6m 2013 ifrs results
DESCRIPTION
TRANSCRIPT
H1 2013 IFRS Results Consistent operating results in cooling economy
Conference Call
August 27, 2013
2
12 12 12 12 13
138 137 142 149 150
12 12 8 11 12 0,4 0,4 6
1 1 32 33 41 37 40
194 195 209 210
216
Q2'12 Q3'12 Q4'12 Q1'13 Q2'13
Cash andequivalents
Due frombanks
Securities
Loan portfolio
Other assets
Assets and liabilities
RUB bln
Interest-earning assets growth lagging… …strong inflow of customer deposits
RUB bln
RUB bln
Continuous widening of funding base… …will support future loan expansion
151 156 164 167 151 164 163 169
100% 95%
101% 99%
Q3'12 Q4'12 Q1'13 Q2'13
Gross loans Customer funds L/D ratio
24 25 26 26 26
77 78 81 84 87
32 30 36 35 36 19 18
21 18 20
Q2'12 Q3'12 Q4'12 Q1'13 Q2'13
Corporate deposits Retail deposits
Corporate accounts Retail accountsRUB bln
+3,6% +3 +6
20 20 21 21 21 3 3 4
3 1 4 5 6 7 7 7 8 8 8 8 8 8 7 7 9
101 103 107 110 113
51 48 57 53 56
194 195 209 210 216
Q2'12 Q3'12 Q4'12 Q1'13 Q2'13
Current accounts
Term deposits
Securities issued
Due to other banks
Subordinatedloans
Other liabilities
Equity
IEA:
76% IEA:
77% IBL:
90% IBL:
88%
3
Loan portfolio
Corporate book stalled with some realigning inside Retail portfolio – key driver of growth
78 83 77 77
51 46 45 41
1 1 2 2
Q2 2013Q1 2013Q4 2012Q3 2012
SME Large corporates Administrations
2.6 – outgrew
SME bracket and
moved to large
corps
+8.8 new loans
-11.4 repayment
RUB bln
20,8 22,3 22,8 24,9
8,4 8,5 8,7
9,8 2,1 2,1 2,1
2,1
Q3'12 Q4'12 Q1'13 Q2'13
Mortgages Consumer and car loans Credit cardsRUB bln
Enhanced cross-
selling to existing
clients
Introduction of
new mortgage
program in
March’13
Loans to large corporates - segment with high risk profile - are well-diversified
16%
33%
24%
24%
3%
Moscow Oblast
Moscow Other regions
South regions
North-West regions 44%
18%
2%
9%
7%
8%
12%
Construction
Manufacturing
Agriculture
Wholesale & retail trade
Other
Transport
RUB
50.8 bln
+3.9 new loans
-1.5 repayment
RUB
50.8 bln
as of June 30, 2013
4
3 400 5 445 5 445 8 098 8 229
10,1% 12,2% 11,9%
13,3% 14,1%
8,0%
13,2% 12,2%
17,6% 16,2%
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Large corporates
NPLs, RUB mln Provisions, % of total portfolio NPLs, % of total portfolio
8 120 7 841 7 765 7 772 7 939
10,4% 10,5% 10,5% 9,8% 10,6%
10,0% 9,9% 9,8% 9,2% 10,0%
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
SMEs
777 965 892 1 009 1 102
3,6% 3,5% 3,5% 3,6% 3,7%
2,7% 3,1% 2,7% 3,0% 3,0%
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Retail
Credit quality management
15
* 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
3,12%
2,46%
1,17%
2,86%
2,24% 2,79%
2,46% 1,83%
2,06%
1,65%
Q2 2013Q1 2013Q4 2012Q3 2012 Q2 2012
Charges to provisions to avggross loans, QoQCharges to provisions to avggross loans, YtD
+ Rub 344 mln new NPLs
- Rub 177 mln recoveries + Rub 207 mln new NPLs
- Rub 114 mln recoveries
12 297 14 251 14 102 16 879 17 270
9,09% 9,52% 9,40%
9,54% 10,13%
8,08%
9,41% 9,02%
10,28% 10,35%
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
NPLs, RUB mlnProvisions, % of total portfolioNPLs, % of total portfolio
*
+ Rub 131 mln new NPLs
no recoveries
NPLs categorization: stable with some FX repricing
Annualized cost of risk NPLs dynamics
5
Credit quality
as of 30.06.2013 Large
corporates SMEs Mortgages Other
retail Total
Gross loans, including 50,801 79,364 24,867 11,905 166,937
Current loans 83.8% 90.0% 98.1% 94.6% 89.7%
Past-due but not impaired, of them - 0.1% 1.2% 1.3% 0.3%
Less than 90 days - 0.1% 0.4% 1.2% 0.2%
Over 90 days - - 0.8% 0.1% 0.1%
Impaired, of them 16.2% 9.9% 0.7% 4.0% 10.0%
Less than 90 days 5.5% 0.5% - 0.4% 1.9%
Over 90 days 10.7% 9.4% 0.7% 3.6% 8.1%
Total NPLs 16.2% 10.0% 1.9% 5.3% 10.3%
Provisions -14.1% -10.6% -2.9% -5.2% -10.1%
Net Loans 43,617 70,975 24,139 11,288 150,019
Provisions to
NPLs Ratio
NPL -
98%
Rescheduled
Loans
5.1%
the whole amount of loans with principal overdue for more than 1 day as well
as loans with any delay in interest payments.
Provisions to
90 days+
NPLs
123%
RUB mln
6
How we address credit quality challenges
-679
-352
-818
-1 075
-337
-32 -101 -90 -67 -67 -66 -125
Q3 2012 Q4 2012 Q1 2013 Q2 2013
Charges on large corps Charges on SMEs Charges on retail
Key challenges
• 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
Our response
• Large corporates proved to be the segment
with the highest risk-profile, requiring heavy
provisioning during the recent quarters
• 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
Stage 3 (January 2014) Primary expertise and monitoring of collateral for borrowers with exposure above
Rub 100 mln
Stage 2 (October 2013) Primary expertise for borrowers with
exposure above Rub 100 mln Monitoring of collateral on borrowers with exposure above Rub 150 mln
Stage 1 (August 2013)
Primary expertise for borrowers with exposure above Rub 150 mln
Monitoring of collateral on Top-20 borrowers
7
7,2% 7,6% 6,7% 7,4% 7,7%
5,8% 6,1% 6,4% 6,4% 6,5%
10,8% 10,9% 11,3% 10,6% 10,9%
14,9% 14,9% 15,4% 14,9% 14,7%
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Corporate term deposits Retail term deposits
Yields on corporate loans Yields on retail loans
NIM stabilized on the back of interest income growth
Net interest income improvement Deposit costs raised on the back of gradual repricing
NIM decomposition Spread dynamics
6,7% 6,7% 7,1% 6,3% 6,5%
11,2% 11,4% 11,7% 11,2% 11,5%
4,4% 4,7% 4,6% 4,9% 5,0%
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Interest SpreadYield on earning assets (net)Cost of funds +0,35%
-0,19% -0,05% -0,07%
Loans Deposits Other Base effect
4,8% 4,6% 4,7%
4,2% 4,2%
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
4 118 4 263 4 461 4 451 4 646
-1 856 -2 010 -2 067 -2 271 -2 409
2 262 2 253 2 394 2 180 2 237
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Interest Income
Interest Expenses
8
Fees and commissions in focus
New developments in remote banking
-79 -85 -100 -93 -110 -17
-19 -50 -22 -40
191 203 192 174 178
384 397 415
317 422
373 375 376
304
316
314 326
355
322
352
125 123 136
105
97
1 291 1 320
1 324
1 107
1 215
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Payrolls
Cards
Cashtransactions
Settlements
Other rev.
RUB mln
Low-cost fee generating products deliver 32% of total
operating income adding stability to revenue base
Cards
Other exp.
+9.8%
Fee income rebound
Corporate business:
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.
Options to be introduced in 2013:
• Adding new types of documents
• Deposit opening
• More flexibility in managing operations
Retail and bank card business synergy:
“Vbank with you” Internet bank for retail clients with
new functions coming in H2 2013 – H1 2014:
• Deposit management
• Payments to any recipient via Internet
• New partnership agreements
• Remote sales – tailored decisions for clients
9
2 138 2 051
2 421
2 091 2 135
Q2'12 Q3'12 Q4'12 Q1'13 Q2'13
62% 8%
3%
5%
4%
6% 4% 7%
Staff costs
Administrative expenses
Taxes other than income tax
Contributions to the State DepositInsurance AgencyDepreciation of premises, equipment andamortisation of intangible assetsOther costs relating to premises,equipment and intelligible assetsRent
Other
Cost optimization
Personnel expenses – main burden on C-I-R Strict control over operating expenses
RUB mln
• 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
• 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
RUB 4,2 bln
Pilots of H1’13
H1’13
Centralization: pilots to be implemented
10
Net profit affected by continuous heavy provisioning
-0,8 -1,1 -0,6 -1,0 -1,3
1,6 1,8 1,3 1,4 1,5
Operating profit before provisions and taxes
Provisions
Q2’13 Q1’13 Q2’12 Q3’12
+9.5%
Q4’12
33,9% 36,6%
25,8% 26,7% 28,8%
14,0% 11,7% 10,6%
6,3% 3,5%
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Operating profit before provisions and taxation/Average equity
ROE
3,5% 3,8%
2,6% 2,7% 2,9%
1,4% 1,2% 1,1%
0,6% 0,4%
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Operating profit before provisions and taxation / Assets
ROA
Operating efficiency Positive operating performance
ROA, % ROE, %
72,5%
64,8% 58,5% 59,9% 58,2%
2010 2011 2012 Q1'13 Q2'13
RUB mln Cost-to-Income ratio, %
11
Questions and answers
http://www.vbank.ru/en/investors
Elena Mironova
Deputy Head of IR
+7 495 620 90 71
Andrey Shalimov
Deputy Chairman of
the Management Board
12
Disclaimer
Some of the information in this presentation may contain projections or other forward-looking statements regarding future events or the
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