ANNUAL REPORT Life is open for discoveries. otkritiefc.ru

Transcription

1 ANNUAL REPORT Life is open for discoveries otkritiefc.ru

2 Otkritie Financial Corporation Banking Group at a Glance 2 Statement of the Chairman of the Supervisory Board 4 Statement of the Chairman of the Management Board 6 Market Review 10 Operational Review 16 Financial Overview 56 Russian Economy in 10 Russian Banking Sector Overview 13 Corporate Banking 16 Investment Banking 22 Retail Banking 28 Small Business Banking 36 Рrivate Banking 41 IT 45 Corporate Social Responsibility 47 Human Resources 51 Financial Highlights 56 Risk Management and Control 60 Corporate Governance 78 Appendix 106 Priorities 60 Key Risk Areas and Risk Management Tools 60 Credit Risk 62 Liquidity Risk 69 Market Risks 69 Operational Risk 71 Financial Monitoring 71 Legal Risks 72 Reputational Risks 73 Strategic Risks 73 Regulatory Risks Priorities 75 Corporate Governance Overview 78 Share Capital 80 General Shareholders Meeting 81 Supervisory Board 83 Management Board 94 Control 98 Compliance with the Corporate Governance Code 100 Abbreviations and Definitions 106 Summary Consolidated IFRS Financial Statements 108 Contacts 120

3 2 Otkritie Financial Corporation Bank 3 Otkritie Financial Corporation Banking Group at a Glance Otkritie Financial Corporation Banking Group is the largest privately-owned banking group in Russia. It is ranked among the world s top 350 banking groups and among the top 10 banking groups in Eastern Europe 1 Otkritie Financial Corporation Banking Group is a universal banking group focusing on four key segments: corporate banking, retail banking, small business banking, and investment banking. The Group consists of two banks: Otkritie Financial Corporation Bank and Khanty-Mansiysk Otkritie Bank 1 4 No. No. by assets among Russian private banking groups 2 by assets among the largest Russian banks 2 BB by S&P, Ba3 by Moody's Otkritie Financial Corporation Bank ratings Total assets 3 3,363.6 billion roubles Total loan portfolio net of provisions 2,565.8 billion roubles Net profit 6.6 billion roubles Regional Network Regional Branch Network in Seven Key Regions of Presence Shareholders of Otkritie Financial Corporation Bank 500 branches and other points of sale 55 Russian regions of presence 7 key regions 42 Otkritie Financial Corporation Bank 35.3 % % 64.7 % 5 St. Petersburg and Leningrad Region 264 Khanty-Mansiysk Otkritie Bank Otkritie Holding Free float Moscow and Moscow Region Volgograd and Volgograd Region Yekaterinburg and Sverdlovsk Region Khabarovsk and Khabarovsk Region Tyumen (including Khanty-Mansiysk Autonomous Region and Yamalo-Nenetsk Autonomous Region) Moscow and Moscow Region Tyumen (Khanty-Mansiysk Autonomous Region and Yamalo-Nenetsk Autonomous Region) St. Petersburg and Leningrad Region Novosibirsk and Novosibirsk Region Novosibirsk and Novosibirsk Region Volgograd and Volgograd Region Yekaterinburg and Sverdlovsk Region 5 2 Khabarovsk and Khabarovsk Region Total number of clients 29,377 clients in corporate banking 3.4 million clients in retail banking 163,121 clients in small business banking 1 Source: The Banker, as at the end of. 2 Based on Interfax CEA ranking in accordance with RAS financial statements as of December 31,. 3 Unless specified otherwise, all highlights referred to in this Report are based on the consolidated financial statements audited by an independent auditor and prepared in accordance with IFRS. 4 Including non-governmental pension funds, which hold 24.0% of ordinary shares, and other shareholders (11.3% of ordinary shares). 5 Including subsidiaries holding 4.1% of interest.

4 4 Otkritie Financial Corporation Bank 5 Statement of the Chairman of the Supervisory Board The year was one of the most challenging in the last decade for the Russian economy in general, and for the banking sector in particular. Among other factors, a steep fall in oil prices and turbulent foreign exchange markets put a lot of pressure on businesses and financial institutions. Otkritie Financial Corporation Banking Group s performance, however, has proven that our strategy is working and sustainable in the challenging environment. Despite lower margins in the banking sector, in net profit earned by the Group increased by 12.4% to RUB 6.6 billion. I would like to highlight that this achievement is the result of our efforts across all key business segments and demonstrates that our business model is well-balanced. The Group s assets increased by 29.6% and reached RUB 3.4 trillion, strengthening our position among the top four largest Russian banking groups. The worsening macroeconomic situation stipulated the notable decline in the amount of high-quality borrowers in the market. In this environment we have chosen a strategy of higher efficiency over market growth, and we believe it is now the right time to focus on the large-scale internal restructuring program which we have already initiated and expect to complete in a few years time. as defined by the state recapitalization program. In our retail business, growth will be mostly driven by mortgage loans which are on the rise even under the current conditions, as a result of government support initiatives. In turbulent, it became vital for banks to prove that they are reliable and deserve to be trusted. Otkritie Financial Corporation Banking Group worked hard to further strengthen the confidence of our clients, investors, and partners. As a sign of its confidence, the Russian government included Otkritie Financial Corporation Banking Group in the list of systemically important credit institutions in Russia and in the capital support program funded with Russian Federation government bonds, thus increasing the capital of Otkritie Financial Corporation Banking Group by RUB 65.2 billion in. We also managed to sustain our excellent reputation in the global markets. The syndicated loan raised by the Group in the international market in the amount of USD million was the only syndicated loan raised by Russian banks in. Our performance demonstrates that even in the most difficult of times we are able to see and grasp opportunities which emerge in the market. And it gives us confidence as we look towards the future. In the mid-run, despite the comfortable liquidity buffer we do not intend to boost the loan portfolio. We will, however, increase our corporate loan portfolio in 2016 with focus on priority industries, Life is open for discoveries Dmitry Romaev President, Chairman of the Supervisory Board otkritiefc.ru

5 6 Otkritie Financial Corporation Bank 7 Statement of the Chairman of the Management Board was yet another difficult year for the Russian economy: both banks and their clients from different industries had to respond to arising challenges. Amid stormy markets, Otkritie Financial Corporation Banking Group focused on its business efficiency, risk management, promoting an integrated approach to customer relationship management, and improving customer experience. The above objectives were also our priority in the process of the integration of Petrocommerce Bank, which merged into Otkritie Financial Corporation Bank in June. Providing the highest quality of service to LUKOIL Group companies, strategically important clients of the Group, was one of the key factors driving the expansion of our client base throughout. Another crucial segment in which we made significant achievements during is innovative service channels. We believe that the success of remote banking is crucial for the future development, and in the long run the ability to offer user-friendly remote banking services will be a must for a successful financial institution. With that in mind, in, we launched our Tochka project proving our small business clients with complete remote access to our clearing and payment services. We also partnered with Rocketbank, a mobile banking leader, which became a member of the Otkritie Financial Corporation Banking Group in The Group reported solid financial results. In, its net profit reached RUB 6.6 billion, exceeding by 12.4% the result. In, RoAE grew to 7.7% (6.2% in ). Our performance demonstrates our resilience, while the projects we implemented form a solid platform for expanding our business and strengthening our leadership across all key business segments of Otkritie Financial Corporation Banking Group. Life is open for discoveries Evgeny Dankevich Chairman of the Management Board otkritiefc.ru

6 MARKET REVIEW Life is open for discoveries otkritiefc.ru

7 10 Otkritie Financial Corporation Bank 11 Market Review Market Review Russian Economy in Economy Overview Unemployment Throughout, the Russian economy continued to adapt to new external conditions; measures taken by the Central Bank of the Russian Federation and the Russian government prevented the economy from free fall, and the financial system from further destabilisation Economic Growth Breakdown; Annual GDP Growth Components in Comparable Prices, % y-o-y Consumer demand Capital expenditure Change in inventory Exports Imports Real GDP growth Source: Rosstat; Otkritie Financial Corporation Bank. Domestic Demand and Net Exports; Effect on Annual GDP Growth in Comparable Prices, % Net exports Domestic demand Source: Rosstat; Otkritie Capital Research Department Early in, the situation was very tense: oil prices crashed from USD per barrel in September to just USD 45.2 per barrel in January, and the economic outlook was highly uncertain. The Russian economy, however, proved to be more resilient than analysts expected. In, economic activity slowed down by 3.7%. While the Russian budget was still well balanced, industrial output experienced a moderately downward trend, falling 3.4% year-onyear. Industrial output was supported by export-oriented industries and import substitution strategies in certain segments (primarily the food industry). However, it would be premature to discuss a rebound in economic activity as uncertainty in the market remains high, consumer demand remains weak, and households are still in a saving mode. As compared with previous recessions in Russia over the last two decades (1997 to 1998, and 2008 to 2009), the current downward move is smoother. After a 7.8% downturn in 2009, the economy grew 4.5% in 2010; now, there are no grounds to project such a dramatic reversal of the trend. The key driver behind the economic slowdown in Russia in was shrinking consumer demand which had been on a downward trend since 2012, due to both external shocks and domestic structural limitations. Since 2012, growth in household spending has been slowing down and in reached a record low of 9.6% (in real terms) for more than 20-year period. Over, domestic consumer demand in the private sector was affected by reduced purchasing power (due to a rapidly depreciating rouble and double-digit inflation), a contraction of retail lending (with the exception of mortgages which were supported by the government to a certain extent), weaker real disposable income (which fell by 4.3% vs a 0.7% decline in ), and higher savings amid greater uncertainty. Investment activity remained weak amid turbulent markets, lack of access to international capital markets, and the higher cost of rouble funding. In, capital expenditure dropped by 8.4% (as compared with a 1.5% decline in ) despite favourable dynamics reported by mining industries, although the government s anti-crisis package did provide certain support to investment. Weaker investment and consumer activity put downward pressure on imports. Therefore, net exports contributed to annual output growth and fuelled the GDP growth. According to the official forecasts, the government expects GDP to fall by 0.2%, assuming an average 2016 Urals oil price of USD 40.0 per barrel. Unemployment Rate as Percentage of Economically Active Population, % Unemployment rate Seasonally adjusted unemployment rate Real wage growth (right scale) Source: Rosstat; Otkritie Capital Research Department. Inflation Inflation Growth Breakdown; Effect on Consumer Price Index, % y-o-y Core inflation Food Other components Overal CPI Source: Rosstat; Otkritie Capital Research Department Balance of Payments 2013 Current Account Balance, % of GDP Source: Bank of Russia; Otkritie Capital Research Department Since 2009, the unemployment rate has been steadily declining. In, against the background of continuing economic decline the positive trend reversed: the unemployment rate increased by 0.4% to reach 5.6% as at the end of (5.2% as at end of ). In, the inflation rate reached 12.9% (vs 11.4% in ), fuelled primarily by a weaker rouble (which depreciated by 58.9% against the U.S. dollar and by 33.4% against the Euro), unfavourable oil prices, geopolitical instability, and foreign trade restrictions. In the last quarter of, however, consumer price growth began to slow, mostly due to the high base effect which is also likely to persist in Lower inflation In, the current account surplus widened to reach 5.2% of GDP, or USD 69.6 billion (vs 2.8% of GDP, or USD 58.4 billion in ). The effect of a shrinking trade surplus (from USD billion in to USD billion in ) was offset by a positive movement in the balance of services and investment income, partly due to a drop in debt service expenses, given the general decline in foreign corporate debt between and. However, the current unemployment rate is still relatively low and is a result of the Russian market adjustment to worsening macroeconomic conditions primarily by slowing wage growth and increasing part-time employment. is also driven by weak consumer demand, a moderately tight monetary policy, wage suppression in the public sector, and a good harvest. On the other hand, rouble depreciation between December and January 2016 put upward pressure on prices, slowing the decline in annual inflation rates, and keeping inflationary expectations high, which expose to a risk the achievement of the inflation target of 4.0% for 2017 set by the Bank of Russia. In, net private capital outflows from Russia comprised USD 58.1 billion (vs USD billion in ), or 4.4% of GDP. Unlike the previous years, the net capital outflow was dominated by private foreign debt repayments. The most notable decline was seen in the foreign liabilities of banks both through disposals of overseas assets and accumulation of funds from current account operations. Therefore, in, the Bank of Russia s reserve assets were up USD 1.7 billion, as compared with a USD billion decrease in.

8 12 Otkritie Financial Corporation Bank 13 Market Review Russian Banking Sector Overview Fiscal Policy Highlights Federal Budget Deficit, % of GDP New Challenges Source: Russian Ministry of Finance; Otkritie Capital Research Department In, federal budget revenues fell 1.7 bps to 16.9% of GDP. The effect of reduced foreign trade was partially offset by higher federal budget revenues in the form of profit tax and VAT paid by non-oil and gas companies. Federal budget expenditures grew by 5.2% yearon-year to reach 19.3% of GDP, driven by double-digit growth in expenses associated with national security and social policy (primarily the indexation of pension benefits). At the same time, a 24.2% reduction in expenses related to the national economy held down the rate of federal expenditures growth, and, therefore, the federal budget deficit widened to RUB 1,945.1 billion, or 2.4% of GDP. Early in 2016, as the oil supply remained well in excess of demand, the Chinese economy continued cooling down, and the U.S. Federal Reserve raised interest rates, oil prices plummeted further (the Urals oil price fell to USD per barrel). This, in turn, triggered depreciation of national currencies and impairment of financial assets in emerging markets, including in Russia. Highly volatile oil prices drove wider fluctuations in Russian financial asset prices and the rouble exchange rate. As of January 1, 2016, according to the Ministry of Finance, Russia s domestic government debt represented by rouble-denominated securities reached RUB 5.6 trillion, demonstrating almost no change from the level reported in (a 1.8% increase). Foreign government debt (including federal guarantees) was reported as of the same date at USD 50.0 billion, down USD 4.4 billion year-on-year. As a result, the debt burden of the Russian budget is still relatively low, at roughly 14.0% of GDP (including government guarantees), giving Russia a competitive edge over most developing countries and supporting its sovereign credit ratings. As of early 2016, the Russian Reserve Fund and the Russian National Wealth Fund totalled USD billion, or 11.0% of GDP. This turbulence made a continuing recession a possibility, especially in light of the high debt burden of Russian companies, and interest rate risks for both banks and borrowers. As before, the floating rate partially offsets the negative effects of the low prices of energy carriers; however, the balance of payments and the economy will need to further adapt to lower prices for most products exported by Russia. Banking Assets, RUB billion 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, Banking assets GDP of Russia Share, % (right scale) Source: Bank of Russia; Rosstat. 110% 100% 90% 80% 70% 60% 50% 40% 30% In, the Russian banking sector experienced a quite dramatic deceleration of growth. Banking assets in Russia grew by 6.9% (a decline by 1.6% year-on-year net of rouble depreciation) 1. In, the aggregate loan portfolios of Russian banks expanded by 7.6% to RUB 44.0 trillion (0.1% growth year-on-year net of rouble depreciation; 12.9% growth in ); corporate loans grew by 12.7% totalling RUB 33.3 trillion (2.5% growth year-onyear net of rouble depreciation; 13.0% growth in ). Retail loans shrank by 5.7% (a decline by 6.3% year-on-year net of rouble depreciation; 12.5% growth in ). Similar to, the slower pace of growth in was primarily due to the notable reduction in consumer loans other than mortgages by most Russian banks. Customer accounts increased by 19.8% in (8.9% growth year-on-year net of rouble depreciation; 15.7% growth in ), outpacing the growth in the banks loan portfolio. In contrast to, this dynamic was mostly fuelled by retail business: retail deposits were up 25.2% (16.8% growth year-on-year net of rouble depreciation; 2.5% decline in ). Corporate deposits and accounts grew by 15.6% (2.7% net of rouble depreciation; 18.8% growth in ). After the Bank of Russia raised the key refinancing rate late in, funding from the Bank of Russia as the percentage of the banking sector liabilities slid from 12.0% at the end of to 6.5% at the end of. In, profit of the Russian banking sector fell to RUB billion (RUB billion in ). Similar to, weaker financial performance was due to higher loss provisions (which totalled roughly RUB 1.4 trillion) and the higher cost of funding as the Bank of Russia raised interest rates. Therefore, RoAE of Russian banks fell to 2.7% in compared with 8.7% in. Late in, the Russian government, the Bank of Russia, and the Deposit Insurance Agency (DIA) embarked on a programme to support the Russian banking sector. Certain measures were already taken in : RUB 800 billion recapitalisation of major national and regional banks by means of federal bonds; prolongation and/or conversion of subordinate loans extended under the government bailout package into other instruments that would be included in the capital adequacy formula. These measures helped to increase the aggregate capital adequacy in the banking sector from 12.5% in late to 12.7% in late. 1 Hereinafter data are sourced by the Central Bank of the Russian Federation at

9 OPERATIONAL REVIEW Life is open for discoveries otkritiefc.ru

10 16 Otkritie Financial Corporation Bank 17 Operational Review Operational Review Corporate Banking Priorities Corporate Loan Portfolio Breakdown by Industry as at the Year End Gennady Zhuzhlev Senior Vice President, member of the Management Board, Head of Corporate Banking In, Otkritie Financial Corporation Bank focused on the following priorities in its corporate business development: to successfully complete the merger with Petrocommerce Bank and to provide the highest level of service to its clients (as a result of the merger with Petrocommerce Bank, the number of Otkritie Financial Corporation Bank s corporate clients grew from 19,760 to 29,377 in ); to focus on managing risks and strengthening credit risk control; to focus on reducing the funding costs by increasing the share of current accounts balances in the funding structure, and on improving the quality of settlements and cash services to generate risk-free income. Throughout, Otkritie Financial Corporation Bank continued its efforts to strengthen the Group s positions in the corporate segment by broadening its client base and promoting relations with large and medium-sized businesses. The Bank managed to expand its business despite volatile markets by constantly improving the level of services provided. Its objective is to be a partner, rather than a mere counterparty to its clients. In, the Bank expanded its product offering, in particular, capitalizing on synergies between its corporate business and investment banking. million roubles % million roubles % Operations with real estate 128, , Services 109, , Industrial manufacturing 81, , Housing construction 53, , Leasing 44, , Construction of industrial and commercial real estate 72, , Mining 97, , Wholesale trade 62, , Transport and communication 26, , Retail trade 21, , Agriculture 3, , Operations with securities 23, Key Figures 1 In the loan portfolio Other 58, , Gross corporate loans 782, , % Number of Corporate Clients Corporate Net Loan Portfolio, million roubles 42.7% Corporate Customer Accounts, million roubles 19,760 29,377 In the loan portfolio 754, ,911 In the deposit portfolio 542, ,237 Corporate Business Share 2, % 30.3% 42.7% 48.1% 57.9% In the net loan portfolio In the deposit portfolio In operating income (revenue) In before operating provisions income (revenue) In the loan portfolio In the deposit portfolio before provising 30.3% 42.7% 48.1% 57.9% 43.6% 47.4% In the deposit portfolio 1 As at the year end. In operating income (revenue) before provising 2 The amounts relating to Treasury, 48.1% Asset and Liability management units and Unallocated balances are excluded from the calculation. 43.6% 57.9% 47.4%

11 18 Otkritie Financial Corporation Bank 19 Operational Review Key Corporate Banking Objectives for Financial Highlights (IFRS) Target Key Results/Achievements in Focusing on risk management Improving business processes and technologies/ Reducing costs Expanding the client base Stepping up commissions and clearing operations enhancing credit risk control: the Bank developed and tested the frameworks for monitoring risk factors and the system for early detection of disruptions in clients businesses; maintaining loan portfolio quality: NPL 90+ ratio accounted for 3.5% at the end of, compared to 1.4% at the end of ; extending rouble-denominated loans to clients from priority industries; focusing on highly liquid collateral. reducing costs of network points through automation and centralisation; optimising the network, maintaining a high quality of services through network configuration improvement. maintaining the growing number of new corporate clients: a 25.0% growth of client base, from 19,760 clients as at January 1,, to 24,693 clients as at January 1, 2016, excluding the effect of the merger with Petrocommerce Bank; diversification of the client base. net fee and commission income earned by the corporate business grew by 12.9% to RUB 5.1 billion (a 21.4% growth in ); the volume of settlements increased: the number of outgoing transfers grew by 9.6% year-on-year (from 4,844,560 transactions in to 5,311,292 transactions in ). million roubles Y-o-y, % Key balance sheet figures Total assets of the segment 782, , including net loans to clients 762, , Total liabilities of the segment 669, , including customer accounts 592, , Key profit & loss figures Net interest income 1 25,882 36,352 40,5 Net fee & commission income 4,507 5,090 12,9 Total operating income before impairment losses and provisions for other transactions 25,065 17, Operating expenses 6,462 8,177 26,5 Profit before income tax 17,900 7, Net interest income before gain from remeasurement of cash flows from assets acquired as a result of business combinations and before allowance for impairment of interest-bearing assets. Note: The financial highlights are shown as of December 31,, for the year ended on December 31, ; and as of December 31,, for the year ended on December 31,. Comments on Financial Highlights (IFRS) During, the Group did not focus on loan portfolio growth but concentrated mostly on working with existing clients and risk management aspects. The corporate net loan portfolio declined by 1.2% to RUB billion (a 38.4% growth in ). This dynamic is the result of new business lending and revaluation of loans denominated in foreign currencies (which accounted for 23.7% of the corporate loan portfolio as at the end of ), on the one hand. On the other hand, by pursuing a conservative approach to managing its risks in light of market instability, the Bank significantly increased its provisions for losses by 165.6%, which ultimately reduced the volume of total loan portfolio net of provisions. In, customer accounts of the corporate business segment declined by 8.5%. Considering available comfortable liquidity buffer the Bank did not offer higher rates on new deposits while a number of corporate deposits matured in accordance with existed schedule. The corporate segment posted a pre-tax profit of RUB 7.7 billion in despite the tightening margins and considerable allocations to loan loss provisions. The key profit drivers in were net interest income, net fee and commission income, and tight control over operating expenses, which increased by 26.5%, thereby not exceeding the target level despite the high inflation rate and merger with Petrocommerce Bank in. Net fee and commission income dominated the structure of non-interest income generated by the corporate business in, totalling 76.8% or RUB 5.1 billion. A 12.9% year-on-year increase in fee and commission income in was due to growth in commissions from settlements (up 74.1%) and commissions from transactions with precious metals and foreign currencies (up 79.8%).

12 20 Otkritie Financial Corporation Bank 21 Operational Review Product Offering Precious Metals Market In, the Bank improved its product offering in the following ways: by offering tailor-made packages designed to meet the clients needs; by adapting its products and services to make sure that they are in compliance with the law; by developing and improving its products and services in accordance with banking best practices. Among the products introduced in are: Direct 1C Integration This is a full-scale solution for direct document exchange (transfer orders, account statements, etc.) with 1C: Enterprise software. Mobile Business Application The Group introduced a mobile business application which offers the functionality to upload digital signature certificates and online opportunity of documents authorization. Budget Monitoring The Group introduced a budget monitoring tool for the clients. This tool was developed by the Bank in-house with maximum flexibility allowing to meet all of the customers' demands. Online Account Opening The Group implemented and launched the pilot version of an online account opening service. The clients are now able to apply for an account through the Bank s website, as well as to set up a package of documents necessary to open an account, and to register online in the remote banking system. Cash Management The clients can deposit cash generated from the business activities to their bank accounts using the Group s ATMs with cash-in function. Virtual Overnight With this solution, interest accrues daily on account balances; cash remains on the client s current account without the need to transfer it to the deposit account. SWIFT-based Account Reporting The clients can now request that the Bank sends to their head offices reports on account transactions via SWIFT, as well as to ask the Bank to process information on the status of their accounts with other banks received via SWIFT and to forward to them the resulting reports. Volume of Precious Metals Bullions Acquired by Otkritie Financial Corporation Bank, tons Source: Otkritie Financial Corporation Bank Total Precious Metals Transactions Turnover, USD billion Source: Otkritie Financial Corporation Bank Leading Positions in the Precious Metals Market Otkritie Financial Corporation Bank has been a leader in the Russian precious metals market for many years. The Bank has major Russian gold miners among its clients. Over the course of, the Bank acquired tons of precious metals in bullions, an increase of 59.7% year-on-year, while the turnover of precious metal transactions totalled USD 20.8 billion. Otkritie Financial Corporation Bank has opened more than 100 correspondent accounts in precious metals for Russian and foreign banks. Using its well-established trade relations with foreign partners, including major international banks, the Bank supplies precious metals to European countries, India, UAE, China and CIS countries. Strategic Objectives of Corporate Banking for 2016 In 2016, in the corporate banking segment the Group intends to: broaden its client base; use a tailor-made approach to customer relations; In, Otkritie Financial Corporation Bank became an accredited member of the Shanghai Gold Exchange (SGE) and is entitled to operate in the Shanghai free trade zone. This gives the Bank access to the Chinese market, which dominates the world s production and use of gold. The SGE access guarantees that the Bank can now offer its clients the most favourable conditions for gold bullion purchase in the Russian market. Since 2011, Otkritie Financial Corporation Bank has been a member of the London Bullion Market Association (LBMA). improve its product offering through synergies between corporate and investment banking; focus on risk-management.

13 22 Otkritie Financial Corporation Bank 23 Operational Review Investment Banking Priorities Financial Highlights (IFRS) Konstantin Tserazov Senior Vice President, member of the Management Board, Head of Investment Banking was in general a success for the investment banking of Otkritie Financial Corporation Banking Group. Investment banking was primarily focused on currency and interest rate derivatives, striving to offer integrated solutions to its clients. The Bank managed to build a new debt capital markets team with over 20 new fixed income and interest rate traders hired over the course of. In, Otkritie Financial Corporation Bank arranged a large number of roubledenominated bond issues of Russian clients (corporations, Russian regions, and financial institutions). In 2016, the Bank intends to remain among the top 3 bond arrangers and plans to prioritise tailor-made solutions for major clients. million roubles Y-o-y, % Key balance sheet figures Total assets of the segment 1,467,951 2,135, including net loans and advances to banks and other financial institutions 30,721 56, including financial assets at fair value through profit or loss 291, , including net loans to clients 789,317 1,534, Total liabilities of the segment 1,162,573 1,704, including due to banks 957,297 1,564, Key profit & loss figures Net interest income 1 5,194 (8,726) n.a. Financial results from trading and FX operations (7,290) 30,892 n.a. Key Figures 1 Total operating income before impairment losses and provisions for other transactions (1,520) 16,233 n.a. Operating expenses 1,680 2, Number of Investment Banking Clients 1,157 Investment Banking Assets, million roubles 2,135,046 Investment Banking Net Loan Portfolio, million roubles 1,534,215 Profit/(loss) before income tax (3,202) 13,725 n.a. 1 Net interest income before gain from remeasurement of cash flows from assets acquired as a result of business combinations and before allowance for impairment of interest-bearing assets. Note: The financial highlights are shown as of December 31,, for the year ended on December 31, ; and as of December 31,, for the year ended on December 31, ,467,951 В активах 789, % Investment Banking Liabilities, million roubles 1 As at the year end. 1,162,573 1,704,009 Investment Banking Share 2, % In total assets В активах В пассивах 67.1% 57.5% 60.4% 52.6% In total liabilities В пассивах 2 The amounts relating to Treasury, Asset and Liability management units and Unallocated balances are excluded from the calculation. 57.5% 60.4% 52.6% Comments on Financial Highlights (IFRS) In, growth in investment banking assets was driven by larger volumes of repo transactions. As collateral for reverse repo transactions, Otkritie Financial Corporation Banking Group accepted highly liquid securities included into the Bank of Russia s Lombard List. The Group continued investing in low-risk securities in, thus sustaining its liquid assets. Financial assets reported at fair value through profit or loss accounted for 9.0% of the Group s assets as of December 31, (11.3% as of December 31, ). The investment banking segment of the Group posted RUB 13.7 billion profit in, attributable primarily to trading and FX transactions. In, investment banking earned RUB 30.9 billion from trading operations, including RUB 14.9 billion from securities trading, and RUB 16.6 billion from FX transactions. The significant part of trading income from operations with securities was attributable to the positive mark-to-market revaluation of the fixed income securities portfolio in.

14 24 Otkritie Financial Corporation Bank 25 Operational Review Key Investment Banking Objectives for Fixed Income Target Key Results/Achievements in Promoting investment banking solutions Diversifying revenues by adding and enhancing new business segments Investment Banking Solutions, Coverage and Sales in, the Group closed transactions with major clients, including those among the top 5 largest Russian corporations, and successfully completed a buy-back of a corporate client s Eurobonds; the Group designed a number of financing strategies involving reverse repo transactions with 14 companies of the Russian top 30; as part of the effort to offer the clients integrated solutions, the Group designed a range of novelty products, such as non-deliverable precious metals hedging arrangements (including option strategies), forward instruments, open forward contracts on bonds (i.e. repo + FX swaps + loan facility); the Group upgraded its solutions for financing, hedging, debt optimisation and management. the Bank hired a new debt capital markets team, strengthening its positions in the primary segment of the domestic debt market. As a result, the Bank broadened its product and service offering and increased fee and commission income from the debt capital markets; Otkritie Financial Corporation Bank became the first issuer to register a new instrument, a RUB billion exchange-traded bond programme. The Bank has already placed two RUB 5.0 billion tranches under this programme; the Bank acted as the arranger of a RUB 8.0 billion subordinated Eurobond issue. The deal was successfully closed despite shrinking primary market for Russian issuers. In, Otkritie Financial Corporation Bank formed the investment banking solutions, coverage, and sales department with the responsibility for: designing and marketing integrated solutions to strategically important clients; selling financial instruments developed by the investment banking segment. This department focuses on the Bank s corporate clients from among Russia s top 100 companies (according to Expert RA and Forbes). This department deals in FX, interest rate, and commodity derivatives, currency conversions, structured investments, credit derivatives, repo transactions; it also handles securities issues, and provides access to Russian and international trading platforms. In, this function was involved in transactions with the total value exceeding USD 1.0 billion. Repo Transactions Debt Markets Otkritie Financial Corporation Bank offers its clients a wide range of instruments in the fixed income market. The number of active clients continued to rise throughout, and is dominated by major asset managers, banks, and insurance companies. The Bank s own securities portfolio is designed and managed by the investment portfolio department, which pursues a moderately conservative approach and generally makes investments of a strategic nature. The fixed income portfolio is a vital tool enabling the Bank to quickly raise liquidity in the market, if necessary. In, Otkritie Financial Corporation Bank entered into repo transactions with major financial institutions in Russia, including Sberbank, Russian Agricultural Bank, Vnesheconombank, Citibank, Credit Suisse Bank, Gazprombank, UniCredit Bank, Bank Saint Petersburg, Raiffeisenbank, China Construction Bank, etc. According to the Moscow Exchange, in Otkritie Financial Corporation Bank s trading volumes in repurchase agreements topped RUB 12.5 trillion, of which RUB 2.3 trillion was attributable Over the course of, Otkritie Financial Corporation Bank continued to expand its operations across the segments of corporate and subfederal bonds, Eurobonds, and asset securitisation instruments. Throughout, Otkritie Financial Corporation Bank took consistent measures to limit its risks and reduce the duration of the fixed income portfolio. Certain changes in the investment structure during the year helped the Bank to increase its portfolio liquidity and to raise the share of instruments from the Bank of Russia s Lombard List as high as around 92.6%. As of December 31,, the Group s fixed income portfolio totalled RUB billion (RUB billion as of December 31, ). to equity repurchase agreements, RUB 8.1 trillion to bond repurchase agreements, and RUB 2.1 trillion to government bond repurchase agreements. For comparison purposes, in Otkritie Financial Corporation Bank posted trading volumes in repo of RUB 5.4 trillion, of which RUB 1.8 trillion was attributable to equity repurchase agreements, RUB 2.1 trillion to bond repurchase agreements, and RUB 1.5 trillion to government bond repurchase agreements. Otkritie Financial Corporation Bank was ranked fifth in Cbonds annual ranking of Russia s top bond arrangers in, and placed fourth in Bloomberg s rating of bond market arrangers in Russia. In December, the Bank won the Cbonds Award for Best Investment Bank/Company for Tier II & III Issuers.

15 26 Otkritie Financial Corporation Bank 27 Operational Review Financial Market Transactions Client Conversions Sales in Financial Markets Otkritie Financial Corporation Bank offers its clients a full range of services in the financial markets with the highest level of customer service which is guaranteed by the team of top professionals, the extensive experience in the financial markets, and the excellent reputation. The Bank s counterparties include over 300 financial institutions and corporations classified as professional traders in the financial markets of Russia, the CIS, and other countries. The Bank has maintained business relations with leading credit institutions globally and has direct access to financial markets via loan facilities extended by major international liquidity providers. Despite turbulent financial markets throughout, Otkritie Financial Corporation Bank s team managed not only to maintain its client base, but also to attract new clients. The Group saw demand coming from the corporate clients both for plain vanilla hedging instruments (such as forward contracts or options), as well as for more complex structured solutions. The Bank s volume of trades in FX and interest rates derivatives exceeded RUB billion in (RUB billion in ), and In, Otkritie Financial Corporation Bank won the Dealer of the Year Award of the Moscow International Forex Association, while sustaining its position as a leading market maker in the Russian financial market: No. 1 in the interbank lending market according to DELTA; Top 3 in the FX section of the Moscow Exchange; Top 5 in the spot FX market. In, the Bank posted a 12.0% increase in its trading volumes year-onyear, while its trading volumes in the organised market grew by 24.0%. in commodity derivatives fell to RUB 0.8 billion (1.7 billion in ); roughly 90.0% of the transactions were fully covered, and, therefore, did not entail any additional credit risk for the Bank. Otkritie Financial Corporation Bank raised RUB 8.0 billion in structured deposits. In mid-, the Group launched an interest rate, commodity, and volatility derivative trading desk, and was able to develop a portfolio of trading strategies, earning additional income from managing this portfolio. Brokerage During the first six months of, the market was highly volatile which drove the Bank s income from currency conversion above estimates. By the end of, however, the corporate clients began to lose their appetite for risk and speculation in the FX market. The volume of currency conversions by individuals exceeded USD 1.4 billion in, and the volume of trades by corporations was in excess of USD 15.0 billion. In, Otkritie Financial Corporation Bank enhanced the performance of its front office and back-office IT solutions and launched a solution aimed at clients who use HFT technologies in their businesses. The Bank was therefore able to attract groups of clients handling large volumes of trades in organised markets. Strategic Objectives of Investment Banking for 2016 The key objectives of investment banking for 2016 include: focus on clients business segments; focus on fee and commission income growth; Over the year, Otkritie Financial Corporation Bank continued its project for automation of the FX conversion process and procedure, with the view to enhance the quality of operations and mitigate operational risks associated with currency conversion. In 2016, the Bank works on providing its clients with online access to the EBS platform and continues to provide its brokerage to clients in the international exchange-traded derivative markets (CME). focus on the clientele expansion and the efficiency of the client base and customers relations management (maximising earnings per client).

16 28 Otkritie Financial Corporation Bank 29 Operational Review Retail Banking Priorities Key Retail Banking Objectives for Alexey Karchazhkin Senior Vice President, Head of Retail Banking Key Figures 1 In, Otkritie Financial Corporation Banking Group focused on managing integration processes and enhancing the quality growth of its client base. Improving business processes and promoting remote banking channels remained high on the Group s agenda. Special attention was paid to achieving excellence in customer service and implementing an integrated approach to customer relations. Considering a large-scale reorganization, priority has been given to improving the quality of business which, in turn, is impossible without introducing state-of-the-art banking solutions and streamlining the product offering to fully meet the clients demands for advanced solutions and low risk. Target Key Results/Achievements in Integration with Khanty-Mansiysk Otkritie Bank Premium segment development Otkritie Financial Corporation Banking Group s mortgage business was transferred over to Khanty-Mansiysk Otkritie Bank; existing holders of Petrocommerce Bank and Otkritie Financial Corporation Bank cards were transferred to Khanty-Mansiysk Otkritie Bank; centralised processing of incoming customer requests by Khanty-Mansiysk Otkritie Bank s call centre; operations and service model developed to rebrand the Petrocommerce s branch network. Black Edition and Aeroflot Black Edition premium packages were developed and launched; first premium customer service areas were launched across Moscow offices; premium products were introduced across the retail network; strategic partnership with Renaissance Insurance Company; qualitative growth was achieved in the segment over : interest income grew by 144.0% year-on-year to RUB million; fee and commission income increased by 75.0% to RUB million; deposit portfolio increased by 124.0% to RUB 45.8 billion. Number of Retail Clients, million Retail Net Loan Portfolio, million roubles Retail Customer Accounts, million roubles 313, , , ,115 Retail Business Share, % 2 In the net loan portfolio In the loan portfolio In the loan portfolio 6.8% 10.8% 6.8% 10.8% In the deposit portfolio In the deposit portfolio 43.9% 30.7% 43.9% 30.7% In operating income (revenue) before In operating provising income (revenue) before provisions provising 28.9% 44.4% 28.9% 44.4% Retail Gross Loan Portfolio Breakdown by Type, million roubles 13, ,647 76, ,433 15, ,587 68, ,809 Consumer loans Mortgage loans Car and other loans Customer Funds, million roubles Total customer accounts Retail business: Term deposits Current accounts 417, ,115 77, , ,513 70,802 1,255,898 1,022,995 1 As at the year end. 2 The amounts relating to Treasury, Asset and Liability management units and Unallocated balances are excluded from the calculation. Enhancing remote banking Boosting efficiency Promoting card and transaction business ios and Android mobile applications regularly were updated adding new user functionality; instant money transfers to third party issuers cards was launched; automated payroll accrual was launched, so that funds are transferred to clients online; the number of remote banking users grew from 55,000 to 100,000. customer relations management was centralised and optimised; details of the Group s retail clients were transferred to a new centralised IT platform. new cards were launched and promoted (Premium Black Edition, Pension Card, LUKOIL-Otkritie-MasterCard co-branded card, Aeroflot MasterCard co-branded card in World and Black Edition versions, co-branded card with Rocketbank); since November, the card products are available in three packages: Premium, Optimum, and Basic. Over the last two months of, more than 20,000 contracts were entered into for such packages, of which Premium accounted for 16%, Optimum for 48%, and Basic for 36%; in, the Group s banks issued roughly 2.8 million cards (vs 2.0 million in ).

17 30 Otkritie Financial Corporation Bank 31 Operational Review Financial Highlights (IFRS) million roubles Y-o-y, % Key balance sheet figures Total assets of the segment 253, , including net loans to clients 191, , Total liabilities of the segment 332, , including customer accounts 313, , Key profit & loss figures Net interest income 1 21,806 21, Net fee & commission income 6,115 3, Total operating income before impairment losses and provisions for other transactions 16,292 14, Operating expenses 16,029 16, Profit before income tax 131 (2,505) n.a. 1 Net interest income before gain from remeasurement of cash flows from assets acquired as a result of business combinations and before allowance for impairment of interest-bearing assets. Note: The financial highlights are shown as of December 31,, for the year ended on December 31, ; and as of December 31,, for the year ended on December 31,. Comments on Financial Highlights (IFRS) To manage the quality of its retail portfolio, in late 2013, Otktitie Financial Corporation Banking Group revised its retail business growth strategy to focus on cross-selling to payroll clients and mortgage borrowers. As of December 31,, the Group s retail gross loan portfolio shrank by 3.5% to RUB billion as the Group continued to tighten its lending standards, particularly in retail segment. Over the year, the business growth tactics was focused on low-risk loans. The mortgage portfolio grew by 10.6% to RUB 76.3 billion, and mortgage loans accounted for 37.9% of the retail loan portfolio compared with 33.0% in. Retail customer funding increased by 57.9% in and reached RUB billion as of December 31,, driven, inter alia, by the successful merger with Petrocommerce Bank. Another driver of retail customer funding growth was the increase of deposits denominated in foreign currencies 41.3% as at the end of compared with 31.5% as at the end of. The positive dynamics of retail deposits over amid volatile markets is yet another proof of the clients trust in the Group s banks. As of December 31,, deposits accounted for 84.4% of the retail customer funding. At the same time, the Group continued to increase retail customer current accounts, which reached RUB 77.4 billion as of December 31,, up by 9.4% year-on-year. Cards In, operating income of the retail segment decreased by 13.0% due to a 42.3% drop in net fee and commission income (to RUB 3.5 billion) which was triggered by lower loan origination and lower agency commissions. Net interest income of the retail segment remained flat in. In, operating expenses grew by 3.1% which is well below the inflation rate of 12.9%. During, the Group s banks issued roughly 2.8 million cards (2.0 million cards in ). The Group launched new card products in as follows: Premium Black Edition Card for Premium Clients, February Premium Black Edition package includes banking and non-banking services and premium level benefits which are available to premium clients on favourable conditions. Card holders have access to a wide range of benefits such as higher interest rates on deposits and card balances, free cash withdrawals at ATMs worldwide, favourable exchange rates for cash withdrawals in foreign currencies, special mortgage conditions, and other nonbanking services. Over, the Group issued more than 14,500 World Black Edition cards. In, the retail business posted a loss of RUB 2.5 billion due to the continuing economic slowdown, rouble depreciation, and the resulting increase in interest rates which triggered a higher cost of risk in the retail segment. Please refer to the "Risk Management and Control" section of this Report (p. 65) for the retail loan portfolio quality overview. Pension Card, February This product was designed for the retired clients who can earn interest on their card balances and receive cash back on purchases at pharmacies. No issuance or service fee applies to these cards. Effective December, the Group cancelled the fee for cash withdrawals made with Pension cards at ATMs worldwide. Over, approximately 40,000 retirees chose Otkritie s Pension card.

18 32 Otkritie Financial Corporation Bank 33 Operational Review LUKOIL-Otkritie-MasterCard, March LUKOIL-Otkritie-MasterCard is a co-branded World MasterCard and LUKOIL card with MasterCard PayPass technology. Card holders earn LUKOIL reward program points on petrol purchases at LUKOIL petrol stations and other eligible purchases; such points can be further used to pay for petrol and other items at LUKOIL retail stations. Over, about 13,000 LUKOIL cards were issued. Aeroflot MasterCard, August In August, the Group launched new co-branded cards with Aeroflot MasterCard, which offers unique conditions for earning bonus miles up to four miles for each RUB 50 spent. The Aeroflot co-branded card is available in two versions: the World and Black Editions. The Aeroflot Black Edition card offers the same package of benefits as the Group s regular Black Edition card. In, the Group issued around 12,500 Aeroflot World cards, and around 5,500 Aeroflot Black Edition cards. Partnership with Rocketbank In early December, Khanty- Mansiysk Otkritie Bank became the service bank for new Rocketbank clients, whose funds will be managed and cards processed by Khanty-Mansiysk Otkritie Bank. As part of their strategic partnership, the two banks plan to launch co-branded products, while Khanty- Mansiysk Otkritie Bank intends to use Rocketbank technologies to promote its products and services. The first co-branded card has already been launched and will be issued to all new Rocketbank clients who will enjoy special conditions. Payroll Projects Mortgage Lending Throughout, the Group promoted its services and functions packaged by its banks as part of payroll projects: the Group s banks implemented major payroll projects involving the issuance of up to 6,000 payroll cards and value-added specialised technological components; the banks implemented a solution for automated crediting of salaries, In, despite the challenging economy, the Group issued RUB 8.0 billion worth of mortgages. In the third quarter of, Otkritie Financial Corporation Bank completed its mortgage portfolio securitisation in the amount of RUB 5.0 billion. The mortgage portfolio grew from RUB 69.0 billion as at the end of to RUB 76.3 billion as at the end of. In, Khanty-Mansiysk Otkritie Bank was one of the first to qualify for the Russian government state-supported mortgage programme. The bank issued RUB 4.5 billion in subsidised loans which accounted for 56.1% of all mortgage loans originated in. Khanty- Mansiysk Otkritie Bank is ranked 10th among 37 banks which participate in the state-supported mortgage programme. and now funds are credited to clients accounts online; over, the Group issued more than 200,000 payroll cards with total balances amounting to RUB 1.6 billion as at year-end; the Group centralised the payroll projects support function and established a dedicated call centre to improve the level of customer service. In, Khanty-Mansiysk Otkritie Bank joined the programme of federal government assistance to members of the military and launched a Military Mortgage option, which is a strategically important project for Otkritie Financial Corporation Banking Group. The Group partnered with leading developers to offer its clients subsidised interest rates for the first year of the mortgage, and the mortgage rate for the customers starts from 7.0% per annum. The Group launched a number of joint marketing campaigns to promote tailor-made offers for the clients. 24 developers partnered with the Group in the subsidy programme, and the Group issued more than RUB 1.0 billion worth of mortgage loans.

19 34 Otkritie Financial Corporation Bank 35 Operational Review ATMs and Payment Terminals As at the end of, Otkritie Financial Corporation Banking Group s ATM network consisted of more than 3,200 ATMs in 55 regions across Russia. In, the Bank of Russia and Joint Stock Company National System of Payment Cards (NSPK) started the program of issuance and acquiring of national payment cards called Mir ( World in Russian). The federal law On the National Payment System prescribes that all retailers and service outlets that accept bank cards as a means of payments for goods and services must accept national payment cards as well. According to this Federal law, employees of state companies will receive salaries only on national payment cards. Otkritie Financial Corporation Banking Group joined the payment system Mir and launched issuance and acquiring of national payment cards in all regions of its presence. All of these measures helped the Bank to grow the number of clients who access the Bank s products and services at least twice per month via the Internet or the mobile banking application to 100,000 people by the end of. Those who chose to become the Bank s client in via the Internet, were able to do so without visiting the offices. The courier can deliver the card together with all the documents to be signed upon client s request. In, the Group worked hard to promote online sales of the deposit products and launched a pilot project for deposits issuance online, similar to the cards. The clients can also apply for mortgage loans online without visiting the offices: the couriers deliver all necessary documents at the clients convenience. These measures helped to increase the number of new customers through the Internet. In, more than 50,000 new transactions were conducted by clients via the Bank s website. Technologies Strategic Objectives of Retail Banking for 2016 In, one of Otkritie Financial Corporation Banking Group s strategic priorities was to promote digital channels as a way of starting new business lines and boosting the efficiency of existing ones. The objective was to become the digital champion. It is a long-term objective which the Bank pursues across all of its business segments. To achieve this, IT processes must be as flexible as possible, and at the same time the Bank should shift its focus on digital services and innovative solutions development. To this end, Khanty-Mansiysk Otkritie Bank formed a special digital department which bridges IT and business and operates in line with the best practice of combining absolutely independent business thinking and modern IT culture. The Bank introduced state-ofthe-art business methods, switching from vertically integrated product development to Agile principles which allowed it to timely and regularly update the products and processes. For clients, this means the ability to access any banking service in just a few clicks via their mobile devices. In, the Bank released updates for ios and Android products every few weeks, providing the customers with new features which they requested over the year. For example, everyone can now become the client of the Group via the mobile application, or open a card, term deposit, or savings account in roubles or in a foreign currency online. A service for instant money transfers to cards issued by other banks was launched. Based on customer feedback, the existing functions were improved, so it is now much easier to exchange currencies, make transfers to companies, or to find the nearest ATM. The Bank launched a user-friendly transfer amount calculator, as well as many more features. The key objectives of retail banking for 2016 include: to further enhance the Bank s retail business efficiency; to improve the Internet banking services; to promote its card and transaction businesses with a focus on premium segment clients; to increase the client base.

20 36 Otkritie Financial Corporation Bank 37 Operational Review Small Business Banking В портфеле кредитов Priorities Key Figures 1 1.4% 2.3% Larisa Shvetsova Senior Vice President, Head of Small Business Banking In, the small business segment of the Group focused on building long-term relations with small companies and individual entrepreneurs by improving customer experience based on a clientoriented business approach. Over, as part of the reorganisation of Otkritie Financial Corporation Banking Group, the Group continued to transfer Petrocommerce Bank s small business assets to Khanty-Mansiysk Otkritie Bank. The key objective behind this process was to maintain the high level of service and to retain clients. The Group managed to successfully complete the integration of small business assets while sustaining the client base as of December 31,. Throughout, the Group remained focused on maintaining the quality of its loan portfolio and managing its risks. In, Otkritie Financial Corporation Banking Group promoted its business in partnership with government and nongovernment organisations supporting small businesses, such as SME Bank (JSC Russian Bank for Small and Medium Enterprises Support) and the Credit Guarantee Agency. Number of Small Business Clients Small Business Share, % 2 139, ,121 Small Business Net Loan Portfolio, million roubles Customer Accounts of Small Business Clients, million roubles В портфеле депозитов 51,492 In the net loan portfolio In the deposit portfolio In operating income (revenue) В операционных доходах (выручке) before provisions В портфеле кредитов В портфеле депозитов до формирования резервов 1.4% 2.3% В портфеле кредитов 33, % 2.3% 4.6% 4.2% 40,637 43, % 4.2% 9.0% 10.5% Key Small Business Banking Objectives for Target Key Results/Achievements in Improving efficiency Reducing risk appetite Integration the Bank designed a product offering consisting of high-margin products which meet the key needs of small businesses; underwriting and decision-making fuctions were centralised; the initial client verification system was improved; the Group streamlined loan conveyor processes; the Group designed processes to manage assets with a higher risk of default. eligibility criteria for collateral were strengthened; the Bank seized granting unsecured loans and loans with flexible repayment schedules. maintaining a high level of customer service; focusing on retaining clients and sustaining the client base. В портфеле депозитов 4.6% 4.2% В операционных доходах (выручке) до формирования резервов Small Business Loan Portfolio Breakdown by Industry as at the Year End 9.0% 10.5% million million roubles % roubles % В операционных доходах (выручке) до Retail формирования trade резервов 10, , Services 7, , Wholesale trade 7, , % Operations with real estate 10.5% 3, , Industrial manufacturing 3, , Transport and communication 3, , Construction of industrial and commercial real estate 1, , Agriculture Leasing Mining Housing construction Other 4, , Gross small business loans 44, , As at the year end. 2 The amounts relating to Treasury, Asset and Liability management units and Unallocated balances are excluded from the calculation.