Transcript Prдsentationsvorlage RZB

Banking in Russia
Achievements & Prospects…
Michel Perhirin
Chairman of the Board
2005
FACTS & TRENDS
Sector wise: … turning into system

The continued steady economic growth has been altering the landscape of Russia’s banking environment.

Compared to the crisis-ridden nineties, a number of recent developments have set Russian banking on a
principally new trajectory, including political and monetary stabilization, liberalization and structural
reform, and tangible improvements in Russia’s international status.
The banking sector in Russia is efficiently transforming into a banking system capable of financing business
expansion, acting both as a channel for capital mobility and solid building block for an effective monetary
system.
3
System monitor: … status improving
Banking system vs. GDP
12%
9%
6%
3%
0%
-3%
-6%
-9%
50%
45%
40%
35%
30%
25%
20%
1997 1998 1999 2000
2001 2002 2003 2004
Total assets, % of GDP (rhs)
GDP change (%, yoy)

The growth of bank assets keeps outpacing the
overall economic growth rate

Sound fiscal policy has produced a shift away
from involvement in public debt operations

Transition of the banking system from a net
creditor on the external market (“capital flight”)
to a borrower is progressing
… the trend is likely to continue in the coming years
4
Environment: … changing for better
The landscape of the banking sector keeps changing steadily both in terms of re-distribution of banks’ role and functions and their market
position
… emergence of what can be called “universal banks” is spreading wide:
 state banks are increasingly working as “conventional” banks
 investment & commercial banks are aggressively expanding and diversifying their product/service range and developing
new business activities (retail, asset management, leasing)
… consolidation in the banking industry is gearing up:
 helping to solve the issue of undercapitalization
 encouraging regional expansion
 banking M&A: Nikoil-Avtobank-UralSib, Eurofinance-Mosnarbank, Rosbank-OVK, GE-Delta Bank, Intesa-KMB Bank,
Hansa bank – Kvest
… tightening regulation adds to market consolidation & transparency:
 min. own capital requirement calls for mergers
 private deposit insurance law makes openness the key to win the retail customers’ confidence and cash
5
The playground: … structure wise
 The structure of the Russian banking sector still remains highly
fragmented, which hampers sector development…
 Market fragmentation though offers a handful of opportunities
to large private players compete successfully against state giants
and the army of regional/pocket banks…
500%
431%
400%
Assets dynamics
comparison
300%
356%
200%
100%
0%
1.1.00
1.1.01
 The enhanced growth in assets observed in Top-20 largest private
banks vs. total banking assets implies inevitable changes towards a
more effective structure to occur in the years to come…
1.1.02
Other total
101-1238
18%
1.1.03
1.1.04
1.1.05
Top-20 private
Distribution of banking assets
(1.03.2005)
State (3)
40%
From many aspects (economic, regulatory, political) this
process is steadily turning irreversible…
21-100
18%
Top 20 private
24%
6
Inner circle: … foreign pie
Distribution of foreign banks’ assets
(01.03.2005)
 Foreign banks that are active in Russia (Top-30) account
for:
9.5% of the total assets
3.8% of retail deposits
8.6% of private loans
 Close in corporate culture, technologies, service quality and
product range, many of foreign rivals are seen increasing their
pressure …
IMB/HVB
14.6%
18.8%
2.1%
Raiffiesenbank
Citibank
Commerzbank
2.8%
HomeCredit bank
3.0%
ABN Amro
3.4%
Deutsche Bank
17.5%
4.0%
 Competition will keep speeding up in both retail and
corporate sectors fueled by acquisitions and dumping prices…
 … the time is late though for such market strategies to present a
major threat to RBRU
ING Bank
4.6%
4.7%
4.9%
5.0%
CSFB
WestLB
SocGen
14.6%
BNP Pariba
Other (18)
Raiffeisenbank is well positioned to protect its market share effectively benefiting from the early market entry and leveraging its
growth strategy by diversified corporate loan portfolio, balanced exposure to corporate and retail markets and cost efficient
network expansion…
7
Top League: … shapers of future
1 Sberbank
2 VTB Group
3 Gazprombank
Total state banks
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Alfa-Bank
Bank of Moscow
Rosbank
IMB/HVB
MDM bank
Raiffeisenbank
PSB SPb
UralSib
Citibank
Khanty-Mansi Bank
MezhPromBank
PromSvyazBank
Petrocommerce
Zenith
Nomos bank
Russian Standard
Ak-Bars
Transcreditbank
NIKoil
Globex
Top 20 private
Assets
01/03/05
USD mn.
74 995
15 700
13 505
104 200
6 611
6 371
5 587
3 941
3 781
3 612
3 580
3 135
2 869
2 660
2 437
2 254
1 954
1 941
1 788
1 686
1 592
1 563
1 528
1 496
60 388
Share of
total
Growth vs.
01.01.04
29.3%
6.1%
5.3%
40.7%
34%
50%
62%
39%
2.6%
2.5%
2.2%
1.5%
1.5%
1.4%
1.4%
1.2%
1.1%
1.0%
1.0%
0.9%
0.8%
0.8%
0.7%
0.7%
0.6%
0.6%
0.6%
0.6%
23.6%
 State and Top-20 largest private banks account for over
60% of the total banking assets…
 Top League market share is likely to grow in the next 3 years
on mergers, acquisitions and inbound cross-boarder
-9%
47%
investments that are seen accelerating on the part of
31%
25%
international majors (Citibank, JP Morgan Chase, Deutsche
-14%
58%
Bank, Intesa, SocGen, BNP Paribas, GECF, HSBC) and
41%
strong European banks…
27%
25%
247%
-51%
52%
16%
63%
33%
167%
89%
44%
20%
36%
22%
RBRU long term commitment to Russia is based on the solid
market platform which offers sizable growth opportunities and
rewards in the years to come…
8
Lending: … towards the business
Share of corporate loans in total assets
Total corporate loan portfolio growth
(1Q 01 = 100%)
50%
1H 04
45%
1Q 04
40%
3Q 03
35%
1Q 03
30%
3Q 02
1Q 02
25%
3Q 01
0%
20%
50%
100%
150%
200%
250%
1.1.99
1.1.00
1.1.01
1.1.02
1.1.03
1.1.04
1.1.05
By 2005 the banking system’s total exposure to the corporate sector have exceeded $120 mn., accompanied by a
continued growth of corporate loans’ share in the total banking assets. This proves that interaction between the
banking system and economy improves…
9
Funding prospects: … vox populi
 Private consumers’ loyalty to the banking system is seen steadily
improving
 Economic stabilization and the growth of income keep driving
50
consumer spending and the demand for consumer financing
 Slowing inflation, falling rates and sable Rouble expand affordability 40
of banks’ lending to households
Term deposit structure (%)
30
20
Private deposit dynamics (USD bn.)
10
0
2004
demand
deposits
2003
1-3
months
2002
2002
3-6
months
2003
6-12
months
1-3 years
over 3
years
2004
CAGR = 47.5%
(2000-2004)
2001
Private sector operations are accelerating: deposits are
increasingly used to finance conventional bank transactions
rather than the budget…
2000
0
15
30
45
60
75
10
Lending to private: … rationale both ways
25 000
Retail loans dynamics
20 000
(USD mn.)
Retail loans still represent a tiny fraction of GDP (aprx. 2%) which times
lower than in peer CEE economies. This suggests an enormous potential
in Russia’s population borrowing capacity that is yet to be untapped.
15 000
Households
10 000
5 000
0
1.1.00
1.1.01
1.1.02
Total





1.1.03
1.1.04
1.1.05
Top-30
Source: Central Bank sites, RZB Group Research
Banks
Risks diversification (corporate vs. retail)
Higher margins
Incentive for regional expansion
Opportunities for new product offering (asset management,
private banking, etc)
Non-interest income growth
 Acquiring the life style of “living on credit”
 Increasing demand for higher quality of life (durables, real estate)
 Appreciating the habit of “making money work” (investment &
leverage)
Consumer financing is expected to progress at an
accelerated pace as borrowing habits keep developing
and discipline improving…
11
The Bank:
Performance & Products
RBRU: … today and beyond
Planned for opening 2005-2006
2004 Growth story: … in detail
Assets growth dynamics
40%
(year-to-date)
35%
32.63%
30%
27.53%
25%
20%
15%
10%
5%
RBRU
1.1.05
1.12.04
1.11.04
1.10.04
1.9.04
1.8.04
1.7.04
1.6.04
1.5.04
1.4.04
1.3.04
1.2.04
-5%
1.1.04
0%
Other total

… kept moving ahead of the market in terms of
assets growth

… expanded the market share by over 4.4%
14
Market share: … assets wise
Our competitive edge has once again proven strong vs. both the largest private local and
international rivals…

RBRU share in assets
4.10%
Top-30 foreign banks
Top-25* banks
20.30%
3.97%
4.00%
3.80%
20.20%
20.10%
3.90%
20.25%
20.04%
20.00%
3.79%
19.90%
3.70%
19.80%
3.60%
19.70%
3.50%
19.60%
3.40%
19.50%
01.01.04
* - Excluding state banks
01.01.05
01.01.04
01.01.05
15
Core business: … leading the lending
Corporate loans growth dynamics
(year-to-date)
80%
70%
67.20%
60%
36.64%
50%
40%
30%
20%
10%
RBRU
1.1.05
1.12.04
1.11.04
1.10.04
1.9.04
1.8.04
1.7.04
1.6.04
1.5.04
1.4.04
1.3.04
-20%
1.2.04
-10%
1.1.04
0%

… outperformed the lending market
growth by far

…bank’s share in total loan portfolio grew
by 22%
Other total
16
Committment: … and loyalty

Lending activities keep accelerating driven by widening product range, improving quality of services, clients’
loyalty and strengthening reputation on the market…
RBRU share in
corporate loan portfolio
Top-30 foreign banks
Top-25* banks
4.50%
4.18%
30.00%
29.00%
4.00%
3.50%
25.00%
3.21%
23.58%
3.00%
20.00%
2.50%
2.00%
15.00%
1.50%
1.00%
10.00%
01.01.04
* - Excluding state banks
01.01.05
01.01.04
01.01.05
17
Towards people: … ahead of many
Retail loans growth dynamics
(year-to-date)
160%
146.01%
140%
106.54%
120%
RBRU market share
100%
(% of total consumer loans)
80%
60%
40%
1.70%
1.66%
20%
RBRU

01.01.05
01.12.04
01.11.04
01.10.04
01.09.04
01.08.04
01.07.04
01.06.04
01.05.04
01.04.04
01.03.04
01.02.04
01.01.04
0%
Other total
RBRU led the growth in consumer lending market
competing successfully in mortgage and car loans sectors
1.60%
1.50%
1.40%
1.40%
1.30%
1.20%
01.01.04
01.01.05
18
Retailing: … prospects shielded
89.32%
100%
Retail deposits dynamics
80%
(year-to-date)
52.65%
60%
27.06%
40%
20%
Retail deposit portfolio
(Top-30 foreign banks)
1.1.05
1.12.04
1.11.04
1.10.04
1.9.04
1.8.04
1.7.04
1.6.04
1.5.04
1.4.04
1.3.04
1.2.04
-20%
1.1.04
0%
16%
RBRU
Top-30 foreign
Top-25 local
49%

RBRU is facing fierce and aggressive pressure from foreign banks in retail
deposit sector…

…although RBRU’s share in the total retail deposit portfolio held by foreign
banks remains a solid platform for a sustainable growth in the mid term
12%
23%
RBRU
Citibank
ABN AMRO
Other foreign (27)
19
Summing up: … talking figures
in Euro mio.
2003
2004
1H 2005
1 619
2 098
2 920
Loan portfolio, including
904
1 498
2 037
Corporate
Retail
790
114
1 220
279
1 622
415
Deposits & C/A, including
759
1 245
1 736
Corporate
Retail
384
375
659
586
1 002
734
Assets
20
Beyond lending: … IB & Treasury

Ruble Corporate Bond Issues: Since 2001 Raiffeisenbank acted as an arranger
and Lead Manager of 52 rouble bond issues totaling RUB 110 Bn (~USD 4 Bn)

Leader in Russian debt capital markets

Syndicated Loans (Russia & Euromarket): Raiffeisenbank acted as
Mandated Lead Arranger of 36 syndicated loans totaling USD 3.3 bln

Raising external equity financing

M&A and structuring advisory

Acquisition financing (LBO/MBO/Re-capitalization)
 FX operations (among top 10 active banks in
terms of volumes)
 Money Market (term deposits, promissory
notes)
 Hedging of RUR/FCY and FCY/FCY exposure
 Brokerage and custody services
 Asset management
21
Syndicating: … $1 billion story
Syndicated
Loan
Syndicated
Loan
Syndicated
Loan
Syndicated
Loan
Syndicated
Loan
USD 35,000,000.
USD 45,000,000.
USD 50,000,000.
USD 10,000,000.
USD 43,000,000.
Mandated Lead Arranger
Mandated Lead Arranger
Mandated Lead Arranger
Arranger
Mandated Lead Arranger
May 2005
April 2005
April 2005
December 2004
December 2004
Syndicated
Loan
Syndicated
Loan
Syndicated
Loan
Syndicated
Loan
Syndicated
Loan
USD 43,000,000.
USD 80,000,000.
USD 600,000,000.
USD 50,000,000.
USD 75,000,000.
Mandated Lead Arranger
Mandated Lead Arranger
Mandated Lead Arranger
Mandated Lead Arranger
Mandated Lead Arranger
November 2004
October 2004
August 2004
February 2005
January 2004
22
Investment banking: … most recent deals
Chelyabinsk Tube Rolling
Plant
TuranAlem Bank
Ochakovo
Home Credit
and Finance Bank
Bond Issue
Bond Issue
Bond Issue
Bond Issue
RUR 3 000 000 000
RUR 1 500 000 000
RUR 3 000 000 000
RUR 3 000 000 000
Arranger
September 2005
Arranger
September 2005
Arranger
September 2005
Arranger
June 2005
VKM (Ruzkhimmash)
United
Metallurgical
Company
Bond issue
RUR 3 000 000 000
Arranger
June 2005
Pyaterochka
Home Credit and
Finance Bank
Bond Issue
Bond Issue
Bond Issue
Bond Issue
Bond Issue
RUR 1 000 000 000
RUR 1 500 000 000
RUR 5 000 000 000
RUR 1 500 000 000
RUR 3 000 000 000
Arranger
June 2005
Arranger
May 2005
Arranger
May 2005
Arranger
May 2005
Arranger
May 2005
23
RBRU: … in terms of ratings








Long-term national scale credit rating - Aaa (rus) and the short-term rating RUS-1 (Moody’s Interfax Rating Agency)
8th - among largest Russian retail banks, based on deposits (Dengi magazine)
8th largest Russian client bank, based on current accounts (Dengi magazine)
11th - among largest Russian banks in terms of net assets (CEA Interfax)
11th - among most profitable Russian banks (CEA Interfax)
11th - among Russian banks in terms of corporate loans (CEA Interfax)
7th - among largest Russian banks in terms of private deposits (CEA Interfax)
4th - among largest Russian banks in terms of consumer loans (CEA Interfax)
24
Acknowlegements: … and awards

2003 Raiffeisen Banking Group in Russia - "Best Syndicated Loan Provider", Global
Finance

2003
Raiffeisen Banking Group in Central and Eastern Europe (in 15 regions) - „Best
Global Finance
Trade Finance

2004
Best Project Finance House, Global Finance

2004
Best market-maker, MICEX

2004
“Deal of the Year” – USD 38.7 mln, LC facility for Aeroflot, Trade Finance

2004
Raiffeisen Zentralbank (Austria) and its NWB in Central and Eastern Europe
Europe”, Global
Finance magazine

2004
“Loan of the Year in Eastern Europe, Middle East and Africa” – loan organized by
Raiffeisenbank Austria, ZAO and Raiffeisen Zentralbank
Oesterreich AG for
Mobile
TeleSystems (MTS), International Financing Review magazine

2005 Raiffeisenbank is ranked No 1 arranger on the rouble corporate bond market, Cbonds

2005

2005 Jan-Jun (excluding Multinational Institutions):
Bank in Central and Eastern Europe“,
Magazine
nominated as
"Best Sub-Custodian in Central and Eastern
Best innovation on RUR corporate bonds market (Securities Market magazine)
 #1 Mandated Lead Arranger
 #1 Mandated Lead Arranger and #3 Bookrunner in Russia, Dealogic
25
Appreciate your attention
THANK YOU !