Vozrozhdenie Bank Promising SME and retail local franchise

Transcription

1 Vozrozhdenie Bank Promising SME and retail local franchise Investor presentation September 2015

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3 Agenda Key facts Business model Business overview Recent IFRS results Investment summary 3

4 Over 24 years of successful development Bank shares begin trading in international stock markets as ADRs. Standard & Poor s rating assigned. Start of cooperation with CIBC. The bank is rated among the TOP- 20 banks by corporate loan portfolio. The bank is rated among three leaders under the Agency for Housing Mortgage Lending Programme. The bank is rated among seven largest mortgage banks in Russia. The bank is rated by Standard & Poor s first for information transparency. The bank is rated among the top 10 largest banks by number of issued bank cards. The millionth bank card is issued. Vozrozhdenie Bank leads S&P s ratings for information transparency from the shareholders perspective based on the Information Transparency in Russian Banks Survey. EBRD awarded Vozrozhdenie Bank with the Transaction of the Year. Securitisation of the mortgage loan portfolio amounted to RUB 4.07 biln. Top 3 by usability of remote services in Private Deposit CX Rank Cash-in-transit service established. Vozrozhdenie Bank is founded and obtains a license. Obtained status of Authorised Bank of the Russian Government. Vozrozhdenie Bank is recognised a financiallystable credit institution. The bank is one of the three leading credit organisations by size of branch network in Russia. According to BrandFinance, the bank is rated among the TOP-500 global financial companies based on its brand value. Securitisation of the mortgage portfolio in the amount of RUB 4 billion. The bank is rated among the TOP-100 largest public companies by Expert RA The bank receives a foreign exchange license from the Central Bank. The bank joins the Moscow Interbank Currency Exchange. Shares listed on RTS. The bank is classified as a socially-valuable credit organisation. Start of cooperation with the World Bank. Development of the ATM infrastructure. Launch of the processing centre. The ATM bank network is recognised as the largest in the Moscow Region. The 100,000th VISA card is issued. Rebranding. CRM system development. Vozrozhdenie Bank is rated by The Banker among the TOP global banks. Launch of the operating model optimisation programme. Dmitry Orlov, Vozrozhdenie Bank founder, passed away. Bank joins S.W.I.F.T. Correspondent banking network established with Western banks. The 14th issue of bank shares, threefold increase in capital. The bank joins the deposit insurance system. The bank is rated among ten largest banks by private deposits. Vozrozhdenie Bank is recognised by The Banker as the Bank of the Year in Russia. The bank s name in Russian was changed to Публичное акционерное общество Банк «Возрождение» and its form of incorporation was changed to public joint stock company. Securitisation of the mortgage portfolio in the amount of RUB 3.45 billion. 4

5 Vozrozhdenie Bank a community bank built on strong relationships with SMEs and individual customers Vozrozhdenie Bank strategy Focus On Core Banking Products Servicing Corporate and SME Customers on Each Stage of Business Development Servicing Retail Customers throughout Their Whole Life-cycle Balanced Lending and Funding policy Prudent risk-management policy Increasing efficiency in service delivery service via Retail Clients Corporate Accounts 21 Regions 142 Offices 899 ATMs 5

6 Distribution network As of September 1, 2015 Moscow Oblast is a home territory with historically strong market position Branches Sub branches Retail offices Total ATMs every town is under coverage 21 regions of presence. Focus on the most perspective South and North- West Branches Total ATMs Sub branches Retail offices 6

7 Basic information & position in Russian banking system Key Figures, RUB Rankings* Assets 217,004 mln Net Assets 36 Loans b.p. Customer Funds 163,459 mln 169,414 mln Loans issued to SMEs 3 Net Loss (609) mln Volume of retail deposits 21 Shareholders equity Retail Clients Corporate Accounts 23,327 mln 1,700,000 61,000 Mortgages 14 Corporate loans 25 Personnel Offices 5, Bank cards issued 13 ATMs 899 Branches/ATMs 39/19 Financial indicators as of June 30, 2015 * RAEX most recent rankings ( 7

8 Market recognition Credit ratings and assessments Listing Moody s Bank deposits rating: B1/NP, stable Counterparty risk assessment: Ba3/NP Included in indices MICEX Broad Market Index MICEX Second-Tier Index MICEX Start Cap Index MICEX Financial Index Standard&Poor s Issuer credit rating: BB-/ruAA-, negative Listing Level 1 (Highest) MOEX High recognition of brand Aaa 25 Aa 22 A 19 Baa 16 Ba 13 B 10 Caa 7 Moody's S&P AAA 42 Moody's Interfax A1.ru AA 35 S&P national scale ruaa- A 28 BBB 21 Moody's B1 BB 14 S&P international BB- B World Finance V.Bank was awarded for Best Corporate Governance, Russia, according to World Finance survey The Banker V.Bank The Bank of the year 2010 in Russia as per the survey of The Banker magazine BrandFinance Banking 500 survey V.bank ranks among top-10 Russian most valuable banking brands with brand value of $190 million 8

9 Business model 9

10 Strategy 10

11 Business model Business based on relationships - Customer oriented growth - Conservative balance sheet - Primarily deposit funded - Focused regional structure - Increasing efficiency via sales enhancement gives solid non-interest income RUB bln Non-interest income Net interest income % 34% 34% 33% 32% 66% 67% 68% 66% 66% Loan portfolio development funded by customer accounts Retail loans Corporate loans RUB bln RUB bln Interest-bearing Deposits Interest-free Current accounts % % % % Note: all loans are gross loans 11

12 Assets and liabilities Stable balance sheet size Resistant funding structure RUB bln 23% 25% 24% 21% 22% % 20% 15% 10% Cash and equivalents Due from banks Invest. securities pledged under repos Securities RUB bln Due to other banks Funds borrowed from the Bank of Russia Client funds Securities issued % 0% Net loans Other assets Liquid assets share Other liabilities Subordinated loans Equity Preferring liquid instruments generating good yields Lower L/D remains within targeted range RUB bln 24,0% 22,4% ,6 7,4 5,3 4,9 20,9 26,5 Securities Corr. accounts with other banks Corr. accounts with CBR 105% Gross loans Customer funds L/D 98% 98% 99% 96% RUB bln 16,1 14,5 Cash Q15 2Q15 12

13 Customer funds Expanding share of retail funds Corporate deposits Retail deposits -0.1% Corporate accounts Retail accounts +7.1% RUB bln 18% 16% 14% 12% 10% 8% 6% 4% 2% Dynamics of effective rates on retail deposits in % RUR 3 months RUR 12 months RUR 18 months FX 3 months FX 12 months FX 18 months Focused on long-term retail deposits* Well-diversified deposit base Volume of retail deposits, % Number of accounts, % months 16% Over 18 months 83,2% 68% 1% 7% 8% Up to 3 months 3-6 months 6-12 months 21,5% 21,5% 11,3% 16,8% 4,8% 34,2% 6,0% 0,5% 0,3% *Contractual maturity structure of retail deposits based on management accounting data up to RUB500 thsd RUB thsd RUB1-3 mln RUB3-10 mln over RUB10 mln 13

14 Who are our SMEs? What is our SME Definitions Segment Total credit exposure, RUB mln Large business > 750 Medium-size and small businesses Micro businesses 6-30 Food processing factories manufacturing different types of high-quality food and beverages. Local retailer chains small chains of handy stores Close-to-House style for daily shopping located in dormitory area with high density of population. 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. 14

15 Loan portfolio Corporate loans down on conservative risk management Loans to large corporates SME loans Retail loans -1.6% -2.9% 166,1 165,1 170,2 168,4 163,5 RUB bln Improved granularity corporate loans distribution by size RUB bln 1Q15 2Q15 46% 42% ,0% ,1% 68 19% 20% 17% 19% 18% 19% ,8% 49 Large corporates on decline due to repayments and one-offs RUB bln 57 Loans to new clients Loans to existing clients Repayments Write-offs 0,0 +1,0-2,8-2,7 Migration between SMEs and large corps -2,7 49 Up to RUB100 mln RUB100 mln - RUB300 mln RUB300 mln - RUB750 mln Above RUB750 mln while SMEs up on more active lending and cut of exposures Loans to new clients +2,2 Loans to existing clients Repayments Write-offs +4,3-7,8-0,10 Migration between SMEs and large corps +2,7 66,6 68,0 RUB bln 1Q15 2Q15 1Q15 2Q15 15

16 Corporate loan book Credit policy sticks to reliable collateral providing mostly working capital RUB bln Uncollateralized & Other collateral as of June 30, % as of June 30, 2015 State guarantees 1% 10% Real estate & Rights of claim 40,7% Corporate portfolio 28,5% Equipment & vehicles 23% RUB bln 41% 8,8% 22,0% Guarantees 25% up to 30 days days days > 1 year maintaining industry and regional diversification Administrations Other as of June 30, 2015 Other regions as of June 30, 2015 Transport 2% 2% 7% Agriculture 5% 4% Real estate 7% RUB bln 41% Manufacturing North-West regions Moscow 13% 12% 9% RUB bln 39% Moscow Oblast 9% Construction Wholesale & retail trade 22% South regions 27% 16

17 Retail lending Retail loan book dynamics Mortgages Consumer and car loans Credit cards 44,1 45,0 +2.0% 46,2 45,2 46,0 2,1 2,1 2,0 2,0 2,1 11,3 12,0 12,4 11,9 12,3 RUB bln Primarily mortgages under state-related agency JSC AHML standards High-margin consumer loans to customers with apparent cash-flow employees of corporate clients Retail loans maturity as of June 30, 2015 Retail portfolio 85,6% 30,7 30,9 31,9 31,4 31,5 1,5% 6,1% 6,8% up to 30 days days days > 1 year Mortgage securitization as a source of long-term funding for loan portfolio expansion Securitisation 1 RUB4.1 billion in December 2011 Securitisation 2 RUB4.0 billion in April 2013 Securitisation 3 RUB3.45 billion in March 2014 Securitisation 4 RUB3.45 billion in June 2015 Consumer loans, RUB Mortgages, RUB Credit cards, RUB Rates on retail loans Class A with 8.95% coupon rate and Baa2 rating from Moody s Class A with 8.5% coupon rate and Baa2 rating from Moody s Class A with 9% coupon rate and Baa2 rating from Moody s Class A with 9% coupon rate and Baa3 rating from Moody s We plan to continue cautiously expanding retail loan portfolio, that was an important lending growth driver during recent years Particular focus is on mortgages and consumer lending to payroll clients

18 Card business sales force in retail Synergy of corporate and retail via core product payrolls as of June 30, 2015 Interest 14% 86% Fees & commissions 8% 15% 30% 21% acquiring cash operations Vbank-service and self-service Visa and Mastercard Mobile and internet bank key drivers for future growth 3 rd by usability of remote services in Private Deposit CX Rank 2015* 26% payrolls Wide client base for business expansion *According to Markswebb Rank & Report Key points 3Q14 4Q14 1Q15 2Q15 Payrolls 15,100 15,100 14,840 15,285 Debit cards 1,161,207 1,099,755 1,069,763 1,043,749 Credit cards 102, , , ,989 ATMs Payrolls is one of the key tools for retail client base growth with strong potential 41,000 of existing corporate clients with 23,397 installed Internet-client and Bank-client systems and 15,285 payrolls - Offering cards to existing corporate clients: credit cards for owners, top and mid-level managers and specialists, debit cards for personnel - Advanced functionality of the mobile and internet bank will switch more customer operations to remote channels unloading the offices and boosting transaction volume 18

19 Risk management 19

20 Risk management and capital position Maturity structure FX structure Assets Liabilities as of June 30, 2015 Assets as of June 30, 2015 Liabilities RUB bln RUB bln 57,8 60,7 49,4 40,6 33,7 51,5 64,7 63,6 80% RUB 20% FX % RUB 19% FX Demand and less than 1 month From 1 to 6 months From 6 to 12 months More than 1 year Loans Due from banks&securities Cash&Other assets Customer accounts Due to banks&securities Other liabilities Capital adequacy under Basel III Key points Tier 1 Tier 1 + Tier 2 Minimum requirements set by the Bank of Russia - Well-balanced maturity structure 12,3% 12,2% 12,0% 12,2% 12,0% 10,5% 9,9% 10,4% 9,6% 10% 9,3% 5% - The bank allocates FX raised on deposits into loans to large export companies and high quality securities that supports margins while remaining overliquid on FX - CAR stands at 12.0% with high share of base capital. We didn t use options offered by the CBR to exclude the effect of repricing accounting FX RWA 20

21 Credit quality management NPLs dynamics* 8,53% 8,25% NPLs, Rub mln Provisions, % of total portfolio NPLs, % of total portfolio 9,15% 8,92% 10,03% 8,48% 12,01% 11,60% 9,13% 9,22% * 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 Heavy provisioning on corps to improve coverage 2,30% 2,20% Provisions on retail, Rub mln Provisions on large corps, Rub mln Provisions on SMEs, Rub mln Charges to provisions to avg gross loans, QoQ Charges to provisions to avg gross loans, YtD 2,13% 1,97% 1,92% 1,21% ,33% 3,33% ,07% 4 69% SMEs +RUB 1,448 mln of new NPLs -RUB 552 mln of recoveries -RUB 101 mln of write-offs 10,24% 9,26% 7,34% 7,98% 5,99% 5,98% 7,02% 6,52% 7,22% 8,75% ,78% 17,74% Large corporates 15,06% 16,23% NPLs categorisation +RUB 986 mln new NPLs -RUB 449 mln recoveries - RUB 2,719 mln write-offs 21,06% 18,04% 19,72% 16,44% 16,77% 16,12% NPLs, Rub mln Provisions, % of total portfolio NPLs, % of total portfolio Retail 4,23% 4,08% 3,65% 2 2% 2 0% 2 0% 2 4% +RUB 1,171 mln of new NPLs -RUB 1,039 mln of recoveries -RUB 1 mln write-offs 4,74% 4 92%* 2 5% *2.7% of which is overdue less than 30 days 21 15

22 Credit quality As of July 1, 2015 Large corporates SMEs Mortgages Other retail RUB mln Total Gross loans including 49,303 67,995 31,544 14, ,459 Current loans 80.3% 89.8% 96.8% 91.4% 88.4% Past-due but not impaired including - 0.8% 1.9% 2.9% 1.0% Provisions to NPLs Ratio 79.5% Less than 90 days - 0.8% 1.9% 2.9% 1.0% Over 90 days Impaired including 19.7% 9.4% 1.3% 5.7% 10.6% Less than 90 days 6.0% 1.1% 0.3% 0.8% 2.4% Provisions to 90 days+ NPLs 112.3% Over 90 days 13.7% 8.3% 1.0% 4.9% 8.2% Total NPLs 19.7% 10.2% 3.2% 8.6% 11.6% Provisions -16.1% -8.7% -1.2% -5.5% -9.2% Net Loans 41,354 62,046 31,176 13, ,384 Rescheduled Loans 8.6% NPL - the whole amount of loans with principal overdue for more than 1 day as well as loans with any delay in interest payments. 22

23 Recent IFRS results 23

24 Financial highlights RUB mln 2Q15 1Q15 QoQ 1H15 1H14 YoY Interest income 6,080 5, % 11,998 10, % Interest expense (3,491) (3,356) +4.0% (6,847) (5,026) +36.2% Fee and commission income 1,124 1, % 2,198 2, % Fee and commission expense (164) (187) -12.3% (351) (357) -1.7% Other operating income % % Total operating income b.p. 3,919 3, % 7,814 7, % Operating expenses (2,276) (2,414) -5.7% (4,690) (4,365) +7.4% Provisions for loan impairment (2,517) (1,415) +77.9% (3,932) (1,866) % Provisions for impairment of other assets (16) (19) -15.8% (35) 37 - Provisions for credit related commitments Taxation 189 (7) (234) - Net profit (609) 40 - (569)

25 Sustainable support of NIM NIM improved amid effective balance sheet management Solid net interest spread Loan rates Deposit rates Interbank +0,47% -0,37% +0,30% Loan&Deposit portfolio volumes Other -0,19% -0,04% Spread (net) Yields on earning assets (net) Cost of funds 11,7% 12,0% 11,9% 13,6% 14,5% 4,56% 4,40% 4,46% 4,61% 4,78% 6,2% 6,2% 6,3% 6,8% 7,3% 5,5% 5,8% 5,5% 6,8% 7,3% Good yields across the assets offset higher funding rates Yields on corporate loans Yields on securities Yields on retail loans Retail term deposits Interbank Corporate term deposits 15,4% 15,5% 15,2% 15,7% 15,9% 12,0% 11,3% 11,6% 11,4% 4,9% 5,2% 6,0% 13,8% 14,4% 6,6% 7,0% 8,1% 7,0% 5,5% 9,3% 7,2% 4,9% 10,0% 8,4% 8,7% 6,7% 8,6% 5,8% 6,8% 6,8% 25

26 Seasonally higher fees amid new products development Operating revenues up supported by fees RUB bln Net interest income Net fees Other income +7.6% % ,27 0,07 0,45 0,37 0,15 34% 1,0 1,0 1,1 0,9 1,0 2,4 2,3 2,5 2,6 2,6 Settlements Cards Cash transactions Other -1.7% % RUB mln Improved efficiency of remote channels amid launch of new product lines Non-interest revenue segmentation Income from Client Bank system and cash operations, RUB mln Income per account, RUB thsd 23,9 26,2 29,6 29,6 29,3 31,8 32,5 19% 20% 7% 54% Corporate Cards Retail Fin. markets 0,9 1,0 1,1 1,1 1,1 1,2 1,2 Jan 2015 Feb 2015 Mar 2015 Apr 2015 May 2015 Jun 2015 Jul

27 Strict cost control Operating costs structure RUB mln Rent and costs relating to premises and depreciation Taxes other than income tax and contributions Cost-to-Income ratio before provisions, % Administrative and other expenses Staff costs +4.5% 59,9% 60,0% % ,8% Cost-to-Income ratio 78,0% 62,7% 62,0% 58,1% M14 6M15 Staff number on decline Key points Growth on YoY basis on the back of high inflation and ruble devaluation - Q1 costs inflated by compensation packages to employees and high IT investments to the infrastructure - First fruits of optimisation project and personnel cut in Q2. Average staff number down by 7.7% YtD. 27

28 Profits & capital Improvement of operating profit offset by high provisions but net income pressed by high provisions RUB bln Operating profit before provisions Provisions RUB mln 1,46 1,30 0,80 1,48 1, ,97-0,82-0,51-1,42-2, Return on equity Return on assets ROE Profit before provisions and taxes to capital ROA Profit before provisions and taxes to assets 25,5% 22,2% 24,8% 27,8% 7,5% 6,3% 13,4% 2,8% 0,8% 0,7% 2,4% 1,4% 2,7% 3,0% -0,4% 0,7% -10,3% -0,05% 0,07% -1,1% 28

29 Capital & Governance 29

30 Capital structure Shareholding structure Share price on MOEX As of June 11, 2015 As per MOEX data Trade volume Last price Orlovs family 33% Other affiliates 24% Other 43% More than 7,500 individuals and 1,000 companies are among our shareholders with foreign investors owning more than 31% RUB RUB RUB RUB RUB RUB 800 RUB 600 RUB 400 RUB 200 RUB Major shareholders (as of September 1, 2015) SHAREHOLDER STAKE IN VOTING SHARES 100 RUB 0 RUB INDICATOR Q Valuations Tatiana Orlova (Member of the Board of Directors) 26.69% JSC Pervobank 10.40% JPM International Consumer Holding Inc. 9.88% Promsvyazbank PJSC 9.77% CREDIT BANK OF MOSCOW (open joint-stock company) 9.68% Alexey Krapivin (Member of the Board of Directors) 6.92% Nikolay Orlov 6.60% Total 79.94% Price to Book Value 0.5 Price to Earnings -5 Book Value per Share RUB ($16.8) Earnings per Share -RUB 97.3 (-$1.8) Market cap RUB 12.1 bln ($217.4 mln) 30

31 High standards of corporate governance MANAGEMENT STRUCTURE Strategy Committee HR and Compensation Committee - Timely information provision to investors - Full disclosure on the website - Quarterly IFRS financial reporting with webcast presentations - Financial reports under IFRS audited from Solid and professional team GENERAL MEETING OF SHAREHOLDERS BOARD OF DIRECTORS 12 members 9 are non-executive 7 independent ACTING CHAIRMAN OF THE MANAGEMENT BOARD Mr Andrey Shalimov MANAGEMENT BOARD 9 members 2 Deputy Chairmen AUDITOR PricewaterhouseCoopers Internal Audit Service System of control Audit committee Audit commission Risk Control Department Internal Control Service The arrows represent the authorities to appoint or elect the relevant Bank s bodies and the External Auditor Continuing excellent reputation recognition: V.Bank has the Best Corporate Governance in Russia, 2013 Andrey Shalimov was awarded for the Best IR in 2012 V.Bank was awarded as the Bank of the Year in Russia in

32 Investment Summary S O U N D S T R A T E G Y Over 20 years in Top-30 Russian banks amid changing competitive landscape Successfully passed through all crises ( ,1998, 2004, 2008) with time-proved conservative risk policies Business model generating high share of fees & commissions Growth in core regions and client segments Focus on operating efficiency B U S I N E S S S T R E N G T H S Loyal clientele due to strong relationships with the customers 60% of client base is concentrated in promising Moscow Oblast Corporate business focused on high-profitable SMEs, retail on safe mortgages, consumer loans only for the known customers Broad product line based on advanced IT-solutions and remote banking services One of the most transparent FI in Russia Best website disclosure in 2015 from NACS, Best Corporate Governance by World Finance in 2013, leaders of Information Transparency to Shareholders by S&P in 2008, 2007, 2006 Management Board with long-term banking experience Well-balanced professional Board of Directors Positive track-record of communication with investors H I G H S T A N D A R D S Russian economy turbulence, geopolitical instability Ongoing pressure on lending rates driven by state banks High potential credit risk Limited demand from key client sector SME Competitive landscape for Russian private banks Still high potential credit risk Pace of operating model optimization project realization C U R R E N T C H A L L E N G E S 32

33 Investor Relations contacts Elena Mironova Deputy head of IR Maria Topoleva Key specialist of IR Download our IR app for iphone Download our IR app for ipad Tel.: Website: Slideshare: Twitter: Download our contacts Download our presentation 33

34 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 Vozrozhdenie Bank (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. 34