As of the year ended December 31, 2007

Transcription

1 As of the year ended December 31, 2007

2 Senior management attendees Alexey Godovanets Aleksander Orlov Ludmila Lebedeva Kamron Mirkurbanov Alexey Stepin Chairman of the Board Member of Board of Directors Deputy Chairman of the Board First Deputy Chairman of the Board Managing director Chief Accountant 1

3 AGENDA Bank overview Business description Strategy of Development Asset quality and reserve adequacy Liquidity and funding Profitability and Capital adequacy 2

4 Bank overview Today CB Moskommertsbank or MosKB is an universal bank for SME, Retail Sales and Private Banking Established in 2001 as a strategic partner of KKB in Russia, the Bank serves main customers of KKB, which have activities in Russia. It makes competitive advantage and allows to increase clients base MosKB is KKB s major and strategically important overseas asset. At present day KKB owns 100 per cent of shares in MosKB MosKB is an integrated universal bank having full typical banking structure with a centralized approach in decisionmaking with total assets of RUR 47,575 mln (IFRS) and capital of RUR 4,894 mln (Basel I) The Bank is focused on an organic development. That is why its network doesn t extensive, but high-performance and allows to satisfy clients needs. Today the bank is presented in all main regions of Russia; its network comprises currently 11 branches: St. Petersburg, Volgograd, Kaliningrad, Novosibirsk, Chelyabinsk, Nizhniy Novgorod, Omsk, Perm, Tyumen, Rostov-on-Don, Samara and 7 subsidiary offices: Moscow five offices, St. Petersburg two offices MosKB has adopted KKB unique business model based on a centralized approach and lean management structure. Risk management procedures in MosKB are in line with the KKB s risk management system. MosKB requires credit approval from KKB for all the credit deals valued more than USD 10 mln Similar to many Russian banks, MosKB relies on short-term domestic funding sources with deposits and interbank (excluding KKB) accounting for over 41 per cent of its funding in December Loans from KKB, which have maturities of over one year represent a long-term funding source for the Bank. KKB has an established track record of supporting the growth of MosKB via equity and non-equity funding 3

5 Bank overview MosKB has average value ROAE, ROAA and CTI in Russian banking sector: 2007 ROAE = 14.9, 2007 ROAA = 1.2 and 2007 CTI = MosKB is focused on high margined segments of banking: SME crediting and retail market (mortgages, car loans and consumer loans, credit cards). It is conductive to increase profitability of the Bank Further lengthening of the maturity profile of its liabilities to match the growing share of long term mortgage loans is one of the key goals and challenges for MosKB The debut placement of RUB 1 bln bond in December 2005 allowed MosKB to refinance promissory notes and introduce publicly traded debt securities to its funding mix. In December 2006 MosKB has issued a second RUB bond (RUB 3 bln, 4 years with 1.5-year put). A third bond (RUB 5 bln, 6 years, 2 years put) has been issued in June 2007 In order to further diversify its funding, the Bank also seeks more longer term funding from international markets. As a natural extension, MosKB further diversifies it s funding structure with a residential mortgage securitisation platform Moscow Stars and Moscow Stars 2 The bank has a conservative approach towards liquidity management purposes 4

6 AGENDA Bank overview Business description Strategy of Development Asset quality and reserve adequacy Liquidity and funding Profitability and Capital adequacy 5

7 Historical milestones The bank was created in April 2001 as Interregional Bank for Development of Entrepreneurship, acting as a strategic partner of KKB Renamed to MosKB in September 2002 KKB begins to consolidated MosKB in its financial statements based on its effective control MosKB becomes a Top 100 Russian bank by total assets MosKB has purchased the pool of mortgage loans of Bank Delta-Credit In June 2005 MosKB became a member of Deposit Insurance System MosKB started building up its regional branch network ( First one in St. Petersburg) Debut bond issue valued for RUR 1 bln, maturing in 3 years MosKB begins focus on retail market and offers first mortgages and car loans MosKB became one of the largest players on mortgage market of Moscow In November 2006 an increase of MosKB charter capital by USD 50 mln (~70 per cent), and USD 40 mln was provided by KKB 2 bond issues in total amount of RUR 8 bln Undertakes first securitisation (USD 164 mln) In July 2007 Kazkommersbank purchased per cent of Bank s equity. The remaining per cent shares obtained in trust management providing 100 per cent control under Moskommertsbank. In December start 2-nd securitisation (warehouse stage USD 311 mln) KKB became the owner of 100 per cent shares of MosKB 6

8 Ownership structure JSC Kazkommertsbank 100% CB Moskommertsbank In April 08 The Central Bank of Russian Federation approved acquisition of the rest per cent of the Bank s stake by JSC Kazkommertsbank. The deal has been closed in May JSC Kazkommertsbank is the owner of 100 per cent shares of MosKB 7

9 Management organization The supreme management body of the Bank is the Board of Directors that executes control over all activities of the Bank and its Management Board The structure of the Board of Directors was changed in February In order to increase its power, to wide its functions and change it from supervisory to executive, some of the KKB s top managers were invited to the Board of Directors of MosKB Members of the Board of Directors: Alexander V. Yakushev - Chairman of the Board of Directors (since 11/02/2008), Managing Director- Regional Director- Director of Akmolinskiy branch; JSC Kazkommertsbank. Alexandr V. Barsukov Member of the Board of Directors (since 27/04/2007), Managing Director. JSC Kazkommertsbank Alexey V. Godovanets Member of the Board of Directors (since 27/04/2007) and Chairman of the Management Board Adil U. Batyrbekov Member of the Board of Directors (since 11/02/2008), Managing Director- Head of Risk Management Department JSC Kazkommertsbank Askarbek Nabiev Member of the Board of Directors (since 11/02/2008) CFO, Managing Director- Department JSC Kazkommertsbank Head of Financial MosKB Business Heads report directly to relevant Heads of KKB The Coordination Committee KKB towards MosKB was established in April 2008 with purpose to develop risk management procedures in MosKB in line of KKB 8

10 Domestic branch network and representation The principle of network management centralization of credit decisions, management under the direct divisional subordination. MosKB plans to develop network of sales points of "light" format around existing major subsidiaries - offices, credit and treasury and transaction offices, lending and cash services office The Branch of the Bank has been mainly build in 2007 in the largest cities of RF (11 multy-million cities and 7 offices in capital region (Moscow, St. Petersburg) Format large universal regional office 9

11 Overview of product offering Loan Portfolio: Corporate banking USD 350 mln, more then 200 borrowers Client Deposits: Nearly USD 200 mln Main products: Loans, Loan Lines till USD 10 mln, overdrafts Syndicated loan lines with KKB > USD 10 mln Guaranties, Trade and Structured Financing Client segments: Large corporate clients- syndicated loans with KKB Rapidly growing private companies with revenues till USD 100 mln Sales Channels: Direct sales: Central office and Branches Sales to KKB s clients Loan Portfolio: Retail banking USD 1,2 bln, more then 7,5 k borrowers Client Deposits: USD 60 mln Main products: Mortgage loans ( nearly 90 per cent of loan portfolio) Car Loans Deposits Client segments: credit products for middle class deposits for mass market Sales Channels: Office network. Call- Centre. Active advertising campaign in media and Internet. Realtors, mortgage brokers Retail banking SME Loan Portfolio: USD 60 mln, more then 400 borrowers. Average loan amount- USD 350k. Main products: Express loan till USD 50 mln Secured credit lines till USD 1 mln Overdrafts Client segments: Small companies with revenues till USD 100 mln Sales Channels: Office network. Advertisement support. Call-Centre. 10

12 AGENDA Bank overview Business description Strategy of Development Asset quality and reserve adequacy Liquidity and funding Profitability and Capital adequacy 11

13 The strategy of qualitative growth Description Current status Planning finish date Client segments Focused on SME and private clients Foundation of SME Department, loan products have been created, structure of retail bloc have been changed, new deposits for individuals, process of reformatting network of sales points has been started 1Q 2009 Risks Centralization of Risk management in KKB Participation in improvement of risk management system project with ABN AMRO. 4Q 2008 Sales Channels The physical presence network in major regional centers of Russia, Contact-Centre, Internet-banking Organizational structure of the branches has been changed, Loans for SME. 4Q Q2009 Business Process Unification of basic business processes, a single technological base with KKB The project of single technological base has been created 1Q 2009 Labor force Attracting additional skills, managerial synergies with KKB Competence in marketing, business planning, universal retail business, SME, back-office has been added. Changes in Board of Directors 2Q

14 Regional presence Regional presence MosKB Assets, USD mln MosKB clients (k) offices 57 offices 50 Assets of MosKB as of the end of 2010 (USD mln) Number of MosKB's Clients, the end of MosKB plans to increase regional presence by creating a new network of retail offices and combined (SME, retail business) offices in KKB will make the decision till the end of

15 Targets and implementation Measure Target values: the end of 2010 As at December 31, 2007 Assets C/I USD 2.67 bln not more then 50 per cent USD 1.94 bln 39.3 per cent ROE Increase of client base Not less then 15 per cent Increase number of clients at minimum for 120 k 15 per cent 10,7 k 14

16 Key challenges & mitigating factors Limited track record Strong and stable management team (key management have been with the bank since its establishment Support and expertise from parent KKB Medium Size Bank Focused development strategy Size adequate objectives Rapid growth in loan portfolio Well collateralised loan portfolio (as at FYE 2007 around 95 per cent of the loan portfolio was supported by some form of collateral of which over 45 per cent was commercial or residential real estate) Conservative lending conditions Expansion plans could pressure costto-income ratio Any deterioration in cost-to-income is expected to be temporary as new branches begin to contribute to profitability (typically 1.5 years after establishment) Access to competitive long-term funding The Bank s strategy is to diversify its funding base to become more independent from international market conditions It plans to acquire higher share of retail deposits via an enlarged branch network Funding support from JSC Kazkommertsbank 15

17 AGENDA Bank overview Business description Strategy of Development Asset quality and reserve adequacy Liquidity and funding Profitability and Capital adequacy 16

18 Corporate and retail banking portfolio overview Retail leading 65,9% Corporate leanding 34,1% 5,50% 1,20% 3,0% 2,3% 9,1% 3,4% 7,7% 8,6% 59,20% Mortgage Loans Car Loans Consumer Loans Finance sector Trade Others Real estate Construction Argiculture As at December 31, 2007 MosKB has a corporate loan portfolio of just over RUR 13 bln and a retail lending portfolio of around RUR 30 bln The corporate lending portfolio is diversified by sector with clients in the finance (29 per cent from Corporate lending portfolio), trade (23 per cent) and real estate (12 per cent) sectors accounting for the greatest share of the banks exposure 17

19 Loan portfolio driving assets growth RUR, thousand Loan to Customers Assets The Bank s loan portfolio has grown strongly in recent years, exceeding RUR 41 bln in 2007 However, the quality of the loan book remains high, as MosKB s loan portfolio is dominated by mortgage retail loans, that are mostly secured 18

20 Low level of credit portfolio concentration More than 60 per cent of the credit portfolio of the Bank is formed by retail credits, which are mostly well collateralized (mortgage credits) Corporate credits are well divesified in the contex of segments of economy, at that the share of each segment doesn't exceed 10 per cent of the totall credit portfolio The share of TOP-10 clients decreased in the 2007 up to 5.4 per cent of the total credit portfolio (8.4 per cent on the 1st of January 2007 vs 5.4 per cent on the 1st of January 2008) Average facility for a corporate client decreased in the Y2007 on RUR 14 mln (from RUR 73 mln as for the 1st January 2007 to RUR 59 mln as for 1 st January 2008) Average amount of retail credit products has also changed in the 2007: average mortgage credit decreased from RUR 4.72 mln to RUR 4.26 mln; auto credit decreased on RUR mln and on the 1st of January 2008 amounted RUR mln; average amount of a consumer credit decreased from RUR mln as for the 1st January 2007 to RUR mln on the 1st of January 2008 At the same time the client base of the Bank (number of borrowers) increased in the 2007 in 2.5 times 19

21 High quality loan collateral Loan portfolio almost fully secured Collateral type (2007) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 3,30% 18,70% 5,30% 96,70% 81,30% 94,70% Equipment 8% Commercial property 7% Others 21% Residential property 64% Secured Unsecured MosKB s loan portfolio is almost fully secured (2007: 94.7 per cent) Loan collateral comprises mostly of residential and commercial property and equipment (motor vehicles, equipment and inventories) 20

22 AGENDA Bank overview Business description Strategy of Development Asset quality and reserve adequacy Liquidity and funding Profitability and Capital adequacy 21

23 Diversification of liabilities: growth of own capital and client deposits share Liabilities structure (2007) Liabilities dynamics Other liabilities 5% Sub. debt 3% Own capital 7% Banks' deposits* 32% R U R bn Debt securities 41% Client accounts 12% Banks' deposits Debt securities Ow n capital Client accounts Other liabilities/sub debt *The funds provided by KKB (including subordinated debt) as of December 31, 2007 accounted for USD 161 mln or 8.6 per cent of liabilities 22

24 Customer Deposits Time Deposits Call Deposits Private Clients Corporate Clients 23

25 Assets / liabilities maturities 2007 Sensitivity analysis at the end of 2007 shows that in case of Interest rates increasing by 1 per cent, this would affect MosKB s P&L by GAP Consolidated mln (respectively in a case of a rate change of -1 per cent the effect were to be RUR mln) < 1 month 1-3 months 3-12 months 1-5 years > 5 years Assets Liabilities This gap analysis is based on the planned repayments of assets and liabilities. Meanwhile, mortgage loans in sum of RUR 28.2 bln, typically extinguished prematurely. The ratio of early repayments for Russia's mortgage market in general and in particular for the MosKB, is 15 per cent. It means, for example, that during 2008, MosKB will receive an additional influx of liquidity at RUR 4.2 bln, which is almost completely, solves the problem of the gap for the period up to 1 year and, accordingly, for more than 5 years GAP MosKB (CPR 15%) 9,5 7,6 4,6 4,7 2,2 11,6 22,0 13,9 4,8 10,4 RUR bn ,1 GAP MosKB 4,6 4,7 1,5 11,6 4,5 13,9 12,9 18,1 10,4 <1 m 1-3 m 3-12 m 1-5 y >5 y 0 <1 m 1-3 m 3-12 m 1-5 y >5 y 24

26 Securitization BLOOMBERG **** Moscow Stars B.V. - New Russian RMBS - Bookrunner: HSBC/RZB Austria ***** Securitisation of Russian Residential Mortgages US$ [179.7] million Issuer: Moscow Stars B.V. Originator: Moskommertsbank Joint Lead Managers: HSBC, RZB Austria Tranche Amount Rating (M/F) WAL (15% CPR) Leg Fin Coupon Class A US$ [159]mn [Baa2/BBB] [ 3.56] yrs [2034] 1m$L+175bps Class B US$ [ 16.2]mn [ Ba2/BB ] [10.11] yrs [2034] 1m$L+525bps Class C US$ [ 4.484]mn Unrated [10.18] yrs [2034] pre-placed * First charge Prime residential mortgages originated within Moscow & its region * W Avg Current LTV [67.58]% * High excess spread level mitigating the credit risk * Term Sheet & Investor presentation attached In December 2007 Moscow Stars 2 BV, in the transaction to attract Mortgage Warehouse Facility, acquired from MosKB (true sale) pool of Russian mortgage loans in amount of USD 311 mln 25

27 AGENDA Bank overview Business description Strategy of Development Asset quality and reserve adequacy Liquidity and funding Profitability and Capital adequacy Profitability and Capital adequacy 26

28 Net profit Net profit 500, , , , , , , , , ,000 50, ,282 CAGR 28.4% 241, , MosKB has generated a healthy profit growth in the last three years. In 2007 profit after tax increased by 28.4 per cent Since 2004 the average growth rate of the bank s net profit was 55.9 per cent p.a. 27

29 Efficiency Throughout the period of existence MosKB demonstrates one of the best indicators of C/I on Russian market Cost-Income Ratio* CTI, compared with market leaders and banks from the comparison group (IFRS as of 2007) 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 18.4% 31.8% 42.2% 39.5% 80,0% 70,0% 60,0% 50,0% 40,0% 30,0% 39,5% 44,9% 48,3% 53,2% 54,1% 55,9% 61,9% 66,1% 66,6% 69,9% 15.0% 20,0% 10.0% 10,0% 5.0% 0.0% ,0% Moskomme rts VTB MDM Ural Bank Slavinvestb Credit Bank Centrinvest Alfa Bank Orgresbank ank of Moscow BIN Bank for Reconstruc CTI 39,5% 44,9% 48,3% 53,2% 54,1% 55,9% 61,9% 66,1% 66,6% 69,9% * Operating expenses / operating income before provisions 28

30 Profitability RoAE* and RoAA* 20,39% 14,32% 14,95% MosKB has been growing significantly in the last three years. To accommodate the 2,52% 1,42% 1,19% growth, the bank had to incurred ROAE ROAA expenses, for example for the expansion 9,80% 9,60% 5,10% 5,90% 4,50% 3,90% 13,40% 8,70% 4,70% of its branch network. However, the bank remains highly profitable with a Operating ROAE of 15 per cent and a ROAA of 1.2 per cent in Yield on interest earning assets Yield on interes t bearing ass ets Net interest margin 29

31 Income structure Net interest income Net fee and commissions income FOREX income Revenue for transactions with financial operations Other The Bank showed strong revenue growth in all major items in Net interest income is the main income of MosKB ( nearly 68 per cent of total income in 2007) 30

32 Income composition Loan Commission structure as of % 7% 3%2% 66% Transaction Commission structure as of % 4% 7% 74% Syndicated Loans Insurance commissions Guarantees, letters of credit risks Factoring Other Cash payments Transaction Operations Documentary operations Other Transaction Commissions Loan Commissions Net fee and commissions increased in 5,3 times for the period of Operating commisions rised more rapidly in common commissions' structure: they increased in 8 times during the last 3 years, that leads to the sharp increasing of their share up to 35 per cent (instead of 23 per cent 3 years ago). We expect, that syndicated commissions (66 per cent of all credit commissions in the 2007) will decrease on 40 per cent in the 2008, that will be compensated thanks to the prospective growth of the operating commissions 31

33 Capital adequacy CAR tier Basel I & CAR total Basel I (per cent) CAR total CB (per cent) 13,0 13,0 14,0 16,5 10,7 15,5 10,6 12,5 13, CAR tier 1 Basel I CAR total Basel I CAR total CB Despite the strong asset growth experienced in 2007 (+51 per cent), MosKB managed to increase its CAR ratio (according to CRB) CAR ratios according to Tier 1 could be roughly maintained (total CAR) and kept above 10 per cent (Tier One) 32

34 Contact details Alexey V. Sudarikov Head of International Funding & Financial Institutions Ph: +7 (495) Natalia S. Lyskova Acting Head of Financial Institutions Ph: +7 (495) Pavel V. Filimendikov Deputy Head of Trade and Structured Finance Ph: +7 (495) Igor A. Zantsev Head of Dealing Ph: +7 (495)