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Sberbank Investor Day_2013


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Sberbank Investor Day_2013

  1. 1. Sberbank Investor DayPresentation
  2. 2. DisclaimerSberbank Investor Day Page 13rd and 4th April 2013This presentation has been prepared by Sberbank of Russia (the “Bank”) and has not been independently verified. This presentation does not constitute or form part or all of, and should not beconstrued as, any offer of, or any invitation to sell or issue, or any solicitation of any offer to purchase, subscribe for, underwrite or otherwise acquire, or a recommendation regarding, any shares orother securities representing shares in, or any other securities of the Bank, or any member of the Bank’s group, nor shall it or any part of it nor the fact of its presentation or distribution form thebasis of, or be relied on in connection with, any contract or any commitment whatsoever or any investment decision. The information in this presentation is confidential and is being provided to yousolely for your information and may not be reproduced, retransmitted or further distributed to any other person or published, in whole or in part, for any purpose.This presentation is not an offer of securities for sale in the United States nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever.The Bank has not registered and does not intend to register any shares, or other securities representing shares, in the United States or to conduct a public offering of any securities in the UnitedStates. The shares, or other securities representing shares, may not be offered or sold in the United States except pursuant to an exemption from, or transaction not subject to, the registrationrequirements of the US Securities Act of 1933, as amended.This presentation is only being distributed to and is only directed at (A) persons in member states of the European Economic Area (other than the United Kingdom) who are “qualified investors”within the meaning of Article 2(1)(e) of Directive 2003/71/EC (as amended and together with any applicable implementing measures in that member state, the “Prospectus Directive”) (“QualifiedInvestors”); (B) in the United Kingdom, Qualified Investors who are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order2005 (the “Order”) and/or high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order; and (C) such other persons asto whom this presentation may be lawfully distributed and directed under applicable laws (all such persons in (A) to (C) above together being referred to as “relevant persons”). The shares, orother securities representing shares, are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevantpersons. Any person who is not a relevant person should not act or rely on this presentation or any of its contents.This presentation does not constitute an offer, or an invitation to make offers, sell, purchase, exchange or otherwise transfer the securities in Russia or to or for the benefit of any Russian personor entity, and does not constitute an advertisement of the securities in Russia. Any foreign securities representing shares have not been and will not be registered in Russia or admitted to publicplacement and/or public circulation in Russia. Any foreign securities representing shares are not intended for “placement” or “circulation” in Russia except as permitted by Russian law.The information in this presentation or in oral statements of the management of the Bank may include forward-looking statements. Forward-looking statements include all matters that are nothistorical facts, statements regarding the Bank’s intentions, beliefs or current expectations concerning, among other things, the Bank’s results of operations, financial condition, liquidity, prospects,growth, targets, strategies, and the industry in which the Bank operates. By their nature, forward-looking statements involve risks and uncertainties, because they relate to events and depend oncircumstances that may or may not occur in the future. The Bank cautions you that forward-looking statements are not guarantees of future performance and that its actual results of operations,financial condition and liquidity and the development of the industry in which the Bank operates may differ materially from those made in or suggested by the forward looking statements containedin this presentation or in oral statements of the management of the Bank. In addition, even if the Bank’s results of operations, financial condition and liquidity and the development of the industry inwhich the Bank operates are consistent with forward-looking statements contained in this presentation or made in oral statements, those results or developments may not be indicative of results ordevelopments in future periods.Sberbank assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason.The information and opinions contained in this presentation or in oral statements of the management of the Bank are provided as at the date of this presentation or as at the other date if indicatedand are subject to change without notice.No reliance may be placed for any purpose whatsoever on the information contained in this presentation or oral statements of the management of the Bank or on assumptions made as to itscompleteness.No representation or warranty, express or implied, is given by the Bank, its subsidiaries or any of their respective advisers, officers, employees or agents, as to the accuracy of the information oropinions or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents.This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where suchdistribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.By attending or reviewing this presentation, you acknowledge and agree to be bound by the foregoing.**NOT FOR RELEASE OR DISTRIBUTION OR PUBLICATION IN WHOLE OR IN PART IN OR INTO AUSTRALIA, CANADA OR JAPAN**
  3. 3. Building on oursuccess
  4. 4. Most NotedAchievementsin 2012Sberbank Investor Day Page 33rd and 4th April 2013Complementing productrange by IBGM services viaintegration with Troika Dialogand the formation of SberbankCIBSPO of 7.6% of theBank’s shares raisesUSD 5.2 bnNet ProfitRUB 347.9 bnFoundation of joint RussianPOS finance bank withCetelemAccess to fast-growingTurkish banking marketthrough acquisitionof DenizBankROE24.2%New level of services throughbranch reformatting andonline solutionsEstablishment ofSberbank Europe AG on the baseof ex-VBI platform – entranceticket to 7 CEE banking marketsEPSRUB 16.03Cross-country rollout of CreditFactory completed for Retailand SMECentralization of IT platformprogresses on trackand will be completedin 2015Started developing the Bank’sNewStrategy for beyond 2014
  5. 5. Sberbank’sStrategy till 2014:*Status ofImplementationSberbank Investor Day Page 4Market Position Financial TargetsQualitative Indicators International Markets3rd and 4th April 2013Comprehensivetransformationinto one of theleading globalfinancialinstitutionsMarket share of the entire Russian bankingsystem targeted at 25-30%Substantial strengthening of the Bank’scompetitive position in the majorityof productsIncrease after-tax profit 2.5-3.0 timesfrom 2007 levelsDecrease cost-income ratio to 40% (underRussian Accounting Standards)Sustain ROE above 20%Achieve headcount of200 000 - 220 000 employeesLeading skills and capabilities onthe market (client relationships,risks, SPS (Sberbank Production System),efficiency gains)Maintain current market position in theretail deposits marketHighly qualified employeesStrong brand and loyal customersStrong corporate cultureEffective and reliable systems and processesTarget market share of >5% in Ukraine,Kazakhstan and BelarusBuild a foothold in Chineseand Indian marketsEntrance to CEE market* Approved by the Supervisory Board on 21 October 2008Receive 5-7% of net income frominternational operations, mainly in the CIS
  6. 6. Sberbank’sStrategy till 2014:Status ofImplementationSberbank Investor Day Page 53rd and 4th April 20131. Service-oriented companyand customer focus— New customer segmentation and service models introduced— Customer service quality index 93% (retail)— New product lines developed & introduced— Loan underwriting optimizedTargets Achievements2. IndustrializationNew IT platform— IT platform centralization on the way— Risk function enhanced & centralized— Centralization and streamlining of support functions in progress3. Sberbank ProductionSystem (SPS) as theBank’s new philosophy ofmanagement— SPS implemented across retail network, productivity growth 30%— New approach to work in branch offices: flexible schedules, ‘universal’tellers, active sales, etc.— Ongoing improvement projects launched in various functional areas: IT,HR, Legal, Property Department, etc.4. Building upinternational presence— Present in 20 countries (Group), foothold in India and China, promisingstart in CEE & Turkey— International assets >12% of the Group’s total assets (2012)5. People — Motivation based on comprehensive performance evaluation— Career & Personal development planning introduced— Corporate University launched
  7. 7. StrategicassumptionsSberbank Investor Day Page 63rd and 4th April 2013Russia remains main home marketRussian market will grow further but at a slower paceCompetition is intensifyingOur advantages: We strive for:— depth of client relationships— cost efficiency— improvement in key management systemsand processes— building IT as a source of future competitiveadvantage— effective integration of new assets— strong brand— customer franchise— network breadth andcapillarity— solid financingProfound changes in customer behaviour and competitive landscapedriven by technology
  8. 8. Key Elementsof the BusinessModel beyond2014New Strategy2014–2018Sberbank Investor Day Page 73rd and 4th April 2013СlientownershipMaximumsimplificationDistinctive HR modeland managementdevelopment processCostefficiencySignificant technologyinvestmentWorld class matureorganizationalprocesses and systemsFinancial Objectives
  9. 9. "ClientOwnership"as a New Sourceof GrowthCorporate Micro & Small CorpHigh growth opportunitiesthrough client acquisition— Acquire new clients through current account opening orgranting a loan— Develop high-quality (reliable, fast, functional) transaction platformMedium & Large Corpa lot of relationships but lowwallet share— Install reliable and functional transaction platform— Offer sophisticated products for larger customers, more speedy servicefor medium ones— Focus on cross-sellingCIB Customersclient base potential notfully exploited— Implement integrated coverage model— Employ proactive cross-selling approach supported by robust account planning— Introduce holistic pricing, develop client analysis tools and step up marketinginitiativesSberbank Investor Day Page 83rd and 4th April 201364245126763626142624897N/A429312Share notrelevant32491460132813Sberbank Market Share*, %Number of clientsCredit portfolioDeposits andcurrent accountsWallet shareVolumesMicro Small Medium Large Largest TOTALWe striveto become:— The service provider of choice for our customers— Focus on depth and continuity of client relationships— Building a reliable and convenient customer experience*Source: Sberbank’s internal assessment
  10. 10. "Сlientownership"as a new sourceof growthRetailSberbank Investor Day Page 93rd and 4th April 2013Over 110 million clientsMany with limited activity“Wallet share” to be improved— Develop deep understanding ofcustomer financial needs and abilitiesthrough intensive data mining— Improve client relationship via“anchor” product offering, strengthened bycustomized solutionsChallenges Possible solutionsCost efficiency formass segment— Reduce servicing costs by cutting manualtransactions, gradual move toward “cash-free environment”, minimizing operationalerrors— Well-trained sales force fromex-operational staffWe striveto become:— The service provider of choice for our customers— Focus on depth and continuity of client relationships— Building a reliable and convenient customer experienceGaining momentum in cross-sell*6225533314,430Revenue poolNumber of clients, activeVIPMassaffluentMass33%36%25%6%23%51%26%25%43%32%Inactive 1 Product per client 2 products per client 3 products per clientMass Mass affluent – Premier VIP - Sberbank First*Source: Sberbank’s internal assessment, based on selected pool of dataSberbank’s market share, %
  11. 11. Cost efficiency asa source ofprofitabilityDevelopment oflong-term strategyfor cost optimization applying comprehensive set of levers e.g.▪ optimization of regional network structure,▪ improved real-estate management,▪ efficient branch reformatting,▪ “digitalization”,▪ centralization and streamlining of support functions, etc.Building effective costmanagement system▪ improved processes▪ increased responsibility▪ transparency & controlOptimization ofsourcing strategiesfor service & equipment categories to significantly improvepurchasing spendProgram targets embedded in motivation systemSberbank Investor Day Page 103rd and 4th April 2013Systematic efforts to decrease Cost-to-income ratioto 40-45% by 2018. We have started:
  12. 12. Next phase in strategic cost management: positive “jaws”,new cost management framework55% 49% 35% 42% 47% 49%2007 2008 2009 2010 2011 2012 2013Sberbank Investor Day Page 113rd and 4th April 2013More sophisticatedapproach tocost efficiency2014 2015-201840–45%Radicalcost cutsStart “obvious”strategic investments“Broad front”investmentRationing and prioritisationHarmonise rate of spend withpace of income growthMore sophisticated prioritisationof projectsFully loaded cost basis for greatercontrol by front line businessesGreater leverage of economiesof scalePeopleBranchesITProcessesRetail “lending factory”Back office consolidationProcess optimisations(SPS)Staff cuts: 40 000Cost–to-incomeNominal cost growth
  13. 13. Sberbank Investor Day Page 123rd and 4th April 2013What is next?Creating shareholder value throughcontinuing innovation— Sberbank has strong potential to develop a culture thatexceeds client expectations repeatedly— This is a long term goal for our management team— We will know that the goal is achieved once Sberbankbecomes capable of continuing to successfully reinvent itselfregardless of who is at the helm.
  14. 14. FinancialOutlook 2013
  15. 15. Table of ContentsSberbank Investor Day Page 143rd and 4th April 2013Summary of 2012 Financial ResultsMacroeconomic Environment in Russia in 2013: Sberbank’s BudgetAssumptionsNet Interest MarginCredit Quality and ProvisioningFees and Other Non-Interest IncomeCosts: General HighlightsPersonnel CostsIT CostsModernization of Branch NetworkCapital AdequacySummary Guidance for 2013
  16. 16. 2012Financial ResultsSummarySberbank Investor Day Page 153rd and 4th April 2013Net Loans/Deposits103.1%NIM6.1%Net ProfitRUB 347.9 bnTier 1 Ratio (Basel I)10.4%Cost / Income49.0%ROE24.2%EPSRUB 16.03Cost of Risk20 bpsROA2.7%
  17. 17. MacroeconomicEnvironment inRussia in 2013Sberbank’s BudgetAssumptionsSberbank Investor Day Page 163rd and 4th April 2013Russian Banking Sector2011 2012 2013EBanking sector assets growth 23.1% 18.9% 12-13%Corporate lending growth 26.6% 13.7% 12-13%Retail lending growth 35.9% 39.4% 18-20%Retail deposits growth 20.9% 20.0% 13-14%Macro2011 2012 2013EGDP Growth 4.3% 3.4% 3.0%Inflation 6.1% 6.6% 6.0%Urals ($/barrel) 109 111 105RUB/USD Exchange rate 29.4 31.1 31.6Budget Balance (% of GDP) 0.8% -0.0% -0.8%
  18. 18. 12,6%10,6%9,7% 9,9%7.8%*6.4%* 6,4% 6,1%5.9 – 6.1%5.3%*4.7%*3,6%4,1%2009 2010 2011 2012 2013*Yield on earning assets Net interest margin Cost of fundsNet Interest MarginSberbank Investor Day Page 173rd and 4th April 2013Net Interest Margin Dynamics (%)* Deposit Insurance System costs includedNet Interest Income Share in OperatingIncome (%)Net Interest Income share in operating income before provisionsSources: Sberbank operating statistics for the respective periods77.1%73.7%76.2% 76.5%73-75%2009 2010 2011 2012 2013Net Interest Income (RUB bn)489,7 479,1561,0704,82009 2010 2011 2012 2013*+17-18%
  19. 19. 7,3%2,6%0,0% 0,2%2009 2010 2011 2012 2013*0.75-0.85%Credit Quality andProvisioningSberbank Investor Day Page 183rd and 4th April 2013NPL Dynamics (RUB bn)Cost of Risk Dynamics (%) NPL Ratio Dynamics (%)NPL ratio - corporate loans NPL ratio – retail loans9,5%8,2%5,4%3,5%4,6% 4,1%3,0%3,1%2009 2010 2011 2012 2013*54 55 5587405 398 3532861.3x1.6x 1.6x 1.61x2009 2010 2011 2012 2013*NPL corporate NPL retail NPL coverage ratio
  20. 20. 17,7 23,635,151,934,441,841,548,736,940,642,547,50,69,414171,92,74,47,314,212,814,416,82009 2010 2011 2012 2013Plastic cards operationsCash and settlement transactions with individualsCash and settlement transactions with legal entitiesAgent commissions on selling insurance contractsGuarantees issuedOther1%76%3%13%3%3%1%Client Brokerage EquityClient Brokerage FICCProprietaryInvestment BankingMerchant BankingAsset ManagementPrivate BankingFees andother Non-InterestIncomesSberbank Investor Day Page 193rd and 4th April 2013Fee Income Dynamics (RUB bn)IBGM– Additional Source of Non-Interest Income, 201297% – client driven business105.7130.9151.9189.2+ 21.5-22.5%
  21. 21. 45.7%2.3%13.3% 25,1%4,0%23,0%28,5%32,1%2009 2010 2011 2012 2013*Costs –General HighlightsSberbank Investor Day Page 203rd and 4th April 2013Operational Jaws Dynamics (%)Operating income growth Operating expenses growthOperating Expenses Structure, 2012Total: RUB 451.4 bnStaff costs11%10%7%8%Operating leases,repairs andmaintenance ofpremises & equipmentDepreciationof premises& equipmentAdministrativeexpensesOther operating costs54%Regional Average Cost-to-Income Ratios2012Source: www.thebankerdatabase.comRegion Average CIRAfrica 49.9%Asia-Pacific 50.9%CEE 56.2%C&S America 55.3%Western Europe 59.0%Middle East 39.7%North America 64.6%Dynamics of Cost Metrics (%)53.847.734.040.946.4 49.04.4%3.6%3.1% 3,4% 3,6% 3,5%2007 2008 2009 2010 2011 2012C/I Ratio Cost/Assets RatioTaxes other than onincome4%4%Telecommunicationexpenses
  22. 22. 1-8 gr 9-11 gr 12-14 gr 15-17 grBase salary Quarterly bonus Annual bonus~60% ~50% ~40%PersonnelCostsSberbank Investor Day Page 213rd and 4th April 201325-Grades and KPI-based Motivation SystemVariable Part is ~38% of all Staff CostsFixedpartVariablepartStaff Costs Structure (RUB bn)191,8 213,59,532,32011 2012201.3Sberbank Standalone SubsidiariesHeadcount Structure241,0 245,325,2 40,72011 2012286.0Actual headcount, Sberbank Actual headcount, subsidiariesHeadcount Breakdown by Business FunctionRetail banking49.3%IT13.1%Middle OfficeRisk Management1%7%Back office 3.5%10.8%13.3%1.8%Corporate bankingDistressed assetsAdministrative~70%266.2245.8
  23. 23. 5,4%9,8%6,5%8,4%4,6%10,2%% of Rev % of OpEx12%13%9%13%32%21%2012OtherHardware support & maintenanceConsulting & DevelopmentLow value equipmentTelecomNetwork ChannelsSoftwareSources: Sberbank’s Standalone, Management accounts16,9 19,238,8 41,6 32-3710,514,120,631,4 30-332009 2010 2011 2012 2013*OPEX CAPEXIT CostsSberbank Investor Day Page 223rd and 4th April 2013IT OPEX Structure 2012 (RUB bn) Percentage of IT ExpensesSberbank Standalone Other Russian banks2011201220112012Financialsector2011FinancialSector2011The Dynamics of IT OPEX andCAPEX (RUB bn)Comparison of the IT Budget in 2011With Leading International Banks(% of Rev)5,4%6,1% 6,1% 6,3% 6,3% 6,5%7,3% 7,4%Сбербанк BBVA Santander BNP P Credit Agr DeutscheBankUni Credit ISP Group
  24. 24. 228721 8751 5771 640 1 6452010 2011 2012 2013 2014 2015Modernization ofBranch NetworkSberbank Investor Day Page 233rd and 4th April 2013Efficiency ofnew-formatBranches hasincreased severaltimes overReformatting ScheduleJan 2011 Branch Reformatting Project launched:cross-countryJan 2016 Project completion~7 700 Branches to be reformatted across Russia4+ 4+ employees per branch as cut-off inselecting priority branches for reformatting33% Of branches relocated as a result ofgeo-marketing studies~1.5-3.0x Increase in volumes of various transactionsin newly reformatted branches50K+ Population of cities throughout Russia whereGeo-marketing is appliedBranch Reformatting BudgetBranch NetworkReformatting Program~7 700 branches# of branches under“work in progress”CompletedTotal(CapEx+Opex)1 718836 units244 th sq.m.RUB24.6 bn20112 7241 875 units621 th sq.m.RUB54.0 bn20122 2641 577 units630 th sq.m.RUB50–60 bn2013 (F)
  25. 25. Capital AdequacySberbank Investor Day Page 243rd and 4th April 2013Basel I Capital adequacy ratio, IFRSTier 1 Tier 211,5% 11,9% 11,6% 10,4% ≥10.5%6,6% 4,9%3,6%3,3% ≥2.6%2009 2010 2011 2012 2013*Key Change Factors of CBR N1 Capital Adequacy Ratio in 2013CAR 1/1/2013 Net Profit 2013 Dividends RWA Growth Basel 3ImplementationOther Factors CAR 1/1/201412.6% +2.5pp -0.4pp -2.1pp -0.3pp -0.3pp 12.1%18.1%16.8%15.2%13.7% 13.1-13.3%
  26. 26. 24,4181,6315,9 347.9 370–3902009 2010 2011 2012 2013 F3,1%13,7%35,4% 32.0%15–17%2009 2010 2011 2012 2013 F7,6%6,4% 6,4% 6,1% 0–20 bps2009 2010 2011 2012 2013 F34,0% 40,9% 46,4% 49,0% 48,0%2009 2010 2011 2012 2013 F3,2%20,6%28,0% 24,2% >20%2009 2010 2011 2012 2013 F13,4%22,3% 19,3%28,3%11–12%2009 2010 2011 2012 2013 F7302600 20 75–852009 2010 2011 2012 2013 FSummaryGuidanceSberbank Groupfor 2013Sberbank Investor Day Page 253rd and 4th April 2013Net Profit (RUB bln)Loan Growth (%)NIM (%)C/I Ratio (%)ROE (%)Deposit Growth (%)CoR (bps)
  27. 27. Insights intoCorporateBusiness
  28. 28. TargetsEstablish unique client interactionmodel andproduct distribution for corporateclientsCorporateand InvestmentBlock3rd and 4th April 2013Sberbank Investor Day Page 27AchievementsOpportunities— Developed a range of competitive product lines— New loan underwriting process enabled substantialreduction in time-to-decision and increased number ofapplications processed— Integration with Troika Dialog created a powerfulCIB player— Prime ranking positions in DCM , M&A and ECM— New underwriting processes launched for micro and smallbusinesses (Credit Factory, Credit Conveyor),as well as products (Business Environment,Business Start)Differentiate client interactionmodel and product distribution bykey segments: large, medium andsmall size enterprisesDevelop customizedproduct solutionsOptimize support processesand technologiesFull roll-out of sales, planning and controlfunctions of client managers, particularly for thesegment of SME businessesSignificant increase in non-interest income fromcorporate clients
  29. 29. 45% 41%2011 201221% 22%2011 201223% 24%2011 201222%27%2011 2012CorporateBusinessClients’Market ShareSberbank Investor Day Page 283rd and 4th April 2013Sberbanks Share of the Corporate Lending Market by Segment (%)Rest of marketSberbankLargest Large Medium SmallSources: Sberbank operating statistics for the respective periods
  30. 30. 6% Small MicroAnnual Revenues(million, RUB)60– 400up to60Number ofCustomers~ 1 000 00022% LargeAnnual Revenues(million, RUB)2 500 – 15 000Number of Customers Over 8 50051%24%17%9%CorporateBusinessLoan Portfolioby Business Sizes(Sberbank Standalonevs. Group)Sberbank Investor Day Page 293rd and 4th April 2013Sberbank Standalone:Loan Portfolio by Size of BorrowersSberbank Group:Loan Portfolioby Size of Borrowers59%22%13%6%13% MediumAnnual Revenues(million, RUB)400 – 2 500Number of Customers ~ 26 00051% Largest 24% Large17% Medium 9% Small59% LargestAnnual Revenues(million, RUB)Over 15 000Number of Customers Over 3 100Sources: Sberbank operating statistics for the respective periods Sources: Sberbank 2012 IFRS annual report
  31. 31. 6 062 6 164 6 518 6 751 7 02012 339 12 30113 087 13 624 13 897Dec-11 Mar-12 Jun-12 Sep-12 Dec-1232,9%33,4%33,2% 33,1%33,6%24%16%18%6%11%5%10%10%Corporate Loan PortfolioStructure by SectorCorporate Loans (RUB bn)Sberbank’s Share of The MarketSberbank Investor Day Page 303rd and 4th April 2013CorporateBusinessLoan Portfolio DynamicsandSector CompositionTransport/aviation/space industry/telecomServicesTradeEnergy/oil & gas/metallurgyMachine buildingConstructionFood & agricultureOtherSources: Sberbank operating statistics for the respective periods Sources: Sberbank 2012 IFRS annual report18 401 18 46519 60520 376 20 917Sberbank Rest of market
  32. 32. Small andMicro BusinessProductsLoansSberbank Investor Day Page 313rd and 4th April 201314417220823325061708188940102030405060708090100050100150200250300Dec-11 Mar-12 Jun-12 Sep-12 Dec-12Balance of debt (RUB Bn)Number of credit contracts, (000)Product Group: DoveriyeBusiness Start2 2 9 14 153150711001520,020,040,060,080,0100,0120,0140,0160,0Cumulative Issues (RUB mn)“Delovaya Sreda” – BusinessEnvironment Technology465 280Unique Users29 119Registered Usersas of December 201229Unique Users392Registered Usersas of August 2012(product launch)+74%Product Group: Business High-quality loan book: NPL 1.3% as of Jan 1, 2013New Products:- Business Project- Business Overdraft- Business Guarantee- Business Start27 36557593486694121147-100-50050100150020406080100120Dec-11 Mar-12 Jun-12 Sep-12 Dec-12Outstanding balance (RUB bn)Number of loan issues, (000)Sources: Sberbank operating statistics for the respective periods
  33. 33. 36% 39% 42% 15%Low (1-11) Medium (12-15) Increased (16-18) High (19-26)36% 38% 28% 9%Low (1-11) Medium (12-15) Increased (16-18) High (19-26)Large andMedium-SizedBusinessesCredit Quality: ExposureBreakdown by RiskSegmentPage 323rd and 4th April 2013Sberbank Investor DayMarket Structureby Risk ProfileLow Medium Increased High18%27%15%40%Sberbank’s portfolio risk profile is significantly below that of the marketMarket Structureby Risk Profile12%27%15%46%Low Medium Increased HighLarge ClientsSberbank’s Share in Each Risk Segment vs. MarketMedium-Sized ClientsSberbank’s Share in Each Risk Segment vs. MarketRisk segmentsRisk segmentsSources: SPARK Database for 2010-11. Internal risk assessment methodology
  34. 34. CorporateBusinessCredit QualityRenegotiated LoansPage 333rd and 4th April 2013Sberbank Investor DaySource: Sberbank (standalone) quarterly 2012 IFRSNPL in Total Corporate PortfolioTotal Restructured Loans and NPL Ratio (Included in Total NPL)227 236 224 2332163,6% 3,7%3,3% 3,3%3,0%0%1%2%3%4%5%150170190210230250270290Dec-11 Mar-12 Jun-12 09 2012 Dec-12Total corporate NPLs, (RUB bn) NPL in total corporate loan portfolio, (%)1 0391 017 1 031 1 034 1 0267,0%7,9%7,4% 7,6% 7,4%0,0%1,0%2,0%3,0%4,0%5,0%6,0%7,0%8,0%9,0%96098010001020104010601080110011201140дек.11 мар.12 июн.12 сен.12 дек.12Total restructured loans, (RUB bn) NPL share in restructured loans, (%)Source: Sberbank (standalone) quarterly 2012 IFRSSep-12
  35. 35. CIBIntegrationHighlights andMarket PositioningPage 343rd and 4th April 2013Sberbank Investor Day— Creation of Sberbank CIB and introduction of the unified brand— 950 people work in CIB business units (339 in HQ, 361 in IBGM,250 in regional banks) and 733 run support functions— Multinational team with an average age of 34 years— 21 sector strategies were created— 2 600 clients are under coverage in Russia, including IBGMproduct range, and 815 abroad— Complementing product lines with IBGM services increased clientloyalty index among largest corporate clients to 67 (from 60)— IBGM remains one of the main revenue drivers; contribution to CIBrevenues was up to 16% from 13%Global MarketsInvestment BankingMerchant BankingAM, Private BankingNet Profit 2012$280 mlnInvestment BusinessResultsSource: Dealogic as of 1 January 2013DCM ECM M&ARank Book-runnerAmount(USD Min)Issues Share %‘11 ‘12 ‘12 ‘12 ‘121 1 VTB Capital 15 595 92 192 2 Sberbank CIB 10 740 77 133 3 Gazprombank 8 337 51 108 4 Citi 5 786 23 74 5 JPMorgan 5 673 25 7Total 84 129 275 100Rank Book-runnerDeal Value(USD Min)Issues Share %‘11 ‘12 ‘12 ‘12 ‘126 1 Credit Suisse 1 733 4 1810 2 Sberbank CIB 1 630 5 173 3 Morgan Stanley 1 587 4 168 4 JPMorgan 1 366 4 145 5 Goldman Sachs 1 041 1 11Total 9 741 16 100Rank Book-runnerDeal Value(USD Min)Issues Share %‘11 ‘12 ‘12 ‘12 ‘1210 1 Sberbank CIB 19 081 31 256 2 Goldman Sachs 16 013 18 218 3 Deutsche Bank 15 655 14 201 4 VTB Capital 9 286 16 127 5 Credit Suisse 8 926 12 12Total 76 775 2287 1002012 Highlights
  36. 36. TransactionalBusinessTrade FinancePage 353rd and 4th April 2013Sberbank Investor DayVolume of New TF Transactionsfor Period (RUB bn)TF PortfolioBalance of Active Deals for he Endof the Period (RUB bn)CashManagement — Internal and external payments— Cash operations— Current account opening and servicing— Interest on outstanding balance— Cash collection— Remote banking services— Currency control andOverseas operations— Corporate cards— Currency conversion— Payroll projects— Acquiring— OverdraftProducts GuaranteesTrade Finance andDocumentaryOperationsNew ProductsCash ManagementE-invoicingTrade FinanceConsultingCash and SettlementTransactions withFinancial Institutions19 1151722543302009 2010 2011 2012 2013 E731422103304302009 2010 2011 2012 2013 ESources: Sberbank operating statistics for the respective periods
  37. 37. Remote Channels2013Banking ChannelsCurrent andPlanned ApproachesPage 36Remote Channels2015Branch Network2013Branch Network2015AccountmanagementCorporate cardsE-invoicingPackageservicesCash collectionCurrencyControlCashmanagementCashtransactionsDepositsAcquiringOverdraftPayroll ProjectsAccountmanagementCurrencyControlCorporate cardsE-invoicingPackageservicesCash collectionCashmanagementCashtransactionsDepositsAcquiringOverdraftPayroll ProjectsAccountmanagementE-invoicingCurrencyControlDepositsCorporate cards PackageservicesCash collectionCashmanagementCashtransactionsAcquiringOverdraftPayroll ProjectsAccountmanagementCorporatecardsE-invoicingPackageservicesCash collectionCurrencyControlCashmanagementCashtransactionsDepositsAcquiringOverdraftPayroll ProjectsSalesServiceInformingSalesServiceInformingSalesServiceInformingSalesServiceInformingSales5%Sales95%30%70%5%95%3rd and 4th April 2013Sberbank Investor Day
  38. 38. Fees & CommissionIncome StructureRevenue Structure2011 - 2012Sberbank Investor Day Page 373rd and 4th April 2013RevenueCompositionSources: Sberbank operating statistics for the respective periods69%71%18% 19%5%7%8%3%2011 2012NII F&C Trading Other68%62%14%18%13% 14%4% 5%2011 2012Cash & settlements Banking card operationsTrade finance IB
  39. 39. Insights intoRetail Business
  40. 40. 462012129200978Retail Block3rd and 4th April 2013Sberbank Investor Day Page 39Targets AchievementsOpportunities— New model of sales and client servicetailored for various client segments,zoning at retail outlets, new formatroll-out across retail branches— Index of service quality reached 93.3%— Credit card market share up to 22.3%— > 70 000 ATM and self-service terminals– the largest single bank ownednetwork in Europe— Intensive development of new comprehensive electronicbanking channelsTime-to-answer atcall-center (seconds)4Q 2012Share of remote channeltransactions (%)200837Reduce share of manualoperations at branchesand decrease share ofcash transactionsDevelop various saleschannels for bankingproducts and servicesContinuously improve the qualityof client servicesIntroduce sales standards;continuously monitor salesprocess and results; improvesales standardsFull roll-out of sales, planning and control functions of client managers, particularly forthe segment of medium-sized businessesComplete branchreformatting project
  41. 41. 33% 39%27% 25%19% 20%11% 9%10% 7%2011 20124 049 4 6495 5827861 0771 4012010 2011 2012Retail DepositsSberbank Investor Day Page 40Retail Deposits (RUB bn)3rd and 4th April 2013Term deposits Current accountsRetail Deposits Structure4 7785 6486 61617%34%CAGR21%Pension Main basic deposits Current accountsPromo deposits OtherSources: Sberbank operating statistics for the respective periodsAverage Daily Balances (%)Share of debit cards balances of total retail deposits13.013.814.7 14.815.215.515.9 15.61Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12Sources: Sberbank Group IFRS annual financial reports
  42. 42. Retail LoanPortfolioPage 416228601 2666007701 005808310326651552010 2011 2012Sberbank Investor Day 3rd and 4th April 2013Number of Loans Issued (000)Sources: Sberbank operating statistics for the respective periodsConsumer Credit cardsMortgages Car loansRetail Loans (RUB bn)2 5281 7771 327Consumer Credit cardsMortgages Car loans2 7113 8905 0552413 6215 3141113213581541922010 2011 2012
  43. 43. TOTAL: ~110 mn retail clientsSberbank Investor Day Page 423rd and 4th April 2013SberbankRetail Clients69 mnOther21 mnPensioners19 mnPayroll0.6 mnPremier PREMIERPAYROLLPENSIONERSOTHERSources: Sberbank operating statistics
  44. 44. 17,4 17,7 18,2 18,5 19,1 19,7 20,3 20,844% 44% 45% 46% 47% 49% 50% 51%0%10%20%30%40%50%60%0,05,010,015,020,025,030,0Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12Pensioners receiving pensions Market share302309313 315 31632% 32%35% 36% 38%0%10%20%30%40%290295300305310315320Dec-11 Mar-12 Jun-12 Sep-12 Dec-12Active payroll accounts Market sharePayrolland PensionAccountsSberbank Investor Day Page 43Sources: Sberbank operating statistics for the respective periodsNumber of Active Payroll Accounts (‘000 corporate clients)Pensioners Receiving Pensions via Sberbank (mn)Strategic goal of 2012to increase the numberof corporate clientson Payroll:— Allows for cross-sellof products— Better credit risk controlStrategic goal of 2012to achieve #1 marketposition in servicingpensioners:Goal achieved;current marketshare of 51%3rd and 4th April 2013
  45. 45. -4 000-3 000-2 000-1 00001 0002 00002 0004 0006 0008 00010 00012 00014 000Mobile Banking:P2P Transfer VolumesBank Card TransactionsSberbank Investor Day Page 443rd and 4th April 2013TransactionsBank CardsMobile BankingSources: Sberbank operating statistics for the respective periods2012Jan Mar Jun Sep DecCash transactions POS payments Transfers23%13%65%Continued growthin non-cash transactions:from 14% in 2009 to35%RUB12.6mnRUB 0.8 mn942 038P2P Cumulative transfer volumes (RUB mn)Cumulative number of transactions (000)2010 2011 2012Jan Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
  46. 46. 15,0 15,115,817,118,14Q11 1Q12 2Q12 3Q12 4Q12Dec-10Mar-11Jun-11Sep-11Dec-11Mar-12Jun-12Sep-12Dec-1212%14%15%16%17%18%20%22% 22%0%5%10%15%20%25%0,020,040,060,080,0100,0120,0140,0160,0180,0Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12Credit CardsSberbank Investor Day Page 45Sources: Sberbank operating statistics for the respective periods3rd and 4th April 2013Trade Turnover Per Active Credit Card (‘000 RUB)8.7mn1.9mn# 1 market sharein Russia26.1bn154.7bnTotal Number of Credit Cards (mn) Credit Card Portfolio Dynamics(RUB bn) vs. Market Share
  47. 47. Dec-11 Mar-12 Jun-12 Sep-12 Dec-12Total Number of Mobile BankingUsers (mn)-400,0-200,00,0200,0400,0600,0Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12Remote ChannelsPage 46Types of Remote Channelsoffered at Sberbank:— Self-service terminals— Sberbank Online— ATM machines— Mobile bankingDirect Debit:— Contracts with Russia’s largest mobile operatorsto activate the function— 2012 achievement: availability of functionto pay utility and electric bills cross-countryTotal Number of Active SberbankOnline Users (mn)vs. Number of Online UsersActivated (‘000)Direct Debit Subscribers(mn)2.4mn5.8mn357k794k5.4mn10.0mn+85%6.7mn+379%Sources: Sberbank operating statistics for the respective periods3rd and 4th April 2013+141%Sberbank Investor Day1.4mn
  48. 48. Quality of ServicesPage 47Number of Machines Idle (%)Quality and Services Indexes7,7%6,1% 6,4%6,9%6,4%4,7%4,1% 4,0% 3,6%4,6%4,3%3,8%4,3%4,9% 4,8%3,3% 2,9% 2,8% 2,7% 2,8%0%20%40%60%80%100%Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12ATMs Idle Self-service Machines Idle Norm MAX of 10%Sources: Sberbank operating statistics for the respective periods3rd and 4th April 201385,7 86,5 86,478,4 79,283,078,0 79,0 80,9 82,384,8 85,2 85,3 87,192,183,9 84,8 85,1 85,1 85,5 86,0 87,3 88,0 88,4 88,8 90,2 91,5 92,3 92,7 93,3Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12Quality Index Services Index Good 65 Excellent 85Sberbank Investor Day
  49. 49. Revenue StructurePage 48F&C Income CompositionSources: Sberbank operating statistics for the respective periods3rd and 4th April 2013Bank card transactions Payments & TransfersInsurance Payroll Other43%50%28%24%16% 13%6% 6%8% 7%2011 2012Revenue Structure, (share %)NII F&C OtherSberbank Investor Day68%74%30%25%2% 2%2011 2012
  50. 50. Credit Card Market Structureas of 1.02.201322%15%7%7%49%47%16%7%3%26%12%11%10%9%58%22%16%13%5%22%Market ShareSelected productsPage 49Mortgage Market Structureas of 1.02.2013Car Loan Market Shareas of 1.02.2013POS Market Structureas of 1.02.2013VTB 24OtherSberbankTinkoff CreditRussianStandardSberbankVTB 24OtherDelta CreditGazprombankOtherSberbankVTB 24RusFinanceBankRosbankOTP BankCetelemRussian StandardOtherAlfa-Bank3rd and 4th April 2013Sberbank Investor DaySources: Frank Research Group
  51. 51. Risk Management
  52. 52. Our Goal:Sberbank Investor Day Page 513rd and 4th April 2013Portfolio structureTo build up a risk management system for Sberbank Groupaligned with world’s best practices and Basel Committee onBanking Supervision requirementsCorporate: 78.7%SB RU71,0%SB-CIB20,0%DenizBank4,1%SBE2,0%SB Leasing0,7%SB CIS2,2%Retail: 21.3%SB RU88,2%DenizBank7,2%SBE3,4%SB CIS0,6%Cetelem0,6%
  53. 53. Sberbank Investor Day Page 523rd and 4th April 2013Elements ofthe targetmodel of integratedrisk managementin 2007Element in place Element is absentQuantitativeassessmentof risksAggregationof RisksBusinessApplicationsUsagetestingIdentification and assessment of significant risksCPMCredit risk Market riskCEMRNIVIRCStressedVaRALM and liquidity riskInterestrate gapNII, EVE FX RiskLiquiditymetricsOperational risk Other significant risksEconomicCapitalother riskEconomicCapitaltransferriskEconomicCapitalprop riskCalculation of regulatory capital (RWA)Stress testingStrategic and Business PlanningRisk appetite and limitsCapital managementRegulatory and management reportingPerformance management of risk (RAPM)Management systemCalculation of economic capital (ECAP)CVAVaRLGDEADPDProcessesProcesses ProcessesIndustrial IT infrastructureILDScenarioanalysisSelf-assessmentof RiskKRI, KCIELDAMAmodelManagementmethodsManagementmethodsManagementmethodsManagementmethodsManagementmethods
  54. 54. Sberbank Investor Day Page 533rd and 4th April 2013Elements ofthe targetmodel of integratedrisk managementin 2012Element is implemented Element is absentQuantitativeassessmentof risksAggregationof RisksBusinessApplicationsUsagetestingIdentification and assessment of significant risksCPMCredit risk Market riskCEMRNIVIRCStressedVaRALM and liquidity riskInterestrate gapNII, EVE FX RiskLiquiditymetricsOperational risk Other significant risksEconomicCapitalother riskEconomicCapitaltransferriskEconomicCapitalprop riskCalculation of regulatory capital (RWA)Stress testingStrategic and Business PlanningRisk appetite and limitsCapital managementRegulatory and management reportingPerformance management of risk (RAPM)Management systemCalculation of economic capital (ECAP)VaRLGDEADPDProcessesProcesses ProcessesIndustrial IT infrastructureILDScenarioanalysisSelf-assessmentof RiskKRI, KCIELDAMAmodelManagementmethodsManagementmethodsManagementmethodsManagementmethodsManagementmethodsCVA
  55. 55. “Credit Factory” forRetail andSME3rd and 4th April 2013Sberbank Investor Day Page 54System of modelscreation and analyticsARCFORequests/Reports2 centers performing late debt collection at early stage (Moscow, Ekaterinburg)Centralised Collection(АС Tallyman)Way4Credit systemsCredit bureauAC stop-listMailingAuto redial systemsVerificationof stop-listsAnti-fraudVerificationinProcessing stop-listsCurrentaccountsInputApplicationData ofvisualassesment/Compliancewith min.requirementsVerificationrouterAcceptanceof resolution("black ”,”white” areas)Acceptanceof resolutionbyunderwriterStrategiesPersonal dataIncomeHonesty dataArchive ofcredithistoriesDemographic dataLevel and stability ofrevenuesCredit historyLoyalty assessmentEmployerAC Stop-listCheck forpossiblefraud /Analysis ofcredit historywithSberbankАС HunterTransactSM4 Underwriting centres (Moscow, Ekaterinburg, St Petersburg, Novosibirsk)Way4Catalogueof productsStorage ofclientphotosPFR (approvalof revenue)FMS (passportdata)Confirmation ofinformationregardingemployerIBCHPartner BankCredit BureauEquifaxNBCHEIFront-office LoyaltyverificationScoring, limitcalculationAnalysis ofexternal CH(Cooperationwith the creditbureau)Manual processingExternal resourcesInternal resourcesAutomatic processing
  56. 56. 99%1%75%26%60%40%Mortgages Granted Q3 2012Credit FactoryRetail portfolioresultsSberbank Investor Day Page 553rd and 4th April 2013Portfolio Structure Cash Loans Granted Q3 2012Applications received 18.9 mnCustomers analyzed 15.6 mnAverage approval rate 63.2 %Average time-to-decision 15.1 hoursLoans disbursed 11.6 mnin total amount RUB 2 307 bnAverage loan amount, RUBCash 147 thsCar 466 thsMortgage 1 301 thsAs of 01.01.13Portfolio RUB 1 562 bnNumber of loans 9.2 mnNPL90+ share in Portfolio 0.86%Credit factory Previous Credit Process Credit factory Previous Credit Process Credit factory Previous Credit Process
  57. 57. New CorporateCredit ProcessSberbank Investor Day Page 563rd and 4th April 2013Main instrumentsMain operationsMain documents3 Credit marker - the maximumamount of liability determined onthe basis of a maximum debtCredit applicationPD LGDCashflowResolution oflegal divisionResolution ofsecurity divisionList of documentsResolution ofdeposit divisionApplicationsummaryResolution of creditinspectorUnderwriter‘sresolutionMain instruments and documentsClientmanagerProcessingservicesCreditinspectorUnderwriterCreditCommittee /«6 eyes»Analysis of adeal, limitrequest,preparation ofapplicationRisks analysis,correction oflimits, checkingmodelsMaking finaldecision onapplicationCollection ofdocuments andorganisation ofapplicationprocessingProcessApplicationrevision(if required)Requestedchanges(if required)Preparation ofresolutionPricing BookingMarkerBasic models Analytical instruments3ManagerTool todeterminesolution levelCredit applicationPD LGDCashflowPricing BookingMarker3Tool todeterminesolution level1 2
  58. 58. New corporatecredit processallows better thansector risk leveland quality of theloan portfolio3rd and 4th April 2013Sberbank Investor Day 57
  59. 59. MoscowSt.PetersburgYekaterinburg NovosibirskAlma-Aty,KievMinskPrague, BrnoBelgrade+34.15%+30%+20.7%+111%Interregional UW centerProductivity Increase7category6 category5 category4 category3 categoryA1-3 categoryA0-3 categoryMonthly average applications per UW:RetailMicroSMECorporate320126127Corporate UWRetail UWFinancemarkets UWSME UWMicro UWNew RiskProcesses DoubleBusinessProductivity inLending – Both forCorporate andRetail Books2008-9 2010 2011 201293people1 750people3rd and 4th April 2013Sberbank Investor Day Page 58
  60. 60. Principles ofOperational RiskManagementSberbank Investor Day Page 59Process• Internal loss data collection• Risk self-assessment• Scenario analysis• 32 000 risk coordinators in all units• IT platform – SAS OpRisk Management• Roll out completed for Russia in 2012• Roll out for Eastern Europe and Turkey –2013-2014ResultsOR Incidents statistics across Basel event types:>34’000 EVENTS above 10k RUB threshold in 2012211131617665 9096 28821 0960 10 000 20 000 30 000Employment Practices and…Damage to Physical AssetsClients, Products and Business…Internal FraudExternal FraudBusiness disruption and system…Execution, delivery and process…OR Level: reports and measures- Ad-hoc reports and escalation to unit heads- Weekly reports- Monthly/Quarterly reports and monitoringOR Capital Model ** In progressFrequencySeverityELD / RSA / SAILD3rd and 4th April 2013
  61. 61. Main processes forRisk Managementfor Global MarketsSberbank Investor Day Page 60High degree of process centralizationPreliminary control Current control End of day control Post controlRegular On demand Ad hoc Fast reductionDetermination and allocation of risk appetiteRisk limits setting and revisionControl processMarket conformity check and Independent price verificationCredit ratings monitoring and reviewCollateral management3rd and 4th April 2013
  62. 62. Economic CapitalPilot AssessmentSberbank Investor Day Page 61Contribution of eachrisk type to the overalleconomical capital ofthe Bank relative toEuropean peersAssessed as at31.12.20120% 100%0.02%0%7%41% 85%23%12%19%19%50%Market riskFX-IRBB risksCredit riskOperational riskOther risks2%Minimum share of Ecapamong the set ofEuropean BanksMaximum share of Ecapamong the set ofEuropean Banks3rd and 4th April 2013
  63. 63. Plans for 2013Sberbank Investor Day Page 62Develop Group reporting to Regulator, related principles of Basel IIComplete modeling development for SubsidiariesImplement new credit decision processes in subsidiary banks:• «New Credit Process» (Corporate)• «Credit Factory» (Retail)Implement of Operational incidents registration system at GrouplevelDevelop logic for general Group limits structure3rd and 4th April 2013
  64. 64. Thank You