9M 2018 Results. November 8, Dmitry Pyanov Senior Vice President, Head of Finance Department. Leonid Vakeyev Head of Investor Relations

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1 9M 2018 Results November 8, 2018 Dmitry Pyanov Senior Vice President, Head of Finance Department Leonid Vakeyev Head of Investor Relations

2 MACRO & MARKET ENVIRONMENT Current indicators Forecast 2018 Market growth 9M 2018 A Market growth 2018 F 9m 9m GDP, % 1.6 Current estimation 1.9 Corporate loans, % m 9m Oil price (Urals, avg), $ Retail loans, % Sep 18 / Sep 17 9m CPI, % Corporate deposits, % m 9m CBR key rate (eop), % Retail deposits, % (1) Source: GDP, oil price - Ministry of Economic Development, CPI Rosstat, market growth the Bank of Russia. 2

3 GOOD PROGRESS IN DELIVERING FY 2018 RESULTS Tangible improvement of profitability 9M 18 Net profit % YoY ROE 12.9% +5.9 ppt YoY 3Q 18 Net profit % YoY ROE 11.2% +6.4 ppt YoY Enhanced cost efficiency Robust business growth Starting from 3Q 18, Post Bank is accounted as JV 9M 18 3Q 18 Cost / Income ratio 39.1% -6.7 ppt YoY Costs growth Costs growth +1.2% YoY +0.3% YoY 9M 18 3Q % YTD Corporate loans 8, % YTD Retail loans 2,663 Cost / Income ratio 38.5% ppt YoY +11.4% QoQ Corporate loans 8, % QoQ Retail loans 2, % YTD Corporate deposits 5, % YTD Retail deposits 3, % QoQ Corporate deposits 5, % QoQ Retail deposits 3,920 3

4 9M 18 KEY DRIVERS OF NET PROFIT GROWTH 9M 17 9M 18 NIM 4.1% 4.0% NCM 0.7% 0.7% 9x 18% 1.6% COR 1.5% 45.8% CIR 39.1% ETR 25.3% 22.5% ROE 7.0% 12.9% 4% % % % - 1% % Net interest income Net fee and commission income (1) Provision charge for credit losses and other provisions. Other income Net operating income Provision charge (1) Staff and administrative expenses Income tax Net profit 4

5 ENHANCED COST EFFICIENCY Staff costs and administrative expenses 45.8% 2.0% 39.1% 1.9% 48.8% 40.3% 41.3% 37.6% 38.5% +1% Cost / Income ratio 1.9% 2.3% 2.0% 1.8% 1.8% Cost / Avg. assets flat Administrative expenses Staff costs (1) 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 9M'17 Number of employees Core business Non-core business -20% 97,522 96,957 96,062 96,610 Effect of consolidation of Post Bank as JV: c. 21,000 employees 4% 4% 4% 4% 78,133 5% Including c. 5,750 employees of VTB Insurance 96% 96% 96% 96% 95% 30-Sep Dec Mar Jun Sep-18 (1) Including pensions. 5

6 BUSINESS GROWTH Loans to legal entities Loans to individuals Banking sector growth: +5% qoq +9% ytd Banking sector growth: +7% +16% qoq ytd 7,307 7,354 7,458 8, % ytd Post Bank contribution +1% +1% +11% 2,534 2,599 2,749 +2% 2,322 2,370 +5% 2,493 +7% 2, % 9M ytd Deposits of legal entities Deposits % change adjusted for Post Bank Post Bank accounted as JV of individuals Banking sector growth: 5,523 5,514 5,775 5,820 flat +5% +1% +4% +10% qoq ytd +5% ytd Banking sector growth: Post Bank contribution 3,622 3,819 4,064 +0% +4% qoq ytd +14% 9M ytd +5% +6% +2% 3,451 3,613 3,834 3,920 % change adjusted for Post Bank Post Bank accounted as JV 6

7 PROFORMA EFFECT OF POST BANK DECONSOLIDATION Deposits of individuals Post Bank accounted as JV Loans to individuals Post Bank accounted as JV ROE % 14% 15% 3,452 3,920 2,322 2, % 12.9% 01-Jan Sep Jan Sep-18 As reported Post Bank accounted as JV NIM % CIR % CoR % 39.1% 1.5% 4.0% 3.8% 36.8% 1.4% As reported Post Bank accounted as JV As reported Post Bank accounted as JV As reported Post Bank accounted as JV 7

8 FY 2018 GUIDANCE 2018 Loans to legal entities Loans to individuals CIR CoR NIM Net profit Initial guidance growth growth 40 % 1.5 % 4 % 170 market growth market growth Actual 9M 18 14% market 9% 15%* market 16% 39.1 % 1.5 % 4.0 % 140 * Post Bank accounted as JV. Updated growth growth guidance market growth 40 % 1.5 % 4 % 170 market growth 8

9 9M 2018 FINANCIAL APPENDIX

10 INTEREST INCOME AND AVERAGE YIELDS Interest income and average yields 10.1% 10.0% 9.4% 9.3% 9.0% 10.3% 9.2% Yield on customer loans 9.3% 9.1% 8.7% 8.7% 8.4% 9.5% 8.6% Yield on total interest bearing assets -4% -2% % 6% 8% 8% 7% 92% 94% 92% 92% 93% % 8% 92% 92% Interest income on other interest bearing assets Interest income on loans and advances to customers 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 Average interest bearing assets 9M'17 +9% +6% 11,281 11,366 11,534 11,764 15% 15% 14% 14% 12,280 13% 11,151 15% 11,859 14% 85% 85% 86% 86% 87% 85% 86% Other interest bearing assets Customer loans (gross) 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 9M'17 10

11 INTEREST EXPENSE AND COST OF FUNDS Interest expense and cost of interest bearing liabilities 5.6% 5.3% 5.1% 4.9% 4.9% 4.8% 4.8% 4.7% 4.6% 4.5% 5.8% 5.4% -10% 4.8% 4.6% Cost of total interest bearing liabilities Cost of customer deposits % 22% 19% 17% 21% 76% 78% 81% 83% 79% -5% % 19% 74% 81% Interest expense on other interest bearing liabilities (1) Interest expense on customer deposits 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 Average interest bearing liabilities 9M'17 +11% +7% 10,603 10,749 10,821 11,117 17% 15% 15% 14% 11,710 15% 10,481 21% 11,216 15% 83% 85% 85% 86% 85% 79% 85% Other interest bearing liabilities (1) Customer deposits 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 9M'17 (1) Including debt securities in issue, subordinated debt, interbank (incl. LORO and other borrowed funds). 11

12 NET INTEREST INCOME AND NIM Net interest income +4% % Q'17 4Q'17 1Q'18 2Q'18 3Q'18 Net interest margin (1) 9M'17-20 bp -10 bp 4.1% 4.1% 4.1% 4.2% 3.9% 4.1% 4.0% 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 9M'17 (1) Calculated as net interest income (adjusted for payments to deposit insurance system) divided by average interest earning assets, which include gross loans and advances to customers, due from other banks (gross), debt securities and correspondent accounts with other banks. 12

13 FEE AND COMMISSION INCOME Fee and commission income breakdown % 17% 7% 10% 62% % 12% 10% 8% 65% +7% % 14% 7% 8% 65% % 15% 6% 8% 68% % 12% 6% 9% 68% % 15% 8% 11% 63% +9% % 14% 6% 9% 67% Other Insurance products distribution and other agency services Operations with securities and on capital markets Guarantees and other credit related commitments Settlement, trade finance and cash transactions 3Q'17 4Q'17 1Q'18 Net fee and commission income 2Q'18 3Q'18 9M'17 0.9% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% +4% -3% Net fee and commission income / avg assets (net) Net fee and commission income 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 9M'17 13

14 PROVISION CHARGE AND COST OF RISK Provision charge for impairment of loans 1.8% 1.5% 0.9% 2.2% 1.5% 1.6% 1.5% Cost of risk (1) Q'17 4Q'17 1Q'18 2Q'18 3Q'18 Cost of risk breakdown M'17 Provision charge for credit losses on loans to individuals Provision charge For credit losses on loans to legal entities 1.9% 1.6% 1.9% 2.2% 2.2% 2.0% 2.1% 2.0% Loans to individuals 1.5% 1.5% 1.3% 1.5% 1.3% Loans to legal entities 0.5% 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 9M'17 (1) Provision charge for credit losses divided by average gross loans and advances to customers. 14

15 GROSS LOAN PORTFOLIO BREAKDOWN UNDER IFRS 9 By measurement approach Post Bank accounted as JV ( X ) Loans at amortised cost Loans at fair value through P&L Loans at fair value through OCI 9,841 9,630 4% 2% 94% +11% +14% 10,969 2% 1% 97% Stage 1: 12 month ECL Provision charge by ECL stages Stage 2: LECL 4.1% Loans at amortised cost by ECL stages , % 82.8% Stage 1 Stage 2 Allowance ratio: 0.7% Allowance ratio: 7.3% 2% 2% 96% 32% 59% 9% 01-Jan Sep-18 NPLs Post Bank accounted as JV ( X ) Stage 3: LECL credit-impaired 75.7% Stage 3 Allowance ratio: 48.3% 52% 46% 6.9% 6.8% 6.9% NPL ratio 3.5% 2% Jan Sep-18 Purchased or originated credit impaired 0.3% 12.6% 1.1% 30-Sep-18 POCI Allowance ratio: 29.3% 0,3% 42% 16% 42% Pass Watch Sub-standard Doubtful NPLs 15

16 LOAN BOOK QUALITY Provision for loan impairment Allowance for loan impairment / NPLs (90+) NPL ratio (1) Total gross loans Post Bank contribution Post Bank contribution NPLs Data as reported 7.5% 7.5% 7.7% Allowance for loan impairment 7.0% Data as reported 6.9% 7.1% 7.6% 6.9% 7.2% 7.3% 7.5% Proforma of historical data adjusted for changes in Post Bank accounting treatment 7.0% 6.8% 6.9% 7.5% 6.9% Proforma of historical data adjusted for changes in Post Bank accounting treatment % +6% % % 9M ytd % % % % 9M ytd % change adjusted for Post Bank Post Bank accounted as JV Coverage ratio % change adjusted for Post Bank Post Bank accounted as JV Loan write-offs -540 bp Data as reported Proforma of historical data adjusted for changes in Post Bank accounting treatment 107.9% 105.8% 105.8% 104.7% -330 bp 102.3% 102.5% 101.0% 102.5% Q'17 4Q'17 1Q'18 2Q'18 3Q'18 (1) The Group defines non-performing loans (NPL) as lifetime expected credit losses (ECL) credit-impaired loans with contractual principal and or interest payments overdue more than 90 days and purchased or originated credit impaired (POCI) loans with principal and or interest payments becoming overdue more than 90 days after the date of initial recognition. 16

17 LOAN PORTFOLIO AND CUSTOMER DEPOSITS Data as reported Proforma of historical data adjusted for changes in Post Bank accounting treatment Loans and advances to customers Customer 99.6% 98.7% 95.7% 99.6% 98.8% 95.7% +11% +14% 9,841 9,630 9,953 9,724 10,206 9,950 26% 26% 27% 24% 24% 25% 104.7% 10,969 24% Loans / Deposits (LDR) deposits Post Bank accounted as JV( X ) Post Bank accounted as JV( X ) 104.7% 9,145 9,333 79% 80% 80% +7% +10% -1% +1% 8,975 +7% 9,127 +9% 9,839 9,610 9,740 40% 41% 41% 40% 38% 40% 40% Customer deposits / total liabilities 77% 74% 74% 73% 76% 76% 76% 75% 60% 62% 59% 60% 59% 60% 60% Individuals Legal entities Loans and advances to customers by industry Individuals Legal entities Loans and deposits by currency % Individuals Oil and Gas Building construction Metals Manufacturing Government bodies Transport Trade and commerce Energy Chemical Finance Telecommunications and media Other 10% 7% 8% 7% 7% 8% 5% 5% 5% 6% 6% 4% 5% 4% 4% 3% 3% 4% 3% 6% 6% 12% 14% 10% 24% 24% 30-Sep Jan-18 (adjusted for Post Bank) Net loans and advances to customers 70% 29% 71% 30% 01-Jan Sep-18 Customer deposits 65% 34% 66% 35% FX RUB FX RUB 17

18 BUSINESS WITH LEGAL ENTITIES Loans to legal entities Deposits of legal entities +14% +11% Current / settlement deposits Term deposits +5% 7,307 7,354 7,458 8,306 5,523 5,514 25% 24% +1% 5,775 5,820 19% 20% 75% 76% 81% 80% Yield on loans and cost of deposits Market shares (1) 8.7% 8.6% 5.3% 5.1% 8.0% 7.9% 7.6% 4.5% 4.5% 4.4% 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 Yield on loans to LE Cost of deposits of LE 18.4% Loans to legal entities 21.5% Deposits of legal entities +160 bp YTD -160 bp YTD (1) The market share is calculated using VTB s methodology with data from the Bank of Russia based on RAS statements. 18

19 BUSINESS WITH INDIVIDUALS Loans to individuals Deposits of individuals Post Bank accounted as JV ( X ) Post Bank accounted as JV ( X ) +5% +8% +15% +14% -3% +2% -3% +7% 2,534 2,322 2,599 2,370 2,749 2,493 2,663 3,622 25% 3,451 25% 3,819 24% 3,613 23% 4,064 26% 3,834 25% 3,920 26% 48% 43% 48% 44% 48% 44% 44% 5% 5% 5% 5% 5% 5% 5% 4% 4% 5% 4% 4% 4% 4% 43% 47% 43% 47% 43% 47% 47% 75% 75% 76% 77% 74% 75% 74% Cash loans and other Credit cards Car loans Mortgage loans Current / settlement deposits Term deposits Yield on loans and cost of deposits Yield on loans to individuals Cost of deposits of Individuals 14.3% 14.0% 13.4% 13.2% 12.7% 4.8% 4.6% 4.9% 4.8% 4.6% Market shares (1) Post Bank accounted as JV 17.2% Loans to individuals 13.2% Deposits of individuals 3Q'17 4Q'17 1Q'18 2Q'18 3Q' bp YTD +120 bp YTD (1) The market share is calculated using VTB s methodology with data from the Bank of Russia based on RAS statements. 19

20 ASSET STRUCTURE Assets structure Assets by currency % +9% +1% +4% +3% 69% 12,947 13,109 7% 5% 4% 5% 9% 7% 13,683 14,068 7% 8% 4% 4% 6% 4% 32% 70% 70% 69% 72% 68% 31% 13% 12% 14% 14% 01-Jan-18 FX RUB FX 30-Sep-18 RUB Cash and mandatory reserves Securities portfolio Due from other banks Loans to customers Other assets 20

21 LIABILITIES AND CAPITAL STRUCTURE Liabilities structure Liabilities by currency % 67% 30-Sep-18 FX RUB +9% 36% 01-Jan-18 FX RUB +1% +5% +3% 64% 33% 11,529 11,640 10% 9% <1% <1% 12,244 12,605 9% 13% <1% 3% Basel capital 79% 80% 80% 77% 6% 6% 7% 3% 3% 2% 2% 2% 2% 2% 2% 2% 14.4% 14.5% 12.6% 12.7% 2% 13.9% 13.4% 12.2% 12.0% Total CAR Tier I ratio 1,465 1,515 1,487 1, Total capital Tier I Due to banks and other borrowed funds Collateralised funding from the CBR Customer deposits Other liabilities Debt securities issued Subordinated debt 1,283 1,334 1,305 1,329 21

22 VTB GROUP FINANCIAL HIGHLIGHTS: P&L AND KEY RATIOS Income statement key indicators 9М 18 9М 17 Change 3Q 18 3Q 17 Change Net interest income % % Net fee and commission income % % Net other income 50.9 (6.5) % 18.8 (12.7) % Operating income before provisions % % Provision charge for credit losses and other provisions (111.4) (118.2) -5.8% (42.4) (42.2) 0.5% Staff costs and administrative expenses (187.3) (185.0) 1.2% (62.6) (62.4) 0.3% Profit before tax % % Income tax expense (40.5) (25.6) 58.2% (16.4) (5.7) % Profit after tax from subsidiaries acquired exclusively with a view to resale - (0.1) - - (0.1) - Net profit % % Key financial ratios 9М 18 9М 17 Change 3Q 18 3Q 17 Change NIM 4.0% 4.1% -10 bp 3.9% 4.1% -20 bp CoR 1.5% 1.6% -10 bp 1.5% 1.8% -30 bp Cost / Assets 1.9% 2.0% -10 bp 1.8% 1.9% -10 bp CIR 39.1% 45.8% -670 bp 38.5% 48.8% bp ROE 12.9% 7.0% +590 bp 11.2% 4.8% +640 bp 22

23 VTB GROUP FINANCIAL HIGHLIGHTS: BALANCE SHEET Balance sheet key indicators 30-Sep Jun-18 QoQ 01-Jan-18 IFRS 9 YTD Gross loan portfolio 10, , % 9, % Loans to legal entities 8, , % 7, % Loans to individuals 2, , % 2, % Total assets 14, , % 12, % Customer deposits 9, , % 9, % Deposits of legal entities 5, , % 5, % Deposits of individuals 3, , % 3, % Total liabilities 12, , % 11, % Total shareholders' equity 1, , % 1, % Post Bank accounted as JV Key asset quality & capital ratios 30-Sep Jun-18 QoQ 01-Jan-18 IFRS 9 YTD NPL ratio (1) 6.9% 7.6% -70 bp 6.9% 0bp LLR ratio 7.0 % 7.7% -70 bp 7.5% -50bp Tier I CAR 12.0% 12.2% -20 bp 12.6% -60 bp Total CAR 13.4% 13.9% - 50 bp 14.4% -100 bp Post Bank accounted as JV (1) The Group defines non-performing loans (NPL) as lifetime expected credit losses (ECL) credit-impaired loans with contractual principal and or interest payments overdue more than 90 days and purchased or originated credit impaired (POCI) loans with principal and or interest payments becoming overdue more than 90 days after the date of initial recognition. 23

24 DISCLAIMER This presentation has been prepared by VTB Bank (PJSC) ( VTB ) and has not been independently verified. This presentation does not constitute or form part or all of, and should not be construed as, any offer of, or any invitation to sell or issue, or any solicitation of any offer to purchase, subscribe for, underwrite or otherwise acquire, or a recommendation regarding, any shares or other securities representing shares in, or any other securities of VTB, or any of its subsidiaries, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or any commitment whatsoever or any investment decision. Some of the information in this presentation may contain projections or other forward-looking statements regarding future events or the future financial performance of VTB and its subsidiaries (together with VTB, the "Group"). Forward-looking statements are statements that are not historical facts. They include statements about our beliefs and expectations and the assumptions underlying them. These statements are based on plans, estimates and projections as they are currently available to the management of VTB. Such forward-looking statements are based on numerous assumptions, beliefs and expectations regarding the Group's present and future business strategies, financial conditions, targets and the operating environment. We caution you that these statements are not guarantees of future performance and involve risks, uncertainties and other important factors that we cannot predict with certainty. Accordingly, our actual outcomes and results may materially differ from what we have expressed or forecasted in the forward-looking statements. These forward-looking statements speak only as at the date of this presentation and are subject to change without notice. We assume no obligation to update or revise these statements whether as a result of new information or for any other reason or to make them conform to actual results. Certain numbers and ratios contained herein, related to past dates and periods, might have been restated in accordance with the latest financial statements issued, and hence differ from the ones presented in the previous communications. Figures shown in this presentation are based on figures disclosed in the annual and interim financial statements of the Group. However, figures used in this presentation might have been rounded, which could result in slight differences in percentage changes compared to those provided in such financial statements. 24

25 Investor Relations Tel: +7 (495)