Vtb · RUS:VTBR

Vtb — Investor Presentation (November 2008)

48 slides from Vtb's investor presentation, November 2008

  1. Slide 1: Investor Presentation

    Investor Presentation 0 © VTB 2008

  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 ("VTB") and its subsidiaries (together with VTB, the "Group"). Such forward-looking statements are based on numerous assumpt

  3. Slide 3: Agenda

    Franchise and Strategy 3 Macroeconomic Overview 10 Russian Banking Sector 15 1H 2008 Financial Results 18 Appendix 27 2 © VTB 2008

  4. Slide 4: Franchise and Strategy

    Franchise and Strategy Macroeconomic Overview Russian Banking Sector 1H 2008 Financial Results Appendix 3 © VTB 2008

  5. Slide 5: VTB performance at a glance

    VTB performance at a glance Total assets BIS capital adequacy ratio US$ billion 100 25% 3% 80 GR: 7 20% C A 60 1.3% 15% 2.3% 2.4% 40 108.8 92.6 10% 15% 15.0% 52.4 12.0% 20 36.7 5% 11.8% 11.6% 17.8 0 0% 2004 2005 2006 2007 1H08 2004 2005 2006 2007 1H08 * Tier I Tier II less deductions Net profit Retu

  6. Slide 6: Leading Russian universal banking group…

    Leading Russian universal banking group… Retail Business Corporate Business Investment Business Loans to large and Research Loans to individuals medium-sized business Consumer loans Global markets Trade and export finance Mortgages Deposit and settlement Fixed income Car loans services Equities Cred

  7. Slide 7: …with strong market position in Russia and abroad

    …with strong market position in Russia and abroad Russia CIS Africa & Asia Europe 81% in total assets 5% in total assets 14% in total assets ƒ # 2 banking group ƒ 336 branches ƒ Presence in China, ƒ Presence in the in Russia in terms across Ukraine, India, Vietnam, UK, Austria, of assets, loans Geor

  8. Slide 8: VTB and global peers in 2007

    VTB and global peers in 2007 Total assets, USD billion Overdue loans / gross loans, % 1,187 819 300 6 260 4.6 5 4.2 3.7 202 4 3.6 200 3.1 3.0 2.7 3 93 2 1.4 100 50 49 48 1 0 0 ICBC Bank of State Banco VTB Bank OTP Yapi Ve Kredi VTB ICBC State Bank of PKO Banco OTP Tatra China Bank do Pekao Bank Bank

  9. Slide 9: Clear strategy to achieve strong growth

    Clear strategy to achieve strong growth „ Consolidate existing leading position in Russian corporate banking „ Develop the whole range of investment banking products and services „ Aggressively grow market share in attractive Russian retail banking sector and expand retail network „ Further expand p

  10. Slide 10: 1H 2008 strategic initiatives update

    1H 2008 strategic initiatives update „ VTB24 profitable ~ US$ 75 mln in 1H’08* „ Branch expansion program essentially completed: 90 VTB24 Retail Retail banking banking branches opened to total 418 „ New deposit sales model with more competitive pricing „ More selective lending with focus on maturiti

  11. Slide 11: Macroeconomic Overview

    Franchise and Strategy Macroeconomic Overview Russian Banking Sector 1H 2008 Financial Results Appendix 10 © VTB 2008

  12. Slide 12: Tough environment

    Tough environment Major indexes development Perceived high risks „ Ongoing problems with financial % RTS 2008: b48% institutions in US and Europe 130.0 „ Increased perception of political risks 120.0 in Russia 110.0 „ Increased volatility in the global 100.0 DJ 2008: b19% capital markets 90.0 „ Wide

  13. Slide 13: Strong Russian state finances

    Strong Russian state finances Federal budget balance „ Russia is one of the fastest growing 8.1% 8.4% 5.9% 7.6% economies in the world RUR billion 1,821 2,167 „ Real GDP growth in 2007 stood at 1,939 1,450 8.1% and is forecasted at 7.1% - 7.2% in 2008 „ Federal budget demonstrates 2005 2006 2007 Jan

  14. Slide 14: Low leverage and real wages growth to keep consumption afloat

    Low leverage and real wages growth to keep consumption afloat % 20 „ Average leverage in the economy is low 16 „ Mutual funds and non-government 12 pension funds have US$ 50bn under management, i.e. only 3% of 8 GDP 4 „ Credit to households expanded 0 rapidly but is only 14% of income Jan 05 Aug 05

  15. Slide 15: Russian authorities' reaction to recent events

    Russian authorities’ reaction to recent events „ Finance Ministry doubles potential budget fund deposits at 28 banks Direct Direct banking banking system system to 1.5 trillion roubles liquidity liquidity injections injections „ Budget funds auctioned for 1-week, 5-weeks and 3-months „ Banks' reserv

  16. Slide 16: Russian Banking Sector

    Franchise and Strategy Macroeconomic Overview Russian Banking Sector 1H 2008 Financial Results Appendix 15 © VTB 2008

  17. Slide 17: Significant potential for underpenetrated Russian banking market

    Significant potential for underpenetrated Russian banking market Total Banking Assets Per Capita* Retail Banking Penetration** USD Developed Economies Developing Economies Retail Deposits/GDP Retail Loans/GDP 15 000 40% 233,931 137,923 11,437 12 000 14.7% 9.8% 28.4% 8.0% 7.8% 19.2% 133,558 30% 9 000

  18. Slide 18: Strong growth in the Russian banking sector

    Strong growth in the Russian banking sector Total banking assets Recent development and banking penetration* +20% 983 ƒ Strong banking asset growth over the last years 820 ƒ Corporate loans and deposits grew by 24% % CA G R: 47 and 22% in 1H2008, respectively 533 ƒ Retail loans and deposits increase

  19. Slide 19: 1H 2008 Financial Results

    Franchise and Strategy Macroeconomic Overview Russian Banking Sector 1H 2008 Financial Results Appendix 18 © VTB 2008

  20. Slide 20: Solid net profit backed by healthy core income growth

    Solid net profit backed by healthy core income growth Net profit* +34.7% „ Net profit increased by 34.7% to US$ 679 million in H1’08 from US$ 504 million in H1’07 „ Strong Q2’08 with net profit up to US$ 558 million US$ million 679 „ Core income more than doubled in H1’08 504 year on year due to sig

  21. Slide 21: Business expansion continued

    Business expansion continued Loans to customers (gross) +29.3% „ Total loans increased by 29.3% to US$ 77.6 billion from the year end 2007 77,611 60,021 „ Corporate loans increased by 25.0% to US$ 65.4 billion US$ million 12,175 7,682 +58.5% „ Retail loans up by 58.5% to US$ 12.2 billion, +25.0% 65,

  22. Slide 22: Demanding market situation – risk closely monitored

    Demanding market situation – risk closely monitored 176.5% 1.8% 159.1% 1.7% 150.6% 1.3% 3.2% 2.5% 2.1% 2.7% 592 526 1.4% 442 1.7% US$ million 2006 2007 1H08 Allowance for loan impairment/Total gross loans 2006 2007 1H08 Overdue and rescheduled loans/Total gross loans Provision charge for loan impair

  23. Slide 23: Managing risk in the securities portfolio

    Managing risk in the securities portfolio Total securities -18.0% „ Securities portfolio cut by US$ 2.4 billion in 1H’08 13,511 „ 10.63% stake in Alrosa sold in Q2’08 with a pre-tax gain of US$ 51 million 1,633 -16.4% „ Proprietary book and risk limits revised. Securities portfolio reduction is plan

  24. Slide 24: Improved asset structure

    Improved asset structure Total assets Breakdown of assets (as % of total) +17.4% 108,754 Cash and 6.5% mandatory 5,829 reserves 5.3% 5,805 92,609 +20.7% 4,831 10,560 5,985 -3.0% Customer 63.2% 11,078 9,733 loans 69.4% +8.5% 13,511 -18.0% Securities 14.6% US$ million +28.9% portfolio 10.2% 75,482 58,

  25. Slide 25: Liabilities: 2008 debt refinancing is well in hand

    Liabilities: 2008 debt refinancing is well in hand Total liabilities Breakdown of liabilities (as % of total) +20.3% Customer 48.7% 91,573 deposits 48.7% 76,108 32,708 +43.2% Retail 14.0% 22,836 deposits 13.5% 14,256 -11.9% 16,174 Corporate 34.7% US$ millions deposits 35.2% +20.2% 32,237 26,415 Whol

  26. Slide 26: Strong capital position

    Strong capital position 19.0% 16.3% 15,8% 14.0% 17, 804 7, 646 15 ,858 16, 978 2006 1H07 2007 1H08 Total Tier I+II BIS Group Capital Adequacy Ratio 25 © VTB 2008

  27. Slide 27: Concluding remarks

    Concluding remarks Future progress in core business VTB Group Targets by 2010 expected „ Retail: increasing contribution to net profit „ Grow faster than Russian banking market both in corporate and retail business „ Investment banking: significant new revenue generation „ Increase share of retail b

  28. Slide 28: Appendix

    Appendix 27 © VTB 2008

  29. Slide 29: Income statement

    Income statement US$ million H1/08 H1/07 % Q2/08 Q1/08 % Q2/07 % FY/07 Interest income 4,316 2,235 93.1% 2,211 2,105 5.0% 1,176 88.0% 5,387 Interest expense -2,183 -1,231 77.3% -1,157 -1,026 12.8% -651 77.7% -2,831 Net interest income 2,133 1,004 112.5% 1,054 1,079 -2.3% 525 100.8% 2,556 Provision c

  30. Slide 30: Balance sheet

    Balance sheet US$ million 30-Jun-08 31-Dec-07 % 31-Mar-08 % 30-Jun-07 Assets Cash and short-term funds 4,377 5,160 -15.2% 5,028 -12.9% 3,441 Mandatory cash balances with central banks 1,428 825 73.1% 1,318 8.3% 850 Financial assets at fair value through profit or loss 8,523 10,436 -18.3% 8,431 1.1%

  31. Slide 31: Balance sheet

    Balance sheet US$ million 30-Jun-08 31-Dec-07 % 31-Mar-08 % 30-Jun-07 Liabilities Due to other banks 11,730 14,794 -20.7% 11,689 0.4% 5,753 Customer deposits 44,609 37,098 20.2% 43,603 2.3% 25,083 Other borrowed funds 7,027 5,176 35.8% 5,437 29.2% 4,679 Debt securities issued 24,508 16,489 48.6% 18,

  32. Slide 32: Key financial ratios

    Key financial ratios H1/08 H1/07 Q2/08 Q1/08 Q2/07 FY/07 (1) Net Interest Spread 4.3% 3.9% 4.0% 4.7% 3.9% 4.1% Net Interest Margin (2) 4.8% 4.1% 4.5% 5.1% 4.1% 4.4% (3) Cost to income 57.1% 56.4% 48.2% 74.9% 56.8% 53.6% (4) Return on equity 8.0% 10.3% 13.0% 2.9% 9.7% 12.3% Return on assets (4) 1.4%

  33. Slide 33: Foreign currency translation gains modeling in 1H'08

    Foreign currency translation gains modeling in 1H’08 „ The table below is a summary of possible foreign currency translation gains represented as if VTB left functional currency in US$ in order to show H1’08 and H1’07 results on a comparable basis (i.e. transferring the H1’08 gains from equity to P&

  34. Slide 34: Operating income

    Operating income Operating income Operating income breakdown 51.5% FX gains 168 less 2,238 losses 413 Trading 87 income 1,477 -177 Provisions and other operating income 8 US$ million -442 US$ million 1,214 Core income* 2,444 1H07 1H08 1H07 1H08 * Defined as net interest income before provisions and

  35. Slide 35: Securities portfolio and derivatives

    Securities portfolio and derivatives 30.06.08 At fair value Repo + loaned Available- Held-to- Total in US$ mln through P&L securities for-sale maturity Debt securities 6,017 1,404 447 272 8,140 - Russian 5,228 928 169 161 6,486 - Foreign 789 476 278 111 1,654 Equity securities 1,785 4 428 0 2,217 Al

  36. Slide 36: Securities portfolio and derivatives

    Securities portfolio and derivatives 31.12.07 At fair value Repo + loaned Available- Held-to- Total In US$ mln through P&L securities for-sale maturity Debt securities 7,623 1,986 268 5 9,882 - Russian 6,758 1,009 102 0 7,869 - Foreign 865 977 166 5 2,013 Equity securities 2,253 226 590 0 3,069 Alro

  37. Slide 37: Loan portfolio breakdown

    Loan portfolio breakdown Corporate loans ( gross) Customer loans breakdown by sectors 25.0% Finance 20% Trade and 20% 12% commerce 12% Individuals 13% 16% Manufacturing 9% 7% Building 8% construction 12% 5% Government bodies 3% 4% Metals 5% Oil and Gas 6% 5% Food and agriculture 4% 4% 65,436 5% Tran

  38. Slide 38: Retail loan portfolio

    Retail loan portfolio Loans to individuals (gross) Breakdown by loan type +58.5% Consumer 40% 12,175 loans +38.5% 1,288 39% 7,682 4,787 +54.9% 12% 930 Car loans and other 11% 3,091 6,100 US$ million +66.6% 3,661 48% Mortgage loans 50% FY07 1H08 Car loans and other Consumer loans Mortgage loans FY07

  39. Slide 39: Customer deposit breakdown

    Customer deposit breakdown Customer deposit breakdown Breakdown of individuals’ deposits +20.2% +15.8% 12,372 10,683 +19.8% 3,564 US$ million 2,974 +14.3% 44,609 7,709 8,808 37,098 12,372 FY07 1H08 10,683 +15.8% Term deposits Current accounts Breakdown of corporate deposits +20.0% US$ million +22.0%

  40. Slide 40: VTB Group public debt instruments repaid this year

    VTB Group public debt instruments repaid this year Amount Borrower Instrument Maturity Date Coupon (US$, mln) 2008 VTB Europe 73 Debt Instruments January 2008 E+1.2% VTB Europe 150 Debt Instruments June 2008 4.375% VTB N-W 300 Debt Instruments July 2008 6.875% VTB 1,750 Series 10 EMTN 1 August 2008

  41. Slide 41: VTB Group public debt instruments issued in 2008 so far

    VTB Group public debt Instruments issued in 2008 so far Amount Maturity Date/ Put Borrower Date of Issue Instrument Coupon (million) or Call Option Domestic Ruble VTB24 February 2008 RUR 10,000 February 2013 7.70% Bond May 2018/ May VTB May 2008 USD 2,000 Series 4 EMTN 2 6.875% 2013 – put option Dom

  42. Slide 42: VTB Group public debt instruments outstanding

    VTB Group public debt instruments outstanding Amount (US$, Maturity Date/Put or Borrower Instrument Coupon mln) Call Option 2008 VTB 1,176 Series 3 RUB EMTN 2 November 2008 7.25% VTB 550 Series 1 EMTN 1 December 2008 6.875% Subtotal 1,726 2009 VTB 1,425 Series 11 EUR EMTN 1 March 2009 E+0.6% VTB 392

  43. Slide 43: VTB Group public debt redemption profile

    VTB Group public debt redemption profile VTB Group public debt maturity profile* 2,317 500 1,726 1,800 392 500 1,288 1 176 500 538 2 138 2 000 1 425 1 200 1 000 US$min 800 750 550 450 400 2008 H2 2009 H1 2009 H2 2010 H1 2010 H2 2011 H1 2011 H2 2012 H1 2012 H2 2013 H1 2013 H2 2014 H1 2014 H2 2015 H1

  44. Slide 44: VTB Group syndicated loans maturity schedule

    VTB Group syndicated loans maturity schedule 1,116 1,120 693 623 US$ million 290 2008 2009 2010 2011 2012 43 © VTB 2008

  45. Slide 45: Market leadership

    Market leadership VTB corporate loans market share and VTB corporate deposits market share market position and market position 10.7% 11.0% 11.0% 10.9% 10.9% 9.4% 10.2% 9.0% 8.7% 7.4% 2 2 2 2 2 2 2 2 2 2 2005 2006 2007 1Q08 2Q08 2005 2006 2007 1Q08 2Q08 VTB retail loans market share and VTB retail de

  46. Slide 46: VTB Group branch network & headcount

    VTB Group branch network & headcount VTB Group branch network 30-Jun-08 31-Dec-07 % y-o-y 31-Mar-08 % q-o-q 30-Jun-07 31-Dec-06 Branches 1,001 932 69 980 21 825 778 Russia 659 583 76 626 33 522 506 of which VTB24 418 328 90 378 40 198 163 CIS & Europe 342 349 -7 354 -12 303 272 VTB Group headcount 3

  47. Slide 47: Strong fundamentals for future business success

    VTB’s competitive strengths Strong fundamentals for future business success „ Highly resilient business model „ Russia's second largest bank with leading franchise Unique VTB positioning and high-quality customer base „ Universal banking uniquely suited to Russia „ Strong brand awareness and state o

  48. Slide 48: Investor Relations

    Investor Relations Tel: +7 (495) 775-71-39 e-mail: investorrelations@vtb.ru 47 © VTB 2008

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