3. Loan portfolio
Corporate book stalled with some realigning inside
SME
Large corporates
2
1
2
41
Administrations
45
RUB bln
Retail portfolio – key driver of growth
Mortgages
Consumer and car loans
1
+3.9 new loans
-1.5 repayment
46
51
2,1
2,1
83
77
77
2,1
8,5
2,1
8,4
2.6 – outgrew
SME bracket and
moved to large
corps
8,7
78
20,8
22,3
22,8
Q2 2013
Q3'12
Q4'12
Q4 2012
Q1 2013
Enhanced crossselling to existing
clients
Introduction of
new mortgage
program in
March’13
Q1'13
+8.8 new loans
-11.4 repayment
Q3 2012
RUB bln
Credit cards
9,8
24,9
Q2'13
Loans to large corporates - segment with high risk profile - are well-diversified
Other
Moscow Oblast
24%
South regions
as of June 30, 2013
12%
Transport
8%
Agriculture
33%
RUB
50.8 bln
24%
North-West regions
Construction
7%
9%
Manufacturing
RUB
50.8 bln
44%
2%
16%
Moscow
3%
18%
Other regions
Wholesale & retail trade
3
4. Credit quality management
NPLs dynamics
Annualized cost of risk
NPLs, RUB mln *
Provisions, % of total portfolio
NPLs, % of total portfolio
9,40%
9,52%
9,09%
10,13%
9,54%
9,41%
Charges to provisions to avg
gross loans, QoQ
Charges to provisions to avg
gross loans, YtD
10,35%
10,28%
3,12%
2,86%
9,02%
2,46%
2,24%
8,08%
1,83%
2,06%
1,65%
12 297
14 251
14 102
16 879
Q3 2012
Q4 2012
Q1 2013
Q2 2013
1,17%
17 270
Q2 2012
2,79%
2,46%
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
* 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
NPLs categorization: stable with some FX repricing
SMEs
Large corporates
+ Rub 344 mln new NPLs
- Rub 177 mln recoveries
Retail
+ Rub 131 mln new NPLs
no recoveries
+ Rub 207 mln new NPLs
- Rub 114 mln recoveries
17,6%
16,2%
13,2%
10,4%
10,5%
10,5%
9,8%
10,6%
10,0%
9,9%
9,8%
9,2%
10,0%
8 120
7 841
7 765
7 772
7 939
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
12,2%
10,1%
12,2%
13,3%
14,1%
11,9%
3,6%
8,0%
2,7%
3 400
5 445
5 445
8 098
8 229
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
NPLs, RUB mln
Provisions, % of total portfolio
777
3,5%
3,5%
3,1%
2,7%
965
892
3,6%
3,7%
3,0%
3,0%
1 009
1 102
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
NPLs, % of total portfolio
4
15
5. Credit quality
as of 30.06.2013
Gross loans, including
Current loans
RUB mln
Large
corporates
SMEs
50,801
83.8%
Mortgages
79,364
Other
retail
24,867
11,905
Total
166,937
90.0%
98.1%
94.6%
89.7%
-
0.1%
1.2%
1.3%
-
0.1%
0.4%
1.2%
0.2%
Over 90 days
-
0.8%
0.1%
0.7%
4.0%
98%
0.3%
Less than 90 days
Provisions to
NPLs Ratio
Past-due but not impaired, of
them
Impaired, of them
-
16.2%
9.9%
Less than 90 days
5.5%
0.5%
Over 90 days
10.7%
9.4%
16.2%
-14.1%
Total NPLs
Provisions
Net Loans
43,617
0.4%
1.9%
0.7%
3.6%
10.0%
1.9%
5.3%
10.3%
-10.6%
-2.9%
-5.2%
123%
8.1%
70,975
-
0.1% Provisions to
90 days+
NPLs
10.0%
24,139
11,288
-10.1% Rescheduled
Loans
150,019
5.1%
the whole amount of loans with principal overdue for more than 1 day as well
NPL - as loans with any delay in interest payments.
5
6. How we address credit quality challenges
Key challenges
Our response
•
•
To reduce concentration the cap for credit exposure on a
new single borrower was cut from 15% to 10% of
equity, on a group of borrowers – from 25% to 15%
•
Exposure to Top-20 Largest groups of borrowers shall
not exceed 210% of Capital
•
The bank established a new division to centralize work
with collateral with the following objectives:
Review and appraisal of colletarized property
Expertise of third-party appraisal
Regular monitoring of collateral portfolio
Large corporates proved to be the segment
with the highest risk-profile, requiring heavy
provisioning during the recent quarters
Q3 2012
Q4 2012
-32 -67
-67
-337
Q1 2013
-101 -66
Q2 2013
-90-125
-352
-679
Stage 1 (August 2013)
-818
Charges on large corps
Charges on SMEs
-
-1 075
Charges on retail
Primary expertise for borrowers with
exposure above Rub 150 mln
Monitoring of collateral on Top-20
borrowers
Stage 2 (October 2013)
•
Workout of bad loans could take several years
including all the legal issues, overtake and sale
of collateral. Adequate appraisal and liquidity of
collateralized property become crucial to
smoothen the procedure
Primary expertise for borrowers with
exposure above Rub 100 mln
Monitoring of collateral on borrowers
with exposure above Rub 150 mln
Stage 3 (January 2014)
Primary expertise and monitoring of collateral for borrowers with exposure above
Rub 100 mln
6
7. NIM stabilized on the back of interest income growth
Net interest income improvement
Deposit costs raised on the back of gradual repricing
Interest Income
Interest Expenses
2 262
Corporate term deposits
2 253
2 394
2 180
Retail term deposits
Yields on corporate loans
Yields on retail loans
2 237
14,9%
4 263
4 461
4 451
4 646
15,4%
14,9%
14,7%
10,8%
10,9%
11,3%
10,6%
10,9%
7,2%
4 118
14,9%
7,6%
6,7%
7,4%
7,7%
6,4%
6,4%
6,5%
Q4 2012
Q1 2013
Q2 2013
6,1%
-1 856
-2 010
-2 067
-2 271
-2 409
5,8%
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q2 2012
Q3 2012
NIM decomposition
Spread dynamics
Interest Spread
Yield on earning assets (net)
Cost of funds
11,2%
11,4%
11,7%
6,7%
6,7%
7,1%
4,4%
4,7%
Q2 2012
Q3 2012
11,2%
4,9%
5,0%
Q4 2012
Q1 2013
Q2 2013
Other
-0,05%
-0,19%
Base effect
-0,07%
6,5%
4,6%
+0,35%
Deposits
11,5%
6,3%
Loans
4,8%
4,6%
4,7%
4,2%
Q2 2012
Q3 2012
Q4 2012
4,2%
Q1 2013
Q2 2013
7
8. Fees and commissions in focus
Fee income rebound
New developments in remote banking
RUB mln
1 291
125
Payrolls
314
1 320
123
326
1 324
+9.8%
136
1 107
355
1 215
58% of clients use remote banking.
73% of them used more convenient and safe Internet
bank as of July 2013, up from 42% in the YE2012.
97
105
352
Cards
322
Cash
transactions
Settlements
373
375
376
304
384
397
415
• Adding new types of documents
• More flexibility in managing operations
422
Retail and bank card business synergy:
“Vbank with you” Internet bank for retail clients with
new functions coming in H2 2013 – H1 2014:
191
203
192
174
178
Cards
-79
Other exp. -17
-85
-19
-100
-93
-110
-50
-22
-40
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q2 2012
Options to be introduced in 2013:
• Deposit opening
316
317
Other rev.
Corporate business:
• Deposit management
• Payments to any recipient via Internet
• New partnership agreements
Low-cost fee generating products deliver 32% of total
operating income adding stability to revenue base
• Remote sales – tailored decisions for clients
8
9. Cost optimization
Strict control over operating expenses
2 421
2 138
2 091
2 051
RUB mln
2 135
Personnel expenses – main burden on C-I-R
H1’13
4% 7%
6%
4%
5%
3% RUB 4,2 bln
8%
Q2'12
Q3'12
Q4'12
Q1'13
62%
Q2'13
Pilots of H1’13
• Centralization of Internet-Bank client support
service
Release of IT and Security administrators from unusual
excessive functions
• Uniting cashier and teller functions
Speed up of processing client applications
• Automation of Internet-Client payments processing
1 manager can process same number of payments like
2 managers before the pilot introduction
• FRAUD-analysis and payment controller function for
pilot branch moved to HQ
• New road map for retail offices
Staff costs
Administrative expenses
Taxes other than income tax
Contributions to the State Deposit
Insurance Agency
Depreciation of premises, equipment and
amortisation of intangible assets
Other costs relating to premises,
equipment and intelligible assets
Rent
Other
Centralization: pilots to be implemented
• HR documentation handling
• Security Administrators function
• Accounts opening
• Establishing IT Help Desk/Service Desk
• Fixed cash collection routs planning
• Credit middle and back office centralized
• Work with orders and requests of Federal Bailiffs Service
and Federal Tax Service
• FX control
• Handling payroll services
9
11. Questions and answers
Andrey Shalimov
Deputy Chairman of
the Management Board
A.Shalimov@voz.ru
Elena Mironova
Deputy Head of IR
+7 495 620 90 71
E.Mironova@voz.ru
investor@voz.ru
http://www.vbank.ru/en/investors
11
12. Disclaimer
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.
12
