2016 VTB Group Investor Day

Transcription

1 2016 VTB Group Investor Day London / May 17, 2016

2 Some of the information in this presentation may contain projections or other forward-looking statements regarding future events or the future financial performance of JSC VTB Bank ("VTB") and its subsidiaries (together with VTB, the "Group"). Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. 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 differ materially 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 do not intend to update these statements to make them conform with actual results.

3 VTB Group Overview Andrey Kostin President and Chairman of VTB Bank Management Board

4 IMPRESSIVE GROWTH STORY AND STRONG COMPETITIVE POSITIONS IN ALL KEY SEGMENTS Total assets RUB trln today +29% y-o-y Leading player in Russia 7.4 vs market +24% y-o-y nd largest banking group in Russia 18% market share in Russia Successful growth story VTB market share in Russia Customer loans Customer deposits 17% 19% 13% Legal entities 7% 12-fold asset growth for the past ten years Well-established universal banking model leading Russian banking group with strong positioning in all key segments: CIB, Retail banking, Insurance, Leasing, Factoring, etc. Extensive branch network over 1,900 branches in Russia Individuals % 11% 5% 2% presence in 22 countries Solid client base over 20 mln active retail and corporate customers 4

5 VTB GROUP CORPORATE DEVELOPMENTS: MIX OF MERGERS AND ORGANIC GROWTH Completion of the BoM integration: Optimisation of costs Strengthening of internal control and risk management system Organic growth Revenue synergies: increased cross-sales and strengthening of VTB Bank s competitive positions M&A deals Launch of Post Bank, a joint venture between VTB and Russian Post A wide network of outlets and an extensive client base Access to pensioners base VTB Group expertise and infrastructure 5

6 VTB GROUP FLEXIBLE OPERATING MODEL Corporate Investment Banking global business line Retail Business global business line Mid-Corporate Banking global business line Assets (1) RUB trln % % 0.8 5% Large corporate clients (revenue > RUB 10 bn) Broad corporate client base with long term relationships with leading Russian companies across all economic sectors #2 Corporate bank in Russia #1 Investment bank in Russia Small corporate clients and individuals (revenue <RUB 0.3 bn) #2 Retail bank in Russia Network: 1,648 outlets and 13 thousand ATMs Post bank Mid-corporate clients (revenue RUB 0.3 RUB 10 bn) Separate global business line and profit centre since 2014 Wide regional franchise Corporate Centre IT Finance Risk management Audit and Compliance HR Admin Legal Security PR (1) Second number represents share of each global business line in VTB Group s total assets, % 6

7 SUMMARY Strategy of quality growth New development strategy 1 Maintaining position of Сorporate-Investment banking while further improving its efficiency 1 Maintaining position of Сorporate-Investment banking while further diversifying CIB business mix 2 Outperforming the market growth in Retail banking, and further increasing the share of Retail in the Group s business mix 2 Outperforming the market growth in Retail banking, and further increasing the share of Retail in the Group s business mix 3 Prioritising Mid-Corporate banking as a separate operating segment and profit centre while further increasing the market share in Russia 3 Outperforming the market growth in Mid-Corporate banking in loans and transaction fee income while further growing customer base 4 Enhancement of Group level risk management and controls 4 Further consolidation of VTB Group governance structure and enhancement of Group level risk management and controls 5 Focusing on operating efficiency and stringent cost control 5 Focusing on operating efficiency and stringent cost control 6 Transitioning the Group to unified functional and technological platforms 6 Prioritising investments in technological platform development and innovations 7

8 VTB Group Corporate-Investment Banking Yuri Soloviev First Deputy President and Chairman of VTB Bank Management Board

9 CIB: 2015 KEY ACHIEVEMENTS In 2015 CIB managed to achieve CIB net income and costs dynamics RUB bn Four-fold year-on-year increase in NOI driven by strong revenue growth, tight cost control and a reduction in provisions vs high 2014 base CIB increased / maintained its leading market position in loans (~23%), deposits (~14%), current accounts (~15%) and across all investment banking products Improved portfolio mix: increase share of Oil and Gas, Metals and Mining, Retail, Telecom, Chemicals and lower exposure to Construction, Utilities, Public Sector Net profit Net operating income CIB structure of net operating income before provisions Year-on-year 30% increase of fees and commissions driven by cross-sell and new product development 45% 9% 15% 45% NII 76% 2014 NCI Other Income income 10%

10 CIB: MARKET IN RUSSIA CIB loans RUB trln CIB deposits and current accounts RUB trln ~22% CAGR ~8% CAGR ~23% ~7% CAGR CAGR F (F) 2019F (F) F (F) 2019F (F) Significant banking market growth in driven by currency impact, closed international capital market and low risk appetite of foreign banks to Russia; We expect slower market growth in both in lending and deposit / current accounts markets in Russia due to low investment demand and high interest rates. 10

11 CIB CREDIT BUSINESS (1) : HIGHLIGHTS Key 2015 achievements Loan portfolio RUB bn Managed to increase CIB segment loan portfolio by 18% and ensure strong revenue growth +14% +18% Maintained strong positions in corporate lending; worked with more than 400 active client groups Kept leading position: VTB market share of CIB Russian credit portfolio rose from 19.3% in 2013 to 23% in ,748 5,186 7,671 6,139 International franchise development: VTB Group established itself as one of the leading lenders and arrangers of private financings in Sub-Saharan Africa and arranged some strategic financing transactions in CEEMEA and Asia (including debt restructurings, holding company financings and event driven transactions) Loans and advances to legal entities (net) CIB loans and advances (net) VTB has extended its presence in infrastructure finance by moving forward with the financing of a landmark toll road construction project and several new deals in mining, airport and shipping finance VTB has taken the leading position in terms of volume of deals approved under the Government investment projects support program (P-1044) Development of Trade Finance franchise and further build-up relations with counterparties from 55 countries Since 2013 Trade Finance business volume has been increased by 7.0x Became one of the key partner banks for Russian Export Credit Agency (EXIAR) (1) Key products in L&D segment are Credit, Leveraged Finance and Investments, Infrastructure credits and project finance, Trade finance, Leasing 11

12 CIB TRANSACTIONAL BUSINESS: HIGHLIGHTS Deposits and current accounts RUB bn 2015 Key achievements Overall GTB revenue increase: net operating income grew by 117%, fees and commissions by 44%, net interest income by 121% 3,520 3,940 3,212 Current account volumes grew by 51% significantly higher than market growth 2, Deposits of legal entities CIB deposits CIB GTB segment financial results RUB bn Significant market share: current accounts 15%, deposits 15%; factoring 33% Leading Custodian in Russia with 6% increase in assets under custody VTB provided new cash management solutions for 80+ large groups of companies which included more than 600 legal entities VTB is recognised to be the top solution and product provider in Cash Management in the Russian Market. Launched multiple products around Liquidity Management, Channels and Cash & Settlements Implemented centralised treasury solutions for 18 government controlled companies, including Rostelecom, Transneft, Rostech and Alrosa Capital consuming transactions were priced with intense focus on ROE hurdle rates VTB Factoring completed the largest ever global factoring transaction between InterRao and Gazprom EnergoHolding for RUB 13 bn Net operating income Net profit Fees and comissions Servicing 24 Depositary Receipts Programs of The Bank of New York Mellon and Deutsche Bank Trust Company Americas 12

13 CIB INVESTMENT BUSINESS: MARKET SHARE Product Line Market Share Position 3 Comments 2015 Δ from 2013 Fixed Income FX Spot 1 22% +7% #1-2 Significantly strengthen the positions in Client FX market FX Derivatives 30% +8% #1-2 Securitisation 75% +22% #1 Equities Cash equities Structured repo DMA 4% -4% 33% +7% 1% +1% #10 #1-2 No data Strengthen the position in Structured REPO the most significant part of Equities business in Russia Development of product lines with Direct Market Access Infrastructure capital 52% +8% #1 Global DCM 42% Banking 2 ECM 49% M&A 26% +24% +28% +7% #1 #1 #1 Significantly strengthen the positions in all product lines in low Russian Market Strengthened international positions in DCM and M&A segments Offset slow Russian IB market by significantly increasing market share in all products and winning more international business Investment Portfolio 5% Management management 0% #3 Hold current positions 1) Estimation of Client FX Market for CIB and MidCap clients 2) 2013 estimation done based on Dealogic database, 2015 Thomson Reuters Deal Making in Russia 2015 publication by deal value 3) In net profit (IFRS) Source: VTB Analytical Center 13

14 IB: HIGHLIGHTS (1/2) Fixed Income FX and Rates: VTB has been recognised as the best Russian Foreign Exchange Provider every year by Global Finance magazine 2014 VTB Started trading African and Asian currencies 2015 VTB prints record-high volumes in trading RUBCNY in the onshore interdealer market in China Local RUB Spot market share in 2015 reaches about 25%, derivatives are over 30% Technological advances in FX allow VTB to enter into strategic partnerships with Alibaba Group and Ant Financial Group Credit Trading: Over the course of the past year in response to rising capital requirements and secondary liquidity adjustments Credit trading has significantly reduced balance sheet use for linear/non-linear risk and has increased the velocity of position turnover VTB has won 10 CBonds awards, including Best Bond Market Sales and Best Bond Market Trading Commodities business: Launch of physical trading and financing in VTBCT Zug. Zug became operating entity and completed first physical deals in crude oil, oil products and base metals First official member on Shanghai Gold Exchange Physical Commodity financing set up in VTB Austria 14

15 IB: HIGHLIGHTS (2/2) Equities The establishment of a true, integrated Global Equities Product which encompasses Cash Equities, Equity Derivatives Volatility Trading, Repo, Private Equity & Special Situations (PESS) and Infrastructure Capital & Project Finance (IC&PF) Completed the re-organisation of our client franchise flow businesses to reflect the prevailing market opportunity / dynamics while maintaining the scope of our product offering and geographical coverage; VTBC Broker: develop a robust, scalable, secure, multi-asset class electronic trading platform which is being pro-actively marketed to clients as we continue to add functionality and new market connectivity; Market-leading MOEX Repo business combined with our core client-facing strategic EQ financing business The PESS portfolio continues to generate significant returns while the team retained their #1 Private Equity Firm in Russia from Private Equity International (#2 in CEE since the category was expanded); IC&PF are the clear leader in their field within the Russia market. The official opening (in February 2014) of the new terminal at Pulkovo International Airport in St Petersburg attracted global acclaim Global Banking Revenue growth of almost 50% in 2015 vs 2014 despite a highly subdued domestic IB market and without increasing headcount Increased market share in the Russian IB market - which hit record levels in with clear leadership across M&A, ECM and DCM activity (verified by ThomsonReuters independent research) A good balance of domestic and international business (~50% of revenues generated on internationally related deals) Development of several profitable niches where VTB has established unique specialist knowledge such as in taking private London Stock Exchange companies and in running domestic Russian IPOs 15

16 2015 GLOBAL BANKING KEY DEALS 16

17 d CIB 2016 KEY PRIORITIES CIB market position Maintain market share in lending and deposits / current accounts Russian banking markets TOP positions in key IB markets (GB, FX, Infrastructure finance) Leverage domestic dominant position in advisory Bespoke approach to international markets focusing on high-yield financing solutions and advisory Key strategic international regions: Asia (China, India), Africa (Southern and Eastern parts), Southern Europe Special focus on growing Russia-China links Product development Focus on new product development: commodities, trade finance, project finance, structured financing solutions New solutions in Cash management techniques Direct market Access platform development Further growth of cross-sell opportunities: increase number of products per one client Operational efficiency Operating platform realignment to decrease share of hard currency CIB denominated costs 17

18 VTB Group Retail Banking Mikhail Zadornov President and Chairman of VTB24 Management Board

19 RETAIL BANKING MARKET IN RUSSIA Retail loans RUB trln Credit cards Cash loans 7.7 9% 54% 10% 27% +11% CAGR % 53% 9% 28% Car loans Mortgage % 50% 8% 32% % 46% 6% 38% +10% CAGR % 45% 5% 40% % 42% 6% 43% Retail deposits Current accounts % 81% +18% CAGR % 81% RUB trln Term deposits F 2019F F 2019F % 82% % 83% +11% CAGR % 85% % 84% Small business loans RUB trln Small business RUB trln % CAGR % CAGR Current accounts % +13% CAGR % Term deposits % % +3% CAGR 70% % 19% 21% 31% 31% 30% 31% F 2019F F 2019F 19

20 VTB GROUP MARKET POSITION IN RETAIL BUSINESS IN RUSSIA Retail loans Retail deposits and current accounts Leto / Post Bank Ex-Bank of Moscow +3.9 p.p. 13.9% 1.2% +1.0 p.p. 18.8% 17.8% 0.9% 0.6% 2.9% 2.7% Leto / Post Bank & VTB Bank Ex-Bank of Moscow +2.0 p.p. 8.7% 0.1% 1.2% +0.5 p.p. 10.7% 11.2% 0.2% 0.2% 1.8% 1.8% VTB % 14.4% 15.0% VTB24 7.5% 8.7% 9.2% F F Small business loans Small business deposits and current accounts Ex-Bank of Moscow VTB p.p. 6.9% 5.6% 1.2% 0.6% 5.0% 5.6% +1.0 p.p. 7.9% 1.2% 6.7% Ex-Bank of Moscow VTB p.p. 6.6% 1.4% 5.2% 11.4% 1.3% 10.0% +1.7 p.p. 13.1% 1.7% 11.3% F F 20

21 RETAIL BUSINESS CONTINUES TO BE THE KEY CONTRIBUTOR TO VTB GROUP P&L AND EFFICIENCY Profitability of VTB Group s Retail business RUB bn CIR 48% 46% 56% Net profit Net operating income 21

22 VTB GROUP CUSTOMER BASE IN RUSSIA BY ENTITY VTB Group customer base (active customers) in 2015 mln VTB24 Post Bank (ex-leto Bank) BoM De-duplication Banking customers, total VTB Insurance VTB Pension Fund De-duplication Total customer base 22

23 VTB24 CUSTOMER BASE BY SEGMENT VTB24 customer segments (active customers) thsd 8,789 9,033 Affluent + HNWI 1,253 (14%) +7 p.p. 1,932 (21%) Upper mass 2,466 (28%) +7 p.p. 3,133 (35%) Mass Lower mass 2,526 (29%) -4 p.p. 2,290 (25%) 2,544 (29%) -10 p.p. 1,679 (19%)

24 VTB24 LOAN PORTFOLIO STRUCTURE AND RISK PROFILE Average loan portfolio RUB bn / % and cost of risk % Cost of risk 4.4% 3.6% 3.2% +11% +4% Other Small business Credit cards Cash loans 1, % 1% 14% 5% 30% 1, % 3% 11% 5% 28% 6% 1, % 4% 9% 5% 27% 5% Car loans 109 8% Mortgage % % % F 24

25 VTB GROUP BRANCH AND ATM NETWORKS IN RUSSIA Branch network ATM thsd Post-office branches Leto/Post Bank Leto/Post Bank and ex-bom Ex-BoM Offices with affluent zones Standard offices -4% +161% 4,312 VTB24 +11% +27% , ,713 1, % (45%) 537 (50%) 470 (45%) 455 (42%) F F 25

26 VTB24 INTERNET AND MOBILE BANKING PENETRATION: STRONG GROWTH TO BE CONTINUED IN 2016 Active users of online & mobile banking % of active clients Input of 2H 2015 Input of 1H H 2015 Active users of online & mobile banking as of 1H % 1.0% 45.2% 3.0% 50.8% 1.5% 33.3% 50.6% 29.4% 28.1% 1.1% 23.8% 12.8% 2.6% 27.1% 21.2% 16.6% 16.8% 9.8% 7.0% 10.6% 1.5% 9.1% 15.2% 8.3% 8.0% 6.3% 5.6% 3.6% 2.5% 0.8% 2.2% 4.4% 4.4% 5.5% 3.4% х % 3.5% 18.5% 4.4% 28.9% 42.2% 49.3% Online&mobile benchmarking study by Finalta among Russian banks VTB24 BoM Russia Avg 2015 Russia Avg Top 3 CEE Avg Global Leaders 26

27 CRM ACTIVITIES PLAY INCREASINGLY IMPORTANT ROLE IN SUPPORTING DYNAMIC GROWTH OF RETAIL BUSINESS VTB24 business plans for selected products and CRM Share of CRM Sales of consumer loans RUB mln Sales of credit cards No. of cards Sales of affluent bundles ( Privilege ) No. of bundles +108% +23% +114% 316, , , , , , % 54% +87% 41% +87% 49% 49% 27% 56% F F F 27

28 SHARE OF CLIENTS WITH SALARY ACCOUNTS Share of clients with salary accounts, 2014 % of active clients 47.0% 42.0% 36.0% 35.0% 32.0% 32.0% 29.0% 22.0% 19.0% 12.0% 3.0% VTB24 BoM Branch productivity benchmarking study by Finalta among Russian banks Russia Average 28

29 VTB GROUP RETAIL BUSINESS KEY STRATEGIC INITIATIVES FOR THE NEXT 3 YEARS Market share and financial performance Increase market share (as a Group) both in loans and deposits + 5% in loans + 5% in deposits and CA Maintain high level of financial efficiency / profitability (ROE ~18%) Customers Increase number of active customers through new customers acquisition and current customers reactivation Continue developing as a multi-brand model to target different client segments (e.g. focus VTB24 on mass-affluent and affluent segments and Post Bank on mass segment and retirees) X-sell: increase number of products per customer Customer experience: improve customer satisfaction (NPS) Multi-channel Continue developing multi-channel model: Increase sales network - mainly by Post Bank Increase penetration of Internet and Mobile bank Increase share of sales in alternative channels (CRM, Internet) Operational efficiency Post bank Achieve high-level of operational efficiency: number of customers per branch employee, sales per branch employee Continue further centralisation of back-office functions IT Successfully realise a joint project with Russian Post Mid 2017 completion of VTB24 IT overhaul YE 2019 harmonisation of VTB Group retail IT landscape 29

30 POST BANK OFFICIALLY LAUNCHED IN APRIL 2016 Post Bank logo and branch format Key numbers (2023) Key numbers (2023): 15,000 Branches in Post offices >17 mln Customers Top-3 Top-3 retail bank in Russia 30

31 POST BANK 2016 BUSINESS PLAN Loan portfolio (gross) RUB bn Customer deposits RUB bn +62% х8.6 Credit cards POS Cash loans Current accounts Term deposits F F Net operating income RUB bn Net profit RUB bn CIR 52% 60% +131% F F 31

32 VTB Group Financial Performance and Outlook Herbert Moos Deputy President and Chairman of VTB Bank Management Board

33 MACRO ENVIRONMENT SIGNIFICANTLY DETERIORATED Oil price USD and exchange rate RUB Inflation and CBR key rate USD/RUB (avg) CBR key rate (avg) (1) 5.5% 7.9% 12.6% Oil price (Urals, avg) % % 52.0 CPI inflation (avg) +1 p.p. 6.8% 7.8% +7.8 p.p. 15.6% Russian macroeconomic indicators % 1.3% 0.8% 0.4% 0.6% 1.7% 2.7% GDP -1.5% -3.7% -3.4% Investments in fixed capital Industrial production -8.4% -10.0% Retail turnover (1) In its current form key rate was introduced by the Bank of Russia in September Average figure for 2013 is calculated based on the period from September 13, 2013 till December 31,

34 VTB SIGNIFICANTLY IMPROVED BALANCE SHEET METRICS AND CAPITAL Total assets RUB bn Customer funding RUB bn +39% +12% LDR 151% 157% 139% 8,769 12,191 13,642 4, % 5, % 7, BIS Group capital RUB bn NPLs (90+) RUB bn Total CAR Tier I ratio 14.7% 10.9% 12.0% 9.8% 14.3% 12.4% NPL coverage ratio 115.5% 114.8% 105.8% Total capital Tier I capital 1, % 1, % 1,516 1,316 NPL NPL ratio % 5.8% 6.3%

35 PROFITABILITY HIT BY LOWER NIM AND RISE IN CREDIT COSTS PARTLY OFFSET BY SOLID FEES GROWTH Net interest income RUB bn Provisions charge (1) RUB bn % % % % NIM 4.4% 4.0% 2.6% CoR % 3.4% 1.8% Net fee and commission income (NFCI) RUB bn Net profit RUB bn Share of NFCI in operating income before provisions % % 76.2 ROE 11.8% % 0.1% 0.1% +113% 13% 12% 19% (1) Including provision charge for impairment of debt financial assets and provision charge for impairment of other assets, credit related commitments and legal claims. 35

36 2016 MANAGEMENT EXPECTATIONS Indicator Measurement Optimistic scenario Conservative scenario Marco GDP, nominal % YoY CPI inflation % YoY Oil price (Urals), average USD/bbl CBR key rate, average % Banking sector Loans to legal entities % YoY Loans to individuals % YoY VTB Group Loans to legal entities % YoY In line with the market In line with the market Loans to individuals % YoY Above the market Above the market NIM % 4.0 >3.0 CoR % 2.0 >2.0 Cost growth % YoY In line with inflation In line with inflation Net profit RUB bn 50 >0 NPL coverage ratio % Above 100 Above

37 VTB GROUP MACRO EXPECTATIONS TILL 2019 GDP growth Y-o-Y Oil price (Urals), average USD/bbl % % % 2017F 2018F 2019F 2017F 2018F 2019F CPI inflation Dec / Dec CBR key policy rate EOP % % % % % % 2017F 2018F 2019F 2017F 2018F 2019F 37

38 RUSSIAN BANKING SECTOR TILL 2019 Loans to legal entities RUB trln Loans to individuals RUB trln % 14% 18% 23% % Y-o-Y avg growth rate % Y-o-Y avg growth rate F 2018F 2019F VTB market share 2017F 2018F 2019F VTB market share Deposits of legal entities RUB trln Deposits of individuals RUB trln % 11% 11% 16% % Y-o-Y avg growth rate +9-11% Y-o-Y avg growth rate F 2018F 2019F VTB market share 2017F 2018F 2019F VTB market share 38

39 VTB GROUP KEY FINANCIAL TARGETS TILL 2019 Indicator Measurement Loans to legal entities % YoY In line with the market Loans to individuals % YoY Above the market NIM % 4.0 CoR % 2.0 CIR % 2019: low 40 th ROE % : > : 11.0 NPL coverage ratio % Above

40 IT AND INFRASTRUCTURE DEVELOPMENT Product and channel innovation Broadening the list of products and services available through mobile and internet banking Omnichannel and seamless customer experience New customer interaction channels Market place (integrated group-wide product platform) Organisational setup to support innovation cycle Simplification of IT landscape Unification of corporate support applications Centralised IT architecture management Data analytics Enhancement of data quality and granularity through introduction of CDO function and methodology MIS improvement through visualisation tools and mobile analytics Centralised risk modelling Cyber security Development of authentication tools (including biometric authentication) Introduction of adaptive anti-fraud systems Key objectives Productivity increase Reduced maintenance cost Overall improvement of IT reliability and security Consolidation and virtualisation of IT infrastructure New data processing center, integrated infrastructure of data processing centers in Russia Private cloud and dynamic capacity management Virtualisation of workstations Workplace mobility Reduced time-tomarket 40

41 CONSISTENT IMPROVEMENT OF COSTS STRUCTURE Staff costs and administrative expense RUB bn Key initiatives Cost / Avg. assets 2.4% 2.2% 1 Completion of integration of the Bank of Moscow 1.8% -0.3% 2 Further consolidation of support and control functions Administrative expenses Staff costs % 60% % 56% % 62% 3 4 Deeper penetration of remote channel client servicing Streamlining of business processes / lean practices Optimisation of international footprint Realignment of costs structure RUB bn 222 FLAT Staff costs Staff costs IT expenses Depreciation and other expenses related to premises and equipment Leasing and rent expenses Taxes Other expenses 62% 9% 10% 6% 10% % UP DOWN FLAT DOWN FLAT 2017 Future 2019 projections Trends IT expenses Depreciation and other expenses related to premises and equipment Leasing and rent expenses Taxes Other expenses 41

42 VTB GROUP RISK MANAGEMENT FUNCTION Centralised risk management Deputy CRO Corporate credit Credit risk management Credit application analysis Loan monitoring and pre-workout Head of Risks CIB International Global CRO VTB Group risk management competence centers Deputy CRO Retail Deputy CRO Integrated risks Consolidated risks Operational risks Head of risks in subsidiaries Risk management departments in subsidiaries Risk management coordination Management board Risk appetite statement, risk management policies Risk committee Risk methodology, portfolio risk management Loan monitoring committee Monitoring exposures and loan workout, control of risk mitigation procedures Credit risks methodology Market & Liquidity risks Subsidiaries Credit committees Corporate credit and investment decisions Retail risk committee Managing risks in the Retail segment Key developments in Loan monitoring and pre-work out functions were integrated into centralised risk management system Risk appetite concept was cascaded from the Group level down to subsidiaries and global business lines Internal models for credit risk assessment (corporate & retail) were fine tuned in accordance with the Basel II requirements Measures aiming at business continuity were implemented, Crisis management body was established Key priorities for 2016 and beyond Further implementation of risk-adjusted metrics (such as ECaP and RAROC) in business decision process and business-planning Further development of IT platform to ensure the availability of up-to-date detailed data on VTB risk profile Further development of VTB Group Retail risk management competence center 42

43 FUNDING STRUCTURE Total liabilities structure RUB bn Customer deposits structure RUB bn 16,000 12,188 11,000 7,267 69% Customer deposits 60% + 9 pp 20% + 2 pp 22% Current accounts F F Comfortable wholesale debt repayment schedule 2,220 1, (1) USD mln 1,339 International debt repaid and bought back since mid-2014: USD 11.6 bn CHF AUD 1,937 1, USD (1) Net of bought back public debt. Exchange rates published by the CBR as of April 14, In addition to international debt, VTB Group currently has RUB 61 bn domestic bonds. 43

44 CAPITAL MANAGEMENT Tier I CAR (Basel I) Total CAR (Basel I) 13% 12% 11% 14% 13% 13% 10.5% comfort zone threshold 2017F 2018F 2019F 2017F 2018F 2019F Dividend payout RUB bn 33.1 Dividend payout for preference shares Dividend payout for ordinary shares * (1) Dividend payout ratio (1) % of net profit in accordance with RAS % of net profit in accordance with IFRS ,250 1,947 Dividend payout % of the Group s net profit under IFRS (1) VTB Bank Supervisory Council recommendation on 2015 dividend payment. 44