3M 2011 IFRS Results

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3M 2011 IFRS Results

  1. 1. Q1 2011 IFRS ResultsPost crisis upturn, step by stepMay 19, 2011
  2. 2. Financial highlights Q1’11 Q4’10 Q1’10 QoQ YoYGross loan portfolio 126,036 115,236 95,427 +9.4% +32.1%Client funds 136,874 130,334 119,256 +5.0% +14.8% L/D 92.1% 88.4% 80.0% +3.7 pps +12.1 pps NPLs 11,061 12,078 10,555 -8.4% +4.8%NPLs as % of loan portfolio 8.8% 10.5% 11.1% -1.7 pps +2.3 ppsCapital adequacy 14.1% 15.2% 18.2% -1.1 pps -4.1 ppsNet interest income 1,364 1,403 1,458 -2.8% -6.4%NIM 3.2% 3.5% 4.0% -0.3 pps -0.8 ppsNet fee income 1,006 1,089 827 -7.6% +21.6%Operating expenses (1,798) (2,252) (1,531) -20.2% +17.4%Net income 317 184 97 +72.3% +227%ROE 7.5% 4.4% 2.4% +3.1 pps 5.1 pps 2
  3. 3. Assets Growing share of loans Risk averse policy on currency riskRUB bln We stick to the strategy 174 166 of having no currency 148 156 RUB mismatches between 147 34 Cash and 33 equivalents assets and liabilities 28 34 Due from focusing mainly on 37 6 17 banks 1 14 USD 6 18 18 16 Securities 11% ruble-nominated assets 11 16 13 14 81% 13 Retail loans 8% 89 98 Corporate Other 73 79 80 loans Other assets 8 9 9 8 9 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 *Based on monetary assets and liabilitiesIEA represent 75% of total assets LTD ratio improving RUB bln Other assets Cash and Customer funds Gross loans L/D ratio equivalents 5% 19% Due from other 92% 87% 88% 84% banks 10% 80% Securities 57% 9% Corporate loan 95 119 102 118 106 125 115 130 126 137 Retail loan portfolio portfolio Q110 Q210 Q310 Q410 Q111 3
  4. 4. Loans and advances Impressive growth… …beating the banking sector… SME Individuals Administrations Large corporates +32.1% VZRZ Sector +9.4% YoY +34.1% +16.3% 34,2 Total Loans 30,7 QoQ +10.0% +2.3% 24,4 25,9 19,1 8,5 8,0 8,4 7,3 8,1 17,5 YoY +34.9% +15.7% 13,7 14,4 15,2 16,6 Corporate Loans QoQ +10.8% +2.2% 65,9 54,6 55,4 57,2 59,8 YoY +29.4% +18.6% Retail Loans QoQ +5.5% +2.6%Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 …in key regions… …across the economy sectors… …in our niche of SMEs. *as of 31.03.2011 *as of 31.03.2011 Other Individuals TransportMoscow Oblast 8% Agriculture Manufacturing(43%) 6% SME 54 702 4% 27% Construction 26% 8% Large RUB RUB 52% corporate 4% 126,036 126,036 51 234 Regional mln. mln 7% authorities Other 14% 20 100 23% regions Individuals 14% 7% Moscow (16%) (41%) Wholesale & retail trade State organizations 4
  5. 5. Liabilities Resilient funding base… … with high share of interest-free fundingRUB bln Retail deposits 166 174 148 147 156 Retail accounts Current accounts/ 70 Corporate Liabilities 29.4% accounts 69 Corporate 59 63 66 deposits Securities 15 issued 13 17 15 14 Due from other 31 25 24 26 28 21 banks Other Liabilities Customer accounts/ 23 17 18 17 6 7 Subordinated Liabilities 87.0% 5 4 5 8 8 loans 4 5 4 4 4 Equity 16 16 17 17 17 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Strengthening long-term resources Maturity gap Rub bln Less than 1 month Q1 2011 1-6 months Q4 2010 10 Net liquividity gap (Assets-Liabilities) 6-12 months Over 12 months 5 25% 35% 20% 38% 5 5 3 0 (3) -5 19% 15% 25% 23% -10 On demand and 30-180 days 180 days -1 year over 1 year less than 30 days 5
  6. 6. Credit quality managementNPLs dynamics Annualized cost of risk NPLs, RUB mln * Charges to provisions to Provisions, % of total portfolio avg gross loans, QoQ NPLs, % of total portfolio Charges to provisions to 11,06% 2,70% avg gross loans, YtD 10,98% 2,63% 2,51% 10,55% 10,48% 10,68% 2,63% 2,66% 10,52% 10,44% 9,71% 9,15% 2,22% 1,83% 1,16% 11 592 12 078 8,78% 1,16% 10 555 10 814 11 061 0,01% Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011* NPL includes the whole principal of loans at least one day overdue either onprincipal or interest as well as not overdue loans with signs of impairment NPLs categorization: improvements in SME and large corporate segments SMEs Large corporate Retail RUB mln - 490 recoveries - 154 recoveries +568 new NPLs - 1 312 recoveries 9,3% 9,5% +371 new NPLs 13,8% 13,9% 8,4% 12,9% 9,3% 12,1% 11,2% 8,0% 7,3% 7,0% 13,4% 6,4% 7,6% 6,4% 7,1% 12,3% 12,9% 12,1% 6,4% 5,6% 7,2% 11,6% 6,4% 6,2% 6,2% 4,1% 8 426 8 605 8 155 8 117 8 195 3,2% 2 936 4,6% 1 279 1 359 1 277 1 025 1 242 2 160 1 624 850 850Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 NPLs, RUB mln Provisions, % of total loans NPLs, % of total loans 615
  7. 7. Credit quality Large SMEs Mortgages Other Total % of as of 31.03.2011 corporate retail total loans Provisions to NPLs RatioGross loans, including 104% 35,205 73,357 10,538 6,936 126,036 100.0% Current loans 33,581 65,162 9,884 6,348 114,975 91.23% Past-due but not 0.5% impaired, of them 0 98 419 119 636 Provisions to Less than 90 days - 98 364 107 569 0.45% 90+ days NPLs Over 90 days - - 55 12 67 0.05% Impaired, of them Less than 90 days 1,624 774 8,097 965 235 1 469 26 10,425 1,766 8.27% 1.4% 132% Over 90 days 850 7,132 234 443 8,659 6.87%Total NPLs 1,624 8,195 654 588 11,061 8.77% Rescheduled LoansProvisions 8.2% - 1,985 - 8,475 - 501 - 577 -11,538 9.15%Net Loans 33,220 64,882 10,037 6,359 114,498 - the whole amount of loans with principal overdue for more than 1 day, loans NPL - with any delay in interest payments as well as not past-due loans with signs of impairment. 7
  8. 8. Q1 2011 Profit and Loss development Q1’11 Q4’10 Q1’10 QoQ YoY Interest income 3,146 3,263 3,641 -3.6% -13.6% Interest expense (1,782) (1,860) (2,183) -4.2% -18.4% Fee and commission income 1,092 1,204 900 -9.3% +21.3% Fee and commission expense (86) (115) (73) -25.2% +17.8% Other operating income 169 122 59 +38.5% +186% Total operating income 2,539 2,614 2,344 -2.9% +8.3% Operating expenses (1,798) (2,252) (1,531) -20.2% +17.4% Provisions (350) (3) (625) x117 -28.6% Provisions on non-core assets 5 (121) - Tax (79) (54) (91) +46.3% -13.2% Net profit 317 184 97 +72.3% +227% 8
  9. 9. Operating income development Though interest rates continued to lower… …restraining NIM growth…Rub bln NIM -13.6% Interest Spread Interest Expenses Yield on earning assets (net) -3.6% Interest Income Cost of funds 14,1% 12,9% 11,6% 11,0% 3,6 3,5 3,2 3,3 3,1 9,8% 7,4% 6,5% 5,6% 5,8% -2,2 -2,1 -2,0 -1,9 -1,8 5,1% 6,7% 6,4% 6,0% 5,2% 4,7% -4.2% 4,0% 3,7% 3,3% 3,5% 3,2% -18.4% Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011…core income growth was driven by fees. Charges to provisionsRub bln Rub bln +8.3% Net interest income Net fees Other income -2.9% 0,1 0,2 0,1 0,1 0,2 0,7 0,6 0,6 0,8 1,0 1,1 1,0 1,0 0,4 1,5 1,4 1,3 1,4 1,4 0,0 Q1’10 Q2’10 Q3’10 Q4’10 Q1’11 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 9
  10. 10. Fees and commissionsStrong non-interest income based on long-term Net fee income distributionrelations with customers Settlements Cash transactions Other Cards RUB mln Share of non-interest +21.6% income in total operating vbank -7.6% income b.p. 46% peer 1 1 089 peer 2 1 044 1 006 975 peer 3 308 335 827 292 292 26% 257 18% 170 190 196 159 15% 138 262 248 277 230 Net fee margin 214 2,4% 218 276 304 287 288 0,0% 1,0% 2,0% 3,0% 4,0%* Vbank data as of 1Q’11, Peer1, Peer2, Peer 3 - FY2010 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Non-interest income breakdown by segments Key points Vbank’s share of net fee income in total operating income Q1 2011 Q4 2010 before provisions remained one of the highest among Russian banks and stood at 40% in Q1 2011 while fee margin was 2,4%, Financial Corporate Others Corporate which is also higher than for our peers. business Financial business 3% 1% Fees and commissions demonstrated robust growth 3% of 22% YoY and remained well-diversified across different 26% 25% banking products with main contribution from settlements Cards and banking cards. Cards 57% 57% Corporate business continued to be the driver of fee income 14% 14% with 57% of fees generated followed by 26% from bankingRetail business Retail business cards business and 14% from retail segment. 10
  11. 11. Costs and efficiency Operating expenses breakdown Stuff evolutionRUB mln 17.4% Average headcount per quarter (people) 70 2 252 -20.2% Staff costs per average employee (000 RUB) 60 1 798 50 1 531 41% 40 41% Non- HR 6 107 6 146 6 146 6 164 6 164 30 43% 20 59% 57% 59% HR 10 0 Q1 2010 Q4 2010 Q1 2011 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Cost-to-Income ratio ROE and ROA development 7,5% ROE ROA 72,3% 72,6% 70,8% 62,7% 4,4% 4,3% 52,7% 48,7% 2,9% 2,4% 0,5% 0,5% 0,7% 0,3% 0,3% * 2006 2007 2008 2009 2010 Q1 2011 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 *2006 - less extraordinary items 11
  12. 12. Key 1st quarter trends Corporate loan portfolio of RUB 98 102 mln up by 10.8% QoQ.Defense of Retail loan portfolio of RUB 16 396 mln up by 5.5 % QoQ.market niche Fees and commissions grew by 22% YoY and comprised 40% of revenue. First time since 2008 NPLs contracted in absolute terms: Rub -1 bln QoQ:Asset quality • from 12.1% to 11.2% in SME segment,improvement • from 9.3% to 4.6% in large corporate segment. Total NPL ratio declined by 2.3pps over the year from 11.1% to 8.8%. Net income of Rub 317 mln, up 3.2 times YoY.Profitability is on ROE improvement is on track - from 4.4% to 7.5% QoQ.track Cost to income of 70.8% is still high and creates room for optimization. 12
  13. 13. DisclaimerSome of the information in this presentation may contain projections or other forward-looking statements regarding future events or thefuture financial performance of Bank Vozrozhdenie (the Bank). Such forward-looking statements are based on numerous assumptionsregarding the Bank’s present and future business strategies and the environment in which the Bank will operate in the future.The Bank cautions you that these statements are not guarantees of future performance and involve risks, uncertainties and other importantfactors that we cannot predict with certainty. Accordingly, our actual outcomes and results may differ materially from what we haveexpressed or forecasted in the forward-looking statements. These forward-looking statements speak only as at the date of this presentationand are subject to change without notice. We do not intend to update these statements to make them conform with actual results.The Bank is not responsible for statements and forward-looking statements including the following information:- assessment of the Bank’s future operating and financial results as well as forecasts of the present value of future cash flows and relatedfactors;- economic outlook and industry trends;- the Bank’s anticipated capital expenditures and plans relating to expansion of the Bank’s network and development of the new services;- the Bank’s expectations as to its position on the financial market and plans on development of the market segments within which theBank operates;- the Bank’s expectations as to regulatory changes and assessment of impact of regulatory initiatives on the Bank’s activity.Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materiallyfrom those expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include:- risks relating to changes in political, economic and social conditions in Russia as well as changes in global economic conditions;- risks related to Russian legislation, regulation and taxation;- risks relating to the Bank’s activity, including the achievement of the anticipated results, levels of profitability and growth, ability to createand meet demand for the Bank’s services including their promotion, and the ability of the Bank to remain competitive.Many of these factors are beyond the Bank’s ability to control and predict. Given these and other uncertainties the Bank cautions not toplace undue reliance on any of the forward-looking statements contained herein or otherwise.The Bank does not undertake any obligations to release publicly any revisions to these forward-looking statements to reflect events orcircumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required under applicable laws. 13

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