial results for 2024 on a separate and consolidated basis. Detailed information and the full text of the reports are published on the BACB website.

3. On April 24, 2025, BACR - Credit Rating Agency AD publishes information on the upgrade and confirmation of the ratings assigned to Bulgarian-American Credit Bank AD, as follows:

   • Confirmation of the long-term financial strength rating of BB+ and confirmation of its outlook as "Stable", confirmation of the short-term rating of B;

   • Confirmation of the long-term national scale rating of BBB+(BG) and confirmation of the outlook as "Stable", confirmation of the short-term national scale rating of A-2 (BG);

     Financial strength rating	Initial rating as of July 26, 2016	Rating as of 22.04.2024	Rating as of 24.04.2025
     Long-term rating	In	BB+	BB+
     Outlook	Stable	Stable	Stable
     Short-term rating	B	B	B
     Long-term rating on a national scale	B+ (BG)	BBB+ (BG)	BBB+ (BG)
     Outlook	Stable	Stable	Stable
     Short-term rating on a national scale	B (BG)	A-2 (BG)	A-2 (BG)

     The assessment was based on the methodology for assigning ratings to banks officially adopted by the rating agency BAKR - Credit Rating Agency AD (https://bcra.eu/files/bank_methodology_2018_bg.pdf).

     According to the published text, during the period under review, Bulgarian-American Credit Bank AD continued to achieve high financial results, with additional increases in some profitability indicators and favorable positioning of the Bank relative to the average values for the system and the reference groups of banks. There was a slight deterioration in asset quality, related to an increased volume of non-performing loans in the portfolio, which remained at relatively higher levels compared to the system and with a lower degree of coverage with impairment losses. The improvement in capital positions continued, with a further increase in capital adequacy (to levels slightly above the system average and significantly above the minimum requirements), while liquidity was reduced to pre-planned levels (also remaining significantly above the minimum requirements).

     The following factors may have a positive impact on the rating of Bulgarian-American Credit Bank AD resumption of the process of improving the quality of the portfolio and reaching the average standards for the banking system in the country ( ) the stabilization of high levels of operating and financial results, maintaining a favorable position in terms of profitability indicators, and maintaining stable levels of capital adequacy and liquidity.

     A negative impact on the assigned rating could be exerted by a deterioration in the quality of the loan portfolio, a significant decline in capital adequacy and liquidity ratios, a deterioration in the quality of investments, and a contraction in operating and/or financial results.

     The full text of the report is available on the website of BACR - Credit Rating Agency AD: https://bcra.eu/bg/companies/balgaro-amerikanska-kreditna-banka

4. On April 30, 2025, BACB published preliminary unaudited individual and consolidated financial statements as of March 31, 2025, together with the relevant interim activity reports and a letter to shareholders.

5. On May 20, 2025, the regular General Meeting of Shareholders of Bulgarian-American Credit Bank AD, Unique Identification Code BACB20052025AGMS, was held, which adopted the following resolutions:

   1. Approved: (a) the audited Annual Consolidated Financial Statements of BACB for 2024 and the Annual Consolidated Report of the Management Board on the activities of BACB in 2024, accompanied by the Independent Auditors' Report; (b) the audited Annual Financial Report of BACB on an individual basis for 2024 and the Annual Report of the Management Board on the activities of BACB on an individual basis in 2024, accompanied by the Report of the independent auditors; and (c) a report on the implementation of the remuneration policy at BACB AD in 2024.

   2. Adopted a decision that the profit of BACB AD for the 2024 financial year, which after taxation amounts to BGN 48,394,911.33 (forty-eight million three hundred and ninety-four thousand nine hundred and eleven levs and thirty-three stotinki) to remain as "Retained earnings from previous periods".

   3. Ernst & Young Audit Ltd., EIK 130972874, and BDO Afa Ltd., UIC 030278596 as the audit firms to perform a joint independent financial audit of the annual financial statements of Bulgarian-American Credit Bank AD for 2025 on an individual and consolidated basis.

   4. Re-elected for a new three-year term until 2028 the members of the Audit Committee Mr. Martin Boychev Ganev (Chairman of the Audit Committee), Mr. Petar Georgiev Atanasov, and Ms. Sevdalina Velkova Paskaleva.

   In addition to the above, the General Meeting adopted resolutions on the other items on the previously announced agenda, approving the draft resolutions proposed in the Invitation and the materials.

6. On July 30, 2025, BACB published preliminary unaudited individual and consolidated financial statements as of June 30, 2025, together with the relevant interim activity reports and a letter to shareholders.

1. Information on facts and circumstances subject to disclosure pursuant to Annex 4 to Regulation No. 2 of the FSC, which occurred during the reporting period

   There has been no change in the persons exercising control over the Bank:

   There are no open insolvency proceedings against BACB and/or the Bank's subsidiaries .

   Conclusion and execution of significant transactions, including s ignificant transactions with related parties :

   The Bank enters into transactions with related parties only as part of its normal banking business under terms that would be customary in transactions between unrelated parties and include the granting of loans, acceptance of deposits, and securities transactions.

   More detailed information on the transactions concluded and changes in the transactions concluded with related parties, disclosed in the annual financial statements and having a material impact on the financial position or results of the Bank's operations during the nine months of 2025 (if any) is contained in the section "Transactions with related parties" of the Accounting Policy and the selected explanatory notes as at 30.09.2025.

   No decisions have been made to enter into, terminate, or cancel a joint venture agreement. There has been no change in the auditors of BACB and its subsidiaries .

   No legal or arbitration proceedings have been initiated or terminated against the Bank and/or its subsidiaries relating to liabilities or receivables of the Bank or its subsidiaries , with a claim value equal to or exceeding 10% of the Bank's equity.

   In connection with its usual activities of active management and collection of non-performing credit exposures, the Bank initiates and conducts enforcement proceedings and/or insolvency proceedings against borrowers/debtors for the compulsory collection of overdue receivables.

   Purchase, sale, or pledge of equity interests in commercial companies

   During the period, BACB and/or its subsidiaries did not purchase or sell any shareholdings and did not establish any pledges on their shares in commercial companies.

2. Information on changes in BACB's accounting policy

   In 2025 BACB consistently applied the accounting policy disclosed in the audited annual financial statements for 2024, taking into account the amendments to IFRS adopted by the EU and effective for annual periods beginning on or after January 1, 2024, as specified in the explanatory notes to the annual financial statements for 2024.

3. Information on changes in the group of companies of BACB

   During the reporting period, there were no changes in the group of companies of BACB.

4. Information on organizational changes

   During the reporting period, no organizational changes were made within the meaning of Article 12, paragraph (1), item 4, letter "c" of Regulation No. 2 of the FSC.

5. Forecasts for the results of the current financial year

   BACB AD does not publish forecasts for its results.

6. Information on persons holding directly or indirectly at least 5% of the votes at the general meeting of shareholders and changes in the votes held by these persons compared to the previous reporting period:

   Shareholder	Number of shares held (directly and/or indirectly) as at 30.09.2025	Percentage of votes at the General Meeting of Shareholders as of 30.09.2025	Number of shares held (directly and indirectly) as at 30 June 2025	Percentage of votes in the General Meeting of Shareholders as at 30 June 2025
   CSIF AD	Directly holds 11,277,473 shares	45.68	Directly owns 11,277,473 shares	45.68
   Tsvetelina Borislavova Karagyozova - directly and indirectly as a person exercising	Directly owns 2,465,000 shares	9.98%	Directly holds 2,465,000 shares	9.98

   control over the direct shareholder CSIF AD (holds 99.99% of the shares of CSIF AD) and	Indirectly (through the controlled SIESAYEF AD) owns 11,277,473 shares	45.68%	Indirectly (through the controlled company SIESAYEF AD) owns 11,277,473 shares	45.68%
   LTBI Holdings LLC (El Ti Bi Ai Holdings El El Si)	8,824,775	35.74	8,824,775	35.74

   The above information is derived from (1) the shareholders' register maintained by Central Depository AD, (2) the data from the notifications received for disclosure of shareholdings under Articles 145 and 146 of the Public Offering of Securities Act, and (3) the powers of attorney and accompanying founding documents of BACB shareholders provided in connection with the General Meetings of Shareholders.

7. Data on the shares held by members of the management and control bodies of BACB AD and changes in the votes held by individuals compared to the previous reporting period

   Name	Member of a management or supervisory body	Number of shares directly held as at 30.09.2025	Percentage of votes at the General Meeting of shareholders as of 30.09.2025.	Number of directly held shares as at 30 June 2025	Percentage of votes at the General Meeting of shareholders as at 30 June 2025.
   Tsvetelina Borislavova Karagyozova	Chair of the Supervisory Board	2,465,000	9.98	2,465,000	9.98
   Silvia Kirilova Kirilova	Member of the Management Board	1,600	0.006	1,600	0.006

8. Information on pending court, administrative, or arbitration proceedings concerning liabilities or receivables amounting to at least 10% of the Bank's equity

   The Bank and/or its subsidiaries are not parties to any pending court, administrative or arbitration proceedings concerning liabilities or receivables amounting to 10% or more of the Bank's equity. In connection with its usual activities of active management and collection of non-performing credit exposures, the Bank initiates and conducts enforcement proceedings and/or insolvency proceedings against borrowers/debtors for the compulsory collection of overdue receivables.

9. Information on loans granted

BACB is a credit institution (bank) licensed and regulated by the BNB with a full license to provide all banking services under Article 2 of the Credit Institutions Act, with its main activity being the provision of loans or other financing at its own expense and risk and the public attraction of deposits or other repayable funds.

BAKB's subsidiary, BAKB Finance EAD, is entered in the public register of the BNB as a financial institution whose main activity is under Article 3 of the Credit Institutions Act, including the granting of loans that are not raised through the public solicitation of deposits or other repayable funds.

The annual and interim financial statements of BACB contain detailed information and financial data on the portfolio of loans granted by BACB or its subsidiaries, large exposures within the meaning of the Credit Institutions Act, and the quality of the Bank's credit assets.

Iliyan Georgiev Loreta Grigorova

Chief Executive Officer Executive Director