2. 2011 Highlights
Results above planned: NI of RUB 1 594 mln, up 2,7 times YoY
Assets increased by 10.7% YoY to RUB 183 888 mln
Total net loan growth was 19.2% YoY to RUB 137 365 mln
Corporate loan portfolio up by 14.6% YoY to RUB 113 003 mln
Retail loan portfolio up by 46.7 % YoY to RUB 24 362 mln
Increase in client funds by 11.4% YoY to RUB 145 142 mln
Loan/deposit ratio improved by 621 bps YoY to 94,6%
NPL ratio decreased by 278 bps YoY to 7,7%
NIM stood at 4.3% for 2011, up by 64 bps YoY.
In Q4 it reached 4.9%, highest since 2009
Spread was 6.2% for 2011, in Q4 grew by 68 bps QoQ to 7.1%
Net fees and commissions grew by 55.5% for 2011 to RUB 4,822 mln
Cost of risk was 1.8%, same level as in 2010
Sufficient capital base (CAR: 13.8%, core Tier 1: 11.9% ), well above
regulatory requirements
ROE was 9,1% for 2011 up from 3,5% in 2010
2
4. NIM recovery on the back of significant decrease of funding
costs
+2,6% +13,2%
Interest 13.6 14,0 Interest income +2,9%
Interest expenses
Income and
Interest 3.3 3.1 3.5 3.6 3.7
Expenses, R
-1.9 -1.8 -1.7 -1.6 -1.5
UB bln -6.5
-8.1
-5,6%
-19,8% -20,4%
2010 2011 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11
+0,7 pps +1,4 pps
6.3% 6.2%
NIM
Net interest spread
7.1%
4.3% 6.3% 6.4%
NIM and 3.6%
5.8%
5.1% 4.9%
4.3% 4.6%
Spread 3.5% 3.2%
evolution
2010 2011 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11
4
5. Strong dynamics of operating income contributes to
operating efficiency
+30,2% Net interest income Net fee income
0.6 Other income Operating expenses
+43,8%
0.5 4.8 +9,7%
Operating 3.9 0.1 0.1
0.2
0.1 0.2 1.4
Income and 7.5 1.1 1.0
1.2 1.3
5.5 2.2
2.0
Expenses, R 1.4 1.4 1.9
UB bln 1
-7.2
2
-8.4
-2.3 -1.8 -2.1 -2.1 -2.4
+16,8%
+6,8%
+16,3%
2010 2011 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11
-7,7 pps -22,2 pps
Other expenses
86,2% Personnel expenses
72,5%
Cost to 32% 64,8%
27%
70,8%
66,1%
35% 60,1% 64,0%
Income 29%
26%
24% 28%
before 40% 38%
provisions,% 51%
42% 40% 36% 36%
2010 2011 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11
5
6. Solid profit growth despite significant charges to provisions
+274%
+66,8% Operating income before provisions
Provisions -1,0%
Operating 4.5
profit and 2.7 1.4 1.4
1.1
provisions, R 0.4
0.7
UB bln 0.0 -0.4
-0.6 -0.7
-1.9 -0.7
-2.3
+23,1%
2010 2011 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11
+174% +156%
Net profit +14,6%
Net
profit, RUB 1.6
0.5
bln 0.6 0.3
0.4 0.4
0.2
2010 2011 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11
6
7. Assets
Balance sheet remains profitable… …despite seasonal inflow of liquid assets
RUB bln RUB bln
177 184 25%
174 174 24%
166 Cash and 0.7
30 27 40 equivalents 7.5
34 3.8 CBR bonds
33 Due from
14 17 91 banks
4.5
6 17
14 19 21 23 Municipal and federal
16 Securities 8.5 bonds
16
Corporate bonds and
27.2
Retail
loans eurobonds
98 102 103 101 Corporate 18.4
88 Corr. Accounts and
loans balances with the CBR
Other
Cash 10.6
9 9 9 9 10 assets 6.5
Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q3 2011 Q4 2011
IEA share comprises 73% of total assets LTD ratio implies future growth
RUB bln
Other assets Gross loans Customer funds
Cash and
L/D ratio
equivalents
5%
15%
98% 99% 95%
88% 92%
Due from other
0%
banks 5%
Securities
13% 58%
Corporate loan 137 138
Retail loan 115 130 126 137 133 135 137 145
portfolio
portfolio
Q4'10 Q1'11 Q2'11 Q3'11 Q4'11
7
8. Loans
Portfolio growth in line with expectations… …with shift towards promising retail
Rub bln
SME Individuals Administrations Large corporates Credit cards Consumer lending Mortgages
+19.2% +46.7%
+0.5%
+8.5%
2.2
35.1 38.1 40.2 2.3
34.2 2.2 6.8
30.7 5.5 3.9 2.7 6.5
8.5 2.1 2.1
8.1 20.1 22.5 24.4 5.8
17.5 4.7 4.8
16.6
13.6 15.4
65.9 72.0 72.3 70.1 12.1
59.8 9.8 10.5
Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11
Moscow oblast remains the key region Breakdown by industry
*as of 31.12.2011 Other *as of 31.12.2011
Transport
Moscow Oblast
(39%) 9%
Agriculture 4%
6%
53,567 Construction 27% Manufacturing
7% RUB
RUB
Other 4% 137,348
137,348
59,377 regions(43%) mln
mln
Wholesale & 23% 18%
24,404 retail trade 2% Individuals
Moscow (18%)
Administrations
8
9. Credit quality management
NPLs dynamics Annualized cost of risk
Charges to provisions to
NPLs, RUB mln *
avg gross loans, QoQ
Provisions, % of total portfolio
NPLs, % of total portfolio Charges to provisions to
avg gross loans, YtD 2.14%
10.48%
9.44% 1.78% 1.92%
9.26%
9.15% 9.09% 1.16%
9.71% 1.77%
8.78% 1.71%
8.31% 8.40% 1.83%
12,078 7.70% 1.48%
11,061 11,030 11,488 1.16%
10,576
0.01%
Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011
* 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
NPLs categorization: visible progress in SME and retail segments
SMEs Large corporates Retail RUB mln
+325 new NPLs
+363 new NPLs +88 new NPLs
12.1% -1,020 recoveries
-8 recoveries - 660 recoveries
11.6% 11.3% 11.5% 9.3% 7.1% 6.9%
11.0% 8.7% 6.4%
7.6%
6.2%
11.2% 11.1% 5.3% 5.0%
12.1% 5.6% 7.0% 6.2% 6.2%
10.4% 10.7% 4.4%
6.4% 4.6% 4.9%
8,464 4.3% 3.4%
8,117 8,195 8,025 7,769 2,936 4.6% 1,399
1,242 1,379 827
1,980 1,025
1,624 1,626 1,625
Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011
NPLs, RUB mln Provisions, % of total portfolio NPLs, % of total portfolio
9
15
10. Credit quality
as of 31.12.2011 Large SMEs Mortgages Other Total % of total
corporate retail loans
Gross loans, including 40,168 72,818 15,384 8,978 137,348 100.0% Provisions to
Current loans 38,188 65,049 15,124 8,411 126,772 92,3% NPLs Ratio
Provisions (2,085) (1,441) (195) (175) (3,896) 122.6%
Past-due but not 0.3%
impaired, of them 215 56 69 56 396
Less than 90
days 215 56 33 41 345 0.25%
Over 90 days - - 36 15 51 0.05% Provisions to
Provisions (44) (1) (47) (15) (107) 90 days+
NPLs
Impaired, of them 1,765 7,713 191 511 10,180 7.4%
151%
Less than 90 days 923 697 - 50 1,670 1.2%
Over 90 days 842 7,016 191 461 8,510 6.2%
Provisions (1,385) (6,935) (190) (452) (8,962)
Total NPLs 1,980 7,769 260 567 10,576 7.7% Rescheduled
Loans
Provisions (3,514) (8,377) (432) (642) (12,965) 9.44%
36,654 64,441 14,952 8,336 124,383
3.8%
Net Loans -
the whole amount of loans with principal overdue for more than 1 day as well
NPL - as loans with any delay in interest payments.
10
11. Liabilities and capital
Funding base remains reliable… … with higher share of long-term resources
RUB bln 184 Retail deposits Up to 1 month
174 177 2010 2011
166 174 1 - 6 months
Retail accounts 6 - 12 months
More than 1 year
72 Corp. accounts 38%
70 69 71 37%
69 Corp. deposits
15 17 16 20 Securities issued
17
31 30 32 33 Due from other 20% 27%
28 banks
17 21 20 19 20 24% 17%
7 8 6 7 Other Liabilities
6 8 9
8 8 4 8 Subordinated
4 4 4 4 18%
17 17 18 18 18 loans 19%
Equity
Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011
Matched FX structure Capital position in line with requirements
Data as of December 31, 2011 Tier 1 Tier 1 + Tier 2 CAR
under CBR rules
Assets Liabilities 15.2%
14.1% (N1)
13.6% 13.4% 13.8%
12.7% 12.0% 11.8% 11.6% 11.9% 11.9%
USD
USD 11%
14%
13%
MIN
RUB EUR
EUR RUB
80% 7%
7% 79%
Other Other
0%
0% Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 31.12.11
11
12. Customer accounts
Seasonal inflow of client funds in Q4 Retail funds maturity
Retail deposits Retail accounts RUB bln Up to 1 month
Corporate accounts Corporate deposits Q3 2011 1 - 6 months Q4 2011
+11.4% 6 - 12 months
+5.0% More than 1 year
23% 26%
71 72
69 70 69
36% 19%
21% 27%
15 17 16 20
17
28 31 30 32 33
17 21 20 19 20 20% 28%
Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011
High share of interest-free funds Key points
Due to cautious pricing policy inflow of retail
Current accounts/ deposits in Q4 2011 after interest rate hikes,
Liabilities
32.3% following the market, were mainly on shorter term
products – the bank will be able to reprice faster in
case of possible rates cut
Customer funds/ Share of almost interest-free funding sources
remains high, supported by seasonal inflow of
Liabilities retail current accounts of Rub 3.9 bln, that
87.7% represented 37% of total client funds.
12
13. NIM development
NIM keeps recovering … … bringing YE’11 figure slightly above the target
NIM +130bps
Interest Spread
+68bps NIM Interest Spread
7,1%
6.3% 6.4%
5.8% 6.3% 5.9% 6.2%
5.7%
5.1% 5.1%
4.6% 4.9%
4.3% 4.0% 4.3%
3.5% 3.2% 3.6% 3.2% 3.7%
Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 2010 3M’11 6M’11 9M’11 2011
Key points
0,07% NIM was improving throughout the year on the back of
-0,12%
stronger net interest income. Healthy dynamic of the
0.13%
last three quarters was partly offset by weak Q1, still
0.22%
leaving the whole YE result above the target of 4.2%
In Q4 NIM improvement was to a larger extent driven by
4.91% increasing share of retail loans as well as the last bulk
4.61%
+30 bps of repricing on deposits attracted in 2009-2010
4.9% for Q4 is the highest level of NIM for the last 2
years
Q3 NIM Loans Deposits Other Base Q4 NIM
effect effect effect
13
14. Spread continues to expand
While loan yields were almost flat… … cost of funds kept contracting
Yields on corporate loans
Yields on retail loans Corporate term deposits Interest spread
Yields on securities Retail term deposits
Current accounts 2011:
17.3%
16.0% 15.8% 15.7% 15.7%
8.2% 6.23%
7.1%
6.1%
5.7% 5.7%
11.3% 6.0% 6.0%
9.8% 10.4% 10.2% 10.3% 5.3% 5.6%
5.1%
4.6% 4.1% 0.1% 0.2% 0.2% 0.2% 0.2%
3.6% 3.3% 3.8%
Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11
Spread recovery in Q4 Key takeaways
Yield on earning assets (net)
Cost of funds Loan rates remained flat with some improvement on
Spread (net)
the corporate side – recent rates increase in H2’11
started to filter through P’n’L
11.0% 10.6% 10.4% 10.7%
9.8% Mix of IEA became more high-yielding with major
7.1%
contribution from retail lending and lowered securities
5.8% 6.3% 6.4% portfolio
5.1%
5.2%
Expansion of yields of IEA coupled with record low
4.7% 4.3% 4.0% cost of funds brought spread up 68 bps QoQ to 7,1%
3.7%
Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011
14
15. Fees and commissions
Strong non-interest income based on long-term
relations with customers
Net fee income distribution
Cards Other Cash transactions Settlements RUB mln
Share of non-interest
income in total operating +25.6%
income b.p. +8.9%
vbank
37% 41% peer 1 1,256
1,368
1,192
peer 2 1,089 364
1,006 335 348
335
26% 27% 26% peer 3 292
253
226 245
190 196 337
291 310
277 230
Net fee margin 287 288 340 353 414
0.0% 1.0% 2.0% 3.0% 4.0% Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011
* Vbank data as of 4Q’11, Peer1, Peer2, Peer 3, Peer 4 – 2Q’11
Non-interest income breakdown by segments Key points
Q3 2011 Q4 2011 The bank continued to earn healthy fees and
commissions - net fee margin remained one of the
Financial Corporate highest among peers and stood at 3% in Q4 2011.
business Financial
Share of non-interest income reached 41% in total
4% 3%
operating income
Cards Cards 20%
23% Healthy business activity in Q4 brought net fee income
56%
64%
up 8,9% QoQ with growth mostly coming from
13% settlements and cash transactions
Retail business
17%
Retail business Corporate business contributed 64% to fee income, up
Corporate from 57% in Q3, banking cards business delivered 20%
business and 13% was delivered by retail segment
15
16. Costs
Operating expenses breakdown Personnel efficiency is improving
RUB mln Personnel expenses
Non-personnel expenses Staff costs/Operating income b.p.
+6.7% 41.9%
16.8% 40.4% 40.9%
1,053 39.0%
922
820
38.1%
835
735
1,330 1,271 1,224 1,352
1,063
Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011
Cost-to-Income ratio Key points
Operating expenses remain one of the key concerns for
the bank, implementation of cost efficiency initiatives will
72.3% 72.5% be in focus in 2012
62.7% 64.8%
Personnel efficiency was improving throughout 2011 with
52.7%
48.7% the share of staff costs in total expenses increasing to
59% in 2011 vs 56% in 2010
Progress in cost efficiency and recovery of revenues
brought Cost-to-income ratio for YE2011 to 64,8% from
2006 * 2007 2008 2009 2010 2011 72.5% for 2010. Mid-term target on CIR remains below
50%
*2006 - less extraordinary items
16
17. Earnings generation capability
ROE, % ROA, %
10,4%
9.1% 9.3%
7.5%
1.04%
0.91% 0.94%
4.4%
0.74%
0.46%
Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011
Value generation Key points
* % of average assets
3.4% -2,0% In 2011 profitability was steadily recovering - ROE for
2011 stood at 9,1%, up from the trough of 3,5% in 2010.
-2,8%
Responsible resources management coupled with
4.9% taking advantages of opportunities in lending led to
-1,9% strengthened core income and ensures further revenue
generation.
-0,2%
1.0%
Solid non-interest income supported by long-term
relations with clients contributes to stronger result.
NIM Non-interest Provisions HR costs Non-HR Tax Net profit
income costs
17
18. Questions and answers
Elena Mironova Andrey Shalimov
IR manager Deputy Chairman of the Management
+7 495 620 90 71 Board
E.Mironova@voz.ru A.Shalimov@voz.ru
investor@voz.ru http://www.vbank.ru/en/investors
18
19. 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 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.
19
