Transcript Slide 1

Presentation
October 2009
1
Overview
2
Overview
Bank of Moscow’s Key Strengths and Investment Highlights
Extensive distribution
network in Moscow and
key Russian regions
Well-diversified and solid client
base of large corporate, SME and
retail clients
5th largest bank in Russia in
terms of total assets*
3rd place by volume of
retail deposits* provides
reliable and stable
funding base
Strong risk profile
Moody’s: Baa1
Fitch: BBB-
Track record of strong support
from the City of Moscow – the
largest shareholder
*Source: Kommersant Dengi Magazine (№27) figures as of 1 July, 2009
3
Shareholder Structure
4
Shareholder Structure
 The City of Moscow has been the largest
shareholder of the Bank since the Bank was
established in 1995.
3,59%
8,15%
3,69%
 Combined stake of the City of Moscow in the Bank’s
share capital is 63.39%, including direct
shareholding of the Property Department of the City
of Moscow - 48.11% and indirect shareholding of
the companies of the Capital Insurance Group 15.28%. The Capital Insurance Group is, in its turn,
controlled by the City of Moscow and the Bank of
Moscow Group.
 Mr. Andrey Borodin, Chairman of the Management
Board, and Mr. Lev Alaluiev, Deputy Chairman of the
Board of Directors, indirectly jointly control 21.18%
of the Bank’s share capital.
48,11%
21,18%
Controlled by
the City of
Moscow
15,28%
Property Department of the City Moscow Government
OJSC Capital Insurance Group
Beneficial Ownership of Mr.Borodin and Mr.Alaluiev
 Since 2004 Bank’s shares are traded on MICEX.
LLC "GSM"
Controlled by GCM Russia Opportunities
Fund (Cayman Islands)
 In July 2009, the13th share issue was completed, as
a result of which the Bank’s share capital was
boosted by RUB 20 bn.
OJSC "GSM Investments"
Others
5
Business Overview
6
Business Overview
Business Lines
Retail Banking
Corporate and Investment Banking
 Current and deposit accounts
 Corporate lending
 Loan services
 Syndicated loans
 Mortgages
 Trade finance and guarantees
 Debit and credit cards
 Foreign trade and exchange operations
 Money transfers
 Debt Capital Markets (Local and International)
 Internet and telephone banking
 Payment and account services
 Internet trading (“Mos-broker”)
 Securities trading
 Precious metals
Asset Management & Private Banking
 Private asset management services
 Fund management services
 Depositary services
 Underwriting
 Research
 Mutual and pension funds
 Private Banking
7
Business Overview
Business Strategy
Prudent Risk Management
Policy
Business Efficiency and
Market Positions
 Emphasis on the further increase of risk management efficiency
 Rigorous control over the asset quality
 Credit risk diversification and strengthening of underwriting standards
 Increase business efficiency
 Maintain leading positions in the national banking industry
 Tighten control over the quality of all business processes, costs and expenses
 Increase and diversify the customer base
Retail Banking
 Maintain high quality of the loan portfolio
 Provide flexible services and solutions to customers to address the current market
environment
 Increase and diversify the customer base
Corporate Business
 Maintain high quality of the loan portfolio coupled with a rise in cross selling
 Provide flexible services and solutions to customers to address the current market
environment
Private Banking
 Offer services to wealthy individuals in line with international standards
 Retain positions in the regions
Branch Network
 Use the regional network to diversify client and risk concentration
PRESERVE ASSET QUALITY, EFFICIENCY OF BUSINESS AND MAINTAIN THE CURRENT
MARKET POSITION
8
Business Overview
Bank of Moscow’s Market Position*
Top Russian Banks by Net Assets (RUB, bn*)
6683,9
Top Russian Banks by Retail Deposits (RUB, bn*)
3242,1
3 538,40
77,1
65
57,6
RSHB
100,6
Promsvyazba
nk
Uralsib
112,9
Uralsib
Rosbank
123,5
Alfa-Bank
UniCredit
Top Russian Banks by Capital (RUB, bn*)
125,4
Rosbank
408,2
Raiffaisen
480,1
VTB 24
512,1
Sberbank
514,2
RZB
148,1
625,4
Alfa-bank
787,1
RSHB
Gazprombank
Sberbank
VTB Group
902,4
Gazprombank
367
1 747,80
Top Russian Banks by Loan Portfolio (RUB, $bn*)
5425,4
13339
2017,20
476,1
Promsvyazba
nk
Rosbank
Raiffaisen
UniCredit
Alfa-Bank
Rosbank
554,60 507,10 457,90
363,90 309,70 308,50 274,80
RSHB
46,4
Gazprombank
56,7
VTB Group
60,3
Sberbank
68,4
Uralsib
83,1
Raffesien
89,3
Alfa-bank
Gazprombank
RSHB
VTB Group
Sberbank
*
148,5
UniCredit
874,00
158,8
Source: Kommersant Dengi Magazine(№27) figures as of July 1, 2009
9
Business Overview
Ratings Reflect the Credibility of the Bank*
A2
A
A3
A-
Baa1
BBB+
Baa2
BBB
Baa3
BBB-
Ba1
BB+
Ba2
BB
BBBa3
B+
*
Senior Unsecured Eurobond Ratings
10
Business Overview
Retail Banking
 No. 3 retail deposit taker in Russian Federation*
 RUB 164.4 bn of term deposits and current accounts as of 30 June 2009*
 Approved by CBR to participate in the Deposit Insurance System
 Authorised bank of the Deposit Insurance Agency to manage retail accounts of the banks with
withdrawn licences
 Over 9 million retail customers as of June 30, 2009**
 As of September 1, 2009, 12.3 mn plastic cards issued compared to 11.0 mn as of 1 January, 2009**
 RUB 101.9 bn – retail loan portfolio (gross) as of 30 June, 2009***
 Variety of deposit products designed for different categories of retail customers
 Wide range of services targeted at the inhabitants of the City of Moscow, including Muscovite Social
Cards issued in partnership with VISA International. It is a combination of a bank debit card, an
identification card, an insurance identification card and Moscow public transportation travel card
designed for those Muscovites, who receive pay offs from the City’s budget.
 1800 ATMs and self-service zones inside retail locations and offices throughout the country to allow
customers to get services from ATMs such as credit payments, transfers, deposits, utility and mobile
communication payments, etc.
 Advanced Internet and Telephone banking
* Source: Kommersant Dengi (№37) figures as of July 1, 2009
**
Source: Bank of Moscow
***
Source: Bank of Moscow IFRS Consolidated Financial Statements as of June 30,2009
11
Business Overview
Corporate and Investment Banking
 Over 105.4 thousand corporate and public sector
customers as of 30 June, 2009*
 Variety of investment banking services,
including:
 Focus on stable sectors of Russian economy
 underwriting
 Corporate banking dominates the asset side of the
 debt issuance
balance sheet:
 as of 30 June, 2009 corporate loans accounted for
81.5% of the Bank’s gross loan portfolio and stood at
RUB 447.6 **
 involved in financing the key projects of the City of
Moscow
 Developing banking products and services targeted at
 research
 asset management
 Strong track records of RUB denominated
bond issuances: since 2004 issues totaling
RUB 434 bn organized for 145 issuers*
SME clients
 Increasingly active in trade financing
 Provides payment services to commercial and public
sector clients through branch network
* Source: Bank of Moscow
** Source: Bank of Moscow IFRS Consolidated Financial Statements as of June 30, 2009
12
Business Overview
Moscow-based with Wide Geographical Reach
 135 outlets and 471 desks at postal offices in Moscow and Moscow Region
*
 68 regional branches and 190 sub-branches*
 With total 393 outlets throughout the country - presence in 60 regions of Russian Federation*
 Foreign subsidiaries in Belarus, Latvia, Estonia, Ukraine, Serbia and Representative office in Frankfurt
United States
of America
Norway
“Eesti Krediidipank”
(Tallin)
Finland
“Latvian Businessbank”
Petrozavodsk
(Riga)
Estonia
Vyborg
Latvia
Poland
Kaliningrad
St. Petersburg
Byelorussia
“Moscow-Minsk” (Minsk)
Vologda
Arkhangelsk
Velikiy Novgorod
Yaroslavl
Kovrov
Moscow
Ukraine
Orel
“BM Bank” (Kiev)
Rostov-on-Don
Nizhny Novgorod
Cheboksary
Kursk Lipetsk
Berezniaki
“Zarechye”
Kazan
Belgorod
Perm
(Kazan)
Voronezh
Sochi
Maykop
Krasnodar
Volgograd
Stavropol
Saratov
Russian Federation
Yekaterinburg
Samara
Ufa
Yakutsk
Tyumen
Chelyabinsk
Astrakhan
Turkey
Petropavlovsk—
Kamchatsky
Izhevsk
Orenburg
Vladikavkaz
Syktyvkar
Kirov
Tula
Orsk
Tomsk
Omsk
Yuzhno—Sakhalinsk
Novosobirsk
Kazahkstan
Kemerovo
Barnaul
Regional Branches
Iran
Kransnoyarsk
Khabarovsk
Novokuznetsk
Japan
Irkutsk
Ulan-Ude
China
Vladisvostok
Subsidiary and Affiliate Banks
*
Source: Bank of Moscow as of 1 September, 2009
13
Business Overview
Conservative Credit and Market Risk Policies in Place
 Vertically integrated risk management system penetrating the Bank, incl. regional branches, with
the CRO reporting directly to the CEO and the Management Board.
 Credit Committee, Small Credit Committee and Mortgage Committee are authorised to make
independent lending decisions.
Credit Risk
Interest Rate Risk





Based on recommendations and requirements of CBR, Basel Committee and auditors
Single borrower/economic group limits
Product type/geographic/industry concentration limits
Ongoing monitoring of borrower’s condition and collateral
Strengthening of underwriting standards to address the crisis
 Measured via gap and interest rate sensitivity models
 Also employ stress testing and scenario analysis techniques
 Limited open foreign currency position, stop-loss, borrower limits
 Centralised control over exchange rates in currency operations
Currency Risk
 In accordance with CBR regulations, currency risk exposure cannot exceed 20% of the Bank’s aggregate capital
in all currencies
 Currency position is controlled by the CBR on a daily basis
 Managed with the aid of scenario analysis, simulative, optimising and predictive modelling
Liquidity Risk
 Strict CBR controls on instant (N2) and current (N3) liquidity standards
 Monitored on a daily basis
14
Business Overview
Bank of Moscow in International and Local Capital Markets
 5 senior Eurobonds issued over the last three
years and 2 LT2 Eurobond issue
 2 placements on the local debt market
 4 syndicated Term Loans outstanding
Eurobonds:
 RUR 5,000,000,000 Eurobonds due 2009
 US$300,000,000 Eurobonds due 2010
 CHF 250,000,000 Eurobonds due 2011
 US$500,000,000 Eurobonds due 2013
 In 2008 the Bank of Moscow raised approximately
US$1.45 bn from international and local markets
LT2 Debt:
 US$300,000,000 Subordinated Eurobonds due 2015
Syndicated Loans:
 US$400,000,000 Subordinated Eurobonds due 2017
 US$220,000,000 Syndicated Term Loan due 2009
 US$105,000,000 Syndicated Term Loan due 2010
 US$600,000,000 Syndicated Term Loan due 2010
 US$30,000,000 & EUR105,000,000 Syndicated
Local Bonds:
 RUR 10,000,000,000 Bond due 2011
 RUR 10,000,000,000 Bond due 2013
Term Loan due 2011
15
Financial Overview
16
Financial Overview
Overview of Assets*
Assets in 2006 – 1H2009 (RUB bn)
Asset Composition (1H2009)
Cash & cash
equivalents
1,2%
13,6%
C ash and equivalents
Mandatory cash balances with central banks
Trading securities
Loans to customers
516,6
600
11,2%
Mandatory cash
balances w ith central
banks
0,2%
525,3
500
7,8%
Financial Assets
400
2,3%
351,6
Premises and
equipment
300
256,0
Loans to customers
133,3
200
63,7%
*
2006
2007
2008
49,8
2,0
1,2
0
35,4
51,3
63,9
6,3
6,3
Other assets
100% = RUB 824,0 bn
37,2
43,7
100
92,4
Due from other banks
1Н2009
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of June 30, 2009.
17
Financial Overview
Bank of Moscow’s Loan Portfolio
Loan Portfolio Breakdown by Industry Sectors (1H2009)*
4,0%
4,1%
3,1%
 Loan portfolio is well diversified by industries
2,3%
and geographically, which is in line with the
credit risk management approach.
18,5%
2,3%
 40% of the Bank’s gross loan book are
5,0%
concentrated in regions*.
9,1%
20,1%
 Focus is on the stable sectors of the
Russian economy.
 As of June 30, 2009, related party lending
16,1%
15,4%
Retail
Financial & other services
Manufacturing
Construction
Trade
Fuel & Energy
State Agencies
Food Industry
Metallurgy
Transport & Communications
accounted for 3.78% of the gross loan
portfolio.**
Others
*
**
Source: Bank of Moscow as of June 30, 2009
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of June 30, 2009
18
Financial Overview
Bank of Moscow’s Loan Portfolio (Cont’d)
Retail Loan Portfolio Breakdown (1H2009)
6,2%
Retail Loan Portfolio (Net), RUB bn
1,8%
106,6
12,9%
91,7
28,3%
72,5
35,2
50,8%
Scoring Loans
Car Loans
Mortgages
Credit Cards
Consumer Loans
2006
2007
2008
1Н2009
 Retail loans decreased 14.0% since the end of 2008 due to the reduction in demand for retail products
by individuals on the back of the financial uncertainty and the Bank’s policy not to enhance retail lending
in the first half of 2009.
*
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of June 30, 2009
19
Financial Overview
Bank of Moscow’s Loan Portfolio (Cont’d)
Overdue Loans and Allowance for Loans Losses
500,00%
Client Concentration: Twenty Largest Borrowers
30%
5,0%
4,7%
28,04%
4,4%
4,1%
400,00%
3,8%
990,1
1 000,0
3,5%
3,2%
300,00%
2,98%
2,9%
621,2
2,6%
2,0%
200,00%
1,47%
25%
25,0%
2,3%
500,0
1,7%
446,2
529,5
549,5
1,4%
1,1%
1,00%
100,00%
164,00%
0,8%
166,04%
148,14%
0,5%
0,2%
0,00%
-0,1%
1H2008
LLP/NPL
2008
1Н2009
NPL/Gross loans
 In 1H2009 the Bank was steadily increasing its loan loss
provisions: as of June 30, 2009 the provisions totalled RUB
24.2 bn, a 88.03% growth from the beginning of 2009.
 As of June 30, 2009 LLPs comprised 4.41% of the loan portfolio
stood compared to 2.43% as of December 31, 2008.
 NPLs accounted for 2.98 % of the Bank’s gross loan portfolio.
 The NPLs are 1.48 times covered by provisions.
*
259,4
356,1
22,60%
1042,5
20,3%
0,0
2006
2007
20%
2008
1Н2009
Total Loans
Collateral
TOP 20 Client Concentration
 Concentration of top 20 borrowers in the total
loan portfolio increased to 28% due to slowdown of
the economy
 Loan portfolio is collateralized by 1.9 times
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of June 30, 2009
20
Financial Overview
Overview of Liabilities
Liabilities in 2006 – 1H2009 (RUB bn)
Liability Composition (1H2009)
0,7%0,2%
800
5,3
12,2%
20,6
23,2%
91,7
92,6
600
3,3
56,0
400
406,5
482,1
2,1
50,5
350,6
63,7%
100% = RUB 755,8 bn
200
259,5
214,9
Due to other banks
Due to Customers
Debt securities issued
Other liabilities
0
37,9
2006
Financial Liabilities at Fair Value
Due to other banks
175,8
69,6
2007
Due to customers
2008
1Н2009
Debt securities issued
Other
 Strong deposit base has always been one of the key
advantages of the Bank.
 As of June 30, 2009, customers accounts comprised
63.7% of the Bank’s liabilities.
 Customer funds increased 18.6% in the first half of 2009.
*
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of 30 June, 2009
21
Financial Overview
Deposit Base
Composition of Client Deposit Portfolio
Growth in Deposits (RUB bn)
By Deposit Type
600
482,1
500
30,4%
Current / Demand
Accounts
406,5
400
350,6
Term Deposits
300
69,6%
259,5
200
By Customer Type
100
24,3%
34,1%
0
2006
2007
2008
1Н2009
 Continued diversification of deposit base with the
following sources of state funding available: CBR
funding (unsecured and secured loans, repo
transactions), Ministry of Finance and funds of
state-owned corporations
 Authorised bank to bid for the funds of the City of
Moscow placed on a tender basis.
*
12,0%
29,7%
Individuals
Federal Budgets + Regional Funds
State Ow ned Organisations
Other Commercial + Legal Entities
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of June 30, 2009.
22
Financial Overview
Profit & Loss Highlights
Selected Profitability Ratios*
Profit and Loss Income (RUB bn)*
1H2009
Net interest income
Net fee and commission
income
2008
2007
6%
2006
13.5
28.4
19.1
14.1
5%
3.8
5.8
4.3
3.1
4%
Gains less losses arising from
Trading securities and
22,1%
(3.7)
1.6
1.0
11,6%
(11.3)
(8.4)
(1.2)
1%
(1.3)
1,8%
2,0%
1.1
8.2
13.2
7.6
Net profit
0.7
6.8
8.9
5.6
4.73
50.76
69.18
46.92
Basic earnings per share (EPS)
4,3%
1,0%
0%
Profit before taxation and
minority interest
15%
4,7%
4,5%
2%
exchange operations
25%
20%
3%
2.3
(Provision for)/recovery of
loan impairment
20,4%
2006
2007
Return on Assets
2008
3,3%
1,9%
10%
5%
0,2%
0%
1H2009
Net Interest Margin
Return on Equity
Operating Income*
Cost/Income Ratio*
55%
30
49,24%
20
18,3
49,29%
46,11%
24,9
17%
5%
6%
77%
77%
17%
19%
12%
50%
45%
30,4
18%
83%
19,7
69%
40%
10
35%
36,18%
0
30%
2006
Income
*
2007
2008
2006
2007
2008
Net commission income
Net income from trading operations
Net interest income
1H2009
1H2009
C ost/Income
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of June 30, 2009.
23
Financial Overview
Capital Adequacy
Capital Adequacy
 As of June 30, 2009 the Bank’s total capital
position was sound with a total capital ratio
(Basel 1 Accord) of 15.7%.
Capital Base (RUB bn)
110
20,0%
90
90,9
 High quality of capital: Tier 1 Capital of
95,4
RUB 62,4bn with the Tier 1 ratio of 10.3%.
70
 In July 2009, the 13th share issue was
completed to boost the capital by RUB 20
bn. As of September 1, 2009 the CAR (CBR
N1) stood at 15.94%.** This is well above
10% minimum limit set by the Bank of
Russia.
66,8
50
40,9
14,80%
15,70%
30
min 8%
(Basel 1
Accord)
13,3%
 On August 3, 2009 the Supervisory Board of
Vnesheconombank (VEB) decided
positively on extending a subordinated loan
for RUB 11.1 bn to the Bank, which will
further strengthen its capitalization.
15,0%
13,90%
10
-10
2006
2007
2008
1Н2009
10,0%
Total capital
Total capital ratio
• Source: Bank of Moscow, IFRS Consolidated Financial Statements as of June 30, 2009
** Source: Bank of Moscow CRR accounts as of September 1, 2009
24