Transcript Presentation - Банк Москвы

Presentation
October 2010
1
Overview
2
Key Investment Highlights
Extensive distribution
network in Moscow and
key Russian regions
Improving outlook for
Russian economy and
banking sector with longterm growth story intact
Track record of strong
support from the City of
Moscow – the Bank’s
largest shareholder and
Russia’s wealthiest
municipality
Leading and progressively
strengthening Russian
banking franchise: #5 by
net assets and loan
portfolio, #3 by retail
deposits*
Solid earnings
generation with
positive profitability
sustained even
through crisis
Investment grade
credit ratings that are
among highest for
Russian banks
Diversified business
model spanning
corporate, retail,
private banking and
asset management
Strong risk profile and
balance sheet with relatively
low NPLs, conservative
provisioning, high collateral
and high capital adequacy
* Source: Kommersant Dengi Magazine(№37) figures as of July 1, 2010
3
Bank of Moscow at a Glance
Top-5 Russian bank by net assets, capital
and loan portfolio**
Ratings
Moody’s
S&P
Fitch
Bank of
Moscow
Baa1
(Negative)
n/a
BBB(RWN)

Top-3 deposit taker**
Russia
Sovereign
Baa1
(Stable)
BBB
(Stable)
BBB
(positive)

Controlled and historically supported by the
City of Moscow



Wide range of banking services, including
corporate and retail lending and deposit
services, private banking, investment
banking and asset management
Key
Performance
Indicators*
(RUB bn, %)
FY 2007
FY 2008
FY2009
H12010
Assets
528,086
801,385
825,144
852,689
Equity
48,595
67,650
86,596
92,583
350,646
406,541
428,029
489,900
351,622
516,564
534,490
572,188
10.4%
9.5%
12.8%
12.3%
Total CAR
14.8%
13.9%
18.9%
17.8%
Net Profit
10,046
6,978
717
6,027
ROE (%)
22.6%
11.8%
0.9%
13,5%
ROA (%)
2.0%
1.0%
0.1%
1,4%
Deposits
The Bank serves more than 9.5 mn retail and
Net Loans
more than 100,000 corporate and public
sector customers
Tier I CAR
* Source: Bank of Moscow IFRS Consolidated Financial Statements as at June 30, 2010
** Source: Kommersant Dengi Magazine(№37) figures as of July 1, 2010
4
Branch Network
 Moscow-based with Wide geographical reach
 136 offices and sub-offices and 474 desks at postal offices in Moscow and Moscow Region*
As at June 30, 2010 the Group operates 70 regional branches which supervise a further 69 fullservice sub-branches and 112 sub-branches providing retail services and 6 cash offices located in
the territory of Russia*
 With total 393 outlets throughout the country – presence in 60 regions*
 Foreign subsidiaries in Belarus, Latvia, Estonia, Ukraine, Serbia and Representative office in
Frankfurt

United States
of America
Norway
“Eesti Krediidipank”
(Tallin)
“Latvian Businessbank”
(Riga)
Estonia
Poland
Kaliningrad
Latvia
Finland
Vyborg
Petrozavodsk
St. Petersburg
Vologda
Byelorussia
Velikiy Novgorod
“Moscow-Minsk” (Minsk)
Arkhangelsk
Yaroslavl
Moscow
Ukraine
Kovrov
Syktyvkar
Kirov
Orel
Tula
Nizhny Novgorod
“BM Bank” (Kiev)
Rostov-on-Don
Sochi
Maykop
Cheboksary
Lipetsk
“Zarechye”
Kazan
Belgorod
(Kazan)
Voronezh
Izhevsk
Kursk
Saratov
Krasnodar
Volgograd
Stavropol
Turkey
Russian Federation
Yekaterinburg
Samara
Orenburg
Vladikavkaz
Petropavlovsk—
Kamchatsky
Berezniaki
Perm
Ufa
Yakutsk
Tyumen
Chelyabinsk
Astrakhan
Tomsk
Omsk
Orsk
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, IFRS Consolidated Financial Statements as of June 30, 2010
5
Macroeconomic and Industry Environment
6
GDP Growth, Fiscal and Monetary Position
Economy and Growth
Real GDP Growth vs. Peer Countries
2 000
1 800
10,0%
6,4%
7,7%
1 600
8,1% 5,6%
4,8%
1 400
4,0%
4,0%
(2,0)%
1 765
(7,9)%
1 660
1 294
0,0%
1 587
200
989
400
765
800
600
6,0%
2,0%
1 229
1 200
1 000
(4,0)%
(8,0)%
(10,0)%
2006
2007
2008
9,9%
7,8%
8,7%
6,8%
2009
Nominal GDP (US$ bn)
8,0%
3,3%
4,0%
2010E 2011E
72,7
(1,8)%
(4,0)%
74,9
54,4
478,8
300
(7,9)%
60
40
303,7
182,2
0
20
0
2005
2006
2007
2008
2009 2010H1 2011E
Russia's Foreign Reserves, end of period, US$ bn
Oil price (Brent, US$/b)
35
12,0%
30
80
439,5
200
100
(5,2)%
(12,0)%
China
India
Brazil
Germany
2009
78,5
461,2
426,3
(4,9)%
(4,9)%
USA
UK
Japan
2010E
Monetary Indicators
65,4
400
(2,4)%
(8,0)%
Russia
100
61,9
0,8%
0,0%
Real GDP Growth (%)
97,7
500
2,8%
1,2%
Oil Price and Foreign Reserve
600
6,3%
4,8%
(6,0)%
0
2005
12,0%
8,0%
11,0%
11,9%
13,3%
12,0%
13,0%
25
20
14,0%
8,8%
10,9%
9,0%
10,0%
28,8
26,3
5
10,0%
7,0%
8,8%
15
10
7,75%
24,5
29,4
30,2
8,0%
6,0%
6,5%
4,4%
4,0%
31,2
2,0%
29,0
0
0,0%
2005
2006
2007
2008
2009 H12010 2011E
US$/RUB Exchange Rate, end of period
C entral Bank Refinancing Rate, end of period
C onsumer Price Inflation (%),end of period
Source: CBR historical data for Foreign Reserve, Economist Intelligence Unit other indicators
7
Business Overview
8
Business Overview
Bank of Moscow’s Market Position
Top Russian Banks by Total Assets (RUB, bn)
Top Russian Banks by Retail Deposits (RUB, bn)
7552
4048
3632
509
Top Russian Banks by Capital (RUB, bn)
107
106
93
Promsvyaz
113
MDM Bank
Alfa-Bank
Gazprombank
VTB Group
130
Rosbank
140
432
Sberbank
442
Promsvyaz
485
169
Uralsib
170
Uralsib
539
Raiffeisen
Alfa-Bank
633
UniCredit
821
RSHB
Gazprombank
VTB Group
Sberbank
984
Raiffeisen
1605
Top Russian Banks by Loan Portfolio (RUB, bn)
1136
5 278
290
276
275
Raiffeisen
Promsvyaz
357
Rosbank
Uralsib
500
Promsvyaz
UniCredit
585
Alfa-Bank
46
690
RSHB
56
Gazprombank
66
VTB Group
68
Sberbank
80
Raiffeisen
120
Alfa-Bank
832
159
RSHB
GaspromBank
VTB Group
Sberbank
230
UniCredit
2 097
703
Source: Kommersant Dengi Magazine(№37) figures as of July 1, 2010
9
Business Overview
Bank of Moscow is among the highest rated in the Russian banking sector
A2
A
A3
A-
Baa1
BBB+
Baa2
BBB
Baa3
BBB-
Ba1
BB+
Ba2
BB
BBBa3
B+
Source: Senior Unsecured Eurobond Ratings
10
Business Overview
Shareholder Structure
 The City of Moscow has been the largest
shareholder of the Bank since it was established in
1995
 Combined stake of the City of Moscow in the Bank’s
share capital is 63.8%, including 46.48% stake of
the Property Department of the City of Moscow and
17.32% stake of Stolichnaya Strakhovaya Gruppa,
which in turn is controlled by the City of Moscow
and the Bank of Moscow Group
 The City has participated in all of the Bank’s 14
OJSC “GSM
Investments”
LLC “GSM”
3.16%
3.25%
Others 2.82%
Credit Suisse
International 2.77%
Goldman Sachs
International 3.88%
Beneficial
Ownership of
Mr. Borodin and
Mr. Alaluev
Property
Department of
the City
Moscow
20.32%
46.48%
equity issues
 Mr. Andrey Borodin, Chairman of the Management
Board, and Mr. Lev Alaluev, Deputy Chairman of the
Board of Directors, indirectly jointly control 20.32%
of the Bank
Source: Bank of Moscow
OJSC Stolichnaya
Strakhovaya Gruppa
17.32%
Controlled
by the City
of Moscow
11
Business Overview
Capital Adequacy
Capital Adequacy
 BoM has a strong capital position
Capital Base* (RUB bn, %)
121,6
120
128
20%
18,9%
 As of June 30, 2010 the Bank’s total capital
ratio (Basel 1 Accord) was 17.8%, and Tier 1
ratio was 12.3%*
 The Bank has been proactively increasing its
capitalisation:
 On July 26 2010 14th issue was successfully
registered with the CBR and boosted the
capital of the Bank by RUB 21.7bn.
 Well honored Goldman Sachs and Credit
Suisse Group AG have acquired stakes
respectively in the Bank of Moscow. The value
of both shares was about RUB 12bn.
 In July 2009 BoM raised RUB 20bn in its 13th
additional share issue
 On October 15, 2009 Vnesheconombank
(VEB) extended a 10-year subordinated loan
to the Bank for RUB 11.1bn
*
100
17,8%
14,8%
80
90,9
15%
13.3%
13,9%
66,8
60
10,2%
40
20
10,4%
12,8%
12,3%
9,5%
10%
40,9
min 8% (Basel 1 Accord)
5%
0
31-Dec-06
31-Dec-07
Total capital
31-Dec-08
31-Dec-09 30-June-10
Total capital ratio
Tier 1 ratio
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of June 30, 2010
12
Business Overview
Main 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
 Depositary services
 Underwriting
Asset Management & Private Banking
 Research
 Private asset management services
 Fund management services
 Mutual and pension funds
 Private Banking
13
Business Overview
Business and Operating Strategy
Businesses

Corporate & Investment Banking

Retail Banking
Private Banking & Asset
Management
Prudent Risk Management
Policy
Operational

Business Efficiency and
Market Positions


Leverage strong retail brand and branch network
Continue developing lending and deposits products

Target high net worth individuals, while seeking to provide product diversity and service quality in line
with best international practices

Emphasis on raising effectiveness of risk management
Control over the quality of the loan and securities portfolios
Credit risk diversification and strengthening of underwriting standards






Branch Network
Focus on acquiring new customers and developing relations with existing ones
Continue servicing all client segments, yet pay particular attention to strengthening presence in SME
segment
Build customer relationships and increase cross-selling, including investment banking products


Increase business efficiency
Maintain leading positions in the national banking industry
Maintain tight control over costs and expenses
Retain and strengthen positions in the regions
Use the regional network to diversify client and risk concentration
Short-term focus on efficiency improvement of existing network, over medium-term potentially resume
network organic growth
FOCUS ON MAINTAINING LEADING POSITION AS TOP 5 RUSSIAN BANK AND IMPROVING
EFFICIENCY, PROFITABILITY AND CURRENT FRANCHISE
14
Business Overview
Corporate and Investment Banking
Deposits and Accounts of Legal Entities** (RUB bn)
 Over 100,000 corporate clients*
302,9
255,3
 Focus on strategically important sectors of Russian
economy
224,0
173,0
52.6%
balance sheet
9.1%
7.7%
26,5%
2007
2008
2009
entities total for RUB 302,9bn as of June 30,
2010**
* Source: Bank of Moscow
** Source: Bank of Moscow IFRS Consolidated Financial Statements as of June 30, 2010
H12010
Loan Portfolio to Legal Entities**
281.5
45.7%
199%
187%
416.4
46.9%
489.5
222.8
281.5
0.9%
2006
213%
197%
183%
including underwriting, debt issuance, research
 The amount of Deposits and Accounts of legal
34,5%
Other Legal Entities
State-owned Organisations
Federal and Regional Budgets and Funds
 Involvement in financing of the key projects of the
 Developing of investment banking services,
17.9%
36.9%
46.6%
 SME – strategically important sector
 Increasingly active in trade financing
14,9%
44.0%
2006
City of Moscow
10.5%
50,6%
55.6%
46,9%
45,7%
 Corporate banking dominates the asset side of the
250,6
2007
541.6
416.4
6.1%
1.5%
0.8%
2008
Gross Loans, RUB bn
Provision/ Gross Loans, %
2009
7.0%
H12010
Collateral/Gross Loans, %
15
Business Overview
Retail Banking
Overview
Retail Loan Portfolio** (RUB bn)

No. 3 retail deposit taker in Russia*

RUB 186.9 bn of term deposits and current accounts as of June 30,
2010**

Approved by CBR to participate in the Deposit Insurance System,
authorized bank of the Deposit Insurance Agency to manage retail
accounts of the banks with withdrawn licenses

Over 9.5 mn retail customers as of September 1 , 2010***

14.4 mn plastic cards as of September 1, 2010

RUB 82.8 bn – retail loan portfolio (gross) as of June 30, 2010**

Wide range of retail services, including Muscovite Social Cards - a
combination of a bank debit card, an ID, an insurance identification
card and public transportation travel card for Muscovites

As at September 1, 2010, BoM had 1,845 ATMs in operation

Advanced Internet and Telephone banking
Retail Deposits and Accounts** (RUB bn)
151,2
126,7
86,5
108%
90%
111%
89%
104,3%
15,4%
113,1
17,6%
74,6
2,9%
3,8%
5,7%
88,3
82,9
2009
H12010
36,6
2006
2007
2008
Gross Loans, RUB bn
Provision/Gross Loans, %
Collateral/Gross Loans, %
Retail Loan Portfolio Breakdown** (H12010)
177,4
186,9
33,3
27,7
144,1
153,2
29,8
Scoring loans
Credit cards 7,8% 1,4%
Car Loans 9,8%
27,5
18,0
99,1
121,4
Mortgages
31,6%
68,5
Consumer Loans
49,1%
2006
2007
2008
Term Deposits
*
**
***
2009
H12010
Current Accounts
Source: Kommersant Dengi (№37) figures as of June 30, 2010
Source: Bank of Moscow IFRS Consolidated Financial Statements as of June 30, 2010
Source: Bank of Moscow
16
Business Overview
Bank of Moscow’s Loan Portfolio
Overview

Loan portfolio is diversified by industries and
geographically, which is in line with the credit
risk management approach

Over 50% of the Group’s loan book is
concentrated in Moscow and the Moscow region


Related-party lending, which includes lending to
municipal entities of the City of Moscow,
accounted for 5.8% of the Group's gross loan
portfolio as at June 30, 2010*
Loan portfolio is dominated by loans in local
currency. Loans in foreign currencies account for
34.2% of total loans to customers**
Loan Portfolio Breakdown by Industry Sectors*
Agriculture
and fishing
Others 6,4% 0,4%
State Agencies 3,6%
Corporate Individuals 13,3%
Food Industry 2,3%
Loans
Transport & Comms 5,1%
Metallurgy 2,4%
88%
Financial & Other
Services 26,2%
Fuel& Energy 8,6%
Trade 8,0%
Construction 13,7%
Manufacturing
10,0%
Loan Portfolio Breakdown by Currency* (1H2010)
EUR 4,4%
Other 3,8%
USD 26,0%
RUB 65,8%
•
•
* Source: Bank of Moscow, IFRS Consolidated Financial Statements as of June 30, 2010
** Source: Bank of Moscow
17
Business Overview
Bank of Moscow’s Loan Portfolio (Cont’d)
Client Concentration: Twenty Largest Borrowers (RUB bn)
Overdue Loans and Allowance for Loans Losses
500%
5%
4,2%
400%
200%
1 200
3%
190,3%
201,3%
1,3%
100%
2%
1%
0,7%
0%
0%
2007
LLP/NPL
2008
2009
1 074,2 1096,7 28%
990,1
26,7%
27,5%
1 000
300%
187,1%
30%
4%
3,9%
186,8%
1 400
2010
NPL/Gross loans
 As of June 30, 2010 the provisions totalled RUB 52.2 bn,
 As of June 30, 2010 LLPs comprised 8.4% of the loan
portfolio compared to 7.5% as of December 31, 2009
 NPLs accounted for 4.2% of the Group’s gross loan portfolio
 The NPLs are 2.0 times covered by provisions
800
26%
24,9%
621,2
529,5
600
446,2
356,1
400
259,4
20,2%
200
577,8
624,4
24%
22%
21,8%
0
20%
2006
2007
2008
2009
1H2010
Total Loans
Collateral
TOP 20 Client Concentration
 The Bank’s loan portfolio increased by over 8%
 Concentration of top 20 borrowers in the total loan
portfolio is 26.7% as at June 2010
 The loan portfolio 1.76 times over-collateralised as at
June 30, 2010
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of December 31, 2009 and June 30, 2010
18
Business Overview
Conservative Credit and Market Risk Policies in Place



Vertically integrated risk management system implemented throughout the Bank, including regional
branches, with the CRO reporting directly to the Bank’s CEO and the Management Board
Credit Committee, Small Credit Committee and Mortgage Committee are authorised to make
independent lending decisions
Centralized decision making on issuance of retail loan products and SME
 Based on recommendations and requirements of CBR, Basel Committee and auditors
 Single borrower/economic group limits
Credit Risk
 Product type/geographic/industry concentration limits
 Ongoing monitoring of borrower’s conditions and collateral
 Centralisation of underwriting standards to address the crisis
Interest Rate Risk
 Measured via gap and interest rate sensitivity models
 Also employ stress testing and scenario analysis techniques
 Limited open foreign currency position, stop-loss, country and 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
Group’s equity 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
19
Business Overview
International and Local Capital Markets Funding History
Eurobonds
US$250mn
US$300mn
US$500mn
RUB 5,000mn
CHF 250mn
US$750mn
CHF 350mn
Due 2009
Due 2010
Due 2013
Due 2009
Issued
Sep-2004
Issued
May-2005
Issued
May-2006
Issued
Nov-2006
Due 2011
Issued
Mar-2008
Due 2015
Issued
Mar-2010
Due 2013
Issued
Sep-2010
LT2 Debt
(Subordinated
Eurobonds)
Local Bonds
Syndicated
Loans
US$300mn
US$400mn
Due 2015
Due 2017
Issued
Nov-2005
Issued
May-2007
RUB 10,000mn
RUB 10,000mn
Due 2013
Due 2011
Issued
Feb-2008
Issued
Aug-2008
US$400mn
US$500mn
US$105mn
US$600mn
US$220mn
Due 2009
Due 2008
Due 2010
Due 2010
Due 2009
Issued
Mar-2007
Issued
Nov-2007
Issued
May-2008
Issued
May-2006
Issued
Nov-2006
US$30mn&
€105mn
Due 2011
Issued
Jan-2009
US$350mn
Due 2011
Issued
Dec-2009
Repaid
 Within 5 years (2006-2010) the Bank of Moscow raised equivalent of USD 4.6bn and RUB 25bn from the international and local capital markets
20
Financial Overview
21
Financial Overview
Overview of Assets and Liabilities
Assets


Assets well-balanced in terms of risk-return
profile
Portfolio of securities mostly issued by federal
and municipal government agencies and
leading Russian corporate in accordance with
conservative risk policy

Fixed-income instruments dominate trading
securities portfolio

Over-collateralized loans to customers portfolio
Financial Assets (RUB bn)
800
686
600
35
133
473
400
343
200
44
256
37
6
always been one of the key advantages of the
Bank
 As of June 30, 2010, customers accounts
comprised 64.4% of the Bank’s liabilities
 Customer accounts increased approximately
14.5% for the first half of 2010
 Reliance on wholesale financing is currently low
 Access to variety of liquidity facilities
1
119
76
746
5
132
37
5
6
572
535
517
352
0
2006
2007
2008
Loans to customers
Mandatory cash balances with CBR
Liabilities
 Strong and relatively stable deposit base has
51
64
735
2009
1H 2010
Cash and equivalents
Trading securities
Liabilities (RUB bn)
800
734
92
21
739
78
760
27
100
7
600
480
400
51
200
0
56
350
2
3
407
428
215
226
2008
2009
490
351
260
38
70
2006
2007
Due to other banks
Debt securities issued
143
1H2010
Due to customers
Other
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of June 30, 2010.
22
Financial Overview
By Customer Type*
Other
commercial
legal entities
31.3%
Composition of Client Deposit Portfolio
Current / Demand
Accounts
29,8%
Individuals
38,2%
Term Deposits
70,2%
State-owned
organisations
9.2%


Funds of Federal
budget, municipal and
regional funds, funds
of legal entities and
individuals
Diversified deposit base including funds of
federal budget, regional and municipal funds,
funds of legal entities and individuals
The Bank is authorised to tender for budget
funds of the City of Moscow along with several
other banks
Growth in Deposits*(RUB bn)
489,9
406,5
350,6
259,5
2006
*
428
2007
2008
2009
1H2010
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of 30 June, 12010
23
Financial Overview
Operating Income (RUB bn)
Operating Income (RUB bn)
5,5
9,5
5,8
4,3
1,6
2,5
2,2
31,3
28,4
19,1
20,2
(3,7)
2007
2008
2009
1H2010
Net commission income
Net income from trading operations and other income
Net interest income
2007
2008
2009
1H2010
1H2009
Net interest income
19.11
28.4
31.3
20.2
13.5
Net fee and
commission income
4.3
5.8
5.5
2.5
3.8
Gains less losses
arising from trading
securities &
exchange operations
1.6
(3.7)
9.5
2.2
2.3
Provisions charge for
loan impairment
(2.5)
(9.0)
(30.4)
(9.0)
(11.4)
Profit before taxation
and minority interest
13.2
8.2
1.3
8.4
1.1
Net profit
10.0
7.0
0.7
6.0
0.66
69.18
50.76
4.81
38.09
4.73
Basic earnings per
share (EPS)
Cost to Income Ratio* (RUB bn, %)
50
45
40
35
30
25
20
51,2%
15
10
5
0
18,3
Selected Profitability Ratios*
55%
49,3%
46,1%
50%
45%
24,9
46,3
30,9%
2006
24,9
2007
35%
24,9
30,4
2008
Operating Income
28,8%
2009
40%
1H2010
Cost/Income
6%
5%
20,4%
22,6%
25%
20%
4%
3%
5,3%
11,8%
5,0%
4,6%13,5%
5,2%
5,2%
30%
2%
25%
1% 1,8%
20%
0%
2006
2,0%
1,0%
2007
Return on Assets
Return on Equity
2008
0,9%
0,1%
2009
1,4%
15%
10%
5%
0%
1H2010
Net Interest Margin
*Source: Bank of Moscow IFRS Consolidated Financial Statements as of June 30, 2010
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