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Bank Vozrozhdenie Promising SME and retail local franchise Investor presentation November, 2013

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Page 1: Investor presentation November 2013

Bank Vozrozhdenie Promising SME and retail local franchise

Investor presentation

November, 2013

Page 2: Investor presentation November 2013

2

This page is intentionally left blank

Page 3: Investor presentation November 2013

3

Agenda

Key facts

Business model

Business overview

Recent IFRS results

Investment summary

Page 4: Investor presentation November 2013

4

Over 20 years of successful development

1991-1992 1993-1995

Establishment

and banking

license

34 branches

in the Moscow

Oblast

1996-1998 2003-2004 1999-2002 2005-2006 2007-2008 2009-2010 2011-2012

9 new regional

branches

opened

Cash collection

and delivery

services

established

Corr. accounts

with western

banks

License for

foreign

exchange

Associate

member of VISA

International

Authorized Bank

of the Russian

Government

Joined S.W.I.F.T.

Joined the

World Bank

development

program

Cooperation

with CIBC

S&P rating

Rated by the

Central Bank

as a stable

bank after

the financial

Crisis

CIBC

becomes a

shareholder

The 3rd

largest

branch

network

Top 10 by

deposits

from

individuals

Top 3 in the

State

Mortgage

Program

Top 7

mortgage

provider

Best mid-

cap Russian

bank (Big

Money)

$ 177 mln

raised by

20th issue

3rd by

lending to

SME

$81 mln

EBRD

financing

Top 10 by

bank cards

issued

Best SME

bank in

Moscow

Oblast

Top 10 retail

banks in

Russia

First MBS

deal on Rub

4,1 bln

Bank’s ADRs

traded on the

Frankfurt

Stock

Exchange

Established

ATM network

and a

processing

center

Top 20 by

corporate

loan portfolio

Widest ATM

network in

the Moscow

Oblast

Over 100,000

VISA cards

issued

17th equity

issue raises

$33 million

Joined

Deposit

Insurance

Program

Overall

rebranding

CRM system

development

The most

transparent

bank in

Russia (S&P)

Top 500

world’s

banking

brands

Best bank IR

and best IR

professional

(Thomson

Reuters )

Bank of the

Year in Russia

in 2010 (The

Banker)

Over 1,550,000

clients

Best public

company

(Secret Firmy

Magazine)

Alexander

Dolgopolov

appointed

as the

Chairman of

the

Management

Board

V.Bank

launched

project on

cost

efficiency

2013

Best Corporate

Governance,

Russia (World

Finance)

Best IR

Management

in Russia

(Global

Banking &

Finance

review)

Page 5: Investor presentation November 2013

5

Prudent risk-management policy

Balanced Lending and Funding policy

Servicing retail customers throughout their whole life-cycle

Servicing Corporate and SME Customers On Each Stage

Of Business Development

Bank Vozrozhdenie

strategy…

… 1 700 000 Retail Clients…

… 63 400 Corporate and SME Clients…

… 21 Region

… 142 Offices

… 863 ATMs

… 6 173 employees

Focus On Core Banking Products

…service…

…via…

Increasing efficiency in service delivery

Bank Vozrozhdenie - a Community Bank built on strong relationships

with SMEs and individual customers

Page 6: Investor presentation November 2013

6

Moscow Oblast is a home territory with

historically strong market position

21 region of presence.

Focus on the most attractive

South and North-West

Branches Sub branches Retail offices

34 42 9 85

Total

As of 01.11.2013

538 ATMs – every town is under coverage

19 36 2 57

Total

325 ATMs

Retail offices Branches Sub branches

Distribution network

Page 7: Investor presentation November 2013

7

* RBC most recent rankings

Key Figures, RUB

Assets

Loans b.p.

Customer Funds

Net Income for 1H13

Shareholders equity

Retail Clients

Corporate Clients

Personnel

Offices

ATMs

216,168 mln

166,937 mln

169,310 mln

521 mln

21,351 mln

1,700,000

63,400

6,173

142

863

Loans to SMEs 6

17

38/19

28

13

Volume of retail deposits

Branches/ATMs

Net Assets

Bank cards issued

Rankings*

Corporate loans 21

Mortgages 9

Basic information & position in Russian banking system

Page 8: Investor presentation November 2013

8

Ba3/D-/NP, stable

BB-/ruAA-, stable

MICEX Financial Index

A1 MICEX

Moody’s

Standard&Poor’s

Included in indices

Listing

BrandFinance Banking 500 survey

V.bank ranks among top-10 Russian most valuable

banking brands with brand value of $190 million

The Banker

V.Bank – “The Bank of the year 2010 in Russia”

as per the survey of The Banker magazine

Market recognition

Credit ratings Listing

High recognition of brand

World Finance

V.Bank was awarded for “Best Corporate

Governance, Russia”, according to World Finance

survey

0

5

10

15

20

25

30

35

40

45

7

10

13

16

19

22

25

01.01.06 01.01.07 01.01.08 01.01.09 01.01.10 01.01.11 01.01.12 01.01.13

S&P

S&P international BB-

Ba3 Moody's

Moody's Interfax

Moody's

Aaa

Aa

A

Baa

Ba

B

Caa

S&P national scale ruAA-

AAA

AA

A

BBB

BB

B

CCC

Aa3.ru

Page 9: Investor presentation November 2013

9

Business model

Page 10: Investor presentation November 2013

10

Personal bank for

corporate and retail customers

Retail customers

Servicing throughout their whole life-cycle

Corporate clients

Servicing on each stage of business

development

Focus on core banking

products

Balanced Credit and

Resource policies

Cooperation with developers

under partnership mortgage

programmes

Customer acquisition

Strong recognition in local

communities

Market strategy

High level of customer

recommendations

Payrolls enhance cross-sales

between retail and corporate

segments

Page 11: Investor presentation November 2013

11

60% 58% 64% 62% 61%

40% 42% 36% 38% 39%

3 773 3 875 3 743

3 490 3 667

Q2'12 Q3'12 Q4'12 Q1'13 Q2'13

Non-interest income Net interest income

124 91 98 131 130

28 31 33 34 37

152 151 156 164

167

Q2'12 Q3'12 Q4'12 Q1'13 Q2'13

Retail loans

Corporate loans

- Customer oriented organic growth

- Conservative balance sheet

- Primarily deposit funded

- Focused regional structure

- Increasing efficiency in service delivery

Note: all loans are gross loans

RUB bln

RUB bln

22%

78%

RUB bln

33%

67%

Business model Business based on relationships… … gives solid non-interest income

Loan portfolio development… … funded by customer accounts

101 103 107 110 113

51 48 57 53 56

152 151 164 163

169

Q2'12 Q3'12 Q4'12 Q1'13 Q2'13

Interest-bearing DepositsInterest-free Current accounts

Page 12: Investor presentation November 2013

12

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

Securitiesissued

Due to otherbanks

Subordinatedloans

Other liabilities

Equity

IEA:

76% IEA:

77% IBL:

90% IBL:

88%

Page 13: Investor presentation November 2013

13

Segment Total credit exposure, RUB mln

Large business > 750

Medium-size and small businesses 30 - 750

Micro businesses 6 - 30

Food processing – factories manufacturing different types of

high-quality food and beverages.

Car stores – range of car parts and accessories, new and used

economy class cars most popular in the regions, where people

give strong preference to repairing their engines themselves.

Clothes factories – small-scale production of clothing and

apparel.

Local retailer chains – small chains of handy stores “Close-to-

House” style for daily shopping located in dormitory area with

high density of population.

Who are our SMEs?

What is our SME Definitions

Page 14: Investor presentation November 2013

14

60,6 59,7 57,5 59,5 57,1

4,4 4,6 4,3 4,3

4,2

65,0 64,3 61,8 63,8 61,2

01.07.13 01.08.13 01.09.13 01.10.13 01.11.13

RUR Corporate FX Corporate

37%

2%

12% 13% 9%

75%

0%

10%

20%

30%

40%

50%

60%

70%

80%

up to 30 mln 30-100 mln 100-750 mln more than 750 mln

RUB bln * as of June 30, 2013

Share of portfolio

Share of clients

42%

10%

6.8%

24 25 26 26 26

32 30 36 35 36

56 55

62 60

62

Q2'12 Q3'12 Q4'12 Q1'13 Q2'13

Term Deposits Current Accounts+2,2% RUB bln

58%

42%

* under RAS

Corporate business Corporate lending – focus on SMEs…

…with 63% of loans less than RUB 0.75 bln issued to 98% of clients

Corporate funding... …mostly nominated in RUB

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

Page 15: Investor presentation November 2013

15

3,2%

13,5%

24,4%

30,1%

11,9%

16,9%

up to 30 days 31-90days

91-180days

181 - 365days

1 - 2 years > 2 years

Corporate portfolio

3

56

29 27

14 4

112

56 54

12

Loan amount

Collateral value

Real

Estate Government

guarantees

Equipment

& Vehicle

Guarantees Other

collateral&

blank

RUB bln

71%

*Guarantees are not taken into account

*as of June 30, 2013

… and regional diversification …maintaining industry…

Conservative risk profile Credit policy sticks to reliable collateral… ….providing mostly working capital…

Average LTV:

55%*

37%

1% 28%

2%

9%

7%

4% 8% 4%

Construction

Manufacturing Agriculture

Wholesale &

retail trade Administrations

Other

Transport

Real estate

RUB

130.2 bln

*as of June 30, 2013

*as of June 30, 2013

14%

39%

24%

13%

11%

Moscow Oblast

Moscow

Other regions

South regions

North-West regions

RUB

130.2 bln

*as of June 30, 2013

Page 16: Investor presentation November 2013

16

Retail lending – promising segment

5

10

15

20

25

01.11.10 01.05.11 01.11.11 01.05.12 01.11.12 01.05.13 01.11.13

Consumer loans, RUB

Mortgages, RUB

Credit cards, RUB

1,0% 2,9% 11,9%

84,2%

up to 90 days 91-365 days 1 - 2 years > 2 years

Retail portfolio

RUB bln

High-margin consumer loans to

customers with apparent cash-flow

–management of corporate clients

Primarily mortgages under state-related

agency JSC “AHML” standards

We plan to continue expanding retail loan portfolio, that was

an important lending growth driver during recent years

Particular focus is on mortgages as the most perspective

segment with gradual widening of consumer lending

*as of June 30, 2013

Retail loans maturity Retail loan book growth (IFRS)

Rates on retail loans Mortgage securitization as a source of long-term funding for loan portfolio expansion

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 cards

Enhanced

cross-selling to

existing clients

Introduction of

new mortgage

programme in

March’13

Securitization 1

Rub 4.1 billion in

December 2011

Class A with 8.95%

coupon rate and Baa2

rating from Moody’s

Securitization 2

Rub 4.0 billion in

April 2013

Class A with 8.95%

coupon rate and Baa3

rating from Moody’s

Page 17: Investor presentation November 2013

17

acquiring

Visa and Mastercard

self-service

Card business – sales force of retail business

Q4 2012 Q1 2013 Q2 2013 Q3 2013

Payrolls 14,000 14,200 14,200 14,760

Debit cards 1,381,959 1,360,308 1,331,515 1,333,679

Credit

cards 46,646 48,297 50,470 54,674

ATMs 819 838 844 854

Corporate

clients

Retail

clients

- Payrolls

- Acquiring

- Self-service transactions via ATMs, Internet-bank, mobile bank - Credit cards

70% 18%

82%

Interest

Fees &

commissions

- Payrolls is one of the key tools for retail client base

growth with strong potential – 63,400 of existing

corporate clients with 18,462 installed “Internet-client”

systems and only 14,767 payrolls

- Offering cards to existing corporate clients: credit cards

for owners, top and mid-level managers and specialists,

debit cards for personnel

- Pushing cross-sales within retail customer segment

39%

22%

22%

14%

3%

1

cash operations

payrolls

Key points …developing anchor card product - payrolls

…generates strong fee income Business strategy… *as of June 30, 2013

Page 18: Investor presentation November 2013

18

Risk management

Page 19: Investor presentation November 2013

19

Sound position on capital, liquidity and market risks

11,6% 12,1% 12,3%

11,9% 11,7%

13,2%

14,2% 14,8% 14,9% 14,6%

11,9%

Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 01.10.2013

Tier 1 Tier 1 + Tier 2

CAR (N1) under CBR rules

11.0%

MIN

Capital position enhanced by subordination

FX structure

Balance sheet structure

Interest rate risk

0

10

20

30

40

50

60

70

80

Demand and lessthan 1 month

From 1 to 6months

From 6 to 12months

More than 1 year

Assets

Liabilities

RUB bln

0

10

20

30

40

50

60

70

80

Demand and lessthan 1 month

From 1 to 6months

From 6 to 12months

More than 1 year

Interest-earning assets

Interest-bearing liabilities

RUB bln

82%

16

5

17

18%

Assets

LoansDue from banks&SecuritiesCash&Other assets

81% 30

4 2

19%

Liabilities

Deposits

Due to banks&Securities

Other liabilities

*as of June 30, 2013

*as of June 30, 2013 *as of June 30, 2013

Page 20: Investor presentation November 2013

20

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 avg gross loans, QoQ

Charges to provisions to avg gross 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 dynamic in different segments: Q2’13 stable with some FX revaluation

Annualized cost of risk NPLs dynamics

Page 21: Investor presentation November 2013

21

Credit quality summary

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

Page 22: Investor presentation November 2013

22

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

to any 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 collaterized 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 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 (from January 2014)

Primary expertise and monitoring of collateral for borrowers with exposure above Rub 100 mln

Stage 2 (from 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 (from August 2013)

Primary expertise for borrowers with exposure above Rub 150 mln

Monitoring of collateral on Top-20 borrowers

Page 23: Investor presentation November 2013

23

Recent IFRS results

Page 24: Investor presentation November 2013

24

Financial highlights

Q2’13 Q1’13 Q-o-Q 1H13 1H12 Y-o-Y

Net Interest Income 2,237 2,180 2.6% 4,417 4,411 0.1%

Net fee and commission income 1,215 1,107 9.8% 2,322 2,417 -3.9%

Trading Income 155 143 8.4% 298 178 67.4%

Total operating income b.p. 3,667 3,490 5.1% 7,157 7,175 -0.3%

Operating expenses (2,135) (2,091) 2.1% (4,226) (4,180) 1.1%

Charges to provisions including (1,309) (964) 35.8% (2,273) (1,502) 51.3%

- provisions for loan impairment (1,290) (985) 31.0% (2,275) (1,188) 91.5%

- provisions for impairment of

other assets (19) 21 - 2 (314) -

Net profit 188 333 -43.5% 521 1,204 -56.7%

RUB mln

Page 25: Investor presentation November 2013

25

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 due to 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

Page 26: Investor presentation November 2013

26

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 active 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/mobile 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

Page 27: Investor presentation November 2013

27

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

• Work with orders and requests of Federal Bailiffs

Service and Federal Tax Service

• FX control

• Handling payroll services

RUB 4.2 bln

Operating structure optimization pilots of H1’13

H1’13

Pilots on centralization to be implemented within next 12M

*as of June 30, 2013

Page 28: Investor presentation November 2013

28

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 taxesProvisions

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, %

Page 29: Investor presentation November 2013

29

Capital & Governance

Page 30: Investor presentation November 2013

30

28%

31% 41%

SHAREHOLDER STAKE IN EQUITY

Dmitry L. Orlov (Chairman of the Board of Directors) 30.70%

Otar L. Margania (Member of the Board of Directors) 18.65%

JPM International Consumer Holding Inc. 9.37%

Total 58.72%

As per MICEX data

H2 2011 H1 2012 H2 2012 H1 2013 H2 2013

Moscow Exchange 974,600 2,017,159 565,361 607,579 316,065

OTC 2,141,597 873,225 1,421,277 100,610 65,341

Total 3,119,452 2,894,069 1,993,938 712,089 381,406

Chairman

Other

management

Structure as of 13.05.2013

More than 8,000

individuals and 1,000

companies are among

our shareholders with

professional investors

owning more than 36%

*Volume growth associated with strategic deals

Capital structure

Share price on MICEX Shareholding structure:

Volumes of trading (shares) Major shareholders

0

360

720

1 080

1 440

1 800

1

10

100

1 000

10 000

100 000

1.11.12 1.1.13 1.3.13 1.5.13 1.7.13 1.9.13 1.11.13

Roubles Shares

Volume Last price

2Q 2013 Price to

Book Value

(P/BV) 0.5

2Q 2013 Price to

Earnings

(P/E) 13.1

Other

Page 31: Investor presentation November 2013

31

V.Bank was

awarded as

the Bank of the

Year in Russia

in 2010

Andrey

Shalimov

was

awarded for

the Best IR

in 2012

CHAIRMAN OF THE

MANAGEMENT BOARD

Mr. Alexander Dolgopolov

GENERAL

MEETING OF

SHAREHOLDERS

BOARD OF DIRECTORS

12 members

9 are non-executive 6 independent

System of control

- Timely information provision to

investors

- Full disclosure on web-site

- Quarterly IFRS financial reporting

with web-cast presentations

- Financial reports under IFRS

audited from 1991

- Solid and professional team

The most

shareholder

transparent bank

in Russia – 2006,

2007, 2008

Dmitry Orlov is included

in top10 of the best bank’s

managers 2009

HR and Compensation

Committee

Continuing excellent reputation recognition:

AUDITOR PricewaterhouseCoopers

Audit commission

Audit committee

Internal Control

and Audit Service Risk Management

MANAGEMENT STRUCTURE

MANAGEMENT BOARD

11 members

4 Deputy Chairmen

The arrows represent the authorities to appoint or elect

the relevant Bank’s bodies and the External Auditor

High standards of corporate governance

V.Bank has

the Best

Corporate

Governance in

Russia, 2013

Page 32: Investor presentation November 2013

32

Over 20 years in Top-30 Russian banks amid

changing competitive landscape

Successfully passed through all crises (1993-94,1998,

2004, 2008)

Business model generating solid fees & commissions

(40% of revenue)

Organic growth in core regions and client segments

Focus on operating efficiency

One of the most transparent FI in Russia – Best

Corporate Governance by World Finance in 2013,

leaders of Information Transparency to Shareholders

by S&P in 2008, 2007, 2006

Management Board (11 members) with long-term

banking experience; the Board of Directors headed by

Chairman with 40 years in Soviet and Russian

banking systems

Positive track-record of communication with investors

Loyal clientele due to strong relationships with the

customers

60% of client base is concentrated in perspective

Moscow Oblast

Corporate business focused on high-profitable

SME, retail – on mortgages with growing consumer

lending share

Broad product line based on advanced IT-solutions

and remote banking services

S O U N D S T R A T E G Y B U S I N E S S S T R E N G T H S

C U R R E N T C H A L L E N G E S H I G H S T A N D A R D S

Ongoing pressure on lending rates driven by state banks

Limited demand from key client sector – SME

Still high potential credit risk

Russian economy slowdown

Still high potential credit risk

Financial markets turbulence

Competitive landscape for Russian banks

Operating model optimization project realization

Investment Summary

Page 33: Investor presentation November 2013

33

+7 495 620 90 71

[email protected]

http://www.vbank.ru/en/investors

Follow us on Twitter:

www.twitter.com/vbank_IR

Investor Relations contacts

Yulia Vinogradova, Advisor to the Chairman

[email protected]

Elena Mironova, Deputy head of IR

[email protected]

Maria Gorbunova, IR specialist

[email protected]

Download presentation: Download contacts:

Page 34: Investor presentation November 2013

34

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.

Disclaimer