Investor Presentation September 2012 1 VTB 2011
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. 2
Why VTB? Russia Prominent opportunity fundamentally strong and high growth economy Why now? stable political leadership and stable macroeconomic situation vs. global uncertainties Banking sector Proxy for the economy diversified exposure to Russia investment case Long term potential solid opportunities for banking business development Attractive valuation intrinsic value is not reflected in the market valuation Unique business model in Russia universal banking platform incorporating corporate and retail banking, IB and other financial services Potential to unlock value significant value can be extracted from the existing franchise Value creation through new initiatives Insurance, Pension Fund, Light Bank International presence basis for capturing new business opportunities outside Russia 3
Why Russia? 5 Why a Russian bank? 7 Why VTB? 9 4
Why Russia? 5
Russia: prominent opportunity fundamentally strong and high growth economy Prudent approach to government spending Budget surplus / (deficit) as % of GDP (2011) 0.8% (1.4%) (1.6%) (2.1%) (2.3%) (4.5%) Russia Turkey Poland BIC CEE EU Real economy gathers Commentary momentum 9.9% 8.3% 6.0% 5.2% 5.2% 4.3% 1.5% 4.2% 4.3% (3.5%) (7.8%) 2008 (15.7%) 2009 2010 2011 Investment in fixed capital, %YoY Real wages, %YoY Real GDP, %YoY Source: Rosstat Clean sovereign balance sheet Efficient and flexible exchange rate rate policy Government debt as % of GDP (2011) 42% 48% 52% 29% 86% 40 The introduction of new refinancing enables the switch to floating FX rate that preserves interest rate stability 9.8% 30 Russia BIC Turkey CEE Poland EU One of of the largest FX FX reserves reseres globally Top countries by FX reserves, USD bn (2011) 3,203 1,258 540 454 386 350 China Japan Saudi Arabia Russia Taiwan Brazil % 20 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 USD/RUB (inverted) Basket/RUB (inverted) 30 20 10 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 CPI, % YoY CBR refinancing rate, % MIBOR, O/N Source: CBR Strengthening recovery momentum combined with solid credit profile Source: Rosstat, EIU, Bloomberg 6
Why a Russian bank? 7
Long Term Potential Solid Opportunities for Banking Business Development Commentary Growth potential driven by low penetration Growth potential driven by low penetration Loans as % of GDP (FY 2011) 147% 77% 55% 55% 45% Secure funding base enhances stability 43% EU * BIC * CEE * Poland Turkey Russia Retail is an important source of growth and margin Retail loans as % of GDP (FY 2011) 62% 34% 31% 28% 16% 10% Decreasing NPL levels (1.5 times coverage) EU * Poland BIC * CEE * Turkey Russia Decreasing NPL levels Loans / Deposits (FY 2011) Overdue loans and loan loss provisions as % of gross Russian banking sector loan portfolio 112% 110% 105% 93% 91% 63% 11.6% 10.5% NPL LLP 8.6% 8.6% 6.3% 5.7% 5.1% 5.0% CEE * Poland EU * Turkey Russia BIC * 2009 2010 2011 1Q 2012 Russian banking sector: growth supported by quality fundamentals Source: For Russia CBR and VTB Capital analysis; for other countries Fitch, ECB, EBA, E&Y, Swiss Re BIC stands for Brazil, India, China * VTB Capital estimations for EY 11 8
Why VTB? 9
VTB: Successful Growth Story through Organic Growth and M&A VTB corporate history Establishment & development Breakthrough strategy Focus on operating efficiency and ROE 1990-2001 2002-2009 2010-YTD The Bank for Foreign Trade (Vneshtorgbank) was established in October 1990 to service Russia s foreign economic transactions and encourage the country s integration in the world economy. In 1997, the Government decided to transform VTB into an open JSC. The CBR became the largest Bank s shareholder, with a 99.9% stake in the Bank s capital. Under the financial crisis of 1998, the bank was among a few Russian credit institutions which continued a full-scale banking activity. In 2002, the Russian Government became VTB s major shareholder, acquiring from the CBR its participation in VTB s capital. A new management team headed by Andrei Kostin joined VTB with the goal to turn it into the country s leading banking institution. In 2005, VTB launched the most successful project of a specialised retail bank in Russia, VTB24. In 2007, VTB became the first Russian bank to launch its initial public offering. In 2008, VTB Capital, the investment business of VTB Group, was established and become one of the Group s strategic business areas. VTB enhanced its positions in all segments of the Russian banking market and became #2 bank in Russia in terms of assets. In 2010, VTB has launched a strategy of efficient growth and business structure improvement aimed at steady growth of the Group s capitalisation and sustainable financial performance. In 2010-2011, VTB completed the integration of its corporate and investment banking businesses building a new major business line CIB. The integration allowed the Group to take advantage of synergies arising from combined product and service offerings in key business areas. In the past 10 years, VTB Group demonstrated over 30-fold increase in total assets Total assets 30x Acquisition of Acquisition of (USD bn) ICB (later VTB North-West) MNB (now VTB Capital plc) BCEN-Eurobank (now VTB France) Donau-Bank (now VTB Austria) OWH (now VTB Germany) Acquisition of UGB (now VTB Georgia) Acquisition of Armsberbank (now VTB Armenia) Guta-Bank (now VTB24) 7.3 11.2 17.8 Mriya (now PJSC VTB Bank (Ukraine) 36.7 Acquisition of Slavneftebank (now VTB Belarus) 52.4 92.6 125.8 Bank of Moscow Acquisition of TransCreditBank 140.8 119.4 210.9 219.9 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1Q'2012 10
VTB in a Snapshot Leading player in Russia Strong distribution footprint Second largest universal banking group in Russia with RUB 6.5 trl / USD 220 bn in assets and competitive product range Largest banking group by corporate liabilities in Russia Market capitalisation at US$17 bn Highly professional and international senior management team Presence in 22 countries across the globe Russia UK Germany Belarus Kazakhstan Austria Ukraine France Serbia Georgia Italy Bulgaria Azerbaijan China Armenia Cyprus China India Dubai Vietnam Singapore Angola New York over 1,700 branches across Russia, CIS and Europe Solid client base - c.16 mln active retail and corporate customers Ranking and Market Share in Russia (1) Key Financial Indicators 2 1 2 2 1Q 12 RUB bn 1Q 12 USD bn FY 11 RUB bn FY 11 USD bn Total assets 6,450.5 220 6,789.6 210 18.2% 19.7% Net loans 4,252.8 145.0 4,301.6 133.6 Net profit 23.3 0.8 90.5 2.8 Corporate loans 2nd Corporate deposits 13.6% Retail loans 8.9% Retail deposits BIS CAR, % 13.7% 13.0% NIM, % 3.8% 5.0% Leverage ratio 9.3х 9.9х LTD ratio, % 124.1% 119.6% (1) VTB s estimates based on CBR data (including TransCredit Bank and the Bank of Moscow) as of March, 31, 2012. 11
Unique business model universal banking platform incorporating corporate and retail banking, IB and other financial services Corporate-investment banking Retail banking Retail banking Corporate banking Significant scale and strong market position Broad corporate client base Well established relationships with leading Russian companies across all economic sectors Investment banking Strong franchise Full range of investment banking services VTB Capital, the Group s investment bank the leader in the Russian Investment banking industry Transaction banking A separate transaction banking unit established to grow the Group s commissionbased income by increasing sales of existing transactionrelated products and services The Group s retail banking business focuses on deposits, lending and certain ancillary services to individuals and small businesses. The Group conducts its retail business primarily through VTB24, the Group s specialised retail banking subsidiary, as well as through retail divisions of other Group members, such as the Bank of Moscow and TCB. The Group is the second-largest Russian retail bank by loans and deposits as of March 31, 2012. Extensive distribution network, with broad coverage throughout the Russian Federation. Non-banking financial businesses LEASING INSURANCE FACTORING VTB Leasing is today one of the leading Russian leasing companies, offering a broad range of services, with regional offices across Russia and subsidiaries in the CIS and Europe VTB Insurance provides individuals and institutions with a full range of services: property insurance, civil and professional liability insurance, and personal insurance (excluding life insurance) The Group offers factoring and ancillary services, incl. the management and collection of receivables and credit management, to corporate clients through its factoring company VTB Factoring 12
Potential to unlock value significant value can be extracted from the existing franchise. Corporate banking Corporate loan portfolio Corporate liabilities +47% -2% +35% Term deposits Current accounts -12% (RUB bn) 2,508 2,668 3,666 3,766 3,690 (RUB bn) 1,592 508 1,084 1,772 540 1,232 2,472 597 1,875 2,435 649 1,786 2,143 740 1,403 31-Mar-11 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12 31-Mar-11 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12 Average yield and cost of funds Market shares and ranks in Russia Average yield on corporate loans Average cost of corporate deposits and current accounts Corporate loan Corporate deposit market share (2) market 1 share (3) 9.0% 3.0% 8.8% 2.8% 8.6% 3.1% 10.1% 8.5% (1) 3.9% 8.5% 4.6% 12.7% 12.1% 2 2 15.0% 2 2 12.0% 21.1% 1 2 18.7% 2 1 2 20.4% 18.2% 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 31-Dec-09 31-Dec-10 31-Dec-11 31-Mar-12 Unique corporate franchise with focus on rationalisation (1) Calculated excluding the effect of provision releases at TransCreditBank and the Bank of Moscow. (2) Calculated based on CBR data (for Russian corporate loan market) and Rosstat data (for loans provided to Russian companies from abroad). Numerator represents VTB Group s consolidated corporate loan portfolio (under IFRS). (3) 1Q 12 data adjusted for promissory notes (equal to RUB 95.2 bn) that according to management view, can be classified as customer deposits. 13
Potential to unlock value significant value can be extracted from the existing franchise. Investment banking and GTB Investment Banking key developments in 1Q 12 GTB key developments in 1Q 12 Global banking DCM: 23 transactions closed. Key deals 3 tranche ECP for Alrosa (USD 1.3 bn), Russian Federation sovereign Eurobond issue (USD 7 bn) M&A: Nord Gold spin-off for USD 2.7 bn Russia & CIS M&A Russia & Russia & CIS DCM CIS DCM Global markets # Lead Manager Amount, (USD mn) # of deals 1 Deutsche Bank 4,676 5 2 VTB Capital 4,083 4 3 Citi 3,532 2 4 Rothschild 1,582 1 5 Nomura 1,582 1 # Lead Manager Amount, (USD mn) # of deals 1 VTB Capital 5,636 23 2 Citi 2 318 5 3 Gazprombank 2,005 4 4 Sberbank 1,581 3 5 Troika Dialog 1,297 4 Launch of equities business on MENA markets and trading operations in Turkey and Poland, active development of US and Asian client base Investment management VTB Capital Private Equity and Special Situations (PESS) successfully placed part of its minority stake in the leading CIS software developer EPAM Systems, Inc during its IPO at NYSE GTB net fee and commission income (RUB bn) 2.8 1Q'11 Product developments SWIFT services for corporate clients launched Time deposits terms optimised Electronic Banking platform functionality improved, including new fraud analysis applications and letters of credit module Sales development +25% c.1,500 new clients attracted Complex and customised cash management solutions established and sold to 30 large groups of companies (74 legal entities), bringing more than RUB 160 mn in new revenue Cash management sales pipeline reached more than RUB 1 bn Trade finance deals closed with 57 groups of companies (268 legal entities) GTB product sales teams put in place in top 20 cities 3.5 1Q'12 14
Potential to unlock value significant value can be extracted from the existing franchise. Retail banking Retail loan portfolio Retail deposits +55% Mortgage loans Car loans Consumer loans & other +52% Term deposits Current accounts +5% +2% (RUB bn) 555 289 54 213 609 329 60 220 763 412 70 281 824 439 76 309 861 470 79 312 (RUB bn) 781 138 643 862 160 702 1,079 198 881 1,161 255 907 1,190 242 948 31-Mar-11 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12 31-Mar-11 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12 Average yield and cost of funds Market shares and ranks in Russia Average yield on loans to individuals Average cost of retail deposits and current accounts Retail loan market share Retail deposit market share 15.9% 6.0% 16.8% 5.9% 16.6% 5.7% 15.9% 5.0% 15.9% 5.0% 10.2% 6.0% 2 2 2 2 12.2% 22 7.2% 22 2 13.7% 2 2 9.0% 2 2 2 13.6% 2 2 2 2 2 8.9% 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 31-Dec-09 31-Dec-10 31-Dec-11 31-Mar-12 Success story with the best returns among Russian peers 15
Value creation through new initiatives. Insurance Successful start up Top 8 market position in 3 years VTB Insurance 1 GWP Product strategy is focused on profitable segments VTB Insurance 1 2011 GWP structure 11.5x 1.0 6% 4% MTPL 25% MOD 19% Property and liability Personal accident (USD bn) 0.1 19% 30% Voluntary medical insurance Other 2008 2011 We operate on the market with high growth potential Russian insurance market GWP (USD bn) 22.0 2.0x 44.7 2011 2016 Russian insurance market profit pool (USD bn) and large profit pools 2.1x 6.6 3.1 2011 2016 we target the most profitable market segments Profit pool structure by products in Russia (2016, excl. captive business) Property Voluntary Medical Insurance Motor Other 9% 25% 35% 31% Retail 34% 25% 11% 30% Corporate Property Accident Motor Other Insurance business represents a good example of VTB s non-banking expansion opportunities carrying significant potential revenue and profit upside (1) in 2011 includes MSK insurance company. Source: FSSN, analytical reports. 16
Value creation through new initiatives. Pension Fund Pension assets to GDP (%) (1) Average pension account in Russia Market experience more than 25 years Market experience more than 12 years Non-state pension fund State pension fund 2011 2020 CAGR 20.7% 86.6 72.6 67.0 average 75% 2005 2011 CAGR 23.5% 188 15.8 14.6 11.5 average 14% 3.4 (RUB thsd) 33 14 10 14 20 12 20 84 UK USA Chile Poland Hungary Kazakhstan Russia Source: OECD, VTB Capital 2007 2008 2009 2010 2011 2015 2020 Source: FCSM, Investfunds.ru, analysts estimates Russian pension market Very young industry with: Less than 5 years of active growth Low penetration in comparison with other financial market segments Significant amount of the pension accounts under management of the Pension Fund of the Russian Federation Average size of the pension account doesn t exceed average monthly wage VTB Pension Fund #8 in terms of total assets (mandatory pension insurance market)) Obligatory pension insurance Strong market growth of 20-30% per annum during next 15-20 years due to: mandatory type of insurance accounts transformation from the state fund to non-state funds Non-obligatory pension insurance Voluntary pension contributions: captive market small size of the market low client base volatility Asset growth of 10-15% per annum during next 15-20 years (1) Presented as of YE 2010. Kazakhstan data as of YE 2009. 17
Value creation through new initiatives. Light Bank VTB plans to enhance its retail banking franchise by launching a new light bank business under the VTB Express brand (USD bn) Project highlights Focus on point-of-sale service (product line: cash noncollateralised loans, credit cards, payments and transfers, etc) Targeted client base mass and low-mass segments (6 mln new clients in 5-7 years) Targeted branch network size 1,000 branches (in 4-5 years) mainly in "non-capital" regions Pilot operations are planned to start in 2012 with a full launch in 2013 Cash loan market in Russia CAGR 83 2011 +18% 110 2012F 129 2013F 156 2014F 189 2015F Source: VTBC analysis In the majority of Russia's regions mass & low-mass client segments account for 30-50% of total personal income Moscow St. Petersburg Surgut Norilsk Ekaterinburg Ufa Khabarovsk Tolyatti Perm Samara Vladivostok Novosibirsk Omsk Tumen Kazan Rostov-on-Don Nizhni Novgorod Krasnodar Chelyabinsk Krasnoyarsk Other regions 13% 17% 17% 32% 38% 36% 38% 36% 37% 41% 43% 44% 42% 49% 50% 48% 48% 50% 49% 50% 62% Source: BCG ROE accretive for the Group 18
International presence basis for capturing new business opportunities outside Russia VTB Capital is strengthening its international franchise International presence Sep 2011 Oct 2011 Nov 2011 New Head of Global Banking and Client Coverage appointed from Merrill Lynch New Head of Central & Eastern Europe appointed from Morgan Stanley Hong Kong office opened 15 subsidiary banks across CIS, Europe, Georgia and Africa 2 branches in China and India 4 branches of VTB Capital in USA, Singapore, Dubai and Hong Kong Dec 2011 Jan 2012 Mar 2012 Apr 2012 Ex Merrill Lynch banker hired as Head of Telecoms, Media & Technology New CEO Asia appointed from Merrill Lynch Sofia office opened with leading Bulgarian IB team joining VTB Capital New York office opens On-going Build-out of small but highly-focused Asia team Our global presence is generally set. Focus on value extraction 19
: an attractive investment opportunity Unique business model in Russia universal banking platform wide branch network throughout Russia commercial and investment banking services other financial services, inc. insurance, leasing, factoring, etc. International presence basis for capturing new business opportunities outside Russia international expansion based on existing platform investment banking to drive international expansion Attractive valuation intrinsic value is not reflected in the market valuation Potential to unlock value significant value can be extracted from the existing franchise Corporate banking: transaction banking, branch reform, expanding mid corporate segment, increase efficiency through cross sell, renewal of the loan portfolio IB: #1 across all products locally, international expansion in focus Retail banking: best in class, high potential for future profitable growth Value creation through new initiative insurance pensions and asset management light bank 20
Attachments 1. VTB Group financials 20 2. Cost optimisation program 27 3. History of integration 29 21
Attachments 1. VTB Group financials 22
Performance of Corporate and Investment Banking financial result Operating income before provisions Profit before taxation 1Q 2011 1Q 2012 1Q 2011 1Q 2012 +9% +46% +13% +146% 59.6 52.7 59.6 52.7 47.1 45.8 (5.6) (13.8) (RUB bn) 30.9 30.1 4.7 5.1 14.2 20.7 2.9 3.7 (RUB bn) (20.1) (23.2) 27.9 22.6 Net interest income Net fee and commision income Net result from financial instruments (1) Other operating income Operating income before provisions (2) Operating income before provisions Provision charge Operating income after provisions Staff costs & administative expenses Segment result (PBT) (1) Represents gains less losses arising from financial instruments and foreign currencies. (2) Operating income before provisions is calculated before provisions for impairment of debt financial assets. 23
Retail Banking performance financial result Operating income before provisions Profit before taxation 1Q 2011 1Q 2012 1Q 2011 1Q 2012 +58% +66% +62% +214% 34.2 34.2 26.0 27.6 (RUB bn) 16.5 3.8 6.3 0.8 1.9 21.1 (RUB bn) 21.1 (2.1) (6.6) 19.0 (16.7) (11.6) 7.4 10.9 Net interest income Net fee and commission income Other operating income Operating income before provisions (1) Operating income before provisions Provision charge Operating income after provisions Staff costs & administative expenses Segment result (PBT) (1) Operating income before provisions is calculated before provisions for impairment of debt financial assets. 24
Solid operating income; NIM under pressure Operating income Net interest margin (1) and spread 72.9 +31% 80.1 56.9 76.7 95.4 8.9% 9.0% 9.0% 10.1% 9.0% (2) 4.6% 9.0% 3.9% 8.0 9.9 9.2 12.1 10.3 54.0 4.4% 4.3% 4.2% 4.4% 5.1% (RUB bn) 46.0 49.1 54.0 77.9 15.2 15.6 3.7 5.5 Net fee and commission income 22.9 13.0 5.8 8.2 (19.3) (19.1) 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 Net interest income before provisions Other operating income Net result from financial instruments (3) Operating income before provisions (4) 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 Average yield on interest earning assets 4.8% 4.9% 4.9% 5.6% 4.3% (2) 3.8% 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 Net interest margin Average cost of interest bearing liabilities (1) Net interest income 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. (2) Calculated excluding the effect of provision releases at TransCreditBank and the Bank of Moscow. (3) Calculated including Gains less losses arising from financial instruments at fair value through profit or loss, Gains less losses from available-for-sale financial assets, Gains less losses / (losses net of gains) arising from extinguishment of liability, Net recovery of losses / (losses) on initial recognition of financial instruments, restructuring and other gains / (losses) on loans and advances to customers, Gains less losses arising from dealing in foreign currencies and Foreign exchange translation losses net of gains. (4) Operating income before provisions is calculated before provisions for impairment of debt financial assets and impairment of other assets, contingencies and credit-related commitments. 25
Staff and administrative expenses costs remain under control Staff and administrative expenses Number of employees +30% (RUB bn) 45.3% 42.8% 41.3% 33.0 34.3 23.5 13.1 14.9 19.9 19.4 14.6 8.9 66.1% 50.7 24.3 26.4 44.5% 42.5 19.8 22.7 BoM 7.2 4.4 2.8 53,311 54,606 8,017 8,338 727 809 44,567 45,459 65,685 10,215 900 54,570 67,912 69,403 10,171 10,085 941 980 56,800 58,338 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 31-Mar-11 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12 Staff costs (1) Cost / Income ratio Administrative expenses Russia Europe CIS and other (1) Including pensions. 26
Asset quality more conservative countercyclical provisioning policy adopted Сost of risk up 60 bps y-o-y to 1.7% loan loss reserves up 30 bps YTD 1.1% 1.2% 0.9% 0.5% 1.7% 8.9% 8.6% 20.4 (RUB bn) 7.7 9.6 8.0 6.3 6.6% 6.3% 6.6% 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 31-Mar-11 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12 Provision charge for loan impairment / Average gross loan portfolio Provision charge for impairment of debt financial assets Allowance for loan impairment / Total gross loans with NPL ratio (1) at a stable level resulting in the increase of NPL coverage ratio 8.2% 7.7% 118.4% 5.9% 5.4% 5.5% 109.2% 111.8% 110.7% 111.3% 31-Mar-11 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12 31-Mar-11 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12 (1) Non-performing loans (NPLs) represent impaired loans with repayments overdue by over 90 days. NPLs are calculated including the entire principal and interest payments. Ratio is calculated to total gross loans including financial assets classified as loans and advances to customers pledged under repurchase agreements. 27
Healthy balance sheet structure Assets structure Customer loans / customer deposits (RUB bn) 6,790 6,337 6,451 7% 6% 6% 14% 13% 12% 4,720 4,448 6% 6% 6% 6% 6% 10% 13% 9% 6% 65% 63% 66% 63% 63% 12% 12% 10% 10% 10% Cash and mandatory reserves Securities portfolio (1) Due from other banks Loans to customers (net) Other assets (2) 117.6% 31-Mar-11 113.7% 30-Jun-11 116.6% 30-Sep-12 119.6% 31-Dec-11 124.1% (3) 31-Mar-12 31-Mar-11 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12 Asset quality Liabilities structure BIS Group capital (RUB bn) 5,712 6,165 5,821 18% 23% 20% 3,848 4,123 14% 14% 62% 58% 59% 62% 64% 15% 13% 12% 11% 13% 5% 4% 5% 4% 4% 4% 4% 4% 4% 4% 31-Mar-11 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12 Due to banks and other borrowed funds (4) Customer deposits (3) Debt securities issued (3) Subordinated debt Other liabilities (RUB bn) 15.5% 13.2% 670 667 736 733 736 100 101 224 224 223 570 566 512 509 513 Tier I 14.1% 12.0% Tier II less deductions 13.2% 13.0% 13.7% 9.2% 9.0% 9.6% 31-Mar-11 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12 Total capital adequacy ratio Tier I ratio (1) Includes debt and equity securities, assets pledged under REPO, securities classified as due from other banks and loans to customers, and derivatives. (2) Includes investment in associates, premises and equipment, investment property, intangible assets and goodwill, deferred tax assets and others. (3) 1Q 12 data adjusted for promissory notes (equal to RUB 95.2 bn) that according to management view, can be classified as customer deposits. (4) Other borrowed funds include bilateral and syndicated bank loans, secured and unsecured financing from central banks. 28
Attachments 2. Cost optimisation program 29
VTB Group cost management strategy for 2012-2014 Targeted ratios Sources of cost savings 45% 28% 17% 42% 28% 14% 41% 28% 13% 20% 10% 30% 40% Supplier and procurement process management Premises and equipment management Outsourcing of selected services FY'12 FY'13 FY'14 Cost / Income Staff costs / Income Administrative expenses / Income Labour automation and other areas 30
Attachments 3. History of integration 31
Track record of successful acquisitions (1) VTB participated in bailout of Guta-bank On the basis of existing retail platform business has grown 30 times in 2004-11 with VTB24 becoming clear #2 retail player VTB24 is one of the most efficient entities of VTB Group with ROE over 25% ROE accretive deal Created critical market share in Saint Petersburg and North- West part of Russia (market share boosted from 5% to 12%) Smooth integration allowed to keep client base and gain market share from (12.0% in 2005 to 15.1% in 2011) Strengthening the Group s relatively weak market position in the city of Moscow and Moscow region through: - Strong brand of Bank of Moscow - Long-term business cooperation with the City government and participation in key strategic and infrastructure projects - Wide BoM point-of-sales network Strengthening the Group s positions in retail business due to large client base, advanced technologies, and participation in unique projects for the public Considerable growth of corporate client base (>100K clients) ROE accretive deal (P/BV 1.5) Effective capital utilisation due to an acquisition of a highly profitable asset Development of long-term partnership with Russian Railways and other railways-industry enterprises Access to >2M retail clients Widening of point-of-sales network in Russian regions 290 branches Synergies realisations due to new cross-sale opportunities and improvement of funding base (new clients deposits and current accounts) Additional upside from recoveries of legacy portfolio (1) Later VTB North-West, merged into VTB in 2011 32
BoM and TCB proven value accretion Profile One of the core subsidiaries servicing some of the Group's target client segments Sufficiently capitalised all capital adequacy indicators above the standards set by the BIS and the CBR Adequately provisioned under IFRS 1Q 2012 corporate actions Mandatory offer to the shareholders of the Bank of Moscow (March 2012) VTB Group share up 0.03% to 94.87% Meets all KPIs in terms of growth and profitability High asset quality (NPL ratio at 2.4%) Actively integrated into VTB Group Growth driver for VTB Group 1Q 2012 corporate actions Share issue (February 2012) VTB Group purchased shares of the additional issue at RUB 22.69 per share and increased its share in TCB to 77.86% 1Q 2012 highlights 1Q 2012 Average highlights Yield and Cost of Funds Loan portfolio (net) + 19% YTD Loan portfolio (net) + 7% YTD Net interest income + 35% Y-o-Y Net interest income + 40% Y-o-Y ROA 1.9% ROA 2.1% ROE 11% ROE 26% Source: Management accounts 33