Transcript Presentation - Банк Москвы

Presentation
August 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(№11) figures as of January 1, 2010
3
Bank of Moscow at a Glance

Top-5 Russian bank by net assets, capital
and loan portfolio**

Top-3 deposit taker**

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
The Bank serves 9.7 mn retail and 105,000
corporate and public sector customers
* Source: Bank of Moscow IFRS Consolidated Financial Statements as at respective date
** Source: Kommersant Dengi Magazine(№11) figures as of January 1, 2010
Ratings
Moody’s
S&P
Fitch
Bank of
Moscow
Baa1
(Negative)
n/a
BBB(Stable)
Baa1
(Stable)
BBB
(Stable)
BBB
(Stable)
Russia
Sovereign
Key
Performance
Indicators*
(RUB bn, %)
FY 2007
FY 2008
FY 2009
Assets
528,086
801,385
825,144
Equity
48,595
67,650
86,596
Deposits
350,646
406,541
428,029
Net Loans
351,622
516,564
534,490
Tier I CAR
10.4%
9.5%
12.8%
Total CAR
14.8%
13.9%
18.9%
Net Profit
10,046
6,978
717
ROE (%)
22.6%
11.8%
0.9%
ROA (%)
2.0%
1.0%
0.1%
4
Branch Network
 Moscow-based with wide geographical reach
 134 offices and sub-offices and 474 desks at postal offices in Moscow and Moscow Region*
 The Group operates 68 regional branches which supervise a further 69 full-service sub-branches
and 113 sub-branches providing retail services and 8 cash offices located in the territory of
Russia*
 With total 394 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
Cheboksary
Lipetsk
“Zarechye”
Kazan
Belgorod
(Kazan)
Voronezh
Izhevsk
Kursk
Saratov
Krasnodar
Volgograd
Stavropol
Maykop
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 as of 1 May, 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%
2007
2008
2009
Nominal GDP (US$ bn)
(1,8)%
(4,0)%
(6,0)%
2010E 2011E
72,7
500
80,2
Russia
China
300
447,8
40
200
100
289,0
168,4
0
20
0
2005
35
12,0%
30
80
60
455,7
Brazil
Germany
2009
78,5
54,4
463,5
India
USA
UK
Japan
2010E
Monetary Indicators
65,4
400
(5,2)%
(7,9)%
100
61,9
(4,9)%
(12,0)%
Real GDP Growth (%)
97,7
(2,4)%
(4,9)%
Oil Price and Foreign Reserve
600
2,8%
0,8%
(8,0)%
(8,0)%
(10,0)%
2006
1,2%
0,0%
(4,0)%
0
2005
3,3%
4,0%
(2,0)%
1 765
1 660
(7,9)%
6,3%
4,8%
4,0%
0,0%
1 587
200
989
400
765
800
1 294
1 000
9,9%
7,8%
8,7%
6,8%
8,0%
6,0%
2,0%
1 229
1 200
600
12,0%
8,0%
2006
2007
2008
2009
2010E 2011E
Russia's Foreign Reserves, end of period, US$ bn
Oil price (Brent, US$/b)
11,0%
11,9%
13,3%
12,0%
13,0%
25
20
14,0%
8,8%
10,9%
9,0%
10,0%
8,8%
15
10
7,0%
6,4%
28,8
26,3
5
10,0%
24,5
29,4
30,2
29,5
7,0%
6,5%
8,0%
6,0%
4,0%
29,0
0
2,0%
0,0%
2005
2006
2007
2008
2009
2010E 2011E
US$/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, June 18, 2010 for 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)
7 158
3 674
3 630
440
89
86
86
Promsvyaz
113
Uralsib
Rosbank
128
Top Russian Banks by Loan Portfolio (RUB, bn)
5 366
863
352
269
262
262
Promsvyaz
Raiffeisen
455
Rosbank
532
Alfa-Bank
Uralsib
611
RSHB
54
Gazprombank
60
VTB Group
62
Sberbank
70
MDM Bank
114
Raiffeisen
120
UniCredit
124
Alfa-Bank
RSHB
VTB Group
158
Gazprombank
798
UniCredit
2 022
707
Sberbank
132
MDM Bank
Promsvyaz
Top Russian Banks by Capital (RUB, bn)
144
Rosbank
Raiffeisen
161
Alfa-Bank
440
Raiffeisen
463
Gazprombank
474
VTB Group
505
Sberbank
586
UniCredit
777
RSHB
Gazprombank
VTB Group
Sberbank
951
Alfa-Bank
1 762
Source: Kommersant Dengi Magazine(№11) figures as of January 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 63.59%, including 46.48% stake of
the Property Department of the City of Moscow and
17.11% stake of Stolichnaya Strakhovaya Gruppa,
which in turn is controlled by the City of Moscow
and the Bank of Moscow Group
OJSC “GSM
Investments”
3.16%
LLC “GSM”
3.25%
Others 3.03%
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%
 The City has participated in all of the Bank’s 14
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
17.11%
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
 As of December 31, 2009 the Bank’s total
capital ratio (Basel 1 Accord) was 18.9%, and
Tier 1 ratio was 12.8%*
18,9%
100
 The Bank has been proactively increasing its
*
90,9
14,8%
80
capitalisation:
 In July 2009 BoM raised RUB 20 bn in its 13th
additional share issue
 On July 26 2010 14th issue was successfully
registered with the CBR and boosted the
capital of the Bank by RUB 21.7 bn.
 On October 15, 2009 Vnesheconombank
(VEB) extended a 10-year subordinated loan
to the Bank for RUB 11.1 bn
20%
15%
13.3%
13,9%
66,8
60
10,2%
40
20
12,8%
10,4%
9,5%
10%
40,9
min 8% (Basel 1 Accord)
0
5%
31-Dec-06
Total capital
31-Dec-07
31-Dec-08
Total capital ratio
31-Dec-09
Tier 1 ratio
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of December 31, 2009
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 as a key focus area – grow retail deposits market share

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 portfolio
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
Tighten 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 AS OPPOSED TO AGGRESSIVE GROWTH
14
Business Overview
Corporate and Investment Banking
Loan Portfolio to Legal Entities**
 Over 105,000 corporate and public sector
customers as of December 31, 2009*
183%
197%
213%
199%
 Focus on strategically important sectors of Russian
6.1%
economy
 Corporate banking dominates the asset side of the
balance sheet
222.8
0.9%
2006
 Involvement in financing of the key projects of the
City of Moscow
281.5
0.8%
2007
Gross Loans, RUB bn
Provision/ Gross Loans, %
416.4
489.5
1.5%
2008
2009
Collateral/Gross Loans, %
Deposits and Accounts of Legal Entities** (RUB bn)
 SME – strategically important sector
255,3
 Increasingly active in trade financing
 Developing of investment banking services,
including underwriting, debt issuance, research
173,0
45.7%
7.7%
46.6%
2006
224,0
52.6%
250,6
55.6%
46.9%
9.1%
10.5%
44.0%
36.9%
2007
17.9%
26.5%
2008
2009
Other Legal Entities
State-owned Organisations
Federal and Regional Budgets and Funds
* Source: Bank of Moscow
** Source: Bank of Moscow IFRS Consolidated Financial Statements as of December 31, 2009
15
Business Overview
Retail Banking
Overview
Retail Loan Portfolio** (RUB bn)

No. 3 retail deposit taker in Russia*

RUB 177.5 bn of term deposits and current accounts as of December
31, 2009**

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 9.7 mn retail customers as of December 31, 2009***

14.1 mn plastic cards as of July 1, 2010

RUB 88.3 bn – retail loan portfolio (gross) as of December 31,
2009**

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 July 1 2010, BoM had 1,842 ATMs in operation

Advanced Internet and Telephone banking
Retail Deposits and Accounts** (RUB bn)
108%
90%
111%
89%
113,1
15.4%
74,6
3.8%
88,3
2.9%
5.7%
36,6
2006
2007
Gross Loans, RUB bn
Provision/Gross Loans, %
2008
2009
Collateral/Gross Loans, %
Retail Loan Portfolio Breakdown** (2009)
177,4
151,2
126,7
86,5
33,3
29,8
99,1
121,4
144,1
2007
Term Deposits
Mortgages
31,1%
68,5
*
**
***
Credit Cards
1,6%
Car Loans 11,8%
27,5
18,0
2006
Scoring Loans 6,6%
2008
2009
Consumer Loans
48,9%
Current Accounts
Source: Kommersant Dengi (№11) figures as of January 1, 2010
Source: Bank of Moscow IFRS Consolidated Financial Statements as of December 31, 2009
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

More than a half of the Group’s loan book is
concentrated beyond the borders of Moscow and
Moscow region*


Related-party lending, which includes lending to
municipal entities of the City of Moscow,
accounted for 2.5% of the Group's gross loan
portfolio as at 31 December 2009
Loan portfolio is dominated by loans in local
currency. Loans in foreign currencies account for
33,3% of total loans to customers*
Loan Portfolio Breakdown by Industry Sectors**
State Agencies 3,2%
Others 5,2%
Food Industry 2,5%
Transport & Comms 4%
Corporate Individuals 15,3%
Metallurgy 3,8%
Loans
88%
Fuel& Energy 6,2%
Financial & Other
Services 21,8%
Trade
10,9%
Construction 13,9%
Manufacturing
12,5%
Loan Portfolio Breakdown by Currency* (2009)
EUR 3,7%
Other 3,9%
USD 25,7%
RUB 66,7%
*
**
Source: Bank of Moscow as of December 31, 2009
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of December 31, 2009
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%
1 400
30%
1 200
400%
3,9%
1 074.2 28%
990,1
27,5%
4%
1 000
300%
200%
3%
186,8%
187,1%
800
621,2
190,3%
2%
600
1%
1,3%
0,7%
0%
0%
2007
LLP/NPL
2008
2009
529,5
446,2
400
100%
26%
24,9%
577.8
24%
356,1
259,4
20,2%
200
22%
21,8%
0
20%
2006
2007
2008
2009
Total Loans
Collateral
TOP 20 Client Concentration
NPL/Gross loans
 As of December 31, 2009 the provisions totalled RUB
43.3 bn, a 3.4 times growth from the beginning of 2009
 As of December 31, 2009 LLPs comprised 7.5% of the loan
portfolio compared to 2.4% as of December 31, 2008
 NPLs accounted for 3.9% of the Group’s gross loan portfolio
 Concentration of top 20 borrowers in the total loan
portfolio increased to 27.5% due to slowdown of the
economy
 Net loan portfolio 2.0 times over-collateralised as at 31
December 2009
 The NPLs are 1.9 times covered by provisions
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of December 31, 2009
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
 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
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
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 4.25bn 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 corporates in accordance with
conservative risk policy
Fixed-income instruments dominate trading
securities portfolio
Over-collateralized loans to customers portfolio
Assets (RUB bn)
800
600
400
200
473
343
6
37 44
always been one of the key advantages of the
Bank
 As of December 31, 2009, customers
accounts comprised 58.0% of the Bank’s
liabilities
 Customer accounts increased 5.3% for 12
months of 2009
 Reliance on wholesale financing is currently low
 Access to variety of liquidity facilities
51
256
5
119
76
6
64
352
517
535
2008
2009
0
2006
2007
Loans to customers
Mandatory cash balances with CBR
Liabilities
 Strong and relatively stable deposit base has
735
686
1
35
133
Cash and equivalents
Trading securities
Liabilities (RUB bn)
800
734
92
21
739
78
7
600
480
400
350
51
200
56
3
2
407
428
215
226
2008
2009
351
260
70
38
0
2006
2007
Due to other banks
Debt securities issued
Due to customers
Other
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of December 31, 2009.
22
Financial Overview
Deposit Base
Growth in Deposits* (RUB bn)
406,5
Composition of Client Deposit Portfolio
By Deposit Type*
428,0
Current /
Demand
Accounts
34.5%
350,6
259,5
Term
Deposits
65.5%
By Customer Type*
Other commercial
+ legal entities
32.5%
2006
*
2007
2008
2009

Continued diversification of deposit base state funding
available through: CBR facilities (unsecured and
secured loans, repo transactions), Ministry of Finance
deposits and funds of state-owned corporations

The Bank is authorised to tender for budget funds of
the City of Moscow along with several other banks
Individuals
41.5%
State-owned
organisations
10.5%
Federal budgets + regional
funds 15.5%
Source: Bank of Moscow, IFRS Consolidated Financial Statements as of December 31, 2009.
23
Financial Overview
Operating Income (RUB bn)
Profit and Loss (RUB bn)
5,5
2009
14.1
19.1
28.4
31.3
3.1
4.3
5.8
5.5
1.1
1.6
(3.7)
9.5
(1.3)
(2.5)
(9.0)
(30.4)
Profit before taxation and minority
interest
7.6
13.2
8.2
1.3
Net profit
5.8
10.0
7.0
0.7
46.92
69.18
50.76
4.81
Gains less losses arising from trading
securities and exchange operations
31,3
28,4
Provision charge for loan impairment
19,1
14,1
2008
Net fee and commission income
4,3
1,6
3,1
1,1
2007
Net interest income
9,5
5,8
2006
(3,7)
2006
2007
2008
2009
Net commission income
Net income from trading operations and other income
Net interest income
Basic earnings per share (EPS)
Cost to Income Ratio* (RUB bn, %)
50
45
51,2%
40
35
55%
49,3%
50%
46,1%
30
25
20
15
10
46,3
18,3
24,9
Selected Profitability Ratios*
30,4
5
0
30,9%
45%
2007
Income
2008
5%
35%
1%
Cost/Income
22,6%
25%
20%
5,3%
3%
2%
2009
20,4%
4%
40%
30%
2006
6%
11,8%
5,0%
4,6%
10%
5,2%
1,8%
2,0%
1,0%
0%
2006
2007
Return on Assets
Return on Equity
2008
15%
0,9%
0,1%
5%
0%
2009
Net Interest Margin
Source: Bank of Moscow IFRS Consolidated Financial Statements as of December 31, 2009
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