Vtb · RUS:VTBR

Vtb — Investor Day (October 2012)

61 slides from Vtb's investor day presentation, Oct 29, 2012

  1. Slide 1: 2012 VTB Group Investor Day

    2012 VTB Group Investor Day London 1 October 29, 2012 © VTB 2011

  2. Slide 2: Forward-looking statements 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 JSC VTB Bank ("VTB") and its subsidiaries (together with VTB, the "Group"). Such forward-looking statements are based on numerous as

  3. Slide 3: Agenda

    Agenda Introduction 4 VTB Group 7 Strategy Implementation 11 Retail Banking 14 Corporate and Investment Banking 29 VTB Group Financial Performance and Outlook 51 3 © VTB 2012

  4. Slide 4: Introduction

    Introduction 4 © VTB 2012

  5. Slide 5: Russia: prominent opportunity – fundamentally strong economy

    Russia: prominent opportunity – fundamentally strong economy Prudentapproach Prudent approach to to government governmentspending spending Real economy maintains momentum Budget surplus / (deficit) as % of GDP (FY’2011) 13.6 9.9 6.0 6.4 4.3 8.3 7.0 6.5 6.0 0.8% 5.2 4.3 3.5 (1.4%) Fixed capital inves

  6. Slide 6: Long term potential – solid opportunities for banking business development

    Long term potential – solid opportunities for banking business development Commentary Growth potential driven by low penetration Retail is an important source of growth and margin Growth potential driven by low penetration Loans as % of GDP (FY’2011) Retail loans as % of GDP (FY’2011) 147% 62% 77% 5

  7. Slide 7: VTB Group

    VTB Group Andrey Kostin, President and Chairman of the Management Board 7 © VTB 2012

  8. Slide 8: VTB: successful growth story – through organic growth and M&A

    VTB: successful growth story – through organic growth and M&A VTB corporate history Establishment and Development and Efficient growth recognition growth strategy 1990-2001 2002-2010 2010-2013  Established in October 1990  2005: Launched VTB24  2010: Launched its new strategy based  VTB Bank joi

  9. Slide 9: Acquisitions update: integrations progressing to plan

    Acquisitions update: integrations progressing to plan TransCreditBank Bank of Moscow ■ Distribution network 285 offices ■ Distribution network 296 offices with 5% in Moscow and Moscow region with 46% in Moscow and Moscow region ■ c.2.3 mln retail customers Profile ■ Over 6.5 mln active retail custom

  10. Slide 10: Key strategic initiatives to drive income growth and enhance risk management

    Key strategic initiatives to drive income growth and enhance risk management Growth of profits, ROE and shareholders’ value Focus on reduction of earnings’ volatility and risks Above market Efficient expansion in growth in CIB Retail Optimal Integration of utilisation of recent costs, funding acquis

  11. Slide 11: Strategy Implementation

    Strategy Implementation Herbert Moos, Deputy President and Chairman of the Management Board, CFO 11 © VTB 2012

  12. Slide 12: Well on track to deliver 2013 targets

    Well on track to deliver 2013 targets Outperforming asset target Gross loans and advances to customers 6,790 6,858 6,300 - 4,645 4,590 4,291 6,500 3,611 3,060 5,100 - 5,500 2,545 (RUB bn) (RUB bn) 0 0 2009 2010 2011 1H’12 ... 2013 2009 2010 2011 1H’12 ... 2013 (target) (target) ROE: in line with exp

  13. Slide 13: An attractive equity story

    An attractive equity story VTB has unique platform that position it strongly in the highly attractive Russian and CEE banking metrics The top Substantial Significant universal bank Leading Leading Market leading value creation cross-sell in a highly corporate and investment and efficient opportunity

  14. Slide 14: Retail Banking

    Retail Banking Mikhail Zadornov, President – Chairman of VTB24 Management Board 14 © VTB 2012

  15. Slide 15: Continued growth in Russian retail banking

    Continued growth in Russian retail banking Population, mln people Retail loans to GDP 39% Retail loans to GDP 34% (incl. mortgages) 199 31% Mortgages to GDP 143 16% 15% 74 10% 38 21% 21% 21% 10 11 5% 3% 5% Hungary Czech Poland Turkey Russia Brasil Hungary Czech Poland Turkey Russia Brasil Retail loa

  16. Slide 16: Overview of VTB's retail banking

    Overview of VTB’s retail banking Profile Distribution  Leading Russian retail business with full range of  4th largest branch network in Russia banking products and services for individuals and  Focus on major cities with leading positions in each of SMEs the regions  Steadily developing retail

  17. Slide 17: Retail banking – key goals and results

    Retail banking – key goals and results Key financial targets (2013) Key goals 26% 19% 24% > 20%  Achieving 20%+ ROE and 40%- CIR ROE 8%  Segmented approach to client servicing  Use VTB24’s expertise and technology to develop 2009 2010 2011 1H'2012 2013 retail business in the CIS (target) Source:

  18. Slide 18: Retail banking – robust growth

    Retail banking – robust growth Retail loan portfolio Retail Deposits Term deposits Mortgage loans Car loans Current accounts +13% Consumer loans & other +15% 1,315 950 1,190 861 1,161 824 1,079 265 763 255 242 862 198 609 529 439 470 160 412 329 87 1,050 76 79 907 948 (RUB bn) (RUB bn) 70 881 60 702

  19. Slide 19: Retail banking – solid performance

    Retail banking – solid performance Operating income before provisions Profit before taxation 1H’2011 1H’2012 1H’2011 1H’2012 +49% +68% +52% +300% +21% 67.9 67.9 52.0 56.3 44.6 44.6 (11.6) 41.7 34.9 (2.9) (RUB bn) (RUB bn) 21.5 17.8 13.8 8.2 (23.9)(34.8) 1.5 2.1 Operating Provision Operating Staff co

  20. Slide 20: Retail Banking – segmented approach and distribution

    Retail Banking – segmented approach and distribution Customers Segment-oriented approach in Targeted segments servicing customers products ▪ Dedicated communication channels: premium branches, separate web platform and call-center PRIME ▪ Dedicated personal relationship managers PACKAGE VIP ▪ Packag

  21. Slide 21: VTB24 – leader in operating efficiency in Russia

    VTB24 – leader in operating efficiency in Russia Branches and ATMs of VTB Retail Banking Branches of key peers Branches 19,029 10,160 10,300 3,000.0 ATMs 11000 2,500.0 7,334 9000 7000 2,000.0 4,000 5000 1,800 1,500.0 1,242 1,234 3000 1,000.0 820 1000 568 476 -1000 1,234 641 500.0 -3000 223 205 0.0 -

  22. Slide 22: TransCreditBank – integration timeline

    TransCreditBank – integration timeline Stages of harmonisation of TCB product range with VTB24 SME, CAR LOANS (REDIRECTION TO VTB24) CASH LOANS, CREDIT CARDS, DEPOSITS, ACCOUNTS AND COMMISSION PRODUCTS, MORTGAGES PACKAGES AND SEGMENT-ORIENTED PRODUCTS PAYROLL PROJECTS 1-Apr-2013 5-Nov-2013 15-Jan-20

  23. Slide 23: TransCreditBank – distribution network

    TransCreditBank – distribution network Analysis of combined distribution network Utility of TCB distribution network for VTB24 TCB VTB24 New markets TransCreditBank (TCB) distribution network network network for VTB24 283 branches Branches 283 677 - TCB branches TCB branches Regions 64 69 3 in citie

  24. Slide 24: Bank of Moscow – distribution network

    Bank of Moscow – distribution network Analysis of combined distribution network Utility of BM distribution network for VTB24 BM VTB24 New markets network network for VTB24 Bank of Moscow (BM) distribution network 296 branches Branches 296 677 - BM branches BM branches Regions 56 69 1 in cities with

  25. Slide 25: Bank of Moscow – retail business integration to create synergies

    Bank of Moscow – retail business integration to create synergies Principles of VTB24 and BM interaction Key interaction areas 1. Distribution network development VTB24 and Bank of Moscow joint Retail Banking - Network development criteria approved - VTB24 best practice of branch standards implemente

  26. Slide 26: Leto Bank – new retail mass market initiative

    Leto Bank – new retail mass market initiative Key developments in 2012 Targets for 2013 • Business model developed and approved • New brand and trademark registered; marketing strategy approved • Branch and POS network development • IT infrastructure developed and implemented • Launch of sales in 26

  27. Slide 27: Leto Bank – POS loans build the customer franchise

    Leto Bank – POS loans build the customer franchise POS loans market (2011) 13.2% • POS loans market CAGR 2012-2016 varies from 6% (negative scenario) to 20% (positive scenario) 23.2% HCFB 4.5% OTP Bank • Key parameters of POS loan portfolio: Alfa Bank • Short average term: 10-12 months 8.4% Russian

  28. Slide 28: Leto Bank – cash loans deliver profitable growth

    Leto Bank – cash loans deliver profitable growth 1Q’2012 Cash loans Market share (in RUB bn) (%) • Cash loans – the largest (15 times larger than POS loans Sberbank 980 33.3% market) and fast-growing market (2x faster than POS) VTB24 307 10.4% Russian Agricultural Bank 152 5.1% • Key parameters of c

  29. Slide 29: Corporate-Investment Banking

    Corporate-Investment Banking Yuri Soloviev , First Deputy President and Chairman of the Management Board 29 © VTB 2012

  30. Slide 30: Russian corporate banking sector

    Russian corporate banking sector GDP, nominal (FY’2011) Corporate loans to GDP (FY’2011) 7,298 86% 77% 63% 62% 51% 3,607 2,778 35% (USD bn) 2,431 33% 1,860 774 288 Russia Turkey Malaysia China UK Germany France Russia Turkey Malaysia China UK Germany France Emerging markets Developed countries Emerg

  31. Slide 31: CIB – financial result

    CIB – financial result CIB operating Income CIB profit before taxation 1H’2011 1H’2012 1H’2011 1H’2012 109.8 109.8 93.0 95.6 93.0 (14.1) 72.5 63.1 64.5 (20.5) 56.8 (40.3) (RUB bn) (RUB bn) 29.4 26.8 10.9 10.4 13.0 (47.1) 6.4 5.1 Net interest Net fee and Net result from Other operating Operating Oper

  32. Slide 32: Key goals and results: Investment Banking franchise

    Key goals and results: Investment Banking franchise Key financial targets (2013) Key goals 46.7 50.8 45.2  TOP-3 investment bank in Russia 27.7  Integration into an leverage CIB platform to boost Total Top 3 origination and client franchise in Russia revenues*  International expansion 2009 2010 2

  33. Slide 33: VTB Capital global business model and key achievements

    VTB Capital global business model and key achievements Global Banking  #1 in Investment Bank by Fees YTD’12  #1 in ECM, DCM and MA league tables of 2011  USD122 bn current deal value of M&A and ECM  Pipeline 20 significant cross- border transactions Global Markets Equities FX & Rates Cash Bonds

  34. Slide 34: Key goals and results: loans and deposits

    Key goals and results: loans and deposits Key Financial Targets (2013) Key initiatives 20% 15% - 20% 12%  Shift from extensive to intensive development, client 6% ROE negative base diversification 2009 2010 2011 1H'2012 2013  Optimise sales and service model to medium Source: management estimates

  35. Slide 35: Key goals and results: global transaction banking

    Key goals and results: global transaction banking Key goals ■ Develop and actively promote cash management products ■ Develop the product managers force ■ Improve the product line and quality of services for payment and account management products ■ Strengthen focus on cross-sales Key results and st

  36. Slide 36: Key initiatives: CIB

    Key initiatives: CIB Results expected  Client – deepen penetration outside Top; share of wallet  Increase of large and mid-sized Focus on  Product – away from plain vanilla; distribution; EM business revenue contribution to profits group PnL  Geography – regional network in Russia – internationa

  37. Slide 37: International Strategy

    International Strategy Alexei Yakovitsky , Global CEO at VTB Capital 37 © VTB 2012

  38. Slide 38: VTB Bank and VTB Capital global presence

    VTB Bank and VTB Capital global presence Belarus Ukraine USA Russia Distribution – Germany Georgia key developed financial Azerbaijan centers United Kingdom Origination – CIS, Central Europe, Austria Balkans, Africa and France Middle East Cyprus China Hong Kong Vietnam Follow our clients Angola inte

  39. Slide 39: International strategy

    International strategy  #1 in ECM in 2010, 2011 Integral part of our  7% market share in 2011 in Cash Equity IB strategy from day 1  #1 in DCM in 2010, 2011, 1H’2012  13% in Cash bonds in 2011, 1H’2012  Fixed Income sales team reshuffle New stage with emphasis on  More than 150 YTD on-boarded

  40. Slide 40: Client Coverage and Global Banking

    Client Coverage and Global Banking Riccardo Orcel, Deputy CEO of VTB Group – Head of Client Coverage and Global Banking 40 © VTB 2012

  41. Slide 41: Client coverage: overview

    Client coverage: overview What is client coverage?  Key clients of each industry sector with diversified product demand, appetite for complex products and  Key origination force investment services  Team of Senior Professionals with  Individual approach to fill in specific direct access to key d

  42. Slide 42: Global Banking: overview

    Global Banking: overview What is Global Banking? #1   IB Sector Groups M&A Investment Bank by  ECM Fees YTD'12 (1)  DCM  Infrastructure Capital & Project Finance Advisory Why have this business? $122bn  Post-crisis decline in EM focus of International Banks created business opportunity to be I

  43. Slide 43: Global Banking: selected deals

    Global Banking: overview Selected Deals #1  Bookrunner in Eastern Europe DCM (Dealogic) (1) Russian Railways Ukraine Pending Vivacom Pending USD 2 billion DCM  Domestic Bond Bookrunner in Russia (Dealogic / Bloomberg / Acquisition of GEFCO Sovereign Eurobond Cbonds) (1) Acquisition issue Joint Fin

  44. Slide 44: International progress in Global Banking

    International progress in Global Banking USA Bulgaria China Turkey Liberty BulgarTabac, Polyus Gold $635m Akbank, Turkey International, US Bulgaria Private Placing (ECM) (M&A) (M&A, IC&PF) (M&A) Closed deals  Advised one of the 5  €100m acquisition of 80%  Advised Polyus Gold on  Citi sold its $

  45. Slide 45: Global Banking: international alliance strategy

    Global Banking: international alliance strategy Building a Partnership Network  Global reach critical to being able to provide Russian clients with international service comparable or better than ‘bulge bracket’ banks  Global reach also vital for attracting foreign investors to Russia  Network of

  46. Slide 46: Global Transaction Banking

    Global Transaction Banking Gurinder Nihal, SVP – Head of Global Transaction Banking 46 © VTB 2012

  47. Slide 47: GTB business strategy in VTB Group

    GTB business strategy in VTB Group  to build a top of the class transaction bank GTB aims  to double its revenues every three-four years Internally Externally  Be the provider of cheap source of funding for  Be the provider of choice for our target client base VTB Group  To be known in the mark

  48. Slide 48: GTB performance and key developments in 1H'2012

    GTB performance and key developments in 1H’2012 GTB operating income before provisions Industries share +77% Foreign subsidiaries (3.6%) 19.4 SME (27.4%) Fees Large business (52.9%) 10.9 State sector (16.2%) Foreign subsidiaries (2.9%) (RUB bn) SME (30.1%) Revenues Large business (38.5%) 1H’2011 1H’

  49. Slide 49: GTB business line development within CIB Model

    GTB business line development within CIB Model GTB business line CIS and European subsidiaries TransCreditBank Bank of Moscow1  Set up organisation and  Migration of the Russian  Provide support and help to GTB governance structure Railways and other corporate Business at BOM  Ensure appropriate

  50. Slide 50: Innovation led product offerings

    Innovation led product offerings Current Term Cash Currency Documentary Factoring account services deposits management control business supply chain Main changes:  Electronic Banking system VTB . . . development and Treasury work continue to outperform market Gazprombank  VTB has initiated deposit

  51. Slide 51: VTB Group Financial Performance and Outlook

    VTB Group Financial Performance and Outlook Herbert Moos, Deputy President and Chairman of the Management Board, CFO 51 © VTB 2012

  52. Slide 52: Solid and growing core earnings power

    Solid and growing core earnings power Net interest income Net fee and commission income +98% +167% 227.0 224.8 43.6 (RUB bn) 171.1 39.2 (RUB bn) 152.2 113.6 24.7 21.0 16.3 2008 2009 2010 2011 1H’12 2008 2009 2010 2011 1H’12 annualised annualised Revenues from trading excluding proprietary book Fixed

  53. Slide 53: Scaling down market risk exposure

    Scaling down market risk exposure Equity securities (in RUB bn) 31-Dec-11 31-Mar-12 30-Jun-12 Equity securities 272 265 247 as % of total assets 4.0% 4.1% 3.6% ■ Level of market risk has been materially reduced through 2012 ■ Principal equity book is set to be unwind or hedged by YE’2012 ■ Full focu

  54. Slide 54: Cost management

    Cost management VTB’s cost base was affected by acquisitions BoM +11% 50.7 TCB 42.5 44.6 BoM 33.0 34.3 TCB 27.1 23.5 Avr.: 30.2 bn (RUB bn) (RUB bn) 38.3 2010 avr: 24 1Q’11-3’11 avr: 4Q’11-2’Q112 29.5 30.7 31.3 34.2 bn 30 bn avr: 46 bn 27.1 20.2 4Q’10 1Q’11 2Q’11 3Q’11 4Q’11 1Q’12 2Q’12 4Q’10 1Q’11

  55. Slide 55: Asset quality

    Asset quality Сost of risk down 70 bps q-o-q to 1.0% … … up 30 bps in 1H’12 y-o-y to 1.4%… 1.4% 1.7% 1.1% Provision charge for 1.2% 0.9% 1.0% loan impairment / 0.5% Average gross loan portfolio 20.4 32.3 Provision charge 11.9 for impairment of (RUB bn) (RUB bn) 9.6 17.3 debt financial assets 8.0 6.3

  56. Slide 56: Bank of Moscow – adequately reserved, franchise delivering

    Bank of Moscow – adequately reserved, franchise delivering Bank of Moscow legacy loan portfolio (1) Gross loans Provisioning ratio (in RUB bn) FY’2011 1H’2012 FY’2011 1H’2012 Corporate loan portfolio 897 956 26% 24% Legacy portfolio 438 410 53% 53%  Market Portfolio 174 177 12% 9%  Related Parties

  57. Slide 57: VTB balance sheet – conservative risk weightings

    VTB balance sheet – conservative risk weightings Russia applies higher risk weights of its balance sheet VTB applies higher risk weights of its balance sheet compared to other emerging markets compared to other emerging markets RWA / Assets (1H’2012(1)) RWA / Assets (1H’2012(1)) Russia 103% 85% VTB

  58. Slide 58: VTB balance sheet – conservative leverage ratio

    VTB balance sheet – conservative leverage ratio VTB ‘s leverage ratio is more conservative vs peers Total Assets / Total Equity (1H’2012) 24.7 16.9 14.4 13.4 13.2 13.1 Avr.: 14.2% 12.8 10.8 8.2 Deutsche Santander BNP UniCredit Erste Bank HSBC Standard VTB PKO Bank Paribas Chartered Source: Goldman S

  59. Slide 59: Capital plan

    Capital plan Focus on the capital consolidation  Perpetual hybrid Tier 1 USD 1 bn  Perpetual Hybrid Tier 1 issuance  Subordinated Lower Tier 2 Notes USD 1.5 bn  Additional share issue ≈15 % 10-11% 14.2% 12.8% 9.5% 8.9% 30-Jun-2012 pro-forma pro-forma inc. perpetual and lower tier2 notes inc. tie

  60. Slide 60: VTB Group management targets

    VTB Group management targets VTB is well on track to deliver 2013 targets New strategy to be approved in 2013 2013 Strategy targets Financial targets  Assets: RUB 6,300 – 6,500 bn Done ROE High-teens Loan portfolio: RUB 5,100-5,500 bn  On track to deliver CIR Below 50%  Net profit: On track to RU

  61. Slide 61: VTB is a strong investment opportunity

    VTB is a strong investment opportunity Leading player in Russia National champion  Leading Russian bank with strong and consolidated 2 2 2 2 2 Rank positioning in all key segments – #2 by assets and all key banking metrics Market 17.3% 19.8% 15.4% 13.4% 9.1% – Russia represents over 95% of revenues

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