Vtb · RUS:VTBR

Vtb — H1 2008 Earnings Presentation

37 slides from Vtb's earnings presentation, Sep 24, 2008

  1. Slide 1: VTB Group 1H 2008 Results Conference Call

    Preliminary unaudited figures VTB Group 1H 2008 Results Conference Call Nikolai Tsekhomsky, CFO, Member of the Management Board September 24, 2008 1 © VTB 2008

  2. Slide 2: Forward-looking statements disclaimer

    Unaudited figures 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 o

  3. Slide 3: Highlights 1H'08 / Update on strategic initiatives

    Preliminary unaudited figures Highlights 1H’08 Update on strategic initiatives 3 © VTB 2008

  4. Slide 4: Highlights 1H'2008

    Highlights 1H’2008 Unaudited figures „ „ Net Net profit profit up up 34.7% 34.7% to to US$ US$ 679 679 million million y-o-y y-o-y „ „ Core Core income income more more than than doubled doubled to to US$ US$ 2.4 2.4 billion billion in in 1H’08 1H’08 y-o-y y-o-y „ „ Net Net interest interest margin

  5. Slide 5: Strategic initiatives update

    Strategic initiatives update Unaudited figures „ 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 o

  6. Slide 6: Financial performance

    Preliminary unaudited figures Financial performance 6 © VTB 2008

  7. Slide 7: Solid net profit backed by healthy core income growth

    Solid net profit backed by healthy core income growth Unaudited figures 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

  8. Slide 8: Business expansion continued

    Business expansion continued Unaudited figures 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 b

  9. Slide 9: Demanding market situation – risk closely monitored

    Demanding market situation – risk closely monitored Unaudited figures 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 char

  10. Slide 10: Managing risk in the securities portfolio

    Managing risk in the securities portfolio Unaudited figures 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

  11. Slide 11: Improved asset structure

    Improved asset structure Unaudited figures 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% portfoli

  12. Slide 12: Liabilities: 2008 debt refinancing is well in hand

    Liabilities: 2008 debt refinancing is well in hand Unaudited figures 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%

  13. Slide 13: Strong capital position

    Unaudited figures Strong capital position 19.0% 16.3% 15% 14.0% 17, 804 7, 646 15 ,858 16, 978 2006 1H07 2007 1H08 Total Tier I+II BIS Group Capital Adequacy Ratio 13 © VTB 2008

  14. Slide 14: Update on current situation

    Preliminary unaudited figures Update on current situation 14 © VTB 2008

  15. Slide 15: Tough environment – strong fundamentals

    Tough environment – strong fundamentals Unaudited figures Environment VTB’s competitive strengths „ Ongoing problems with financial „ Highly resilient business model institutions in US and Europe „ Russia's second largest bank with „ Increased perception of political leading franchise and high-quali

  16. Slide 16: Russian authorities' reaction to recent events

    Russian authorities’ reaction to recent events Unaudited figures „ 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-mont

  17. Slide 17: Concluding remarks

    Concluding remarks Unaudited figures 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

  18. Slide 18: Appendix

    Preliminary unaudited figures Appendix 18 © VTB 2008

  19. Slide 19: Income statement

    Income statement Unaudited figures 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%

  20. Slide 20: Balance sheet

    Balance sheet Unaudited figures 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

  21. Slide 21: Balance sheet

    Balance sheet Unaudited figures 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 24,50

  22. Slide 22: Key financial ratios

    Key financial ratios Unaudited figures 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 o

  23. Slide 23: Foreign currency translation gains modeling in 1H'08

    Foreign currency translation gains modeling in 1H’08 Unaudited figures „ 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

  24. Slide 24: Operating income

    Operating income Unaudited figures 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 US$ million -442 1,214 Core income* 2,444 1H07 1H08 1H07 1H08 * Defined as net interest income befo

  25. Slide 25: Securities portfolio and derivatives

    Securities portfolio and derivatives Unaudited figures 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 1,78

  26. Slide 26: Securities portfolio and derivatives

    Securities portfolio and derivatives Unaudited figures 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 22

  27. Slide 27: Loan portfolio breakdown

    Loan portfolio breakdown Unaudited figures 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%

  28. Slide 28: Retail loan portfolio

    Retail loan portfolio Unaudited figures 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 Mortgage 48% loans 50% FY07 1H08 Car loans and other Consumer loans Mo

  29. Slide 29: Customer deposit breakdown

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

  30. Slide 30: VTB Group public debt instruments repaid this year

    VTB Group public debt instruments repaid this year Unaudited figures 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 E

  31. Slide 31: VTB Group public debt instruments issued in 2008 so far

    VTB Group public debt Instruments issued in 2008 so far Unaudited figures 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% 201

  32. Slide 32: VTB Group public debt instruments outstanding

    VTB Group public debt instruments outstanding Unaudited figures 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 2

  33. Slide 33: VTB Group public debt redemption profile

    VTB Group public debt redemption profile Unaudited figures 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 H

  34. Slide 34: VTB Group syndicated loans maturity schedule

    VTB Group syndicated loans maturity schedule Unaudited figures 1,116 1,120 US$ million 693 623 290 2008 2009 2010 2011 2012 34 © VTB 2008

  35. Slide 35: Market leadership

    Market leadership Unaudited figures 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

  36. Slide 36: VTB Group branch network & headcount

    VTB Group branch network & headcount Unaudited figures 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

  37. Slide 37: Investor Relations

    Unaudited figures Investor Relations Tel: +7 (495) 775-71-39 e-mail: investorrelations@vtb.ru 37 © VTB 2008

VTB Group — H1 2008 Earnings Presentation on 6ix