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Investor presentation june-2014_ru

Bank Vozrozhdenie has over 20 years of experience in banking and provides retail and commercial banking services. It has a network of 143 offices and 874 ATMs across 21 Russian regions. The bank focuses on core banking products and personal service. It has a loan portfolio of RUB 171.6 billion, with retail loans making up 41% and corporate loans 59%. Retail loans are focused on mortgages, while corporate loans support small and medium enterprises. The bank maintains a conservative balance sheet with liquid assets and is primarily deposit funded.

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Bank Vozrozhdenie Promising SME and retail local franchise Investor presentation June 2014
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3 Agenda Key facts Business model Business overview Recent IFRS results Investment summary
4 Over 20 years of successful development 1991-1992 1993-1995 Establishment and banking license 34 branches in the Moscow Oblast 1996-1998 2003-20041999-2002 2005-2006 2007-2008 2009-2010 2011-2012 9 new regional branches opened Cash collection and delivery services established Corr. accounts with western banks License for foreign exchange Associate member of VISA International Authorized Bank of the Russian Government Joined S.W.I.F.T. Joined the World Bank development program Cooperation with CIBC S&P rating Rated by the Central Bank as a stable bank after the financial Crisis CIBC becomes a shareholder The 3rd largest branch network Top 10 by deposits from individuals Top 3 in the State Mortgage Program Top 7 mortgage provider Best mid- cap Russian bank (Big Money) $ 177 mln raised by 20th issue 3rd by lending to SME $81 mln EBRD financing Top 10 by bank cards issued Best SME bank in Moscow Oblast Top 10 retail banks in Russia First MBS deal on Rub 4,1 bln Bank’s ADRs traded on the Frankfurt Stock Exchange Established ATM network and a processing center Top 20 by corporate loan portfolio Widest ATM network in the Moscow Oblast Over 100,000 VISA cards issued 17th equity issue raises $33 million Joined Deposit Insurance Program Overall rebranding CRM system development The most transparent bank in Russia (S&P) Top 500 world’s banking brands Best bank IR and best IR professional (Thomson Reuters ) Bank of the Year in Russia in 2010 (The Banker) Over 1,550,000 clients Best public company (Secret Firmy Magazine) Alexander Dolgopolov appointed as the Chairman of the Management Board V.Bank launched project on cost efficiency 2013-2014 Best Corporate Governance, Russia (World Finance) Best IR Management in Russia (Global Banking & Finance review) Best Banking Chairman of the Board in Russia (Global Banking & Finance review) Best IR Management in Russia (Global Banking & Finance review)
5 Prudent risk-management policy Balanced Lending and Funding policy Servicing retail customers throughout their whole life-cycle Servicing Corporate and SME Customers On Each Stage Of Business Development Bank Vozrozhdenie strategy… … 1 700 000 Retail Clients… … 63 400 Corporate and SME Clients… … 21 Region … 143 Office … 874 ATMs Focus On Core Banking Products …service… …via… Increasing efficiency in service delivery Bank Vozrozhdenie - a Community Bank built on strong relationships with SMEs and individual customers
6 Moscow Oblast is a home territory with historically strong market position 21 region of presence. Focus on the most perspective South and North-West Branches Sub branches Retail offices 34 43 9 86 Total As of 01.06.2014 549 ATMs – every town is under coverage 19 36 2 57 Total 325 ATMs Retail officesBranches Sub branches Distribution network
7 * RBC most recent rankings Key Figures, RUB Assets Loans b.p. Customer Funds Net Income Shareholders equity Retail Clients Corporate Clients Personnel Offices ATMs 210,836 mln 171,606 mln 153,095 mln 428 mln 22,793 mln 1,700,000 63,400 6,066 143 874 Loans to SMEs 6 19 39/19 28 13 Volume of retail deposits Branches/ATMs Net Assets Bank cards issued Rankings* Corporate loans 21 Mortgages 10 Basic information & position in Russian banking system Financial indicators as of April 01, 2014
8 Ba3/D-/NP, stable BB-/ruAA-, negative MICEX Financial Index A1 MICEX Moody’s Standard&Poor’s Included in indices Listing BrandFinance Banking 500 survey V.bank ranks among top-10 Russian most valuable banking brands with brand value of $190 million The Banker V.Bank – “The Bank of the year 2010 in Russia” as per the survey of The Banker magazine Market recognition Credit ratings Listing High recognition of brand World Finance V.Bank was awarded for “Best Corporate Governance, Russia”, according to World Finance survey 0 7 14 21 28 35 42 7 10 13 16 19 22 25 01.01.06 01.01.07 01.01.08 01.01.09 01.01.10 01.01.11 01.01.12 01.01.13 01.01.14 S&P S&P international BB- Moody's Ba3 Moody's Interfax Aa3.ru Moody's Aaa Aa A Baa Ba B Caa S&P national scale ruAA- AAA AA A BBB BB B CCC
9 Business model
10 Strategy Focus on core banking products and personal service
11 62% 61% 64% 72% 71% 38% 39% 36% 28% 29% 3 490 3 667 3 808 3 682 3 645 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Non-interest income Net interest income 131 130 133 126 128 34 37 41 43 44 164 167 173 168 172 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Retail loans Corporate loans - Customer oriented organic growth - Conservative balance sheet - Primarily deposit funded - Focused regional structure - Increasing efficiency in service delivery Note: all loans are gross loans RUB bln RUB bln 26% 74% RUB bln 29% 71% Business model Business based on relationships… … gives solid non-interest income Loan portfolio development… … funded by customer accounts 110 113 116 112 109 53 56 55 50 44 163 169 171 162 153 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Interest-bearing Deposits Interest-free Current accounts
12 12 13 13 13 12 149 150 155 156 158 11 12 14 12 76,41 1 1 1 1 37 40 33 29 26 210 216 217 211 211 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Cash and equivalents Due from banks Invest. securities pledged under repos Securities Net loans Other assets IEA 80% IEA 82% Assets and liabilities Interest-earning assets grew to 82% of balance sheet Diversified funding structure Liquid assets share at a comfortable level L/D ratio up as client funds replaced by CBR financing RUB bln RUB bln RUB bln 21 21 22 22 23 7 7 5 4 43 1 1 4 17 9 9 10 14 163 169 171 162 153 5,5 8 8 9 9 10 210 216 217 211 211 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Due to other banks Borrowed funds from repos with CBR Client funds Securities issued Other liabilities Subordinated loans Equity 164 167 173 168 172163 169 171 162 153 101% 99% 102% 104% 112% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Gross loans Customer funds L/D 29 26 5 5 6,9 1,7 6,4 19,4% 18,3% Q4 2013 Q1 2014 Securities pledged under repos with CBR Investment securities available for sale Trading securities Cash and cash equivalents
13 26 26 25 24 20 35 36 37 31 29 60 62 62 55 49 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Corporate deposits Corporate accounts Customer funds - corporate Corporate client funds continues dropping… … but not due to clients loss RUB bln Key points 30,7 31,9 30,4 26,4 26,2 33 32 33 32 32 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Average balances on corporate current accounts, Rub mln Number of accounts, thousand FX structure 91% 7% 2% Rub 48.6 billion Rouble US Dollar Euro We are reluctant to raise corporate deposits, a volatile funding source, due to fierce competition and heightened market rates. A decline in corporate accounts resulted from lower average balances across the whole client base that reflected customers’ search for diversification and growing needs of their own businesses in working capital. Share of FX corporate funds grew from 7% to 9 % QoQ on the devaluation effect. -12.3%
14 Customer funds - retail Retail client funds Credit turnover on card accounts growing RUB bln 84 87 91 87 89 18 20 18 19 16 103 107 109 106 104 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Retail deposits Balances on card accounts RUB bln Key points 73% 19% 8% Rub 104,5 billion Rouble US Dollar Euro 0 5 10 15 20 25 30 FX structure 2012 2013 2014 RUB bln Q1 2012 38.9 Q1 2013 40.3 Q1 2014 41.4 The decline in retail funds was reasoned by seasonal outflow from card accounts during long New Year and Christmas holidays. However, the credit turnover in Q1 2014 improved by 2,7% YoY. FX deposits were in clients’ demand with the proportion in total retail funds growing to 27%. Excluding revaluation effect, retail FX deposits grew by 3,4%. -1.5%
15 Segment Total credit exposure, RUB mln Large business > 750 Medium-size and small businesses 30 - 750 Micro businesses 6 - 30 Food processing – factories manufacturing different types of high-quality food and beverages. Car stores – range of car parts and accessories, new and used economy class cars most popular in the regions, where people give strong preference to repairing their engines themselves. Clothes factories – small-scale production of clothing and apparel. Local retailer chains – small chains of handy stores “Close-to-House” style for daily shopping located in dormitory area with high density of population. Who are our SMEs? What is our SME Definitions
16 Loan portfolio Corporate portfolio free of uncollectable NPLs Retail portfolio with mortgages leading the way RUB blnRUB bln 46,1 50,8 52,0 51,4 51,6 83,4 78,4 80,0 73,3 75,6 1,2 0,9 0,7 0,9 0,5 131 130,2 132,6 125,6 127,8 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Large corporates SMEs Administrations 59% +1,7% 22,8 24,9 27,6 29,5 30,6 8,7 9,8 10,7 11,0 11,2 2,1 2,1 2,2 2,1 2,1 33,6 36,8 40,5 42,6 43,9 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Mortgages Consumer and car loans Credit cards The 3rd mortgage securitization deal on RUB3,45 billion was successfully closed in March 2014 70% +2,8% FX structure * 90% 7% 3% Rub 171,6 billion Rouble US Dollar Euro As of April 1, 2014 20% 41% 18% 10% 11% Moscow Other regions South Regions North-West Regions Moscow Region As of April 1, 2014 Rub 171,6 billion Regional diversification of loan portfolio * *Loan portfolio before provisions for impairment
17 28,6% 18,4% 25,4% 27,6% up to 90 days 91-180 days 181-365 days > 1 year Corporate portfolio RUB bln 72,4% *as of April 1, 2014 … and regional diversification…maintaining industry… Corporate loan book Credit policy sticks to reliable collateral… ….providing mostly working capital… 37% 0% 24% 1% 11% 6% 4% 8% 8% Construction ManufacturingAgriculture Wholesale & retail trade Administrations Other Transport Real estate RUB 127.8 bln *as of April 1, 2014 15% 39% 25% 13% 9% Moscow Oblast Moscow Other regions South regions North-West regions RUB 127.8 bln 12% 2% 21%44% 21% RUB 127.8 bln Real estate Uncollateralized loans & Other collateral Equipment & vehicle Government guarantees Guarantees *as of April 1, 2014 *as of April 1, 2014
18 Retail lending – promising segment 5 10 15 20 25 01.05.11 01.11.11 01.05.12 01.11.12 01.05.13 01.11.13 01.05.14 Consumer loans, RUB Mortgages, RUB Credit cards, RUB 0,8% 1,6% 1,9% 95,8% up to 30 days 31-180 days 181-365 days > 1 year Retail portfolio RUB bln High-margin consumer loans to customers with apparent cash-flow –management of corporate clients Primarily mortgages under state-related agency JSC “AHML” standards We plan to continue expanding retail loan portfolio, that was an important lending growth driver during recent years Particular focus is on mortgages as the most perspective segment with gradual widening of consumer lending *as of April 1, 2014 Retail loans maturityRetail loan book growth Rates on retail loans Mortgage securitization as a source of long-term funding for loan portfolio expansion 66% 68% 68% 67% 68% 27% 26% 26% 27% 27% 7% 6% 6% 6% 5% 33,6 36,8 40,5 42,6 43,9 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Mortgages Consumer and car loans Credit cards Securitization 1 Rub 4.1 billion in December 2011 Class A with 8.95% coupon rate and Baa2 rating from Moody’s Securitization 2 Rub 4.0 billion in April 2013 Class A with 8.95% coupon rate and Baa2 rating from Moody’s Securitization 3 Rub 3.45 billion in March 2014 Class A with 9% coupon rate and Baa2 rating from Moody’s +3%
19 acquiring Visa and Mastercard self-service Card business – sales force of retail business Q2 2013 Q3 2013 Q4 2013 Q1 2014 Payrolls 14,200 14,760 15,040 15,040 Debit cards 1,331,515 1,333,679 1,347,461 1,273,089 Credit cards 50,470 54,674 64,462 70,306 ATMs 844 854 884 870 Corporate clients Retail clients - Payrolls - Acquiring - Self-service transactions via ATMs, Internet-bank, mobile bank - Credit cards 70%16% 84% Interest Fees & commissions - Payrolls is one of the key tools for retail client base growth with strong potential – 63,400 of existing corporate clients with 19,080 installed “Internet-client” systems and 15,040 payrolls - Offering cards to existing corporate clients: credit cards for owners, top and mid-level managers and specialists, debit cards for personnel - Pushing cross-sales within retail customer segment 30% 23% 33% 10% 5% 1 cash operations payrolls Key points…developing anchor card product - payrolls …generates strong fee incomeBusiness strategy… * as of April 1, 2014 - Corporate cards
20 Risk management
21 Sound position on capital, liquidity and market risks Healthy capital structure FX structure Balance sheet maturity breakdown Interest rate risk 44,8 46,6 34,6 71,9 63,2 32,1 33,9 58,2 Demand and less than 1 month From 1 to 6 months From 6 to 12 months More than 1 year Assets Liabilities RUB bln 29,4 46,3 53,4 52,3 62,9 32,1 33,9 58,2 Demand and less than 1 month From 1 to 6 months From 6 to 12 months More than 1 year Interest-earning assets Interest-bearing liabilities RUB bln 82% 17 5 15 18% Assets Loans Due from banks&Securities Cash&Other assets 82% 33 4 1 18% Liabilities Deposits Due to banks&Securities Other liabilities *as of April 1, 2014 *as of April 1, 2014*as of April 1, 2014 11,9% 11,7% 11,4% 12,0% 8,8% 9,7% 14,9% 14,6% 13,2% 13,8% 11,2% 11,6% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q4 2013 Q1 2014 Tier 1 Tier 1 + Tier 2 Total regulatory capital (Н1.0) Common equity Tier 1 (Н1.1) Basel I Basel III
22 7 772 7 939 8 671 3 518 3 882 9,8% 10,6% 11,1% 5,3% 5,3%9,2% 10,0% 10,8% 4,7% 5,1% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 SMEs 8 098 8 229 8 135 7 517 7 517 13,3% 14,1% 15,2% 14,8% 16,1% 17,6% 16,2% 15,6% 14,6% 14,6% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Large corporates NPLs, Rub mln Provisions, % of total portfolio NPLs, % of total portfolio 1 009 1 102 1 810 1 350 1 730 3,6% 3,7% 3,2% 1,9% 2,0% 3,0% 3,0% 4,5% 3,2% 3,9%* Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Retail Credit quality management 15 2,10% 0,57% 3,11%3,12% 2,46% 2,10% 2,30% 2,90%2,79% 2,46% Q1 2014Q4 2013Q3 2013Q2 2013Q1 2013 Charges to provisions to avg gross loans, QoQ Charges to provisions to avg gross loans, YtD +Rub 553 mln new NPLs -Rub 149 mln recoveries -Rub 40 write-offs +Rub 776 mln new NPLs -Rub 396 mln recoveries 14 102 16 879 17 270 18 616 12 385 13 129 9,40% 9,54% 10,13% 10,46% 7,36% 7,70% 9,02% 10,28% 10,35% 10,75% 7,36% 7,65% Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 NPLs, Rub mln Provisions, % of total portfolio NPLs, % of total portfolio * no new NPLs no recoveries NPLs categorization Annualized cost of riskNPLs dynamics* * NPL includes the whole principal of loans at least one day overdue either on principal or interest as well as not overdue loans with signs of impairment *2,0% of which is overdue less than 30 days
23 Credit quality As of April 1, 2014 Large corporates SMEs Mortgages Other retail Total Gross loans, including 51,573 76,178 30,622 13,233 171,606 Current loans 85.4% 94.9% 97.0% 93.9% 92.3% Past-due but not impaired, including - 0.3% 2.4% 1.8% 0.7% Less than 90 days - 0.1% 2.3% 1.7% 0.6% Over 90 days - 0.2% 0.1% 0.1% 0.1% Impaired, including 14.6% 4.8% 0.6% 4.3% 6.9% Less than 90 days - 0.8% 0.1% 0.5% 0.4% Over 90 days 14.6% 4.0% 0.5% 3.8% 6.5% Total NPLs 14.6% 5.1% 3.0% 6.1% 7.7% Provisions -16.1% -5.3% -0.9% -4.6% -7.7% Net Loans 43,274 72,151 30,338 12,630 158,393 Provisions to NPLs Ratio 101% Provisions to 90 days+ NPLs 116% Rescheduled Loans 6.5% NPL - the whole amount of loans with principal overdue for more than 1 day as well as loans with any delay in interest payments. RUB mln
24 Recent IFRS results iPhone
25 Financial highlights 1Q14 4Q13 1Q13 YoY QoQ Interest income 5,063 5,005 4,451 13.7% 1.2% Interest expense (2,472) (2,359) (2,271) 8.9% 4.8% Fee and commission income 1,101 1,148 1,222 -9.9% -4.1% Fee and commission expense (185) (208) (115) 60.9% -11.1% Other operating income 138 96 203 -32.0% 43.8% Total operating income b.p. 3,645 3,682 3,490 4.4% -1.0% Operating expense (2,187) (2,417) (2,091) 4.6% -9.5% Provisions for loan impairment (893) (244) (985) -9.3% x3.7 Provisions for impairment of other assets (9) (121) 21 - -92.6% Taxation (128) (176) (102) 25.5% -27.3% Net profit 428 724 333 28.5% -40.9% RUB mln
26 Latest achievements and great potential Operating expense under control Operating efficiency Operating model optimization project developments Implementation Centralization of: - Internet-Bank client support  - Work with orders and requests of Federal Tax Service  - AML/FT control  in Moscow region - Controller function over processing retail “Regular Payments”  - FRAUD-analysis and payment controller function in 1/3 of branches completed by Jan’14 Automation of Internet-Client payments processing  in Moscow region Optimization of retail clients incoming payments processing  Uniting cashier and teller functions  in Moscow region Targeted sale of retail products June 2014 Online retail payment to any recipient  Work with orders and requests of Federal Bailiffs Service  Implementation HR documentation handling Pilot Security Administrators function Pilot Accounts opening / electronic client files Pilot Internal payrolls centralization Pilot FX control Pilot Fixed cash collection routs planning 2014 Credit middle and back office centralized 2014 Handling payroll services 2014 Establishing IT Help Desk/Service Desk 2014 59,9% 58,2% 56,0% 65,6% 60,0% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Cost-to-Income ratio, % 1 299 1 321 1 279 1 360 1 300 326 328 336 404 436 161 176 181 203 170305 310 338 450 281 2091 2135 2134 2417 2187 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Rent and costs relating to premises, equipment and depreciation of intangible assets Taxes other than income tax and contributions to the State Deposit Insurance Agency Administrative and other expenses Staff costs RUB mln
27 Target on NIM achieved Net interest income evolution NIM decomposition Recent changes of retail deposit ratesSpread dynamics 4,5 4,6 4,9 5,0 5,1 -2,3 -2,4 -2,5 -2,4 -2,5 2,2 2,2 2,4 2,6 2,6 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 RUB bln +0,15% -0,09% -0,17% +0,07% Loans Deposits Other Base effect 4,2% 4,2% 4,5% 4,9% 4,9% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 6,4% 6,4% 6,7% 6,9% 6,6% 11,2% 11,5% 11,8% 11,8% 11,9% 4,8% 5,0% 5,1% 4,9% 5,3% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Spread (net) Yields on earning assets (net) Cost of funds 6 Months RUB 1,5-year RUB 6 Months FX 1,5-year FX Sep’13 - -0,25 pps Feb’14 - - -0,5 pps – -0,6 pps -0,5 pps – -0,6 pps Mar’14 - +0,5 pps – +1 pps -0,1 pps – -0,3 pps -0,1 pps – -0,3 pps
28 1 107 1 215 1 247 940 916 1 058 1 137 1 145 1 169 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Net fee income Net fee income with corrected gradual accruals of one-off reclass 2,2 2,2 2,4 2,6 2,6 1,1 1,2 1,2 0,9 0,9 0,20 0,22 0,14 0,10 0,14 -2,1 -2,1 -2,1 -2,4 -2,2 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Net interest income Net fees Other income Operating Expenses Operating results Key pointsNet fees structure Stable operating result Net fees RUB bln RUB mln -1.0% -21.6% +4.4% -13.4% 303 399 409 87 238 334 339 332 335 274 248 253 272 283 219 222 224 234 235 185 1107 1215 1247 940 916 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Settlements Cards Cash transactions Other RUB mln -2.6% -17.3% The bank still maintains one of the highest among peers shares of non-interest income in total revenues before provisions – 29% Diminishing F&C income was due to tougher market competition on fee-generating products pricing, higher fees of payment system and lower business activity Remote channels is the key for further fees growth. In March 2014 we launched full-blown mobile bank, updated internet bank coming soon. First fruits are expected in Autumn 2014
29 Efficiency indicators Net profitOperating profit under provisions pressure ROA, %ROE, % 26,7% 28,8% 31,2% 23,0% 25,8% 6,3% 3,5% 4,6% 13,2% 7,6% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Operating profit before provisions and taxation / Average equity ROE 2,7% 2,9% 3,1% 2,4% 2,8% 0,6% 0,4% 0,5% 1,4% 0,8% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Operating profit before provisions and taxation / Assets ROA -1,0 -1,3 -1,3 -0,4 -0,9 1,4 1,5 1,7 1,3 1,5 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Provisions Operating profit before provisions and taxes 333 188 247 724 428 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Net profit RUB mln -40.9% +28.5%
30 Capital & Governance
31 28% 31% 41% SHAREHOLDER STAKE IN EQUITY Dmitry L. Orlov (Chairman of the Board of Directors) 30.70% Otar L. Margania (Member of the Board of Directors) 18.65% JPM International Consumer Holding Inc. 9.37% Total 58.72% As per MICEX data H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 Moscow Exchange 974,600 2,017,159 565,361 607,579 316,065 OTC 2,141,597 873,225 1,421,277 100,610 65,341 Total 3,119,452 2,894,069 1,993,938 712,089 381,406 Chairman Other management Structure as of 13.05.2013 More than 8,000 individuals and 1,000 companies are among our shareholders with professional investors owning more than 36% Capital structure Share price on MICEXShareholding structure Volumes of trading (shares)Major shareholders Q1 2014 Price to Book Value (P/BV) 0.5 Q1 2014 Price to Earnings (P/E) 6.0 Other 0 360 720 1 080 1 440 1 800 1 10 100 1 000 10 000 100 000 1.6.13 1.8.13 1.10.13 1.12.13 1.2.14 1.4.14 1.6.14 RublesShares Volume Last price
32 V.Bank was awarded as the Bank of the Year in Russia in 2010 Andrey Shalimov was awarded for the Best IR in 2012 CHAIRMAN OF THE MANAGEMENT BOARD Mr. Alexander Dolgopolov GENERAL MEETING OF SHAREHOLDERS BOARD OF DIRECTORS 12 members 9 are non-executive 6 independent System of control - Timely information provision to investors - Full disclosure on web-site - Quarterly IFRS financial reporting with web-cast presentations - Financial reports under IFRS audited from 1991 - Solid and professional team HR and Compensation Committee Continuing excellent reputation recognition: AUDITOR PricewaterhouseCoopers Audit commission Audit committee Internal Control and Audit Service Risk Management MANAGEMENT STRUCTURE MANAGEMENT BOARD 11 members 4 Deputy Chairmen The arrows represent the authorities to appoint or elect the relevant Bank’s bodies and the External Auditor High standards of corporate governance V.Bank has the Best Corporate Governance in Russia, 2013
33 Over 20 years in Top-30 Russian banks amid changing competitive landscape Successfully passed through all crises (1993-94,1998, 2004, 2008) Business model generating solid fees & commissions (40% of revenue) Organic growth in core regions and client segments Focus on operating efficiency One of the most transparent FI in Russia – Best Corporate Governance by World Finance in 2013, leaders of Information Transparency to Shareholders by S&P in 2008, 2007, 2006 Management Board (11 members) with long-term banking experience; the Board of Directors headed by Chairman with 40 years in Soviet and Russian banking systems Positive track-record of communication with investors Loyal clientele due to strong relationships with the customers 60% of client base is concentrated in perspective Moscow Oblast Corporate business focused on high-profitable SME, retail – on mortgages with growing consumer lending share Broad product line based on advanced IT-solutions and remote banking services S O U N D S T R A T E G Y B U S I N E S S S T R E N G T H S C U R R E N T C H AL L E N G E SH I G H S T AN D A R D S  Ongoing pressure on lending rates driven by state banks  Limited demand from key client sector – SME  Still high potential credit risk Russian economy slowdown Still high potential credit risk Competitive landscape for Russian private banks Financial markets turbulence Operating model optimization project realization Investment Summary
34 Investor Relations contacts Maria Gorbunova IR specialist M.Gorbunova@voz.ru Elena Mironova Deputy head of IR E.Mironova@voz.ru +7 495 620 90 71 investor@voz.ru http://www.vbank.ru/en/investors www.slideshare.net/IRTeam Follow us on Twitter: www.twitter.com/vbank_IR Download presentation Download contacts Download our IR app for iPad: Download our IR app for iPhone:
35 Some of the information in this presentation may contain projections or other forward-looking statements regarding future events or the future financial performance of Bank Vozrozhdenie (the Bank). Such forward-looking statements are based on numerous assumptions regarding 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 important factors that we cannot predict with certainty. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecasted in the forward-looking statements. These forward-looking statements speak only as at the date of this presentation and 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 related factors; - 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 the Bank 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 materially from 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 create and 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 to place 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 or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required under applicable laws. Disclaimer

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Investor presentation june-2014_ru

  • 1.
    Bank Vozrozhdenie Promising SMEand retail local franchise Investor presentation June 2014
  • 2.
    2 This page isintentionally left blank
  • 3.
    3 Agenda Key facts Business model Businessoverview Recent IFRS results Investment summary
  • 4.
    4 Over 20 yearsof successful development 1991-1992 1993-1995 Establishment and banking license 34 branches in the Moscow Oblast 1996-1998 2003-20041999-2002 2005-2006 2007-2008 2009-2010 2011-2012 9 new regional branches opened Cash collection and delivery services established Corr. accounts with western banks License for foreign exchange Associate member of VISA International Authorized Bank of the Russian Government Joined S.W.I.F.T. Joined the World Bank development program Cooperation with CIBC S&P rating Rated by the Central Bank as a stable bank after the financial Crisis CIBC becomes a shareholder The 3rd largest branch network Top 10 by deposits from individuals Top 3 in the State Mortgage Program Top 7 mortgage provider Best mid- cap Russian bank (Big Money) $ 177 mln raised by 20th issue 3rd by lending to SME $81 mln EBRD financing Top 10 by bank cards issued Best SME bank in Moscow Oblast Top 10 retail banks in Russia First MBS deal on Rub 4,1 bln Bank’s ADRs traded on the Frankfurt Stock Exchange Established ATM network and a processing center Top 20 by corporate loan portfolio Widest ATM network in the Moscow Oblast Over 100,000 VISA cards issued 17th equity issue raises $33 million Joined Deposit Insurance Program Overall rebranding CRM system development The most transparent bank in Russia (S&P) Top 500 world’s banking brands Best bank IR and best IR professional (Thomson Reuters ) Bank of the Year in Russia in 2010 (The Banker) Over 1,550,000 clients Best public company (Secret Firmy Magazine) Alexander Dolgopolov appointed as the Chairman of the Management Board V.Bank launched project on cost efficiency 2013-2014 Best Corporate Governance, Russia (World Finance) Best IR Management in Russia (Global Banking & Finance review) Best Banking Chairman of the Board in Russia (Global Banking & Finance review) Best IR Management in Russia (Global Banking & Finance review)
  • 5.
    5 Prudent risk-management policy BalancedLending and Funding policy Servicing retail customers throughout their whole life-cycle Servicing Corporate and SME Customers On Each Stage Of Business Development Bank Vozrozhdenie strategy… … 1 700 000 Retail Clients… … 63 400 Corporate and SME Clients… … 21 Region … 143 Office … 874 ATMs Focus On Core Banking Products …service… …via… Increasing efficiency in service delivery Bank Vozrozhdenie - a Community Bank built on strong relationships with SMEs and individual customers
  • 6.
    6 Moscow Oblast isa home territory with historically strong market position 21 region of presence. Focus on the most perspective South and North-West Branches Sub branches Retail offices 34 43 9 86 Total As of 01.06.2014 549 ATMs – every town is under coverage 19 36 2 57 Total 325 ATMs Retail officesBranches Sub branches Distribution network
  • 7.
    7 * RBC mostrecent rankings Key Figures, RUB Assets Loans b.p. Customer Funds Net Income Shareholders equity Retail Clients Corporate Clients Personnel Offices ATMs 210,836 mln 171,606 mln 153,095 mln 428 mln 22,793 mln 1,700,000 63,400 6,066 143 874 Loans to SMEs 6 19 39/19 28 13 Volume of retail deposits Branches/ATMs Net Assets Bank cards issued Rankings* Corporate loans 21 Mortgages 10 Basic information & position in Russian banking system Financial indicators as of April 01, 2014
  • 8.
    8 Ba3/D-/NP, stable BB-/ruAA-, negative MICEXFinancial Index A1 MICEX Moody’s Standard&Poor’s Included in indices Listing BrandFinance Banking 500 survey V.bank ranks among top-10 Russian most valuable banking brands with brand value of $190 million The Banker V.Bank – “The Bank of the year 2010 in Russia” as per the survey of The Banker magazine Market recognition Credit ratings Listing High recognition of brand World Finance V.Bank was awarded for “Best Corporate Governance, Russia”, according to World Finance survey 0 7 14 21 28 35 42 7 10 13 16 19 22 25 01.01.06 01.01.07 01.01.08 01.01.09 01.01.10 01.01.11 01.01.12 01.01.13 01.01.14 S&P S&P international BB- Moody's Ba3 Moody's Interfax Aa3.ru Moody's Aaa Aa A Baa Ba B Caa S&P national scale ruAA- AAA AA A BBB BB B CCC
  • 9.
  • 10.
  • 11.
    11 62% 61% 64%72% 71% 38% 39% 36% 28% 29% 3 490 3 667 3 808 3 682 3 645 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Non-interest income Net interest income 131 130 133 126 128 34 37 41 43 44 164 167 173 168 172 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Retail loans Corporate loans - Customer oriented organic growth - Conservative balance sheet - Primarily deposit funded - Focused regional structure - Increasing efficiency in service delivery Note: all loans are gross loans RUB bln RUB bln 26% 74% RUB bln 29% 71% Business model Business based on relationships… … gives solid non-interest income Loan portfolio development… … funded by customer accounts 110 113 116 112 109 53 56 55 50 44 163 169 171 162 153 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Interest-bearing Deposits Interest-free Current accounts
  • 12.
    12 12 13 1313 12 149 150 155 156 158 11 12 14 12 76,41 1 1 1 1 37 40 33 29 26 210 216 217 211 211 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Cash and equivalents Due from banks Invest. securities pledged under repos Securities Net loans Other assets IEA 80% IEA 82% Assets and liabilities Interest-earning assets grew to 82% of balance sheet Diversified funding structure Liquid assets share at a comfortable level L/D ratio up as client funds replaced by CBR financing RUB bln RUB bln RUB bln 21 21 22 22 23 7 7 5 4 43 1 1 4 17 9 9 10 14 163 169 171 162 153 5,5 8 8 9 9 10 210 216 217 211 211 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Due to other banks Borrowed funds from repos with CBR Client funds Securities issued Other liabilities Subordinated loans Equity 164 167 173 168 172163 169 171 162 153 101% 99% 102% 104% 112% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Gross loans Customer funds L/D 29 26 5 5 6,9 1,7 6,4 19,4% 18,3% Q4 2013 Q1 2014 Securities pledged under repos with CBR Investment securities available for sale Trading securities Cash and cash equivalents
  • 13.
    13 26 26 2524 20 35 36 37 31 29 60 62 62 55 49 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Corporate deposits Corporate accounts Customer funds - corporate Corporate client funds continues dropping… … but not due to clients loss RUB bln Key points 30,7 31,9 30,4 26,4 26,2 33 32 33 32 32 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Average balances on corporate current accounts, Rub mln Number of accounts, thousand FX structure 91% 7% 2% Rub 48.6 billion Rouble US Dollar Euro We are reluctant to raise corporate deposits, a volatile funding source, due to fierce competition and heightened market rates. A decline in corporate accounts resulted from lower average balances across the whole client base that reflected customers’ search for diversification and growing needs of their own businesses in working capital. Share of FX corporate funds grew from 7% to 9 % QoQ on the devaluation effect. -12.3%
  • 14.
    14 Customer funds -retail Retail client funds Credit turnover on card accounts growing RUB bln 84 87 91 87 89 18 20 18 19 16 103 107 109 106 104 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Retail deposits Balances on card accounts RUB bln Key points 73% 19% 8% Rub 104,5 billion Rouble US Dollar Euro 0 5 10 15 20 25 30 FX structure 2012 2013 2014 RUB bln Q1 2012 38.9 Q1 2013 40.3 Q1 2014 41.4 The decline in retail funds was reasoned by seasonal outflow from card accounts during long New Year and Christmas holidays. However, the credit turnover in Q1 2014 improved by 2,7% YoY. FX deposits were in clients’ demand with the proportion in total retail funds growing to 27%. Excluding revaluation effect, retail FX deposits grew by 3,4%. -1.5%
  • 15.
    15 Segment Total creditexposure, RUB mln Large business > 750 Medium-size and small businesses 30 - 750 Micro businesses 6 - 30 Food processing – factories manufacturing different types of high-quality food and beverages. Car stores – range of car parts and accessories, new and used economy class cars most popular in the regions, where people give strong preference to repairing their engines themselves. Clothes factories – small-scale production of clothing and apparel. Local retailer chains – small chains of handy stores “Close-to-House” style for daily shopping located in dormitory area with high density of population. Who are our SMEs? What is our SME Definitions
  • 16.
    16 Loan portfolio Corporate portfoliofree of uncollectable NPLs Retail portfolio with mortgages leading the way RUB blnRUB bln 46,1 50,8 52,0 51,4 51,6 83,4 78,4 80,0 73,3 75,6 1,2 0,9 0,7 0,9 0,5 131 130,2 132,6 125,6 127,8 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Large corporates SMEs Administrations 59% +1,7% 22,8 24,9 27,6 29,5 30,6 8,7 9,8 10,7 11,0 11,2 2,1 2,1 2,2 2,1 2,1 33,6 36,8 40,5 42,6 43,9 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Mortgages Consumer and car loans Credit cards The 3rd mortgage securitization deal on RUB3,45 billion was successfully closed in March 2014 70% +2,8% FX structure * 90% 7% 3% Rub 171,6 billion Rouble US Dollar Euro As of April 1, 2014 20% 41% 18% 10% 11% Moscow Other regions South Regions North-West Regions Moscow Region As of April 1, 2014 Rub 171,6 billion Regional diversification of loan portfolio * *Loan portfolio before provisions for impairment
  • 17.
    17 28,6% 18,4% 25,4% 27,6% up to 90days 91-180 days 181-365 days > 1 year Corporate portfolio RUB bln 72,4% *as of April 1, 2014 … and regional diversification…maintaining industry… Corporate loan book Credit policy sticks to reliable collateral… ….providing mostly working capital… 37% 0% 24% 1% 11% 6% 4% 8% 8% Construction ManufacturingAgriculture Wholesale & retail trade Administrations Other Transport Real estate RUB 127.8 bln *as of April 1, 2014 15% 39% 25% 13% 9% Moscow Oblast Moscow Other regions South regions North-West regions RUB 127.8 bln 12% 2% 21%44% 21% RUB 127.8 bln Real estate Uncollateralized loans & Other collateral Equipment & vehicle Government guarantees Guarantees *as of April 1, 2014 *as of April 1, 2014
  • 18.
    18 Retail lending –promising segment 5 10 15 20 25 01.05.11 01.11.11 01.05.12 01.11.12 01.05.13 01.11.13 01.05.14 Consumer loans, RUB Mortgages, RUB Credit cards, RUB 0,8% 1,6% 1,9% 95,8% up to 30 days 31-180 days 181-365 days > 1 year Retail portfolio RUB bln High-margin consumer loans to customers with apparent cash-flow –management of corporate clients Primarily mortgages under state-related agency JSC “AHML” standards We plan to continue expanding retail loan portfolio, that was an important lending growth driver during recent years Particular focus is on mortgages as the most perspective segment with gradual widening of consumer lending *as of April 1, 2014 Retail loans maturityRetail loan book growth Rates on retail loans Mortgage securitization as a source of long-term funding for loan portfolio expansion 66% 68% 68% 67% 68% 27% 26% 26% 27% 27% 7% 6% 6% 6% 5% 33,6 36,8 40,5 42,6 43,9 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Mortgages Consumer and car loans Credit cards Securitization 1 Rub 4.1 billion in December 2011 Class A with 8.95% coupon rate and Baa2 rating from Moody’s Securitization 2 Rub 4.0 billion in April 2013 Class A with 8.95% coupon rate and Baa2 rating from Moody’s Securitization 3 Rub 3.45 billion in March 2014 Class A with 9% coupon rate and Baa2 rating from Moody’s +3%
  • 19.
    19 acquiring Visa and Mastercard self-service Cardbusiness – sales force of retail business Q2 2013 Q3 2013 Q4 2013 Q1 2014 Payrolls 14,200 14,760 15,040 15,040 Debit cards 1,331,515 1,333,679 1,347,461 1,273,089 Credit cards 50,470 54,674 64,462 70,306 ATMs 844 854 884 870 Corporate clients Retail clients - Payrolls - Acquiring - Self-service transactions via ATMs, Internet-bank, mobile bank - Credit cards 70%16% 84% Interest Fees & commissions - Payrolls is one of the key tools for retail client base growth with strong potential – 63,400 of existing corporate clients with 19,080 installed “Internet-client” systems and 15,040 payrolls - Offering cards to existing corporate clients: credit cards for owners, top and mid-level managers and specialists, debit cards for personnel - Pushing cross-sales within retail customer segment 30% 23% 33% 10% 5% 1 cash operations payrolls Key points…developing anchor card product - payrolls …generates strong fee incomeBusiness strategy… * as of April 1, 2014 - Corporate cards
  • 20.
  • 21.
    21 Sound position oncapital, liquidity and market risks Healthy capital structure FX structure Balance sheet maturity breakdown Interest rate risk 44,8 46,6 34,6 71,9 63,2 32,1 33,9 58,2 Demand and less than 1 month From 1 to 6 months From 6 to 12 months More than 1 year Assets Liabilities RUB bln 29,4 46,3 53,4 52,3 62,9 32,1 33,9 58,2 Demand and less than 1 month From 1 to 6 months From 6 to 12 months More than 1 year Interest-earning assets Interest-bearing liabilities RUB bln 82% 17 5 15 18% Assets Loans Due from banks&Securities Cash&Other assets 82% 33 4 1 18% Liabilities Deposits Due to banks&Securities Other liabilities *as of April 1, 2014 *as of April 1, 2014*as of April 1, 2014 11,9% 11,7% 11,4% 12,0% 8,8% 9,7% 14,9% 14,6% 13,2% 13,8% 11,2% 11,6% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q4 2013 Q1 2014 Tier 1 Tier 1 + Tier 2 Total regulatory capital (Н1.0) Common equity Tier 1 (Н1.1) Basel I Basel III
  • 22.
    22 7 772 7939 8 671 3 518 3 882 9,8% 10,6% 11,1% 5,3% 5,3%9,2% 10,0% 10,8% 4,7% 5,1% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 SMEs 8 098 8 229 8 135 7 517 7 517 13,3% 14,1% 15,2% 14,8% 16,1% 17,6% 16,2% 15,6% 14,6% 14,6% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Large corporates NPLs, Rub mln Provisions, % of total portfolio NPLs, % of total portfolio 1 009 1 102 1 810 1 350 1 730 3,6% 3,7% 3,2% 1,9% 2,0% 3,0% 3,0% 4,5% 3,2% 3,9%* Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Retail Credit quality management 15 2,10% 0,57% 3,11%3,12% 2,46% 2,10% 2,30% 2,90%2,79% 2,46% Q1 2014Q4 2013Q3 2013Q2 2013Q1 2013 Charges to provisions to avg gross loans, QoQ Charges to provisions to avg gross loans, YtD +Rub 553 mln new NPLs -Rub 149 mln recoveries -Rub 40 write-offs +Rub 776 mln new NPLs -Rub 396 mln recoveries 14 102 16 879 17 270 18 616 12 385 13 129 9,40% 9,54% 10,13% 10,46% 7,36% 7,70% 9,02% 10,28% 10,35% 10,75% 7,36% 7,65% Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 NPLs, Rub mln Provisions, % of total portfolio NPLs, % of total portfolio * no new NPLs no recoveries NPLs categorization Annualized cost of riskNPLs dynamics* * NPL includes the whole principal of loans at least one day overdue either on principal or interest as well as not overdue loans with signs of impairment *2,0% of which is overdue less than 30 days
  • 23.
    23 Credit quality As ofApril 1, 2014 Large corporates SMEs Mortgages Other retail Total Gross loans, including 51,573 76,178 30,622 13,233 171,606 Current loans 85.4% 94.9% 97.0% 93.9% 92.3% Past-due but not impaired, including - 0.3% 2.4% 1.8% 0.7% Less than 90 days - 0.1% 2.3% 1.7% 0.6% Over 90 days - 0.2% 0.1% 0.1% 0.1% Impaired, including 14.6% 4.8% 0.6% 4.3% 6.9% Less than 90 days - 0.8% 0.1% 0.5% 0.4% Over 90 days 14.6% 4.0% 0.5% 3.8% 6.5% Total NPLs 14.6% 5.1% 3.0% 6.1% 7.7% Provisions -16.1% -5.3% -0.9% -4.6% -7.7% Net Loans 43,274 72,151 30,338 12,630 158,393 Provisions to NPLs Ratio 101% Provisions to 90 days+ NPLs 116% Rescheduled Loans 6.5% NPL - the whole amount of loans with principal overdue for more than 1 day as well as loans with any delay in interest payments. RUB mln
  • 24.
  • 25.
    25 Financial highlights 1Q14 4Q131Q13 YoY QoQ Interest income 5,063 5,005 4,451 13.7% 1.2% Interest expense (2,472) (2,359) (2,271) 8.9% 4.8% Fee and commission income 1,101 1,148 1,222 -9.9% -4.1% Fee and commission expense (185) (208) (115) 60.9% -11.1% Other operating income 138 96 203 -32.0% 43.8% Total operating income b.p. 3,645 3,682 3,490 4.4% -1.0% Operating expense (2,187) (2,417) (2,091) 4.6% -9.5% Provisions for loan impairment (893) (244) (985) -9.3% x3.7 Provisions for impairment of other assets (9) (121) 21 - -92.6% Taxation (128) (176) (102) 25.5% -27.3% Net profit 428 724 333 28.5% -40.9% RUB mln
  • 26.
    26 Latest achievements andgreat potential Operating expense under control Operating efficiency Operating model optimization project developments Implementation Centralization of: - Internet-Bank client support  - Work with orders and requests of Federal Tax Service  - AML/FT control  in Moscow region - Controller function over processing retail “Regular Payments”  - FRAUD-analysis and payment controller function in 1/3 of branches completed by Jan’14 Automation of Internet-Client payments processing  in Moscow region Optimization of retail clients incoming payments processing  Uniting cashier and teller functions  in Moscow region Targeted sale of retail products June 2014 Online retail payment to any recipient  Work with orders and requests of Federal Bailiffs Service  Implementation HR documentation handling Pilot Security Administrators function Pilot Accounts opening / electronic client files Pilot Internal payrolls centralization Pilot FX control Pilot Fixed cash collection routs planning 2014 Credit middle and back office centralized 2014 Handling payroll services 2014 Establishing IT Help Desk/Service Desk 2014 59,9% 58,2% 56,0% 65,6% 60,0% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Cost-to-Income ratio, % 1 299 1 321 1 279 1 360 1 300 326 328 336 404 436 161 176 181 203 170305 310 338 450 281 2091 2135 2134 2417 2187 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Rent and costs relating to premises, equipment and depreciation of intangible assets Taxes other than income tax and contributions to the State Deposit Insurance Agency Administrative and other expenses Staff costs RUB mln
  • 27.
    27 Target on NIMachieved Net interest income evolution NIM decomposition Recent changes of retail deposit ratesSpread dynamics 4,5 4,6 4,9 5,0 5,1 -2,3 -2,4 -2,5 -2,4 -2,5 2,2 2,2 2,4 2,6 2,6 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 RUB bln +0,15% -0,09% -0,17% +0,07% Loans Deposits Other Base effect 4,2% 4,2% 4,5% 4,9% 4,9% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 6,4% 6,4% 6,7% 6,9% 6,6% 11,2% 11,5% 11,8% 11,8% 11,9% 4,8% 5,0% 5,1% 4,9% 5,3% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Spread (net) Yields on earning assets (net) Cost of funds 6 Months RUB 1,5-year RUB 6 Months FX 1,5-year FX Sep’13 - -0,25 pps Feb’14 - - -0,5 pps – -0,6 pps -0,5 pps – -0,6 pps Mar’14 - +0,5 pps – +1 pps -0,1 pps – -0,3 pps -0,1 pps – -0,3 pps
  • 28.
    28 1 107 1 2151 247 940 916 1 058 1 137 1 145 1 169 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Net fee income Net fee income with corrected gradual accruals of one-off reclass 2,2 2,2 2,4 2,6 2,6 1,1 1,2 1,2 0,9 0,9 0,20 0,22 0,14 0,10 0,14 -2,1 -2,1 -2,1 -2,4 -2,2 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Net interest income Net fees Other income Operating Expenses Operating results Key pointsNet fees structure Stable operating result Net fees RUB bln RUB mln -1.0% -21.6% +4.4% -13.4% 303 399 409 87 238 334 339 332 335 274 248 253 272 283 219 222 224 234 235 185 1107 1215 1247 940 916 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Settlements Cards Cash transactions Other RUB mln -2.6% -17.3% The bank still maintains one of the highest among peers shares of non-interest income in total revenues before provisions – 29% Diminishing F&C income was due to tougher market competition on fee-generating products pricing, higher fees of payment system and lower business activity Remote channels is the key for further fees growth. In March 2014 we launched full-blown mobile bank, updated internet bank coming soon. First fruits are expected in Autumn 2014
  • 29.
    29 Efficiency indicators Net profitOperatingprofit under provisions pressure ROA, %ROE, % 26,7% 28,8% 31,2% 23,0% 25,8% 6,3% 3,5% 4,6% 13,2% 7,6% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Operating profit before provisions and taxation / Average equity ROE 2,7% 2,9% 3,1% 2,4% 2,8% 0,6% 0,4% 0,5% 1,4% 0,8% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Operating profit before provisions and taxation / Assets ROA -1,0 -1,3 -1,3 -0,4 -0,9 1,4 1,5 1,7 1,3 1,5 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Provisions Operating profit before provisions and taxes 333 188 247 724 428 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Net profit RUB mln -40.9% +28.5%
  • 30.
  • 31.
    31 28% 31% 41% SHAREHOLDER STAKEIN EQUITY Dmitry L. Orlov (Chairman of the Board of Directors) 30.70% Otar L. Margania (Member of the Board of Directors) 18.65% JPM International Consumer Holding Inc. 9.37% Total 58.72% As per MICEX data H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 Moscow Exchange 974,600 2,017,159 565,361 607,579 316,065 OTC 2,141,597 873,225 1,421,277 100,610 65,341 Total 3,119,452 2,894,069 1,993,938 712,089 381,406 Chairman Other management Structure as of 13.05.2013 More than 8,000 individuals and 1,000 companies are among our shareholders with professional investors owning more than 36% Capital structure Share price on MICEXShareholding structure Volumes of trading (shares)Major shareholders Q1 2014 Price to Book Value (P/BV) 0.5 Q1 2014 Price to Earnings (P/E) 6.0 Other 0 360 720 1 080 1 440 1 800 1 10 100 1 000 10 000 100 000 1.6.13 1.8.13 1.10.13 1.12.13 1.2.14 1.4.14 1.6.14 RublesShares Volume Last price
  • 32.
    32 V.Bank was awarded as theBank of the Year in Russia in 2010 Andrey Shalimov was awarded for the Best IR in 2012 CHAIRMAN OF THE MANAGEMENT BOARD Mr. Alexander Dolgopolov GENERAL MEETING OF SHAREHOLDERS BOARD OF DIRECTORS 12 members 9 are non-executive 6 independent System of control - Timely information provision to investors - Full disclosure on web-site - Quarterly IFRS financial reporting with web-cast presentations - Financial reports under IFRS audited from 1991 - Solid and professional team HR and Compensation Committee Continuing excellent reputation recognition: AUDITOR PricewaterhouseCoopers Audit commission Audit committee Internal Control and Audit Service Risk Management MANAGEMENT STRUCTURE MANAGEMENT BOARD 11 members 4 Deputy Chairmen The arrows represent the authorities to appoint or elect the relevant Bank’s bodies and the External Auditor High standards of corporate governance V.Bank has the Best Corporate Governance in Russia, 2013
  • 33.
    33 Over 20 yearsin Top-30 Russian banks amid changing competitive landscape Successfully passed through all crises (1993-94,1998, 2004, 2008) Business model generating solid fees & commissions (40% of revenue) Organic growth in core regions and client segments Focus on operating efficiency One of the most transparent FI in Russia – Best Corporate Governance by World Finance in 2013, leaders of Information Transparency to Shareholders by S&P in 2008, 2007, 2006 Management Board (11 members) with long-term banking experience; the Board of Directors headed by Chairman with 40 years in Soviet and Russian banking systems Positive track-record of communication with investors Loyal clientele due to strong relationships with the customers 60% of client base is concentrated in perspective Moscow Oblast Corporate business focused on high-profitable SME, retail – on mortgages with growing consumer lending share Broad product line based on advanced IT-solutions and remote banking services S O U N D S T R A T E G Y B U S I N E S S S T R E N G T H S C U R R E N T C H AL L E N G E SH I G H S T AN D A R D S  Ongoing pressure on lending rates driven by state banks  Limited demand from key client sector – SME  Still high potential credit risk Russian economy slowdown Still high potential credit risk Competitive landscape for Russian private banks Financial markets turbulence Operating model optimization project realization Investment Summary
  • 34.
    34 Investor Relations contacts MariaGorbunova IR specialist M.Gorbunova@voz.ru Elena Mironova Deputy head of IR E.Mironova@voz.ru +7 495 620 90 71 investor@voz.ru http://www.vbank.ru/en/investors www.slideshare.net/IRTeam Follow us on Twitter: www.twitter.com/vbank_IR Download presentation Download contacts Download our IR app for iPad: Download our IR app for iPhone:
  • 35.
    35 Some of theinformation in this presentation may contain projections or other forward-looking statements regarding future events or the future financial performance of Bank Vozrozhdenie (the Bank). Such forward-looking statements are based on numerous assumptions regarding 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 important factors that we cannot predict with certainty. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecasted in the forward-looking statements. These forward-looking statements speak only as at the date of this presentation and 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 related factors; - 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 the Bank 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 materially from 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 create and 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 to place 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 or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required under applicable laws. Disclaimer