Circular to Banks and Financial Institutions No. 2024-01 of January 19, 2024

1 Tunis, January 19, 2024 CIRCULAR TO BANKS AND FINANCIAL INSTITUTIONS No. 2024-01 Subject: Classification, risk coverage, and monitoring of commitments. The Governor of the Central Bank of Tunisia, Having regard to Law No. 2016-35 of April 25, 2016, establishing the status of the Central Bank of Tunisia, Having regard to Law No. 2016-48 of July 11, 2016, on banks and financial institutions, Having regard to Circular No. 91-24 of December 17, 1991, on classification, risk coverage, and monitoring of commitments, as amended and supplemented by subsequent texts, notably Circular No. 2023-02 of February 24, 2023, Having regard to Circular No. 2006-19 of November 28, 2006, on internal control, Having regard to Circular No. 2017-06 of July 31, 2017, on accounting, prudential, and statistical reporting to the Central Bank of Tunisia, Having regard to Circular No. 2021-05 of August 19, 2021, on the governance framework for banks and financial institutions, Having regard to Opinion No. 2024-01 of the Compliance Control Committee dated January 17, 2024, as provided for in Article 42 of Law No. 2016-35 of April 25, 2016, establishing the status of the Central Bank of Tunisia. Decides:

2 Article 1 - Annex III to the aforementioned Circular No. 91-24 is repealed and replaced by the annex to this circular. Article 2 - This circular enters into force from its publication date, and its provisions apply to the fiscal year 2023 and subsequent years. THE GOVERNOR, Marouane EL ABASSI

3 Annex to Circular No. 2024-01 of January 19, 2024 Annex III (new) to Circular No. 91-24 of December 17, 1991 Methodology for determining collective provisions This methodology is based on the following steps: I. Determination of the calculation base for collective provisions Gross commitments by disbursement and off-balance-sheet commitments, excluding notified but unused credits, classified as 0 and 1 at the end of the reference year designated "Nr". Commitments towards banks, financial institutions as defined by Law No. 2016-48, and microfinance institutions established as joint-stock companies are excluded. II. Grouping of commitments 0 and 1 into homogeneous groups The target population's commitments are grouped by customer segment and economic sector. • Commitments to private sector professionals

• Agriculture
• Mechanical and electrical industries
• Agro-food industries, including oil processing
• Pharmaceutical industries
• Other industries
• Construction and public works (BTP)
• Tourism, including travel agencies
• Real estate development
• Commerce
• Health
• Telecommunications and ICT (TIC)
• Other services, including car rental agencies • Public counterparties
• State-owned enterprises operating in competitive sectors

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• Other public bodies • Individuals (Particuliers)
• Private sector individuals: Housing loans
• Private sector individuals: Consumer credit
• Public sector individuals: Housing loans
• Public sector individuals: Consumer credit Banks and financial institutions must ensure, within the framework of this grouping, the homogeneity of the groups. III. Determination for each counterparty group designated "gi" of an estimated average migration rate over the most recent 7-year history, including the reference year and excluding the year 2020. TMgi (N) = Additional risk of group i in year (N) / Commitments 0 and 1 of group i at the end of year (N-1) × 100 TMMgi = ∑ TMgi(N) / n (from N=1 to n) Where:
• TMgi(N): Migration rate of year N for counterparty group i.
• Additional risk of group i: Commitments 0 and 1 from year (N-1) for group i that became classified as 2-3-4 by the end of year (N).
• TMgi(N) must be adjusted to eliminate exceptional effects that may cause bias.
• TMMgi: Historical average migration rate of counterparty group i.
• n: Number of years retained in the calculation of TMMgi. IV. Increase (Mark-up) of historical average migration rates The historical migration rates for counterparty group "gi" are increased by the rates "Δgi" as follows: Counterparty Group | Δgi Private Sector Professionals Agriculture 6.50% Mechanical and electrical industries 2.75% Agro-food industries, including oil processing 2.25%

5 V. Application of standard provisioning rates "TPgi" The standard provisioning rates "TPgi" are as follows: Pharmaceutical industries 0.25% Other industries 3.50% Construction and public works (BTP) 6.00% Tourism, including travel agencies 7.50% Real estate development 6.50% Commerce 3.00% Health 1.00% Telecommunications and ICT (TIC) 0.75% Other services, including car rental agencies 3.75% Public Counterparties State-owned enterprises operating in competitive sectors 6.00% Other public bodies 2.50% Individuals (Particuliers) Private sector individuals: Housing loans 1.50% Private sector individuals: Consumer credit 2.50% Public sector individuals: Housing loans 0.50% Public sector individuals: Consumer credit 0.75%

Counterparty Group | TPgi Private Sector Professionals Agriculture 40% Mechanical and electrical industries 40% Agro-food industries, including oil processing 40% Pharmaceutical industries 40% Other industries 40% Construction and public works (BTP) 40% Tourism, including travel agencies 40% Real estate development 30% Commerce 40% Health 40% Telecommunications and ICT (TIC) 40% Other services, including car rental agencies 40% Public Counterparties State-owned enterprises operating in competitive sectors 40% Other public bodies 40% Individuals (Particuliers) Private sector individuals: Housing loans 20% Private sector individuals: Consumer credit 40%

6 The mark-up rates "Δgi" and the standard provisioning rates "TPgi" must be applied by banks. Financial institutions may, following prior approval from the Central Bank of Tunisia and based on a reasoned report, adopt mark-up rates "Δgi" and/or provisioning rates "TPgi" lower than those indicated above. VI. Calculation of the amount of collective provisions "PC" on commitments 0 and 1 Collective provision for group i: PCgi = Commitments 0 and 1 of group i × (TMMgi + Δgi) × TPgi Global collective provision: Sum of collective provisions by group: ∑ PCgi (from i=1 to n) The amount of collective provisions must be reviewed on each annual financial statement closing date. The target population and the TMMgi must be recalculated annually. Public sector individuals: Housing loans 20% Public sector individuals: Consumer credit 40%