Randolph Koppa, President, Trade & Development Bank, Mongolia

1. Unlocking the economic potentialUnlocking the economic potential
of Mongoliaof Mongolia’’s resources sectors resources sector
Mr. Randolph S.Mr. Randolph S. KoppaKoppa
PresidentPresident
Trade and Development Bank of MongoliaTrade and Development Bank of Mongolia
““Mongolia 2010 Investment SummitMongolia 2010 Investment Summit””
Hong Kong 14 October 2010Hong Kong 14 October 2010

18. A new era has begunA new era has begun
• OT agreement Oct. 2009
• Clearer government vision and direction
- Tavan Tolgoi structure
- Privatization
- Listing of key resources
- Reform of stock exchange
- Stabilization fund
- Sovereign debt issue
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19. What does it mean?What does it mean?
• IMF predicts Mongolia’s GDP will double in
five years from current level of below $5
billion
• GDP growth will average 20% p.a. 2013-16
• GDP will more than double again by 2020
• Per capita GDP grows from $1,916 to $9,000
in ten years
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20. Unlocking the potential in next 5 yearsUnlocking the potential in next 5 years
• Mine Development $ 9 bn. to $ 10 bn.
• Infrastructure $ 5 bn. to $ 7 bn.
• Urban development $ 5 bn. to $ 7 bn.
• Agriculture $ 1 bn. to $ 2 bn.
• Industry $ 8 bn. to $ 11 bn.
• Environment $ 1 bn. to $ 2 bn.
• Social $ 2 bn. to $ 3 bn.
• Industrial park $ 8 bn. to $ 10 bn.
Total: $ 39 bn. to $ 52 bn.
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21. How to fund the need? Opportunities for investorsHow to fund the need? Opportunities for investors
• Foreign Direct Investment
• Domestic banking sector
• Domestic stock exchange
• Domestic debt market
• Sovereign borrowing
• International capital markets
• Foreign borrowing
• Grants and other
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22. Foreign InvestmentForeign Investment
Most of development of new
major mining projects will
be funded through foreign
investors.
Mongolia’s FDI has been
growing 30% annually.
This rate would mean $11
billion in new FDI in next
five years.
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USD billion

23. BudgetBudget
• Current Budget expenditures approx $1 billion,
with small deficit
• Increased revenues from mining can enable
increased budget to meet many social and
infrastructural needs
• Establishment of Homeland Development Fund
aims to use surplus mining revenues to meet
such needs
• Estimate: $2 billion or more
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24. Banking sectorBanking sector
• Banking sector is small compared to other emerging
countries
• Mongolia bank loans to GDP only 34%
• Central and Eastern Europe over 50%
• USA, Korea, China over 100%
• To reach CEE level in 5 years will require $250
million of outside equity capital as GDP doubles
• Banks could provide $1.5 billion in investment
financing, apart from working capital funding.
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25. Page 8
Loan growth has resumedLoan growth has resumed
MNT billion
41.5%
66.3%
25.8%
-12.0%
45.8%

26. Lending will need to grow, as will capitalLending will need to grow, as will capital
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27. Investment by businessesInvestment by businesses
• Spending by business on fixed assets will increase
from current estimated 5% of GDP
• General level of developing countries is 25% with
US at 14% and China at 40%
• Moving to 25% of GDP will generate over $6
billion in investment, of which $1.5 billion could be
provided by domestic banks. The balance requires
funding from profits or capital markets and
foreign sources.
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28. Stock MarketStock Market
• Mongolia stock market very small: approx. $600 million
market cap which is 27% of domestic bank credit and
$200 per capita
• Developing countries ratios around 50% or $3000 to
$5,000 per capita
• Developed countries market cap equals bank credit, with
$40,000 or more per capita
• Potentially, $2 billion or more could be raised under
properly organized stock exchange as market cap reached
40% of domestic credit
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29. Public debtPublic debt
• Mongolia has virtually no public or publicly traded
debt
• Mongolia needs to establish a domestic capital market
• This will enable a forward rate which will attract
foreign investors
• Up to 20% of GDP should be possible based on other
emerging countries
• This would mean up to $2 billion could be raised
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30. Foreign Sovereign DebtForeign Sovereign Debt
• Mongolia has less than $2 billion in foreign
debt, much on concessionary terms, or
about 40% of GDP.
• There is capacity to raise sovereign
commercial debt
• Within 5 years, additional $3 billion could
be raised and keep debt ratio below 50% of
GDP
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31. Foreign Equity MarketsForeign Equity Markets
• Several successful overseas listings already:
SGE, MoEnCo, Hunnu, North Asia Resources,
Winsway, Mongolian Mining Corporation;
others in pipeline
• Hong Kong, London AIM, Australia, Toronto
• Government plans to list key assets
• Potentially, $5 bn. to $10 bn. required
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32. Foreign Debt MarketsForeign Debt Markets
• Already one issuer: TDB in 2007 for $75 million
• Sovereign Issue planned late 2010 will establish
benchmark
• As credit ratings improve, more access possible.
• Potential of $3 billion or more
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33. Project and structured financeProject and structured finance
• IFIs and international banks already active
as direct lenders.
• PPP and export finance structures expected
• Syndication market small but growing
• Potential need of $5 billion or more
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34. SummarySummary
• FDI $ 10 bn. to $ 12 bn.
• Domestic sources $ 12 bn. to $ 13 bn.
• Sovereign Borrowing $ 3 bn. to $ 5 bn.
• Foreign Capital Markets $ 8 bn. to $ 12
bn.
• IFI & Foreign bank Loans $ 5 bn. to $ 8 bn.
• Donors and NGOs $ 1 bn. to $ 2 bn.
Total $ 39 bn. to $ 52 bn.
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35. A Reachable Goal?A Reachable Goal?
• Consider: OT, TT and other major strategic
mines will generate $4 bn. to $7 bn. of exports
per year, with $2bn. to $3 bn. in net income per
year, providing significant revenues to the State
in taxes, royalties and dividends.
• Significant increases in profits and tax revenues
from other economic sectors
• Continuing growth in GDP and increasing
personal incomes.
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36. PreconditionsPreconditions
• Political Stability
• Strong legal and regulatory environment
• Governance
• Fiscal discipline
• Stabilization fund
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37. Risks and ConcernsRisks and Concerns
• Inflation
• Populism
• Dutch Disease
• Boom Bust cycles
• International financial markets
• China growth trend
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38. ConclusionsConclusions
• New era is beginning
• Mongolia is on the RADAR SCOPE and
warrants the attention of international
investors
• Many opportunities for investors in mining
and all other sectors
• Steady growth path is possible
• Potential for a healthy wealthy state
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39. If interested,If interested,
please contact usplease contact us
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40. MongoliaMongolia’’s leading banks leading bank
• Mongolia’s leading corporate bank
TDB is the largest corporate lender in Mongolia with 25% corporate
lending market shares. It serves approximately 360 major Mongolian
corporates in all major business sectors.
• Leader in international banking
Having established over 80 correspondent relationships with
international financial institutions and correspondent accounts with
major clearing banks around the world TDB offers a wide range of
international banking services designed to appeal to both domestic
and international clients. Currently, TDB maintains 27 nostro
accounts in 14 currencies with 20 top rated foreign banks of 15
countries. Total amount of trade finance lines reached $115 million.
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41. Financial ResultsFinancial Results
(mln.USD) 2007 2008 2009 2010.08
Total Asset 444.5 520.3 567.0 653.1
Total Loans 307.2 347.4 281.2 360.5
Total Deposits 362.6* 404.6* 408.0 496.1
Total Equity 47.5 54.0 47.3 61.6
Net Profit 11.5 11.5 10.6 9.9
Capital Adequacy 13.8% 14.7% 12.9% 13.7%**
ROA 3.5% 2.8% 1.9% 2.3%
ROE 32% 24.9% 19.5% 24.4%
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MNT/USD = 1301.8
08/31/2010
* includes USD 75.0 million bonds
** 12.9% under revised calculation effective August 2010

42. Bank Ratings by MoodyBank Ratings by Moody’’ss
Senior Unsecured EMTN (foreign currency) Ba3
LT/ST Bank Deposits (foreign currency) B2/NP
LT/ST Bank Deposits (domestic currency) Ba3/NP
LT/ST Issuer Rating Ba3/NP
Subordinated Obligations B1
Bank Financial Strength D-
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43. THANK YOUTHANK YOU
Trade and Development Bank of Mongolia
Juulchin Street - 7
Baga Toiruu - 12
Ulaanbaatar, Mongolia
Tel: +976 11 319943
Fax: +976 11 312418
Email: corrbanking@tdbm.mn
http://www.tdbm.mn
http://www.bankcard.mn
http://www.mongolianbusinessguide.com
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