AK BARS Bank: Key Investment Highlights

Transcription

1 AK BARS Bank: Key Investment Highlights September,

2 Content AK BARS Bank At Glance 3 Macroeconomic Overview of Russia and Tatarstan 6 Bank`s Activity 10 Key Highlights 16 Business Lines 22 Innovations 35 Bank`s Strategy 41 Appendix 43 2

3 AK BARS Bank at Glance 3

4 Key Highlights Strong relationships with the Government of Tatarstan Bank 1 in the Republic of Tatarstan Effective corporate governance Shareholders aimed at the Bank`s development and growth 3 Extensive branch network in Tatarstan and across Russia 7 Experienced team 6 Long-term, stable and flexible platform for business growth Stable financial position and 4 conservative risk management policy 5 4

5 Rankings & International credit ratings by equity (1) by distribution network in Russia with 30 branches and 240 other offices (2) among the Website Banking Rank 2016 (3) among the Internet Banking Rank 2016 (3) Top 15 best Russian banks according to Deloitte: «Review of Russian banks mobile applications in 2015» Fitch Ratings BB- Moody`s Investors Service B2 (1) According to Profile magazine as of (2) Comparison composed by AK BARS Bank, as of 1 July, 2016, excluding Sberbank network (3) According to Markswebb Rank & Report 5

6 Macroeconomic overview of Russia and Tatarstan 6

7 Macroeconomic Situation - Russia GDP dynamics Real Disposable income and Consumer price index The RUB against the US dollar and oil prices for Urals Investments in fixed capital The US dollar average, rubles per US dollar US/barrel world oil price, Urals USD Source: Federal State Statistics Service, CBR, Ministry of Finance 7

8 Macroeconomic Situation - Russia Dynamics of Public debt (% of GDP) The dynamics of the Current account and Capital outflow ,4 58,3 69, ,5-58,1-152,9 US Current Account, USD bln. US Capital Outflows, USD bln. International reserves (bln. USD). 600 External debt repayment of the of banks and corporate sector Debt as of January 1, US $ bln Source: CBR, Ministry of Finance 8

9 Agriculture Manufacturing Mining Processing Construction Freight turnover Paid services for public Production and electricity, gas and water Retail business Macroeconomic Situation - Tatarstan The Republic of Tatarstan ranked first within the national rating of investment climate among constituents of the Russian Federation in 2015 and 2016*. GRP growth Real Disposable income and Consumer price index Investments in Fixed capital Dynamics of basic economic activities 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% 13,6% 9,9% 10,1% 6,2% 0,0% 0,0% ,3% distribution of Investment in fixed capital, % YoY Source: Federal State Statistics Service, Ministry of economics of RT *According to the Agency of strategic initiatives of Russian Federation 9

10 The Bank`s Activity Experience Confidence Innovations 10

11 Key Milestones The Bank is established by the Government of Tatarstan Fitch Ratings assigns international ratings, including a long-term rating В- The Bank raises its first international syndicated loan Moody s Investors Service assigns international ratings to AK BARS Bank, including a longterm Ва3 The Bank issues its first Eurobond and raises another international syndicated loan Fitch Ratings upgrades rating to BB- (Stable) Moody s upgrades rating to Ba2 (Stable) The Bank issues a Eurobond in the amount of USD 250mln The Bank is ranked 16 th among largest Russian mortgage banks The Bank pays back a syndicate loan in the amount of USD 200mln Share capital increase of USD 300m to USD 932mln In December the Bank issues a Eurobond in the amount of USD 280mln The Bank successfully closes the first syndicated Murabaha financing contract in the CIS in the amount of USD 60mln AK BARS Bank acquires status of General Partner of Universiade 2013 in Kazan AK BARS Bank issues bonds in total amount of RUB 10bn Becomes Strategic Partner of SEZ «Innopolis» The Bank closes second syndicated Murabaha deal in an amount of USD 100mln The Bank receives the status of a Participating Financial Institution in accordance with FATCA The Bank closes its debut RUB 2.5bn mortgage portfolio securitization deal The Bank issues RUB 5 bn. bonds Cabinet of Ministers of Tatarstan singles out the Bank as the authorised bank of the Government Branches open outside Tatarstan The Bank issues rouble bonds and raises two international syndicated loans Share capital increases to USD 886mln Fitch Ratings upgrades rating to BB (Stable) The Bank raises international syndicated loan The Bank repays syndicated loans in the amount of USD 285mln The Bank redeems a Eurobond issue in the amount of USD 176mln Resumes loan disbursement under government program of concessional auto lending The Bank issues the largest ever subordinated Eurobond in its history in the amount of USD 600mln The largest unsecured Eurobond issue in 2012 among CIS banking issuers with a «B-BB» rating category, USD 500mln AK BARS Bank closes US$350 mln. eurobond deal The Bank becomes the National Partner and the Official Bank of 16th FINA World Championships AK BARS Bank issues additional shares in the amount of RUB 9.8 bln. funded by the Government of the Republic of Tatarstan The Bank closes its RUB 11.2 bn mortgage portfolio securitization deal 11

12 AK BARS Bank major bank of Tatarstan AK BARS Bank plays an important role in the implementation of Tatarstan s regional policy Reputational Importance Authorised agent of the government of the Republic of Tatarstan for servicing the budgetary accounts and implementation of the social policy of the Republic Business profile Top-20 largest financial institution in Russia Universal bank with one of the largest distribution networks Ultimately controlled by the Republic of Tatarstan 12

13 AK BARS Bank major bank of Tatarstan Principal shareholders PJSC «Nizhnekamskneftekhim» «Еurobest» Ltd Garant- Management, LLC 1,842% 4,545% 0,045% Shareholders holding less than 1 percent of share capital «Sinek Investment&Development Limited» Company 6,838% 6,647% 25,779% State-owned housing stock under the President of the Republic of Tatarstan Non-Commercial Organization «Komproekt» Ltd 8,561% The Republic of Tatarstan, represented by the Ministry of Land and Property regulations of Tatarstan «OSMAND HOLDING LIMITED» Company 8,618% 14,565% 8,092% «IKS-LUCH» Ltd 14,468% JSC "Svyazinvestneftehim" 13

14 AK BARS Bank At Glance Gross loan portfolio, 1H 2016 Retail 23% RUB mln AK BARS Bank loan portfolio is diversified across the key sectors of Tatarstan s economy 44 largest clients account for 48.3% of total loan portfolio Corporate 77% Successful track record _3м 2016_6м Branches and other offices Corporate clients Retail clients, mln Key Ratios, % _3м 2016_6м Net loans / deposits Provisions / gross loans Overdue loans / gross loans Equity / assets Tier 1 capital ratio (3) (1) Total capital ratio (3) (1) (1) In the first half of 2015 Bank calculated the capital adequacy in accordance with the requirements of the Basel Committee on Banking Supervision - Basel III 14

15 Key Indicators 15

16 Asset Base Asset Structure (RUB bln.) For the first half of 2016, the Bank's assets decreased by 6.9%, which is mainly due to a decrease in other assets and securities by 16% and 15% respectively, compared to Loans and advances to customers represent the largest part of assets (58.2%) Source: IFRS accounts 16

17 Loan Portfolio Corporate vs. Retail loans (%) Loan portfolio breakdown (gross), ,0% 81,5% 16% 20% 23% 23% 23% 23% Agriculture and food processing 6% Other 9% Finance 32% 63,0% Manufacturing 5% 44,5% 84,0% 80,0% 77,0% 77,0% 77,0% 77,0% Construction14% Individuals 23% 26,0% Trade 11% 7,6% -10,9% m Loans to corporates Loans to individuals AK BARS Bank loan portfolio is diversified across the key sectors of Tatarstan s economy Net loan portfolio maturity profile, 2015 (RUB bln.) Loans to individuals, (1H 2016) Loans to corporates, (1H 2016) 17

18 Loan Portfolio Quality and Provisioning Overdue loans and provisions as % of total loans Structure of gross loan portfolio (1H 2016) Overdue loans coverage, % largest clients with loan amounts more than RUB 1.2 bn.: 48,3% Other 51,7% 13,1% 3,9% 4,8% 4,6% Portfolio collateralization, 1H 2016 Secured loans compose 72% in loan portfolio NPLs, over 90 days During 2016 share of the overdue loans changed insignificantly to 6,0% (5,8% in 2015) Provision coverage of overdue loans is at 218% The Bank s business is aiming to support and work closely with the Government of Tatarstan Republic and related parties(2): gross loans: RUB 75.0 bln (27.2 % of total) customer accounts: RUB 63.1 bln. (26.7 % of total) Subordinated debt: RUB 19.9 bln. Cash / securities 15% Guarantees of third parties 19% Other(1) 13% Real estate 25% Unsecured loans 28% Source: IFRS accounts (1) Other includes goods in stock, motor vehicles, production equipment and state guarantees (2) Shareholders, other related parties (including associates, entities under control or significant influence of the management or shareholders), Tatarstan Republic Government bodies and state organisations 18

19 Adequate Capitalisation Levels CBR BASEL III CAPITAL (RAS) BASEL III CAPITAL (IFRS) * m m Tier 1 (RUB bln.) 34,0 33,5 34,4 35,6 35,4 37, m Total (RUB bln.) 46,2 51,9 73,0 72,9 Total (RUB bln.) 50,8 50,2 47,7 59,3 61,3 63,3 2,9% 4,8% Tier 2 Total CAR AK BARS Bank received RUB 12.1 bln. from Deposit Insurance Agency as a Tier-2 capital under government support program in June 2015 August 28, Bank placed additional issue of ordinary shares in the amount of RUB 9.8 bln. * Until 2014 Bank calculated the capital adequacy in accordance with the requirements of the Basel Committee on Banking Supervision - Basel I 19

20 Sustainable Funding Model Focused on Deposits Liabilities composition (%) Customer accounts (%) Borrowings maturity profile, 2015 (RUB bln.) Customer deposits maturity profile, 2015 (RUB bln.) Source: IFRS accounts (1) Includes deferred income tax liabilities, trade payables, fair value of derivative financial instruments and other liabilities 20

21 Business Lines 21

22 Business Lines Retail Business Retail business is the most dynamically growing segment around 3,2 mln. clients as of 30/06/2016. Corporate Business The Bank s largest business is corporate banking representing 41% of total revenues (1) Retail Lending Retail portfolio represents around 23% of the total loan portfolio (as of June 30, 2016) Predominantly focused on consumer and mortgages lending 36% and 57% of retail portfolio respectively Lending Business More than 70,000 customers Loans to corporate customers represent 77% of the Bank s total loans and advances to customers Deposits Offers a wide range of deposits tailored to serve targeted segments Deposits Corporate customer accounts represent 60% of total customer accounts State and public organizations are the largest depositors: 54% of total term deposits Principal member of the international MasterCard payment system and the VISA payment system More than mln. plastic cards issued as of May, Plastic Cards 889 ATMs,360 information kiosks, POS terminals (as of June, 2016) (1) Source: IFRS accounts 1H

23 Retail Business Services to individuals Deposits Retail Lending Cards Money Transfer Brokerage Services Term deposits On Demand Current accounts Consumer Mortgage Car loans Debit Prepaid Credit Unistream Western Union Contact Golden Crown Trust management Online Trading Eurobond Purchase Distant Services AK BARS Online (Remote Banking) SMS-Banking Mobile app Easy Finance Information kiosks Bot in Telegram system bankok Other Services Currency Exchange Payments acceptance Precious metals Safety deposit box Securities Post Bank 23

24 Strategic Initiatives of the Retail Business in 2015 Title Validity Result for 2015 "Student card" The project was launched in N.Chelny, Nizhnekamsk: - More than RUB 26 mln. of expense reimbursements received cards issued: more than RUB 2.1 mln. turnover commission obtained in TSP 16th FINA World Championship Bank acted as the National Partner and official supplier of banking services during the 16th FINA World Championship: - Over 70 thousand cards issued - Profit more than RUB12.3 mln. Debit Card for pensioners longevity card" More than cards were issued - Cards balance as of : RUB 593 mln. - Project income: more than RUB 12 mln. "Without queue" Project The share of banking operations through the remote banking services increased in the branches by 190%, in the self-service terminals by 220%, reduction of the transactions carried out through the cashier made 10.2% in Mobile banking AK BARS Online Launched for smartphones on the bases of the Android and ios platforms 24

25 Corporate business Corporate Banking Cash - settlement service Business Loans Online services Bank cards Accounts for residents Accounts for non-residents Small business Medium and Large businesses Internet / Client-Bank Electronic account statement Phone Client Payroll Corporate cards Merchant acquiring Internet acquiring Money Placement International economic activity Bank guarantees Brokerage services Term deposit in rubles and foreign currency "Overnight Deposit On Demand deposits Accrual of interest on the minimum balance on the account. Settlement and cash services Documentary operations International guarantees Trade finance Conversion operations Contract guarantee Advance guarantee Guarantee under the state contract Customs guarantee VAT Refund Guarantee Excise guarantee Branded warranty Tender guarantee 25

26 Key Projects of Corporate Business In April 2015 the Bank and the Government of the Republic of Belarus entered into the agreement on the implementation of the program of concessional financing for the purchase of equipment made in Belarus The basic conditions of the program: Loans are granted for the purchase of new goods manufactured in the Republic of Belarus Ministry of Finance of the Republic of Belarus subsidizes part of the interest on the loan, in the amount of the key rate (11.00%), established by the Central Bank of the Russian Federation. Results: loans worth more than RUB 100 mln. since the program implementation May, 2015 the launch of an exclusive program of concessional lending for the purchase of machinery KAMAZ The basic conditions of the program: Funding is provided by the state bank SME Bank". The interest rate on the loan % or 13.00% per annum. The seller offers a discount for the purchase of machinery, thereby forming a reduced marketing loan rate from 4%. Results: loans worth more than RUB 200 mln. since the program implementation 26

27 SME Support AK BARS Bank cooperates with SME Bank The results over the partnership period between AK BARS Bank and SME (as of June, 2016) About 30 credit agreements Financing raised: RUB bln The advantages of joint programs between SME Bank and AK BARS Bank Provision of funds at competitive rates Long-term lending deadlines Implementation of investment projects Partial credit for the current activities 27

28 Project financing Project financing - is the target oriented lending for investment projects of the newly created company Company Project description Project cost Planned indicators LLC "Bars Technology" Within the project, the factory for car batteries of wide nomenclature range production is in the construction. It will be placed in the Special Economic Zone "Alabuga" (Tatarstan). The planned production volume mln. batteries per year. more than RUB 1 bln. After reaching full production capacity the company plans to occupy not less than 15% market share of domestic battery production Ltd "Monopoly" The project envisages the expansion of the activities of freight forwarding companies by increasing the fleet of 220 trucks (tractor + trailer). The Bank opened 2 credit lines totaling RUB 674,080,000 to finance the project. It is planned to acquire 220 units of Kamaz trucks and 40 units of refrigerators semi-trailers RUB mln. After reaching the capacity of the planned volume, revenues (taking into account the project) is to make about 2.6 bln. RUB. per year (including VAT) 28

29 Correspondent Relations AK BARS Bank has an extensive network of correspondents all over the world, enabling it to execute clearing, banknote, and documentary business transactions, as well as other banking operations, efficiently and professionally Correspondent bank Currency Correspondent bank Currency USA The United Kingdom JPMorgan Chase Bank NA USD JPMorgan Bank N.A GBP Deutsche Bank Trust Company Americas USD Japan Germany The Bank of Tokyo-Mitsubishi UFJ Ltd. JPY Commerzbank AG EUR/GBP Switzerland Deutsche Bank AG EUR UBS AG CHF J.P. Morgan AG Sweden SEB (Skandinaviska Enskilda Banken AB (Publ)) EUR SEK Turkey Turkiye Is Bankasi A.S. China Agricultural Bank of China Limited TRY CNY/USD Hungary Republic of Belarus OTP Bank Plc HUF Belinvestbank JSC RUB 29

30 Investment Business Investment business represented by: AK BARS Bank Investment Company AK BARS Finance Management Company AK BARS CAPITAL АK BARS Bank AK BARS Finance Investment Company AK BARS CAPITAL Management Company Bloomberg BBG000PG2V69 Bloomberg BBG001BBN3T7 Bloomberg BBG004TTLGM3 AK BARS Bank uses a wide range of tools: structured finance, bills, trading, brokerage, bonds, Eurobonds and alternative finance. Information about the Bank and its public loans is available on the website of the Moscow Stock Exchange, Bloomberg and Reuters terminals. The Bank is a reliable borrower in the domestic debt market, and since an active participant in the international Eurobond market. 30

31 Signature Deals in DCM Murabaha USD 60 mln 1-year syndicated Murabaha financing Debut in Russia and CIS Awarded the title of «Deal of the Year 2011 in Europe» by IFN AK BARS Bank Eurobonds USD 500 mln The largest unsecured Eurobond issue in 2012 among CIS banking issuers with a «B-BB» rating category Murabaha USD 100 mln Awarded by special honorable prize by Islamic Finance News AK BARS Bank Eurobonds $ The Bank became the first Russian financial institution to issue a new benchmark international hard currency bond in Borrower 2011 Issuer 2012 Borrower 2013 Issuer 2015 Eurobonds outstanding Issue Issue amount, USD bln. Year Tenor LPN - Subordinated Loan (outstanding) LPN (outstanding) Domestic RUB bonds outstanding/mortgage loans AK BARS Bank Mortgage bonds RUB Securitization of mortgage portfolio 2016 Issue Issue amount, bln. Year Tenor ВО-04 (outstanding) MA AKBARS MA AKBARS

32 Trade Finance AK BARS Bank is aiming to build long-term and trusting relationships with its customers, Russian and foreign financial institutions. The Bank provides a wide range of services to meet the needs and economic interests of the partner banks and contractors. Mutually beneficial partnership enables banks to achieve not only their own goals, but also contributes to the development of their business clients. Major deals in 2015: In March 2015, the Bank received funding from its long-term partner- Raiffeisen Bank International AG (Austria), that provided the resources under the guarantee of the Austrian Export Credit Agency Oesterreichische Kontrollbank AG. The total volume of transaction: EUR 3.8 mln. By attracted funding AK BARS Bank credited the purchase of industrial production from the Austrian company for the client. In December 2015, the Bank provided 1- year financing to "Belarusbank" under the import contract of his client with the Russian exporter. The funds are allocated to Belarusian Bank for the purchase of Russian-made equipment. In November 2015, AK BARS Bank provided EUR 1 mln financing to "Belgazprombank" under the import contract of Belarusian bank`s client. Within the funding attracted, "Belgazprombank" credited the purchase of products from the Russian supplier by Belarusian importer for its own production. The transaction carried out with the participation of the Russian Agency for the Insurance of Export Credit and Investment (EXAR). 32

33 Innovations 33

34 Current activity, Innovation and Change RUN CHANGE current activities implementation and changes implementation Product teams number and composition increase p/q in accordance with project scope AGILE First results: Significant reduction (2 times) in TIME TO MARKET 34

35 Laboratory of new digital banking products development AK BARS NEXT AIMS: Plan is under development Start - September 2016 Diversification: a new direction - digital business Building a financial supermarket Growth of transactional business Holding the current and the acquisition of a new customer base Center of own competencies in fintech Network optimization (channels) Development without physical presence Building the omni-channel The laboratory serves the goal of creation a unique banking products and services 35

36 Innovations First time in the world AK BARS Bank combined 4 service within a single card: banking application transport application loyalty program a pass ticket for sports and other events implemented the option of downloading tickets for sports and other events to a bank card in Russia issued a reloadable prepaid card released form factors of a bank card for contactless payments For the first time in Russia AK BARS Bank : designed multi-functional cards for students combining area pass to educational institution, students record book, payment tool for group nutrition implemented complex project "Electronic Government of the Republic of Tatarstan" aimed to meet the needs of citizens and innovations in information and management technologies to be widely accepted in the activities of the government of the Republic of Tatarstan * The «Electronic Government of the Republic of Tatarstan» project is implemented as mobile app accessible through Apple platform 36

37 Innovations Development of modern payment instruments: Virtual card Mobile applications Remote channels of banking products sales, including mobile wallet usage In the Republic of Tatarstan: Active development of infrastructure for the acceptation of contactless cards in the region Aiming at non-cash payments development by analogy with the European countries Online payments for public services by bank cards - Within the State and municipal services portal of Tatarstan - By Tatarstan E-government informants (interactive kiosks) - Through the mobile app. 37

38 AK BARS Online (Remote Banking Services) The number of transactions in AK BARS Online system The number of AK BARS Online users +72,7% +133% 38

39 EXPERIENCE. CONFIDENCE. INNOVATIONS The Bank s Strategy 39

40 Business lines strategies Corporate Business Active promotion of targeted banking products, convenient services The development of transaction services The introduction of new technologies, from cloud services to API-interfaces usage Retail Business Further development of the remote service channels, such as internet and mobile banking Active use of predictive sales, proposals predicating customer needs 2X the proportion of operations in 1Q 2016 conducted through remote channels increased Investment Business The development of the financial supermarket concept Make the investment in the securities market more accessible to customers - via online and mobile services Robo-Adviser investment services testing is in progress Our facilities and services should be available to customers regardless of the physical presence of the Bank. We are preparing a pilot project to bring out our banking products to new markets without opening offices. Some of our services are already available for all smartphones and run without a visit to the Bank. 40

41 Appendix: IFRS Indicators 41

42 Financial Highlights Balance sheet, RUB BN _3m 2016_6m CAGR m 2016 Cash and equivalents % Securities portfolio (including direct repo) % Due from other banks % Gross loans % Provisions % Net loans % Investment properties (12.5%) Other assets % Total assets % Due to other banks (31.9%) Customer accounts % Murabaha facility and Eurobonds % Securities issued % Subordinated debt % Other liabilities % Total liabilities % Equity % Total liabilities and equity % Key Ratios, % _3m 2016_6m Net loans / deposits Provisions / gross loans Overdue / gross loans Equity / assets Tier 1 capital ratio Total capital ratio Source: IFRS accounts 42

43 Financial Highlights (cont d) Profit and Loss Statement, RUB mln 6m m 2016 Net interest income (1 819) Net fee and commission income Other income Operating profit Operating expenses (3 595) (3 893) Total profit before provisions and taxes Provision for loan impairment (5 921) (9 973) Profit before tax (5 439) Income tax 881 (574) Net profit (4 558) Source: IFRS accounts 43

44 THANK YOU FOR YOUR COOPERATION!