Social Report 2016

World Without Barriers. VTB Group

Conscious Responsibility 2 Contents

VTB Group in 2016 4 3.3. Internal communications and corporate culture 50 Abbreviations 6 3.4. Occupational health and safety 53 Statement of the President and Chairman of the Management Board of VTB Bank (PJSC) 8 4. Social environment 56 1. About VTB Group 10 4.1. Development of the business environment 57 1.1. Group development strategy 12 4.2. Support for sports 63 1.2. CSR management 13 4.3. Support for culture and the arts 65 1.3. Internal (compliance) control 16 4.4. Support for health care and education 69 1.4. Stakeholder engagement 17 4.5. Support for vulnerable social groups 71 2. Market environment 26 5. Natural environment 74 2.1. Support for the public sector and socially significant business 27 5.1. Sustainable business practices 74 2.2. Support for SMBs 34 5.2. Financial support for environmental projects 77 2.3. Quality and access to banking services 35 6. About the Report 80 2.4. Socially significant retail services 38 7. Appendices 84 3. Internal environment 44 7.1. Membership in business associations 84 3.1. Employee training and development 46 7.2 GRI content index 86 3.2. Employee motivation and remuneration 49 7.3. Independent Assurance Report 90 VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices VTB Group in 2016

4 VTB Group in 2016 5

RUB 51.6 billion earned 72.7 thousand people 274.9 thousand MWh in net profit employed by the Group RUB 5.1 billion spent on charity of electricity consumed

900 athletes from seven countries RUB 43 million spent 5,833.3 thousand liters Over 2,000 sales offices took part in the 9th VTB Spartakiad on the World Without Tears of fuel consumed corporate charity program

2,600 applications submitted Over 1.3 million people visited 21.1 million individual customers to enroll in the VTB Junior exhibitions supported by VTB Bank 4,161 tons of paper consumed and VTB Rost programs in the major Russian museums

Over 40 awards and a top- 61.8 hours spent on training 356 contracts worth RUB 300 kg of batteries collected for three spot in 60 international per employee 1.46 trillion signed at the recycling by VTB employees rankings (VTB Capital) St. Petersburg International Economic Forum VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices Abbreviations

6 Abbreviations 7 PJSC Public joint-stock company

Post Bank PJSC Post Bank

RB GBL Retail Business global business line

Report VTB Group Social Report for 2016 ARB Association of Russian Banks RSMB Corporation Russian Small and Medium Business Corporation Bank of Moscow OJSC Bank of Moscow RSPP Russian Union of Industrialists and Entrepreneurs Bank, VTB Bank VTB Bank (PJSC) SC State company CBR Central Bank of the Russian Federation SDO State defense order CIB GBL Corporate Investment Banking global business line SMB Small and medium-sized business CJSC Closed joint-stock company SUE State unitary enterprise CSR Corporate social responsibility Supervisory Council Supervisory Council of VTB Bank (PJSC) DIA Deposit Insurance Agency VTB Bank (Armenia) VTB Bank (Armenia) CJSC FATCA US Foreign Account Tax Compliance Act VTB Bank (Austria) VTB Bank (Austria) AG GBL Global business line VTB Bank (Belarus) CJSC VTB Bank (Belarus) GMC VTB Group Management Committee VTB Bank (Belgrade) VTB Bank JSC Belgrade GRI Global Reporting Initiative VTB Bank (France) VTB Bank (France) SA GRI Guidelines GRI Sustainability Reporting Guidelines VTB Bank (Georgia) JSC VTB Bank (Georgia) GTE Gas turbine engine VTB Bank (Kazakhstan) Subsidiary Organization JSC VTB Bank (Kazakhstan) Hals-Development HALS-Development PJSC VTB Bank (Ukraine) PJSC VTB Bank (Ukraine) IFRS International Financial Reporting Standards VTB Capital CJSC VTB Capital Leto Bank PJSC Leto Bank VTB Factoring VTB Factoring, Ltd. LLC Limited liability company VTB Insurance VTB Insurance, Ltd. MC Dynamo CJSC Management Company Dynamo VTB Leasing JSC VTB Leasing MCB GBL Mid-Corporate Banking global business line VTB Northwest Regional Center Northwest Regional Center of VTB Bank (PJSC) MCC Moscow Central Circle VTB Pension Fund JSC NPF VTB Pension Fund MultiCarta MultiCarta LLC VTB Registrar CJSC VTB Registrar NFC Near Field Communication VTB, Group, VTB Group VTB Group (within the scope of the Report) NSPK National Card Payment System VTB24 VTB24 (PJSC) OJSC Open joint-stock company 6.5 Program SMB lending promotion program OHS Occupational health and safety VTB Social Report 2016 Statement of the President and Chairman of the Management Board of VTB Bank (PJSC)

8 Statement of the President and Chairman 9 of the Management Board of VTB Bank (PJSC)

be to increase the profitability of our business mention. The project allows female employees Automation and IT Department at the Financial and achieve a higher net profit, to build a single to work from home while on child-care leave in University under the Government of the Russian full-service bank, and to modernize the Group order to make money and keep their skills current. Federation. Students now gain practical professional through large-scale technological transformation. Moreover, companies of the Group actively promote skills working directly at business units. The launch The key task for 2017 is to finish the main part of mentoring practices in Russia and abroad. of the joint innovative educational program has the activities, which aim at integrating VTB24. become a new milestone in our long-term fruitful For many years, Group companies have been cooperation with this leading specialized university. In 2016, VTB retained and strengthened leading implementing large-scale sponsorship and charity positions in all main business segments. activities, placing a special focus on seamlessness As we head into the Year of Ecology in Russia, we The Group’s investment business unit VTB and continuity. Upon completion of Bank Moscow’s place particular emphasis on various environmental Capital was named Best Trade Finance Bank in integration, VTB Bank continues to support Bank initiatives and promoting a more sustainable use Russia. It received more than 40 awards and Moscow’s most important sponsorship projects, of resources. To prove our commitment, in 2016 confirmed its high position in international including the intellectual TV game show “What? we established VTB Ecology, a separate legal entity rankings and the title of the best investment bank Where? When?”, the Velobike bike rental system, within the Group. VTB Ecology will act as a single in Russia. Among the most notable events of the VTB Kremlin Cup and the Moscow Urban Forum. center for managing the Group’s environmental 2016 were the completion of Bank of Moscow’s projects, the most notable of which are cooperation integration and the establishment of Post Bank by Supporting high-profile business events is a key area with the World Wildlife Fund (supporting its effort to reorganizing Leto Bank and FSUE Russian Post. of VTB’s sponsorship activities. Some of the biggest conserve the population of wild cats), projects with events of 2016 were the St. Petersburg International the Ministry of Natural Resources and Environment One of the landmark initiatives on this front was Economic Forum, the Eastern Economic Forum of the Russian Federation and international the 6.5 Program, a lending promotion scheme and the Army 2016 Military Technology Forum. programs including a series of initiatives aimed that was launched with the support of VTB at restoring the balance in the ecosystem of Bank and VTB24 to offer soft loans to the SMB A major cultural event in 2016 was the exhibition the Arctic. We also continued the Plant a Tree sector. Over RUB 30 billion has been advanced of Ivan Aivazovsky’s paintings at Moscow’s as a Gift project, aimed at encouraging tree Sustainability matters hold an important place in since the scheme was set up in late 2016. Tretyakov Gallery timed to the bicentenary of planting to restore forest habitats in Russia. VTB Group’s corporate culture and the Group’s the artist. VTB was the general sponsor of the practical activities in all regions of activity. We place great value in our people and exhibition, which drew over 600,000 visitors. Looking forward, we aim to maintain strong economic pay particular attention to developing their The year was marked by another important performance, improving our corporate culture, and We are pleased to present our ninth Social professional competencies and improving the event: the signing of an agreement with the continuing sponsorship projects and environmental Report, which summarizes VTB Group’s environment they work in. In December 2016, Pushkin State Museum of Fine Arts to support initiatives. We hope that 2017 will allow us to accomplishments in the area of corporate social a special training program, Project Mindset, exhibition, restoration and publishing activities. implement our ambitious plans and will justify responsibility in 2016. We hope you will find was introduced. It aims at providing insight the highest expectations of our stakeholders. this information useful and interesting. into effective project and risk management VTB Group is committed to supporting education, techniques and teamwork communication and many of its members maintain close ties with In 2016, we examined the results of the VTB skills for employees. Over 200 employees leading local universities. In 2016, we continued to Group Development Strategy for 2014-16 and set participated in the program in December 2016. run the VTB Junior and VTB Rost programs. Over 350 new targets in the strategy document approved young specialists have participated in the programs for the following two years. The priority areas of Among innovative HR projects in 2016, Post since their inception five years ago. Among other Regards, Andrey Kostin VTB’s development for the next three years will Bank’s Client Service from Home warrants special accomplishments was the opening of the Banking VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 1. About VTB Group

10 11 1. About VTB Group Table 2. Key ratings of VTB Bank at 31 December 2016 Rating agency Forecast Rating

Credit ratings

VTB Group is Russia’s second-largest financial group VTB is a strategic holding company that has a group- Standard & Poor’s Stable BB+

and one of the leading players on the international wide development strategy linking and integrating Moody’s Investors Service Negative Ba1 financial services market. The Group comprises business objectives for all subsidiaries and banks National Corporate Governance Score over 20 financial and lending institutions that are under one brand. The Group has centralized financial active in all of the major segments of the financial and risk management functions and a unified Russian Institute of Directors - 7++ market. VTB’s subsidiaries and associates operate control framework. Group companies operate both within and outside of the CIS, including in corporate investment banking, mid-corporate Europe, Asia and Africa, expanding the Group’s banking, and retail business segments1. presence in the world’s key financial centers Figure 1. Direct economic value generated and distributed and promoting its international relations. 2015 2016

Table 1. VTB Group key operating highlights234

Indicator 2015 2016

Key financial indicators2

Assets, RUB billion 13,641.9 12,585.5

Loan portfolio, RUB billion 10,110 9,487

Customer deposits, RUB billion 7,267.0 7,346.6 803,1 680,8 Shareholders’ equity, RUB million 1,454.1 1,410.2 933,4 Net profit, RUB million 1.7 51.6 963,1

Non-financial indicators Interest income less impairment provisions Corporate customers, thousand 491.9 535.1 Fee and comission income Individuals, million 19.0 21.1 27,9 Other non-interest income Total number of sales offices3 2,040 2,008 (√) Interest expenses 149,7 22,4 Number of sales offices in Russia 1,779 1,788 Fee and commission expenses 87,7 Other non-interest expenses Number of sales offices in less-populated or economically disadvantaged Russian regions4 464 471 145,7 Salaries and other payments and benefits to employees Average headcount, thousand 75.6 72.7 (√) 98,6 137,9 5,1 Social investments (charity) Number of shareholders, thousand 90.5 90.0 109,7 3,6 Other administrative expenses 83,1 Free-float voting shares and GDRs, % of ordinary registered shares 39.1 39.1 167,2 18 82,0 Paid out dividents 96,9 51,1 13,1 27,0 Taxes Generated Distributed Generated Distributed economic value economic value economic value economic value

1 For details, see Section 4.3. Review of operating performance of the VTB Annual Report at www.vtb.ru, as well as individual websites of Group companies. 2 In accordance with the VTB Group’s IFRS audited consolidated financial statements for 2016. 3 Excluding in-store offices (desks). 4 Regions with below-average population that are in the lowest quartile by per capita income in accordance with state statistics. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 1. About VTB Group

12 13 1.1. Group development strategy The merger will also enable the Group to streamline Employee engagement initiatives include promoting 1.2. CSR management costs and improve its overall financial performance. a close-knit corporate culture, developing professional and managerial skills among employees, setting up Building a successful business is only possible Modernize the Group through large-scale a pool of candidates for internal hire positions, as Corporate social responsibility is a key element of the if employees and management strive towards technological transformation. Technological well as implementing social initiatives and programs Group’s conduct that helps to improve its image both common goals, ensuring an efficient and transformation entails rapid development of aimed at maintaining diversity and inclusiveness. in Russia and abroad, unite its financing and lending seamless work flow between the Head Office and digital channels, significantly reducing the time companies around common values, and mitigate subsidiaries. This is especially true of our Group, it takes to introduce new products and services, As a responsible business, the Group is fully aware strategic, reputation and operational risks. Ultimately, which has a presence across all segments of the developing data analysis tools and an integrated of the potential economic, social and environmental this enables the Group to grow its market value and financial services market. A formalized strategy and system for streamlining and automating processes. impacts of its activities and takes a holistic approach consolidate its status as a major international player. regular performance reporting against targets also to promote the sustainable development of society. Vasily Titov play an important role in improving stakeholder The Strategy also includes initiatives aimed VTB is committed to creating a favorable environment First Deputy President and Chairman confidence and strengthening the corporate brand. at promoting the Group’s sustainable in all regions where it has a presence, both internally of the Management Board of VTB Bank (PJSC) With the establishment of a single bank in 2018, development, improving customer service and externally, and assumes additional obligations VTB will be in a position to optimize its business and experience, increasing employee to society beyond complying with local laws and processes, further enhance interaction between engagement and optimizing costs. regulations and offering quality products and services. VTB Bank’s CSR Policy (the “Policy”) is a fundamental global business lines, achieve substantial cost Corporate social responsibility (CSR) activities aimed at document, which defines the Group’s principles savings and increase the transparency of corporate The initiatives aimed at improving customer making positive changes across the Group and society and activities in the area of corporate social governance. This synergy will enable business service and experience will be delivered in each at large are thus in tune with VTB’s strategic intent to be responsibility. The Policy has been developed lines to realize their joint strategic agenda of the three key business lines. The CIB GBL will focus an open and transparent business that people can trust. and implemented with an aim to increase the and will help to improve VTB Group’s overall on streamlining the development and introduction transparency of the Group’s business processes, financial performance. of customer strategies, implementing a new “all-in” CSR activities are voluntary and have a tangible improve business management practices Vladimir Levykin pricing mechanism based on the comprehensive impact on strategic and tactical business decisions and communications with key stakeholders, Head of Strategy and Corporate Development, assessment of value derived from a given customer, that are meant to cater to the interests of all and enhance the reputation, image and Senior Vice President of VTB Bank (PJSC) and introducing a unified customer relationship stakeholders. VTB develops its CSR framework investment attractiveness of the Group.5 management (CRM) framework across the Group drawing on both its own experience with various to drive common standards of service, transparency stakeholders, and leveraging global sustainability In 2016, VTB Group adopted a development and better performance among account managers. and non-financial reporting standards. strategy for 2017-19 (the “Strategy”), focused on the following priority tasks: On the mid-corporate front, it is planned to enhance the existing service model in the Corporate social responsibility principles (VTB Bank) 5 Increase profitability and achieve a higher net profit. high-end customer segment and to introduce a CSR key principles are closely linked to the principles of VTB Bank Code of Ethics and comprise the following: The Group expects lending to recover in the Russian new comprehensive service model for bottom-end Commitment to the Bank’s mission, common goals and vision banking sector enabling it to expand its loan portfolio customers with a focus on transactions business. Provision of quality services owing to a high level of professional competence by at least 10% per annum. Under the strategy, Respect for human dignity and worth the Group is expected to outperform the market The RB GBL will adopt new analytical tools to obtain Integrity and mutual respect in dealing with stakeholders in terms of retail lending growth rates, increasing a better understanding of customer needs and the Fairness of decision-making by management the segment’s share in the overall loan portfolio. potential for differentiated offerings. The integrated Legal compliance and responsibility VTB Bank and Post Bank are both expected Profitability Complete the VTB Bank – VTB 24 merger and build to become leading players in terms of the quality Protection of employees’ health a single full-service bank. Merging VTB Bank and of service and customer loyalty in their respective Openness to stakeholders VTB24 into an integrated bank is a key project in the sectors. With this as a focus, significantly improving Strategy. The initiative is expected to improve the the quality, convenience and functionality of Group’s management structure by creating a single, digital channels, the mobile and the online bank, highly-competitive entity, efficiently leveraging is a key priority. A regular assessment of customer its business lines to deliver common objectives. satisfaction will be introduced across business lines. 5 VTB Bank Code of Ethics, approved by VTB Bank Supervisory Council (Minutes No. 18 of 20 December 2013). VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 1. About VTB Group

14 15 Figure 2. Corporate conduct management The Policy applies to all of the Bank’s divisions and Figure 3. 2016 materiality matrix is binding for all employees. CSR officers in each division are responsible for Policy enforcement and 5.5 compliance with its provisions. All functions and Lower significance compared Managing impacts with the previous reporting periods on the market management bodies, both at the Group and Bank Higher significance compared level, are involved in the management of various 5.0 with the previous reporting periods 14 aspects of CSR activities. The elements of CSR 2 are also considered by some coordinating bodies 4.5 3 established under the GMC. At the Bank level, the 1 24 8 Managing Managing CSR vision is defined by the Supervisory Council 4.0 20 impacts Corporate conduct social and its Committees, while its implementation on employees impacts 19 27 is within the remit of the relevant functions 3.5 26 4 and departments. There are also dedicated 13 22 teams and groups with a narrow CSR focus. 3.0 9 15 18 6 7 Managing To further improve its non-financial reporting, 2.5 25 17 21 environmental the Group continues to follow the Global 10 11 12 impacts Relevant to external stakeholders Reporting Initiative Sustainability Guidelines 2.0 16 (G4 GRI Guidelines), with the selected 23 performance indicators subject to independent 1.5 5 The Policy describes governance matters assurance for the fifth consecutive year.

relating to the Group’s corporate conduct and its 1.0 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 impact on corporate, market, social and natural In line with GRI recommendations, the Group Relevant to internal stakeholders environments. VTB performs its CSR management conducts an annual analysis to establish topics alongside the following five directions: for further inclusion into a corresponding matrix that reflects the most material aspects for Internal environment sustainable reporting based on their influence Local market environment on both internal and external stakeholders.

Local social environment Economic impact Environmental impact (Economic) social ecology 1. Business ethics 15. Responsible approach to financing Corporate conduct, which overlaps each of the above 2. Customer satisfaction 16. Resource efficiency 3. Financial results and market share four areas and is defined as another major area for 4. Innovations the Bank’s CSR activities. 5. Promotion of the image of Russia Overall impact 6. Transparent procurement processes 17. Affordable and accessible services 18. Corporate governance Social impact 19. CSR management 7. Sponsorship and charity 20. Financial incentives for employees 8. Employee education and development 21. Financial support of government-initiated projects 9. External and internal communications 22. Initiatives for young people 10. Gender equality 23. Import substitution 11. Headcount management 24. Social and economic development of regions 12. Non-financial incentives 25. Support for customers in difficult life circumstances 13. Occupational health and safety 26. Support of major industries 14. Socially significant retail services 27. Support of SMB's VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 1. About VTB Group

16 17 1.3. Internal (compliance) control control procedures by type. Based on the available The Bank’s key efforts and achievements Federal Tax Service, and FATCA forms, filed to information, a corresponding risk map that enables in the area of regulatory (compliance) risk the US Internal Revenue Service. FATCA training the Bank to identify the most risk-prone business management in 2016 include the following: materials and regulatory documents are regularly Maintaining a strong compliance culture is an integral processes has been formed. A report on the posted on the Bank’s corporate information part of the Bank’s performance. A system of internal establishment of risk management and internal Establishing a dedicated committee to consider any portal and the Group’s Compliance Web Portal. control extends to all employees who have even the control framework to prevent and combat corruption matters related to the management of operational slightest involvement in dealing with customers and was submitted to the Supervisory Council in 2016. and regulatory (compliance) risks that are inherent serving their accounts. in the Bank’s products and activities; 1.4. Stakeholder engagement Alexander Yakovlev A priority task in the context of developing a Introducing bank-wide self-assessment on Head of Compliance Control and Financial Monitoring, group-wide internal (compliance) control function operational and regulatory (compliance) risks; Vice President of VTB Bank (PJSC) is to ensure that internal controls are designed, Approving threshold values (triggers and limits) VTB provides its shareholders with an opportunity not implemented and operated effectively across for key indicators of regulatory (compliance) only to earn dividends, but also to have their say in the the Group using a unified approach. In 2016, risk, with the introduction of a quarterly KRI data running of the Bank and control over its business. They The Bank implements internal (compliance) there were five meetings held by a special GMC collection process; may also directly contact any competent person, from control functions, as defined by the current version coordinating commission for compliance and Transitioning the Automated Operational and an employee to a member of the Supervisory Council, of Regulation No. 242-P6. In accordance with the internal controls aimed at countering money Compliance Risk Management System into the live with their queries and proposals. We highly value the requirements of this Regulation, as well as with laundering and the financing of terrorism. environment; trust of our shareholders and strive to build it further. a view to preventing any violations of law (including Conducting internal checks on VTB Bank’s regulatory Vladimir Khotkin anti-corruption legislation) and internal regulations, With a view to adopting a unified approach to (compliance) risk management system. Head of Shareholder Relations Service, in 2016 the Bank introduced a revised Policy internal (compliance) control that reflects past Public Relations Department of VTB Bank (PJSC) on managing regulatory (compliance) risk that experience and is designed to improve functional The Bank plans to further improve its regulatory establishes relevant principles and methodology interaction and communication between Group (compliance) risk management practices in 2017, for managing and assessing the impact of companies, VTB made a number of decisions that including by monitoring the efficiency of regulatory Stakeholder trust is one of the key elements regulatory (compliance) risk, which is defined as are binding on all Group companies. These include (compliance) risk management on a regular basis, of a successful banking business, as it contributes the risk of loss resulting from a failure to comply a requirement to update internal regulations and adapting the risk management system to cater to financial attractiveness. In its dealings with with laws, internal regulations and standards processes to the extent such updates are not in to the needs of the merged retail business, and stakeholders, the Bank is committed to an open for self-regulatory organizations (to the extent conflict with local and extraterritorial laws. introducing self-assessment practices across retail and constructive dialogue, drawing on best such standards or rules are binding on the business units and business support functions. international practices and codes of conduct, Bank), as well as loss resulting from sanctions Under the current internal reporting system, a total as well as the highest standards of corporate or other actions by supervisory authorities. of 14 submissions were made in 2016 through FATCA compliance governance. VTB also carefully considers the social a whistleblower hotline, a special communication and environmental impact of any decisions it makes. The Policy on managing regulatory (compliance) tool to report suspected or actual wrongdoings. For the purposes of compliance with FATCA and The Bank’s key stakeholders include the following: risk contains a structured list of risk categories No evidence pointing to a conflict of interest current Russian legislation, the Bank has an and factors, key risk indicators (KRI) relating or corruption-related offense was established internal document regulating the production of Shareholders and investors to the risk of corruption and business process from the investigation of these reports. 2015 reports, which must be prepared and filed Customers violation, among other risks, as well as a list of to meet the requirements of domestic legislation Employees governing financial dealings with foreign nationals Business partners and legal entities, as well as the Foreign Account Local communities and residents Compliance and anti-corruption training (VTB Bank) Tax Compliance Act (FATCA) enacted in the US. Governments, regulatory authorities and media The Compliance Control team provides Bank employees with regular advice aimed at preventing the violation of law. In 2016, the Bank introduced Compliance, a distance learning course, which is mandatory for all new In 2016, the Bank successfully submitted its The Bank produces timely financial and non-financial hires and has to be taken by all employees every year. Combating Corruption is another distance learning course 2015 reports to relevant tax authorities, including reports, focusing on increasing their reliability, available for new hires. reports on foreign tax residents, filed to Russia’s transparency and accuracy, aligning approaches

6 Regulation No. 242-P of 16 December 2001, “On the Organization of Internal Control in Credit Institutions and Banking Groups”. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 1. About VTB Group

18 19 to data collection and consolidation, improving conducts its business in strict compliance with laws VTB established Shareholder Relations Centers The Bank leverages various communication feedback mechanisms and expanding senior and regulations, and acts upon the recommendations in Moscow, Yekaterinburg and St. Petersburg in order channels to better reach out to and engage with its management’s involvement in the public disclosure of local regulators. It pays taxes and makes to maintain day-to-day contacts with shareholders shareholders. Each shareholder may contact VTB of operating results and business plans. The Bank other mandatory payments in full when due. in cities where many of them reside. The Centers Bank using the channel that is most convenient have proved to be efficient in providing shareholder to them: in person, by telephone, via email, social Table 3. Stakeholder engagement advice, performing transfer agent functions, and networks, a mobile application or other channels. serving as a source of information on the agenda Stakeholder communication mechanisms 2015 2016 of upcoming General Shareholders’ meetings. Total number of references to VTB Group in mass media 340,481 350,412

References to VTB Capital 37,616 43,184 Investor Days, Workshops and Open Days (VTB) Number of unique users participating in VTB’s online projects 74,125 73,017 Investor Day is an event that is attended not only by current shareholders but also by prospective investors, Number of visitors to the vtbrussia.ru website 3,023,127 3,082,844 journalists and representatives of investment companies. In 2016, Investor Days were held in Moscow, Number of visitors to the vtb.ru website 5,311,800 6,687,195 St. Petersburg, Yekaterinburg and Krasnodar – the four cities where many of the Bank’s shareholders reside. Total print run of The Energy of Success corporate magazine, copies 51,600 51,600 The choice of the city was also determined by the economic and financial activity of local residents, their level of wealth and interest in investment products. Shareholder relations 2016, the number of shareholders decreased Along with Investor Days, specialized workshops for private investors were held in nine cities (Samara, by 0.54% year-on-year to around 90 thousand, Stavropol, Cheboksary, Kazan, Rostov-on-Don, Khabarovsk, Vladivostok, Irkutsk and Ufa). Participants Safeguarding the interests of shareholders, around 89 of which thousand are individuals. explored top-of-mind issues and discussed them with experts who were invited to share their expertise promoting sound corporate governance on specific topics. Nineteen Open Days were held for minority shareholders at VTB branches and outlets. and maintaining transparency are high In 2016, VTB Bank and its subsidiaries (VTB Registrar, Around 1.7 thousand people took part in Investor Days, workshops and Open Days in 2016, with shareholders on the Bank’s agenda, as these are the VTB24, VTB Insurance) continued to implement showing more interest in these events than last year. An extensive program of meetings covering important drivers of market value7. a comprehensive shareholder and investor relations a broad range of topics, from VTB’s operations to tax reliefs for private investors, was highly appreciated program, aimed at maintaining contacts with by participants. There were no significant changes in the Bank’s shareholders across Russia and develop ties with shareholder structure in 2016. The main changes the local representatives of investment companies in the share capital were related to the conversion and key mass media. During the year, the Bank In 2016, the Bank received a total of 11 thousand To bring the Bank closer to its shareholders, of previously placed preference shares, held held over 70 events in various formats, including queries, with an average of 915 handled per it is also planned to promote and leverage by the Russian Ministry of Finance, and class A investor days, workshops, open days, master month. Queries covered a wider range of electronic technologies and channels, e.g., preference shares, held by the State Corporation classes for students, media briefings, a roundtable subjects than the year before. Shareholders were a full-fledged electronic voting at General Agency for Deposit Insurance, into Type 1 and Type in Yekaterinburg, meetings with analysts and mostly interested in share records and custody, Shareholders’ meetings (including via a remote 2 preference shares, respectively. The Russian investment companies, etc. The Annual General dividends and their distribution, the timing connection or a terminal), supplementing Federation, represented by the Federal Agency Shareholders’ Meeting and Investor Days were and agenda of General Shareholders’ meetings, the VTB Shareholder mobile application with for State Property Management, continues to be streamed live at Shareholder Relations Centers. regional events for minority shareholders, VTB additional features and capabilities, etc. the Bank’s major shareholder, with its interest share prices and their growth outlook. remaining unchanged from the previous year Investor relations at 60.9% of ordinary shares. At 1 September For 2017, the Bank plans a number of major initiatives to promote shareholder relations, Russia’s investment climate has improved since including the launch of privileges and special 2014 and 2015. Positive takeaways from investor products that were developed by the Retail Business meetings, both at the level of senior management division in collaboration with the Shareholder and the Investor Relations team, signal a change Relations Service. Key privileges will include favorable in investors’ attitude towards investing in Russia’s deposit terms, lower interest rates on cash loans banking sector and VTB in particular. and credit cards, premium service and discounts.

7 For details, see PJSC VTB Bank Report on relations with minority shareholders in 2016 and planned activities for 2017, posted on the Bank’s website. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 1. About VTB Group

20 21 Figure 4. Investors by type, % of free-float shares Figure 5. Investors participating in investor meetings in 2016

57% By geography: By funding type: 54% 53% 2014 2015 2016

21% 20% 18%

8% 9% 9% 8% 6% 6% 6% 7% 5% 4% 4% 5%

Strategic Value Growth Index Broker / dealer Others and anchor investments

Over 2016, the Bank has kept the investment An Investor Day in London, attended by the community fully abreast of VTB’s operating and Group’s top executives, was one of the most

financial results and any factors affecting its notable events targeted at institutional investors. Great Britain (45%) Growth (56%) performance. The Investor Relations team has A session on macroeconomics, with its participant Europe (23%) Hedge funds (17%) continued to diversify the shareholder base and work mix of senior Russian officials, including Deputy USA and Canada (19%) Value (12%) closely with portfolio managers of major investment Finance Minister, Deputy Minister of Economic Russia (6%) Others (15%) funds that hold VTB stock and bonds, as well as with Development and First Deputy Chairman of the Bank prospective investors. In 2016, VTB’s management of Russia, drew much attention from investors. Asia and the Middle East (3%) team placed a strong focus on relations with strategic Others (4%) and anchor investors who have maintained their The Investor Relations team prepares quarterly share in the Bank’s capital, regardless of negative statistics, containing particular information developments in the Russian economy. information on the investor mix by type, geography, In response to requests from shareholders and geopolitical factors on its shareholder base and etc. VTB also keeps the investment community investors, the Bank has continued to improve the maintain a high share of foreign investors. In 2016, the Bank held over 250 meetings informed of its CSR activities. For example, Investor Relations page of its corporate website with institutional investors and analysts; VTB Bank prepared and provided official responses that provides the latest news for investors and The management of VTB Group and the Investor the Group’s representatives took part to queries from investors regarding its financial analysts, information about upcoming conferences Relations team make every effort to maintain in eight investment conferences organized support of environmentally sensitive projects. and road shows, the most recent financial reports, a strong investor base and diversify it further. by major international investment banks. investor presentations, share and GDR quotes, The Group will continue to strengthen its ties analyst recommendations and much more. with the investment community in 2017. Table 4. Meetings with institutional investors A concerted effort of VTB’s top executives and the Investor Relations team allowed the Group Format 2015 2016 to mitigate the adverse impact of economic and Meetings during conferences 126 103

Meetings outside of conferences 104 102

Meetings during Investor Days 0 62 VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 1. About VTB Group

22 23 Government relations community through participation in activities In collaboration with the Russian National Committee of the Russian Union of Industrialists and of the International Chamber of Commerce (ICC As a major bank with state interest, VTB Bank Entrepreneurs (RSPP), with VTB President and Russia), the Bank organized a conference for its forms its strategy and business model taking Chairman being member of the RSPP Bureau. clients and other professional market participants. into account tasks set by the Government, and The conference, themed Independent Guarantee: it works to achieve national strategic goals. VTB’s top executives take part in meetings and International Experience and Russian Practice, Bank experts are consulted in drafting laws, working sessions with the Russian President and sought to identify ways to develop a unified while the Bank itself actively cooperates with the head of the Russian Government in order to approach to the use of bank guarantees in Russia. government authorities, state corporations foster communication, introduce new forms of The Bank teamed up with the ARB to set up and public organizations, participates in state business and discuss the situation in the national a number of working sessions and meetings with financing programs and supports initiatives aimed economy in the light of emerging trends. Contacts the representatives of the Russian Finance and at encouraging small and medium-sized businesses. with senior officials from the Economic Development Economic Development ministries, the Moscow and Finance ministries have now become regular. Government Public Advisory Council for Liaison VTB Bank is committed to national development with Credit Institutions, Russia’s Federal Customs priorities, playing an important role in the Over the past year, the management of the Bank and Service and other government agencies in order to successful performance of many domestic its local teams actively assisted the core committees develop a common view on the following matters: industries and, thus, contributing to the social of the State Duma, the Finance Ministry, the CBR, and economic stability of the Russian Federation. the RSPP and the ARB in their lawmaking efforts. Optimizing the issuance of bank guarantees under The Bank promotes the interests of the business Federal Law No. 44-FZ8; Extending the Register of Bank Guarantees to Figure 6. Investors by geography, % of free-float shares guarantees issued under Federal Law No. 223-FZ9; Introducing an electronic format for bank guarantees 70 % issued to meet obligations under contracts concluded in accordance with Federal Law No. 223-FZ (at the 60 % 58 % 2014 request of the Moscow Government Department for 51 % 50 % 48 % 2015 Competition Policy) to the Moscow Government’s 2016 bidding practice; 40 % Transitioning to the electronic management of guarantees issued to customs authorities, etc. 30 %

20 % 18 % 19 % 18 % 16 % 17 %16 % 12 % 10 % 10 % 9 % 4 % 3 % 1 %

0 % Russia Asia and the Middle Europe (inc. USA and Canada Others East Great Britain)

8 Federal Law No. 44-FZ of 5 April 2013, “On the Contract System for the Procurement of Goods, Work and Services for Public and Municipal Needs”. 9 Federal Law No. 223-FZ of 18 July 2011, “On the Procurement of Goods, Work and Services by Certain Entity Types”. Advancing to Excellence through Daily Choices

Balanced social progress is achieved only through significant financial results VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 2. Market environment

26 27 2. Market environment In 2017-19, the Group is determined to maintain FSUE Russian Post (payment processing), market leadership in corporate lending and SUE Mosgortrans (payment instruments for investment banking, achieve higher-than-market passengers) and OJSC Russian Railways (transport growth in retail banking and increase its customer services at the Moscow Central Circle). VTB is actively working to improve business The Group maintained its strong foothold in Russia’s base in the medium business segment. In addition, performance. We expand the structure and sources banking market, improving the performance of its VTB will continue to focus on its high-profile projects In 2016, loans provided by Group banks to major 13 of funding - we increase the share of client funds. We corporate investment banking business, propelling such as the development of the newly established customers totaled RUB 7,121.3 billion. are actively working with small and medium-sized retail banking growth and strengthening its position Post Bank and the contemplated merger of VTB24 businesses. We put high hopes on a joint project in the SMB segment. In 2016, VTB Bank took over the and VTB Bank. Increasing the use of the MIR Figure 7. VTB Group’s loan portfolio by industry with the Russian Post - Post Bank. In addition, we core assets of Bank of Moscow. More than 10 million National Payment System is another top priority. as of 31 December 2016 are optimizing the Group within the framework of individuals and small-sized enterprises became VTB the strategy of creating a single bank. One of the key Bank’s new clients. All products and services provided tasks for us is to increase the availability of services, previously by Bank of Moscow remained in place, 2.1. Support for the public sector including through the development of remote offered to customers on the same terms. VTB expects and socially significant business banking channels. that the new, one-brand strategy and platform will Yuri Solovyev translate into extra competitive advantages and First Deputy President and Chairman of the improved financial results in the medium and long run. VTB is ready to consider funding the most ambitious Management Board of PJSC VTB Bank projects aimed at supporting Russia’s important As part of the Bank of Moscow takeover, VTB industries and promoting import substitution Bank transformed its operations support model. initiatives. Today we have more than 1,500 customers While the macroeconomic environment remained It integrated the regional office of centralized loan in the public sector and the defense industry that challenging in 2016 against the backdrop of Western back-office operations into its structure in order to represent all kinds of companies in terms of revenue, sanctions, lower domestic consumer spending and streamline operating processes in loan and deposit personnel numbers and the size of manufacturing significant uncertainty, Russia successfully steered management for large, medium and small-sized facilities. Our customer base includes both the economy toward stability. Growth was back on enterprises and to ensure staff compatibility. businesses employing thousands of workers and Individuals (22,9%) track as the industrial production index increased by ‘mono’ enterprises with a focus on the production of Oil and gas (11,6%) 1.1% compared with 2015. Despite the unfavorable By actively participating in the 6.5 Program10, VTB one component or assembly unit that is, however, Building (10,3%) market environment, VTB Group continued to Bank and VTB24 played an important role in the essential for the construction of a finished product, Metals (8,6%) drive Russia’s economic growth by providing development of Russia’s SMB sector. In 2016, VTB be it an airplane, a vessel or a rocket. Government bodies (8,3%) considerable support to the public sector, socially expanded the range of so-called “socially significant” Valery Lukyanenko Manufacturing (6,3%) significant businesses and backbone companies. retail services and opened new branches to improve Deputy President and Chairman of the Management Trade and commerce (5,1%) access to banking services for individuals. Board of PJSC VTB Bank Energy (4,9%) Table 5. Number of the Group’s customers in 2015-1611 12 Finance (4,7%) As one of Russia’s major state-run banks, VTB Bank Transport (4,5%) Chemical (4,4%) Customers of Group companies 2015 2016 provides extensive support to key industries and Telecommunications and media (3,2%) socially significant companies that are critical to Large business, thousand 23.2 19.5 Russia’s economic stability. A large retail network Others (5,2%) Medium business, thousand12 70.04 88.9 allows the Bank to establish robust relations Small business, thousand12 398.65 426.7 with clients in the regions, including holding The CIB GBL provides a broad range of documentary Individuals, million 19.0 21.1 companies with subsidiaries across Russia. services to large companies across different industries, with the Bank’s customer base The Bank cooperates with a number of Russia’s including both Russian and foreign companies. 10 For further details about the 6.5 Program, see Section 2.2. “Support for SMBs”. socially significant companies, including In 2016, the largest beneficiaries of VTB Bank’s 11 All customers, including customers with zero balances (Group banks). 12 A small business is defined as a firm with annual revenues of up to RUB 300 million, and a medium-sized business is defined as a firm with annual revenues of RUB 300 million to RUB 10 billion. 13 Companies/groups of companies with annual revenues exceeding RUB 10 billion. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 2. Market environment

28 29 documentary services (bank guarantees and was three times named Best Trade Finance Bank Table 7. Select loans provided for regional and city authorities in 2016 letters of credit) provided at the request of major by Euromoney Awards for Excellence 2016, EMEA customers were from the following industries14: Finance Europe Banking Awards and Global Region/city Number of contracts awarded through auctions, RUB million Finance World’s Best Investment Banks Awards, Perm Krai 7,500 Oil and gas (20%) as well as Best Investment Bank in Great Britain Nizhny Novgorod Region 6,000

Infrastructure construction (11%) according to the research and the market players Moscow Region 4,000

Transport (8%) poll by the British periodical Finance Monthly. Krasnoyarsk Krai 4,000 VTB Capital analytical team was among the leaders Kursk Region 3,000 In 2016, VTB Bank placed a particular emphasis of the surveys by Institutional Investor 2016 EMEA Omsk 1,400 on the development of distant banking channels, Research Team and Extel Survey 2016, including implementing the following initiatives: the first place in the ‘Transport’ category in the Nizhny Novgorod 1,300 EMEA region. As of year-end 2016, VTB Capital Voronezh 1,000 New electronic document forms have been received more than 40 awards, and was ahead of Krasnodar 700 introduced to help customers streamline their the curve in such international rankings as Dealogic, operations, including an application for foreign cash Thomson Reuters, Bloomberg и Mergermarket. Support for state and municipal authorities substitution policy, VTB Group provides strong receipt, a payment order against acceptance sent by In particular, VTB Capital was internationally support to the defense industry, cooperating the Bank, a statement of acceptance or acceptance recognized for its unique concept of dialogues VTB provides various kinds of support to state and with the following holding companies: denial, and an advance acceptance of a payment with leading international investors within the municipal authorities as part of its commitment to order sent to the Bank; framework of the World Economic Forum in Davos drive the social and economic development of the Rostec Another initiative has enabled customers to file in 2016 and a new concept of a studio discussion country. Under bilateral cooperation agreements, PJSC United Aircraft Corporation electronic applications via their user accounts with investors during the Investment forum ‘RUSSIA VTB provides both financial and non-financial JSC Russian Helicopters to request a limitation on the number of IP/MAC CALLS’, being the best in the categories of Corporate support, with the former including loans and JSC United Engine Corporation addresses or a technician’s visit; & Financial Awards 2016 as ‘Most innovative lending commitments and the latter focusing on JSC High-precision Systems The Bank also introduced electronic payroll registers financial communication’, ‘Best communication developing lending and other banking infrastructure JSC United Instrument Manufacturing Corporation to save labor costs for its payroll customers. with international investors and mass media’, and improving general financial literacy. ‘Best interaction with investors and analysts’, VTB Group extends loans to defense companies The CIB GBL has a history of successful performance and ‘Best sustainable development campaign’. Support for the defense industry to financially support their day-to-day operations, recognized by multiple awards. In 2016, VTB Capital and help them deliver on government Pursuant to Federal Law No. 275-FZ15 and procurement and export contracts, run upgrade its commitment to drive Russia’s import projects and develop new products. Table 6. Select cooperation agreements with governmental agencies

Constituent entity Strategic cooperation with JSC United Engine-building Corporation - Perm Engines (VTB Bank) of the Russian Federation Agreement VTB Bank has been a longstanding strategic financial partner of JSC United Engine Corporation - Perm Arkhangelsk Region Agreement on strategic partnership and development of long-term efficient cooperation Engines. It has opened a credit line to fund the company’s working and fixed capital needs associated with Agreement on cooperation with the Far East and Baikal Area Development Fund under the aegis of the Eastern the implementation of engine-building projects for Russia’s civil aviation and gas transportation industries. Far East and Baikal Area Economic Forum In 2016, VTB Bank opened three credit lines worth a total of RUB 4.2 billion for the company. Agreement on cooperation with Kaliningrad Region Development Corporation in implementing regional Gas turbine engines built by JSC United Engine Corporation - Perm Engines are used to pump natural gas on Kaliningrad Region investment projects the entire Nord Stream 2 pipeline, a new, Yamal-Baltic Sea-Germany route for transporting Russian natural Murmansk Region Agreement on strategic partnership and development of long-term efficient cooperation gas into the European Union under export contracts. Nenets Autonomous District Agreement on strategic cooperation More than 500 gas turbine engines made by the company are currently in operation at Russia’s main gas Republic of Tatarstan Agreement on cooperation in fostering the SMB sector and pursuing investment, innovation and R&D projects pipelines, including the Nord Stream, Blue Stream and Yamal-Europe pipelines that are strategically important St. Petersburg Agreement on cooperation providing for the implementation of RUB 20 billion worth of investment projects to Russia. The company has also shipped the first gas turbine engines for the Southern Gas Corridor and signed a delivery contract for the Power of Siberia project.

14 The list was compiled based on the number of documentary services agreements concluded in 2016. 15 Federal Law No. 275-FZ of 29 December 2012, “On Government Defense Contracts”. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 2. Market environment

30 31 In addition, the Bank provides support and Management Board Chairman Andrey Kostin Support for a wheat deep processing project (VTB Bank) for Government Defense Contracts, and Russian Defense Minister Sergei Shoigu In the reporting period, VTB Bank opened a RUB 1 billion credit line for CJSC Yubileiny Stud Farm, a fully- consultations and training. signed an agreement on cooperation in the military integrated pork products company based in the Tyumen Region. The funds are designated for the construction and patriotic education of Russian citizens. of the first pig feed plant in the Urals that will have a wheat deep processing capacity of 120,000 tons a year. In 2016, the Bank was the general sponsor of the Army 2016 International Military and Technical Support for value-added industries Forum held at the congress hall of the Patriot Military and Patriotic Park of the Armed Forces of Russia’s value-added industries that are strategically Support for the agriculture industry The Bank also provided financial assistance to OJSC the Russian Federation. At the forum, VTB Bank important to the country’s economy ended the year Zainsk Sakhar, an entity of JSC Agrosila, for upgrade signed a cooperation agreement with United Aircraft 2016 with positive financial results. VTB backed Import substitution measures have translated into projects and other purposes. In addition, the Bank Corporation and United Instrument Manufacturing value-added industries using traditional mechanisms vibrant growth for Russia’s agricultural industry in granted a RUB 88 million loan to LLC Rassvet Plyus Corporation, the holding company Tekhnodinamika of support for priority industries and delivering on its 2016 which grew by 4.8% compared with the previous YUG for increasing the production of grain crops. and FSUE Atomflot. In addition, VTB Bank President commitments under the DIA’s capital boost program. year. As VTB Group continued to cooperate extensively with agricultural companies in the reporting period, Transport infrastructure development its industry loan portfolio increased by 0.2%. Customer training: support for Government Defense Contracts As manufacturing industries strongly rely on As part of its commitment to improve performance on Government Defense Contracts, VTB Bank held In 2016, VTB Bank provided funds in the form of transportation, strong transport infrastructure is workshops for its customers in 2016 to address agendas on contract support services provided by the Bank. a RUB 2.5 billion revolving line of credit for CJSC crucial to the social and economic development VTB Bank experts shared details on recent legislative changes and the Bank’s payment management practices Sodruzhestvo-Soya that is part of the international of the country. In 2016, VTB Bank placed a strong for defense contracts, as well as answered participants’ questions. Those who attended included the Bank’s agricultural group Sodruzhestvo. The funds are intended focus on supporting transport companies, taking current customers that have contracts with the Russian defense ministry, prime contractors and contractors of for replenishing the company’s working capital. part in a number of large industry projects. other governmental agencies that consider turning to the Bank for contract support services. Table 9. VTB Bank’s key 2016 projects supporting the agriculture industry

Table 8. VTB Bank’s key 2016 projects supporting Russia’s value-added industries Amount, RUB Organization/ customer Purpose Support million Type of Amount, RUB PJSC Roskar Poultry Farm Partial financing of the farm’s upgrade project Loan 1,000 Customer Purpose support million Working capital financing, including purchases of agricultural OJSC Chelyabinsk Electrometallurgical LLC LISKo Broiler (part of PJSC raw produce for plant primary and industrial processing, Integrated Plant and OJSC Kuznetskie Cherkizovo Group) grains for animal feed purposes, and animal feed Credit line 789 Ferrosplavy (part of OJSC Chelyabinsk Two trout farms: assistance under the SMB Lending Electrometallurgical Integrated Plant) Financing of current operations Credit line 5,000 LLC Kala Ya Maryapoyat and JSC Promotion Program run by SMB Corporation in partnership Material procurement for a newly-constructed metalworking Kala-Ranta with Bank of Russia Loan 689.5 SC RusTekhnologii United Company plant in the Vladimir Region Credit limit 3,000 Support of the company's current operations, including Financing of group companies’ working capital needs, LLC Legenda sunflower seed purchases Credit line 600 purchases of forest harvesting and wood pellet production JSC Agrarian Group (part of the equipment, and the provision of guarantees for tax holding company JSC Siberian SC Vologodskie Lesopromyshlenniki authorities Credit limit 2,000 Agrarian Group) Business expansion, implementation of investment projects Loan agreement 500 The construction of the first 120,000-ton capacity wheat CJSC Yubileiny Stud Farm deep processing plant in the Urals Credit limit 1,000 Financing of a project to build a value-added wood Financing of a large poultry farm in Russia (VTB Bank) LLC Belozerskles processing facility in the Belozersk District, Vologda Region Loan 1,000 PJSC Roskar Poultry Farm is a major agricultural company in Russia making a broad range of chilled and frozen chicken meat, eggs, chopped and minced half-finished goods, and finished poultry products. The In addition, VTB Bank provided financial assistance The Bank also helped the company to partially company also makes essential egg products for the food industry, including white, yolk and mixture. In 2016, to LLC Lestekhsnab, a timber processing finance its investment project focusing on the the Bank opened a RUB 600 million five-year credit line as part of a RUB 1 billion credit line extended to the company in the Kirov Region, issuing a RUB construction of a new timber production facility. farm. The funds are intended for the partial financing of the upgrade project proposed by the farm that has 280 million loan for its working capital needs. an annual production capacity of 690 tons of poultry meat and 195 million eggs. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 2. Market environment

32 16 33 Table 10. VTB’s key transport infrastructure development projects in 2016 Table 11. Key 2016 projects supporting the housing industry

Amount, RUB Amount, Organization/ customer Purpose Support million Group company Organization/customer Purpose Support RUB million LLC Vozdushnyye Vorota Severnoi Refinancing of the company’s portfolio of loans obtained for Financing of energy efficiency initiatives at the Cooperation Stolitsy the Pulkovo airport reconstruction and upgrade project Loan 36,000 VTB Factoring Rostec corporation's entities Agreement 100,00016

Financing of the Western High-speed Diameter highway JSC Far East Generation LLC Magistral Severnoi Stolitsy project Loan 16,000 Company Financing of current operations Loan 20,000

Financing of the Moscow-St. Petersburg M11 high-speed OJSC Mosenergosbyt Financing of current operations Credit line 3,000 LLC Magistral Dvukh Stolits highway project Loan 10,200 Partial financing of infrastructure development at the Yasno.Yanino microdistrict in the Leningrad Region, VTB Bank LLC KVS Development including sustainability initiatives Loan 1,095 Further cooperation with OJSC Russian Railways (VTB Bank) In the reporting period, VTB Bank continued cooperation with OJSC Russian Railways, which included the Social infrastructure development In 2016, the Group continued to pursue signing of a general agreement on the issue of RUB 10 billion bank guarantees under the MCC project. health care and education projects. Pursuant to this agreement, the Bank provided a bank guarantee for Moscow Metro against Russian Improving the quality of socially significant Railways’ default on its obligations to provide transport maintenance services at the MCC’s Small Beltway. services is key to better living standards. In addition, the Bank pledged to provide banking support for projects run by JSC RZDstroy, a subsidiary of Russian Railways. In particular, VTB Bank will be in charge of supervising the use of funds by the company’s Table 12. VTB’s key social infrastructure development projects in 2016 contractors. Amount, Group company Organization/ customer Purpose Support RUB million In the reporting period, the Bank also issued a social the social and economic development Construction of a district maternity and RUB 382.5 million bank guarantee to Vyatavtodor of the country. In 2016, VTB Bank continued LLC VIS Infrastructure children’s clinical center Credit line 6,500 for road and bridge maintenance in the Kirov to support projects in the housing industry. MD Medical Group Investment Financing of a project to build a regional-level VTB Bank plc perinatal center in Samara Loan 2,000 Region and provided guarantees against default by JSC Karelstroimekhanizatsiya under a RUB 299 VTB Bank also actively supports water supply million project to build a flyover over railways and sewage treatment projects. In 2016, it As part of efforts to advance the development of the Education, another essential component of in Petrazavodsk. In addition, the Bank provided issued a RUB 200 million bank guarantee to regional market of health care services and improve social development, is also a key priority integrated support for all financial transactions JSC NPP Biotechprogress, a leading R&D firm living standards, the Bank also granted a RUB 70 million for VTB. In the reporting period, the Bank made by companies participating in the MCC project. in the Leningrad Region that is implementing loan to LLC Veris Diagnostics and Treatment Center for provided a RUB 365 million loan to OJSC a project focusing on the development the purchase of modern equipment for a new health KCUS to partially finance the construction of a Housing industry revamp of innovative water supply and sewage care facility. In addition, the Bank opened a credit line general education school in the city of Kirov. treatment solutions for the housing sector with a credit limit at RUB 1 billion for LLC GEROPHARM Housing construction projects help improve and various manufacturing industries. for the construction of a modern pharmaceutical plant. living standards and to contribute overall to the

Construction of a perinatal center under a public-private partnership project (VTB Bank) Support for Major Repairs System development (VTB Bank) VTB Bank intends to participate in the construction of a perinatal clinical center by providing project finance in the In 2016, VTB Bank, the Association of Regional Operators of Major Repairs at Apartment Blocks and JSC United amount of RUB 6.5 billion for an eight-year period. Apart from VTB Bank, the public-private partnership project Electronic Market Place signed a trilateral agreement on cooperation in the integrated development of a Major involves the government of the Khanty-Mansi Autonomous District, Yugra Development Fund and the VIS group. Repairs System. The contract outlines various agreements between the parties in improving and developing the It is expected that the center will be able to accommodate up to 10,000 births a year. framework for major repairs done at apartment blocks, with VTB Bank to be responsible for handling the accounts of regional operators.

16 Finance provided in 2016: RUB 10 million. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 2. Market environment

34 35 2.2. Support for SMBs Number of small and medium-sized business In 2016, VTB Bank and SMB Corporation signed of the loan and deposit portfolios – important customers: 426.7 thousand and 88.9 thousand, an agreement on cooperation to cement the integration objectives that were successfully respectively success of the program by further improving achieved. On 10 May 2016, remote-banking Loans to small and medium-sized businesses: overall access to debt for the sector and providing banking channels operated previously by Bank VTB has more than 300,000 customers in the SMB RUB 14.5 billion and RUB 647.8 billion, respectively more loans and guarantees to SMBs. of Moscow were successfully relaunched under sector. In 2016, the 6.5% program delivered great the VTB Bank brand. Changes were introduced to results exactly because it successfully reached out to In 2016, VTB provided extensive finance under In cooperation with JSC Russian Export Center, VTB the visualization of customer channels, customer its target audience – small and medium businesses. import substitution projects implemented in the Bank initiated a series of marketing initiatives to documentation and bank data. A well-thought-out VTB is an absolute leader in this project: six in ten loans agricultural, food, health care, pharmaceutical, promote financial and non-financial support for integration plan and team efficiency were important issued under the 6.5% Program were provided by our transport infrastructure and other industries. export-oriented SMBs. Those included seminars for success factors, with the Bank not receiving a single bank. In 2016 alone, we signed 234 loan agreements medium-sized businesses and follow-up surveys complaint from customers over any disruptions in for a total of RUB 37 billion, Bank VTB (Kazakhstan) signed an agreement for the participants. All respondents said that they operations. Thus, the integration process provided Mikhail Oseyevsky with several national funds under government were interested in participating in similar events, the smooth continuity of service to all customers. Deputy President and Chairman of the Management co-financing and subsidies programs aimed at expressing high opinions of the seminar. Among Board of PJSC VTB Bank promoting local entrepreneurship, improving the topics best aligned with business needs, they Current priorities include the development of a robust the competitiveness of the sector and increasing mentioned documentary instruments for exporters management framework for the retail banking business access to financial services for farms. (60% of respondents) and currency controls (57%). line that encompasses VTB Bank, VTB24 and Post Bank Exploring market trends and challenges in relation in Russia and a number of subsidiary banks abroad. Cooperation with small businesses is a priority area Improvement of the business to exporters was a priority for 45% of respondents. for VTB Bank’s retail banking business line. We keep a environment for SMBs Development of branch networks close eye on the market to quickly respond to changes, improving access to finance for this segment of VTB Bank is committed to improving the business At the end of 2016, VTB Bank’s network consisted entrepreneurs. 2.3. Quality and access climate for SMBs, participating in the SMB Lending of 236 branches in 80 Russian cities. Maksim Lukyanovich to banking services Promotion Program sponsored by JSC Federal Small Leader of the Small Business Office, PJSC VTB Bank and Medium-sized Business Development Corporation The number of VTB24 branches reached 1,076 sites, (hereinafter, “SMB Corporation”) in cooperation with Today we have the capabilities to provide high quality, located in 74 regions and 369 cities, with the network the Russian Ministry for Economic Development and albeit basic, banking services to people even in remote covering 80% of the country’s population. Forty-six As support for the SMB sector remained a key focus, the Bank of Russia. VTB Bank was one of the first parts of the country. [...] VTB has a number of projects new branches were opened in 12 more cities in 2016. VTB provided RUB 662.3 billion worth of loans to banks in Russia to extend finance under this Program that are something bigger than just a bank’s story. In addition, the bank implemented more than 40 SMBs in 2016. The key highlights of the Group’s 2016 to SMBs pursuing projects in priority industries. 17 Among them, I would name the Post Bank project. projects to improve its branch network performance activities in the SMB sector include: Dmitry Rudenko and carried out branch closure initiatives, shuttering Chairman of the Management Board of PJSC Post Bank 16 underperforming sites in an optimization effort.

Projects implemented under the 6.5 Program (VTB) VTB has branches providing retail services not only 17 In late 2015, Russia launched the SMB Lending Promotion Program, also known as the 6.5 Program . Under this In 2016, Group banks contributed to increasing overall in Russia but also in Azerbaijan, Armenia, Belarus, program, Russian banks offer the sector soft loans in the amount of RUB 10 million to RUB 1 billion at interest rates access to banking services by extending their branch Georgia, Kazakhstan, Serbia and Ukraine. of 10.2% and 9.2%. VTB Bank and VTB24 are among the participating banks, with the first loan under the program and ATMs networks, implementing improvements extended by VTB Bank. As of the end of 2016, VTB Bank signed 234 loan agreements, advancing a total of RUB in remote-banking tools and launching a number of In 2016, Post Bank also pursued a network 37 billion. The average loan amount was RUB 158 million and the average interest rate was 10.05%. In particular, large-scale projects in retail banking. Among them was development program, putting into operation finance was provided for the construction of the first phase in a greenhouse farm project in the Novosibirsk Region, the launch of Post Bank, established by reorganizing around 5,700 new sites, including 334 customer the construction, reconstruction and upgrade of an animal breeding farm, the construction of a high-precision Leto Bank. The key objective of Post Bank is to service centers, in 61 constituent entities of bearings plant and other projects. VTB plans to advance no less than RUB 30 billion in loans to SMBs under the improve access to financial services for individuals. Russia. At the end of the year, its network program in 2017. spanned more than 1.8 thousand localities, with During the reporting period, the key focus was placed around 2 thousand branches based in cities with on the smooth integration of Bank of Moscow into a population of less than 100,000 people. 17 The facility was dubbed “6.5 Program” in reference to the 6.5% refinance rate offered by the Bank of Russia to participating banks. VTB Bank to retain the customer base and growth VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 2. Market environment

36 1819 20 37 Table 13. Number of the Group’s branches in 2015-16 Table 14. Key distant banking projects

2015 2016 Distant banking channel Projects completed Total, incl. 18 2,040 2,008 (√) • New payment options: tax payment, including via the website of the Federal Tax Service, transfer of payments to • branches in Russia, incl. 1,779 1,788 more recipients (3,500), fine payment with a 50% discount, etc. • branches in underpopulated and economically depressed Russian regions19 464 471 • Improved ease of use: adapting registration forms for mobile devices, introducing search options to check the history of transactions, improving access to transactions, etc. • branches abroad 261 220 Online banking • New sales-oriented features: banners and a currency exchange rate display for currency transactions

Limited service branches (desks) 288 264 • Distant approval of transactions20 • New payment options • Launch of the SuperTroika cash back card with a top-up option Most branches of VTB Bank are equipped The number of ATMs operated by VTB Bank Mobile banking • Mobile banking training for new customers with ramps or elevators to provide barrier- increased by 355 to 1.8 thousand. • An increase in the number of payment recipients, including in the government sector (7,000 types of payment) • QR code scanning free access for disabled people. • Selection of attractive saving accounts using a formula VTB24 opened 1.7 thousand new ATMs in ATMs • New training options Development of ATM networks the reporting period to deploy a total of • Launch of a dedicated mobile banking tool (information options) 12.6 thousand self-service machines. Tools for small businesses • Launch of an Internet-Bank-Client website In 2016, VTB Group’s banks opened more than 2,000 extra ATMs, bringing their VTB Bank ranked fourth among Russian banks in regions of presence, along with their customer total number to around 16 thousand. in distant banking customer experience in 2016 debt updates, to its online utility bill pay system. according to Private Deposit CX Rank 2016 published by the МarksWebb think tank. Developing distant banking channels is also a Confident growth (Post Bank) priority for Post Bank. The bank’s mobile app At the end of 2016, Post Bank’s ATM network included around 2 thousand machines. There was a distinct focus on In 2016, VTB24 processed 741 thousand utility allows customers to check their balance, check the extending the network in remote areas where the bank predominately installs POS terminals enabling customers bills for a total of RUB 2.7 billion paid via date for the next loan payment and place a deposit to deposit or withdraw cash, check their balance or pay for goods or services. Post Bank operated around 4.1 distant banking channels. VTB24 also added with a premium of 0.25% of the base rate. The app thousand POS terminals across the country at the end of 2016. The bank’s main priorities for 2017 include 1.4 thousand extra utility providers to the list is available to both customers and non-customers expanding its geographical reach and increasing its customer base. of utility services that users can pay via the of Post Bank. Users need to download it to get VTB24-Online tool and the bank’s self-service access to a virtual card for purchasing goods and machines. In addition, VTB24 implemented a services online and making other payments. Development of remote-banking with 2015. More than half of all retail transactions solution to enable its partners to submit their for retail customers handled by VTB Bank were made via distant customers’ applications for mortgage loans to the Better quality and personal data protection banking channels. The amount of loans sold by the Bank online, via user accounts, without visiting Apart from extending its branch and ATM network, Bank’s call center nearly doubled to total RUB 31.3 a branch. Another solution enabled customers Satisfaction levels of the Group’s customers in the Group is also committed to enhancing its billion in 2016 compared with the previous year. to open saving accounts using mobile or online the banking sector are high. In 2016, VTB24 won distant banking tools for retail customers in banking tools. There are also plans to implement the Best Cash Back Product award from Banki.ru, order to improve access to banking services and The Bank primarily pursued three saving account management on ATM interfaces. while its loyalty program for MIR card holders was their quality. In 2016, around 500,000 retail goals in developing its distant recognized as the best in its class in class by Frank customers of VTB Bank, accounting for 22.3% banking channels, including In 2016, VTB24 was one of the first banks in Research Group. VTB Bank’s Operations Support of all its customers, were regular users of distant Russia to utilize the Apple Pay and Samsung Pay Department conducts quarterly surveys among banking services, which was almost double the Adding new options and features to increase sales apps for MasterCard holders. VTB24 is set to customers via distant banking tools to measure level of the previous year. Transactions performed and customer engagement further improve the quality of its distant banking their satisfaction with the Bank’s services. using mobile and online banking tools exceeded Improving ease of use services, including by developing an automated RUB 111 billion, an increase of 70% compared Increasing customer security payment service, and linking more utility providers

18 Excluding limited service branches (desks). 20 The option is available for Private Banking Program customers, enabling them to approve a broad range of transactions such as payments, cash 19 Regions with below-average population that are in the lowest quartile by per capita income in accordance with state statistics. transfers, opening of saving accounts and currency exchange. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 2. Market environment

38 39 Figure 8. Customer satisfaction assessment results at Group banks and canceled loan debts for those affected by VTB Insurance also provided support to customers deadly 2016 accidents, including the plane crash in difficult life circumstances. In 2016, the bank in Rostov-on-Don, the collapse of an apartment continued to run an array of life insurance schemes, block in Mezhdurechensk, Kemerovo Region, and launching new products with extended benefits, the crash of the Russian defense ministry’s plane in including fixed income plans. At the end of 2016, Sochi. VTB24 also had a priority focus on supporting VTB Insurance’s customer base for life insurance Bank VTB VTB24 Post Bank its mortgage loan customers, shifting around 30% products comprised 24.8 thousand individuals. (90%) (78,7%) (80%) of foreign currency mortgages into Russian rubles.

Table 15. Select insurance programs run by VTB Insurance in 2016

The number of customers accepting the invitation 2.4. Socially significant retail services Amount of to take part in the survey increased by 275% Number insurance in 2016 – a total of 7.2 thousand submitted filled-in of signed premium, RUB Title Summary 2016 status agreements thousand questionnaires compared to 2.6 thousand a year A few years ago, we conducted a large-scale survey survey. It demonstrated that civil officers, employees of Endowment policy providing financial earlier. Group banks received a high average Dolgo i Schastlivo protection for personal and family plans Completed 54 53,956 score from their customers in the 2016 survey. government-funded and municipal institutions and the staff serving major corporate customers comprise an Long-term risk insurance products providing Insurance Plan for protection from disability loss to railroad In 2016, VTB24 handled 100% of customer important business segment for us. That is why we place Railroad Workers workers Completed 177 2,204 complaints sent via official channels, while our bets on widening cooperation with these groups Maximum Investment life insurance product Current 9,899 10,346,490 Post Bank processed 98% of such complaints. when planning our retail banking business growth and Endowment policy for the insured person’s The complaint processing times at Post Bank when developing new products and services. Na Vyrost children and grandchildren Current 905 252,404 was reduced from 18 to three days. Migel Markaryants Endowment policy providing financial Head of the Retail Business Department, protection for the insured person’s close Blizkie Lyudi relatives and friends Begun 159 36,467 Vice President of PJSC VTB Bank Distant banking security is an important priority Personal Plan Endowment product for personal savings Begun 3,167 321,175 for Group banks. VTB uses a wide range of data Reserve Fund Fully packaged endowment product Begun 379 10,394 security solutions, including multi-level security Fixed income systems employing cryptographic protocols and Providing socially significant services to the insurance plan Endowment policy offering a fixed income Begun 85 2,244,783 keys that enable encryption and digital signatures. population is an important priority for VTB. It drives its retail banking business growth, with services In 2016, VTB Bank implemented a number of ranging from assistance to people in difficult life The launch of the Mir National Payment Card terminals accept MIR cards in Russia. The Group plans measures to improve its distant banking services. circumstances to basic retail services for communities Program was one of the most important initiatives to issue 3.5 million MIR cards by the end of 2018. Customers can now limit the number of IP addresses (e.g., the Moscow Resident’s Social Card and the implemented by the Group in 2016 to support retail via internet-based customer service to restrict Social Taxi project) and mortgage lending. borrowers amid the macroeconomic instability and Support for vulnerable groups access to the Bank’s distant services on their the negative impact of the Western sanctions. VTB24 behalf. In addition, a billing option is now available Support for customers in difficult began to issue MIR cards in October 2016. The first In 2016, the Group actively supported vulnerable to customers paying taxes via the website of the life circumstances issue (140,000 cards) was intended for paying cash groups within the population. VTB Bank extended Federal Tax Service for generating online payment allowances to draftees called up for military service the scope of various social projects, while Post documents and payment transfers. Customers are In 2016, the Group continued to provide assistance during the spring campaign. Starting 24 October Bank launched special products for senior citizens, not required to fill in their card data or other details, to its customers struggling with unforeseen 2016, MIR cards have been offered to all VTB24 offering them attractive terms on retirement plans. which enhances the security of tax payments. circumstances, offering them banking products customers. The bank’s important priority is to make on softer terms and even writing down debts in such cards available to employees in the public sector Senior citizens comprise an important target some cases. In particular, VTB24 and Post Bank free of charge. More than 14 thousand ATMs and POS audience for Post Bank; They are expected to make offered special deposit programs to customers up as much as one-third of its total customer base VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 2. Market environment

40 41 by 2023. To attract and retain older customers, benefits to locals. Approximately 1.3 million cards The year 2016 saw an increase in the number of users issued more than 153 thousand mortgage loans Post Bank developed a special retirement program were issued under the program as of December of the My Travel Pass app launched a year earlier. for a total of RUB 294 billion, which was 50% more offering senior citizens various discounts, including 2016, with balances on them amounting to more The app allows owners of mobile devices with NFC than in 2015. The bank’s mortgage loan portfolio, a reduced annual interest rate of 16.9% on loans than RUB 2 billion at the end of the last year, 6.96% capability21 to buy one-ride tickets and passes for which also includes housing loans, went up by and guaranteed monthly income of up to 7% per more than in 2015. The Bank offers special benefits the metro, surface transport and intercity train travel, RUB 110 billion, or 14%, to total RUB 879 billion. annum on a saving account’s minimum balance. to Seniors Card holders, including a 4% year-end and load them right onto their Troika travel card, bonus and no fee for SMS alerts. The card also offers skipping ticket windows and terminals. In particular, Group banks run a number of mortgage lending VTB Bank offers senior citizens the Retirement unique, non-financial advantages to holders, who the number of My Travel Pass active users increased support programs, including a government- Card product in all regions of presence. Retirement can use it as an identity card instead of a compulsory to more than 70 thousand people in 2016, with over sponsored program offering borrowers a base rate Card holders enjoy various advantages, medical insurance certificate at outpatient clinics, 350 thousand tickets and passes bought via the of 11.4% per annum and the Lyudi Dela program including an interest income of 4% per annum a concessionary travel pass and an electronic app, which was 11 times more than a year earlier. with discount interest rates on mortgage loans on their account’s balance, no card fee and no social certificate. In partnership with NSPK and the for employees of government-owned and private fee for the transfer of utility bill payments. Moscow City Government’s departments, VTB Bank Support for home buyers companies in the education and health care began preparations for the migration of social cards industries, officers of law enforcement agencies VTB Bank also participates in the Moscow Resident’s to the MIR National Payment System scheduled Group banks have a firm foothold on the mortgage and employees of governmental agencies. Social Card program launched under the aegis of the for 2017-18, an initiative that they proposed as lending market. In 2016, VTB Bank extended The Bank issued 60 thousand loans under the Moscow City Government to provide various social part of the working group at the Bank of Russia. 19.7 thousand mortgage loans for RUB 42 billion, program for a total of RUB 30.5 billion. an increase of 48% on the previous year. VTB24

Free rides on subway (VTB Bank) In partnership with MasterCard, VTB Bank launched a new debit card called Super3 - World MasterCard PayPass Government Mortgage Lending Support Program (VTB Bank and VTB24) linked to the Troika travel app that enables users to pay for travel on Moscow’s public transport. Holders of the In 2016, VTB Bank took an active part in a government housing lending support program under which it Super3 card get a cash back of up to 5% on the e-purse linked to the Troika travel card for travel on Moscow’s provided mortgage loans for the purchase of newly built apartments at an annual interest rate of 11.4%. public transport free of charge. Around half of all mortgage loans extended by VTB24 in 2016 were issued under the program. Since the launch of the program in March 2015, a total of around RUB 235 billion worth of mortgage loans were issued, including RUB 158 billion in 2016, with VTB24 almost reaching its participation quota. VTB24 accounted for an As a strategic partner of the Moscow City Government, In cooperation with the Murmansk city government, average 25% of all loans granted under the program. At the same time, VTB24 and VTB Bank made a decision VTB Bank continues to participate in the development, Post Bank offers a City Support Card product linked to in 2016 to extend more program-related loans in the first quarter of 2017. Individuals who applied for them implementation and follow-up support of the a saving account. The card is available to vulnerable before 31 December 2016 are to be entitled to reduced interest rates ranging from 10.4% to 11.4%. Transport and Road Network Department’s parking fee groups such as large families, WWII veterans and both e-payment initiatives. VTB Bank is a leading acquiring military and civilian veterans of wars involving the bank on the market of city services, offering top-ups Soviet Union and Russia in the post-Soviet as well as In addition, Group banks actively pursue corporate Group banks also run regular marketing and promotion for car owners’ parking accounts and options to pay for people in difficult life circumstances who can use the lending programs. In particular, VTB24 offers events for existing and potential customers. On Moscow residence permits, parking passes and fines card to purchase drugs, medical devices, community attractive loan deals to its payroll customers. Under 24 November 2016, VTB Bank held its first open for parking offenses, including the removal of vehicles. services and foodstuffs at a discount of 5% and higher. a large-scale mortgage lending program for Russian conference for mortgage borrowers, which focused Railways, VTB24 extended more than RUB 4 billion on pricing mechanisms for newly built apartments In 2016, VTB24 and Bank of Moscow customers VTB regularly organizes fundraising events via worth of loans to the company’s employees in 2016. and mortgage lending growth plans for a period after were able to save around RUB 130 million on its distant banking channels, inviting customers the completion of the Government Mortgage Lending fines for road traffic offenses. When paying them to transfer donations for social and charitable VTB24 also retained market leadership in extending Support Program. VTB Bank plans to hold similar within 20 days after the issue of the penalty purposes with no bank charges, e.g., to Rusfond mortgage loans to military servicemen in 2016, granting events, which it believes enable a positive experience. via online or mobile banking tools, customers and the Social Taxi Service. More initiatives are more than RUB 16 billion worth of such loans to this were eligible for a 50% discount. More than 20 being pursued to increase the number of payment category last year, with its market share totaling 30%. thousand customers paid over 130 thousand fines recipients on behalf of My Documents Centers for a total amount of RUB 300 million in 2016. of Public Services and the Moscow Metro.

21 Near Field Communication is a wireless connectivity technology that enables convenient short-range communication between electronic devices. Making Ourselves Better by Streamlining Our Business

VTB values its team of competent, highly motivated and loyal employees VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 3. Internal environment

44 45 3. Internal environment Figure 10. Personnel age and gender structure, 2016

VTB Bank is an attractive and socially responsible discussed at an annual HR conference organized employer. We are valued because we provide our by the Group. In 2016, the conference was employees with an opportunity to gain unique attended by 124 participants from 25 companies professional experience and build a successful career. of the VTB Group. During the conference, the We actively work with our employees to develop their winners of the 2016 Best HR Projects contest were professional and managerial competencies, a culture announced: Post Bank, with its Client Service from of efficiency and responsibility for result. There are Home, was awarded for the most impressive HR many young people in our team; we maintain close ties project; VTB24 was awarded for its contribution to with universities and invite talented students to work at corporate culture, and VTB Factoring was awarded the Company. for the active promotion of corporate values. Gleb Yermakov Head of Human Resources, Senior Vice President VTB Group’s average headcount in 2016 was 72.7 Under 30 (41%) Men (29%) of VTB Bank (PJSC) thousand employees (√), down 4% from 2015. The reduction in headcount was in particular 30-50 (50%) Women (71%) attributed to increased pressure towards labor Over 50 (9%) Continuous improvement and achievement productivity, the merging of overlapping functions, of set goals are heavily dependent on having as well as Bank of Moscow’s integration into VTB. a strong team of highly motivated, loyal and Top employers in 2016 were VTB24 (44%), VTB competent professionals. Pursuant to its HR Bank (27%), and Post Bank (10%). Personnel In 2016, the Group recruited a total of 25 thousand 200 female employees in the South and Siberia policy, VTB is guided by labor laws adopted in age and gender structure remained virtually people, with the highest number of new hires macro-regions benefited from this initiative, which Russia and other jurisdictions where it conducts unchanged from 2015 (see Figure 10). at VTB24 (9.3 thousand people), Post Bank (8 is planned to be rolled out across the entire bank business, as well as by its internal regulations. thousand people) and VTB Bank (4.2 thousand in 2017. Client Service from Home was recognized Figure 9. Average headcount, 2015 and 201622 people). The employee turnover rate was 18.4%. as the year’s best HR project and won the audience The GMC Coordinating Commission for Human choice award at the Group’s annual HR conference. 75,577 Resources is responsible for Group-wide people 72,721 Group companies actively engage with leading local 13,658 management. VTB also has an integrated HR 13,966 universities, as students and young professionals are Over the reporting period, Group companies took 5,624 Committee, which includes senior executives from 7,304 regarded as key target groups for recruiting. In 2016, up various initiatives aimed at the employment 10,838 VTB Bank, VTB24 and VTB Capital. VTB’s HR policies VTB Bank + VTB Group took on 230 student interns and over of the disabled, including the following: 10,955 19,392 Bank are focused on the following priority areas: of Moscow 40 students were granted individual bursaries. Post Bank’s participation in the Business Advisory 34,482 32,060 personnel recruitment, training and development VTB is committed to creating equal opportunities Board on Disability (38 disabled individuals work in employee motivation and remuneration and a comfortable working environment the company) internal communications and corporate culture 2015 2016 for vulnerable groups, including women on VTB Capital teamed up with the Office for Disabled development child-care leave and disabled people. Individuals under the Public Employment Center of the occupational health and safety VTB24 Moscow Central Administrative District and the Quality VTB Bank In 2016, Post Bank set up Client Service from Home, of Life Charitable Trust to take part in a career fair for VTB closely monitors the best local and international Bank of Moscow a project that allows female employees to work the disabled, which was held via Skype (four disabled practices to keep up with emerging trends and to Post Bank from home while on child-care leave in order to individuals work in the company) maintain its corporate practices at an appropriate Other earn income and keep their skills up-to-date. Over level. The most recent trends and prospects are

22 The average headcount of VTB Bank for 2016 (15,780) included the average headcount of the Bank of Moscow (3,612) for the period from 1.01.2016 to 09.05.2016. (On May 10, the bank’s integration was officially completed). VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 3. Internal environment

46 47 3.1. Employee training of distance learning hours in 2016 rose by 17% Table 16. VTB Group’s key executive training programs in 2016 and development from a year ago to 37.57 hours per employee. VTB Group/ Company Figure 11. Training hours at the Group in 2015 and Name of the within the Number of We all have studied at school and university, but 2016 (including distance learning) program Group Purpose Level of managers participants sometimes in our life or work you come across a 4,49 Training VTB Group executives to address the challenge you don’t have enough knowledge for. And 4,22 New Energy for strategic and operational challenges facing Middle managers of VTB 70 executives from you don’t have a teacher beside you who can prompt Leadership VTB Group the organization Group 11 companies Shaping common understanding of key aspects and guide you through it; now you have to learn on 2,73 2,42 Management of management, studying tools for effective Line managers of VTB 330 employees from your own. You take on the challenge, plunge into Algorithms VTB Group management and implementation of tasks Group 12 companies

it, start looking for answers wherever possible, but Studying the aspects of financial 49 participants were first you ask your colleagues or surf the Net. If the management, strategic HR, marketing and certified, of which 14 with 1,8 1,76 Corporate MBA VTB24 leadership Line managers honors challenge is too big and requires a more systemic approach, additional training becomes a must. Academy of Studying and improving management skills 2015 2016 Management VTB Insurance (in-class format) Line managers 254 line managers There’s nothing better than studying as an adult: Leadership you know exactly what knowledge you need and how Development Total number of distance learning hours, mln hours you’re going to apply it today. Training Program in Total number of on-site learning hours, mln hours collaboration with Kirill Sedakov the Higher School of Developing leadership skills and Head of PMO, Business Development, MultiCarta Economics Post Bank competencies among managers Line managers Over 300 employees VTB places a strong focus on providing continuous learning for its executive managers, as they are Employee training and development is a the ones who set the tone for the organization and Project Mindset (VTB Bank) priority area for VTB’s HR policies and is form a positive attitude towards work. In 2016, the At the end of 2016, VTB Bank launched Project Mindset, a new modular training program designed to provide designed to maintain high professional Group completed a number of training initiatives insight into a project-based approach, effective project and risk management techniques and teamwork standards of work. At the beginning of 2016, for executives, aimed primarily at developing communication skills. The program was elaborated according to a construction-based principle and consists VTB committed an ambitious plan to improve leadership skills and increasing motivation. Some of seven modules with total length of 117-hours that may be taken in any order. In December 205 employees corporate training, which was implemented programs were improved to reflect lessons learned underwent this training. through a number of initiatives aimed at: from experience, e.g., increasing active in-class and distance learning hours under the New Energy for improving the corporate culture; Leadership program, adding inter-module activities from a negotiations strategy to an agile methodology There were also training programs dedicated creating a self-learning organisation; to the distance learning format, and creating a mobile (a flexible methodology on software solutions), in to building positive team spirit and promoting key themes of the year (situational app for the Management Algorithms program. which more than 1.3 thousand employees took part. developing requisite personal skills, of which change leadership, maintaining balanced motivation the most notable are the following: and managing performance through personal and VTB is also keen on providing its employees Improving employee performance in a changing organizational accountability). with training in theoretical aspects and practical environment has moved up on the agenda, Constructive Communication, and Applying Personality skills that are required in their day-to-day work. considering the integration of Bank of Moscow and the Typology in Communication and Management, The number of training hours per employee was Training activities in 2016 were centered around creation of Post Bank. Training programs that deserve trainings aimed at improving business communication 61.8, up 12% from the previous year. Post Bank personal competencies, effective teamwork, a mention in this context include Situational Change skills and mastering effective persuasion techniques provided the most hours of training (186 hours negotiation skills, and change leadership. Leadership (VTB Bank), Improving Personal Efficiency (Post Bank); per employee), followed by VTB24 (76 hours per amid Change (Post Bank), and Management in the Tough Negotiation, a training session covering skills employee) and VTB Bank (18 hours per employee). To nurture and grow a self-learning organization, VTB Time of Change (VTB Leasing). In addition, members and techniques used in negotiations; Public Speaking: put an emphasis on its Knowledge Academy, which of the merged teams (VTB Bank and the former Preparing an Effective Speech (VTB Leasing); Distance learning is becoming increasingly serves as an open platform for exchanging experience, Bank of Moscow) benefited from integration training Babylon, a role-playing business game aimed popular across the Group, as this format is a good knowledge and conducting debates during the sessions designed to facilitate adaptation to the new at revealing negotiation skills and teaching way to reduce costs, increase training coverage reporting period. In 2016, the Academy organized 15 environment. Over a thousand employees from nine players how to make effective business decisions and promote self-learning. The total number training sessions covering a broad range of topics, divisions of the bank attended these sessions. (VTB Insurance); VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 3. Internal environment

48 49 Team Management Rules, а training focused on learning for front-line staff designed to teach how to form and received induction training, followed by a session In addition to competitive salaries, Group companies the principles and instruments of effective teamwork develop teamwork and management skills. on coaching skills (Coaching Skills for Managers provide voluntary health insurance, accident and (VTB Bank (Belarus)). and Leaders: Acting as a Coach). Mentoring is also sickness insurance, the reimbursement of relocation Attracting young talent and promoted by other companies within the Group, e.g.: expenses and other benefits, which are designed to Taking into account that many Group companies building a mentoring culture increase personnel loyalty and motivation. For example, work in retail banking, VTB places a strong focus on VTB Bank (Kazakhstan) has a dedicated mentoring VTB Bank provides the following social benefits: teaching front-office staff effective customer relations Attracting young talents and creating the requisite program that has been running for two years, with 40 skills. Various training initiatives were held by Group conditions for their professional development are students from six regions joining the program in 2016; voluntary health insurance (VHI), and international companies in 2016 to drive a customer-centric approach important elements of VTB’s HR management. In Post Bank launched a pilot mentoring project, which medical insurance (IMI) for policyholders with a first- among front-office staff and to share information about 2016, Group companies continued cooperation brought together 33 mentors and 350 employees time cancer diagnosis; specialized product offerings, including the following: with 41 universities in the Russian Federation. in 2016; accident and sickness insurance; The main outcomes of these efforts were: VTB Factoring continues to expand its mentoring one-off payments for family emergencies; a range of training sessions, business games, program, with 48 new participants joining in 2016. financial aid in the event of exceptional circumstances; workshops and webinars at VTB24, aimed at enhancing five career fairs held at the Higher School of Economics, reimbursement of expenses on VHI insurance for customer relations skills and improving knowledge St. Petersburg State University and Moscow State children under 1 year of age; about banking products, e.g., “What? Where? When?”, University; 3.2. Employee motivation reimbursement of relocation expenses; an interactive game during which players analysed most 17 free master classes and presentations held at and remuneration additional paid leave; common complaints about banking products; universities and VTB Bank offices with the involvement corporate pension program. VTB Insurance’s training program aimed at providing of business and HR leaders; knowledge about the key terms, parameters and launching new partnership programs, including the Everybody wants their performance to be evaluated In 2016, VTB Bank continued to provide IMI insurance advantages of the company’s products, and improving M&A Case Competition (in partnership with the Moscow by management. If your work is evaluated and for employees with cancer. The coverage has been effective sales techniques; VTB Insurance also conducts State University IB Club), the Dream Bold Dreams the evaluation is high enough, you can be proud expanded so that policyholders can get help if cancer regular checks to make sure employees understand fellowship program, the Russian National Contest of what you do. This is a very good motivating factor was diagnosed before the policy date, and receive products’ key features and terms and conditions; for Finance and Economics Students and Graduates in driving employee performance. treatment not only abroad, but also in Russia if they VTB Bank (Kazakhstan)’s two training programs, (in partnership with АССА). Gennady Galperin choose to do so. This insurance product is also Positive Psychology: Managing Psychological Stress, CEO and Chairman of the Management Board available at a discount to the employee’s relatives. a training session designed to help employees restore VTB Bank also supported the launch of the Banking of VTB Insurance, Ltd. psychological balance and increase stress resistance, Automation and IT Department at the Financial Moreover, the VTB Privilege Club is actively developing and Teamwork and Cooperation, a training session University under the Government of the Russian within VTB Group. In it, employees and their relatives Federation, which was opened in 201623. Motivation system receive special conditions and discounts from partners of the program. Most often, the partners of the Club Over 2016, VTB worked hard on increasing (now there are more than one hundred of them) are VTB Junior and VTB Rost ( VTB Bank and VTB Capital) personnel loyalty and motivation and strengthening VTB customers. Some Group companies offer special VTB Junior and VTB Rost are two programs for young professionals, which have been running in VTB Bank and its employer brand in order to improve attraction benefits to their employees. For example, VTB24 partly VTB Capital since 2011. VTB Junior is targeted at bachelor and master’s students eager to do an internship in and retention rates across the Group. compensates work-related higher education expenses, business or business support divisions, while VTB Rost is meant for graduates with a master’s degree who are while Post Bank provides hardship allowance for well-prepared to work in VTB’s key business functions. Over 2.6 thousand applications were received in 2016, up Compensation is a fundamental element of the employees working in the Far North and equivalent 60% from a year ago, and 90 graduates of leading universities were taken on board. Since the inception of these motivation system. With that in mind, Group areas. The motivation system in the former Bank of programs five years ago, over 10 thousand young professionals have applied and over 350 have been admitted. companies constantly monitor the levels of pay Moscow (which merged into VTB Bank in 2016) has across peers to make sure the compensation been changed significantly. Apart from adapting pay package they offer is competitive. On top of their and other compensation benefits to match those of The Group’s active efforts to attract young talent are Bank put together a cross-functional mentoring salary, employees receive bonus payments at VTB Bank, bonus payouts to back office and control bolstered by a powerful blend of initiatives aimed program, which was introduced in 2016. The program the end of each relevant period (month/quarter/ function staff were changed from quarterly to annual. at forming a counseling and mentoring culture. VTB is supported by a dedicated group of 13 mentors who year) based on their performance against KPIs. Owing to a competitive level of pay and 23 For details, see Section 4.4. “Support for health care and education”. extensive efforts to improve the employer VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 3. Internal environment

50 51 brand, Group companies ranked highly in Management Algorithms, and three employees informed of major corporate events, and publish Corporate culture the following employer ratings in 2016: were offered promotion to executive positions. interviews with the Group’s leaders. In 2016, Team Energy was named the best corporate magazine Over 2016, VTB Bank continued to improve corporate Randstad Award: VTB Group was named the third To add extra motivation to its teams, VTB Bank held in the financial sector and received the Best culture and promote common values, including most attractive employer in the sphere of financial an annual ceremony to recognize the 2016 top Corporate Media award from Russia’s Association through team-building activities. The Code of Ethics, services; performers: 48 employees received VTB Honorary of Communication Directors and Corporate Media. adopted in 2013, is a key document outlining the In HeadHunter, the rating of Russia’s top employers: Badges of Distinction, 86 employees got letters of principles and rules of business conduct and ethics VTB24 was ranked as the sixth best employer; commendation signed by the President and Chairman In the reporting period, Post Bank set up that are aimed at improving VTB’s market value, Universum Professional Survey (2016): VTB Capital of the Board and 38 employees of the companies of BankTube, a corporate analogue of YouTube financial stability and operating performance. was named the fourth most attractive employer in the Group were awarded with letters of commendation that gained over 700 users in 2016. Russia and VTB24 took 20th place. signed by the President and Chairman of the Board.

Talent pooling Promulgating corporate values (VTB Factoring) 3.3. Internal communications In 2016, VTB Factoring continued progress toward embracing corporate values, which were developed with wide Building a talent pool is a core element of VTB’s and corporate culture input from all employees. The activities included an employee survey and a discussion among company leaders and HR policies. staff, with the following values emerging from the discussion: collective accountability Since 2016, the Group has been using assessment Corporate culture is a core intangible asset of any customer comes first centers to fill management and executive organization that helps it to build its business for the civility, respect, and engagement positions at its regional network of banks and future. Corporate values are a vital code by which we efficient processes and technologies subsidiary banks on a competitive basis. VTB live and work as one team. The rules give us a universal developing yourself to serve others Group employees were invited to participate in an frame of reference in our day-to-day decision-making. internal competition for a managerial position at a They create a unique work environment that brings A significant effort was made to raise the awareness of corporate values through various visual means, such as corporate regional network of VTB Bank, by taking out the best in our people and leaders, makes them thematic photos in the company’s main lobby, narratives and video clips available on the corporate portal, etc. VTB an online test designed to define and assess their willing to go the extra mile, understand their value and Factoring’s project was recognized at the Group-wide annual HR conference. individual strengths and communication skills. be proud of what they do. This is what determines how Out of 90 employees who took the online test, 22 our employees feel as they come to work and go home, were invited to in-person assessment centers. what drives their motivation and how they respond to Corporate functions, sports festivals and family fun Rostec - Russian Corporate Games (the VTB Bank various challenges. days at VTB are all aimed at building a close-knit team took first place in the team competition). As part of the talent pool initiative that has been Anton Musatov and enthusiastic team. To promote healthy lifestyles running in the Bank for two years, 143 key positions CEO of VTB Factoring, Ltd. among employees, VTB supports football, hockey VTB Bank pays special attention to the organization were defined and 69 successors were identified and paintball teams, and holds regular sports of family events. In 2016, the project “Children 360°” (in the space of one to two years). In 2016, events. In the reporting period, Group employees was launched, the goal of which is to contribute 14.5% successors received promotion. VTB Bank Internal communications took part in the following sports events: to balancing the professional and personal life of recommended its most promising employees as employees, as well as to increase financial and candidates for inclusion into the federal pool of Effective internal communications constitute the 9th VTB Spartakiad (over 3 thousand spectators, career literacy of the children of employees25. During high-potential managers24. The Government of the a vital element of the VTB’s corporate culture, more than 900 athletes from seven countries, 13 the year, more than 30 events were carried out Russian Federation approved six Bank employees especially considering the large number of sports) within the program; they involved about 6 thousand for inclusion in the federal pool. Post Bank also people it employs and the multiple geographic mass ice-skating at the VTB Ice Stadium (over 2 employees and their children. For the implementation conducted employee assessment that led to 14 locations in which it conducts business. The Team thousand participants) of the project “Children 360°” VTB Bank received employees being included in the bank’s talent Energy corporate magazine is one of the main the 10th Moscow International Velonotte (over 100 the first degree award of the prestigious award pool. All members of the talent pool undertook communication channels that inform employees employees of VTB Bank) “HR-brand” in the nomination “Capital”. a training course in a cross-group program about key results and achievements, keep them VTB24 Marathon of Sports (over 5 thousand employees of VTB24) 24 Federal talent pool was established in accordance with the list of instructions given by the Russian President after the meeting dedicated to the forming of a management talent pool (No. PR-1573 dated 1 August 2008). At 26 December 2016, the federal talent pool comprises over 2,000 candidates (www.gossluzhba.gov.ru/rezerv). 25 For details on improving the financial literacy of the children of employees, see Section 4.1 Development of the business environment. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 3. Internal environment

52 53 In 2016, the Group organized the Epiphany Frosts are invited to come and spend time at their Blood donation is a long-standing initiative In 2016 a total of 20 accidents were reported and in the Izmailovo Kremlin in Moscow, a corporate parents’ workplace. Over 100 children involving employees from all companies within investigated, including four serious injuries at VTB event that has now become regular and brought participated in the event in 2016. the Group. In 2016, 255 employees from VTB Group companies located in Russia. The number of together more than 3 thousand guests who Bank took part in the Donor Day, an event sick-leave days due to work-related injuries was 591, took part in various educational and training Volunteering organized in collaboration with A.N. Bakoulev down by 13.5% from the year before. In the Group’s activities. The event was attended by employees Scientific Center for Cardiovascular Surgery. subsidiaries abroad, one accident occurred. The and their family members, kids supported by Active volunteering work is a good indicator The event helped to collect 115 liters of blood. accident frequency rate, i.e. the number of accidents the Children’s Palliative Care Fund, as well as of an organization’s corporate maturity and per total man-hours worked, was 0.158 (√)27 in 2016. children from the Vasilyevsky orphanage in Ivanovo serves as an effective team-building tool. Region, whose participation was sponsored 3.4. Occupational health and safety In the next reporting period, VTB intends to further with funds raised by VTB Capital employees. VTB24 holds a regular monthly contest for the improve occupational health and safety. The activities best volunteer project: employees come up with As a socially responsible employer, VTB Group strives scheduled for the coming year include the next phase In the run-up to the New Year, VTB24 launched two ideas to help children, veterans and elders, to create a safe and comfortable work environment of the workplace assessment program, improvements festive projects, the Miracles of Father Christmas to run environmental campaigns, etc. Around for its employees. During 2016, VTB26 took a in distance occupational health and safety training, (20 thousand participants) and the Christmas 20-25 projects compete for the best volunteer number of steps to reduce work-related injuries and and continued initiation of preventive measures Tree of My Childhood (8.9 thousand participants), project every month. A total of 125 projects occupational illnesses, including the following: towards lower rates of work-related injuries. with employees receiving various gifts, such as were sponsored in 2016, with RUB 1 million books, sweets and souvenirs for their children. raised by employees and RUB 3.5 million workplace conditions assessment (28,1 thousand provided by the employer. VTB24 also won an workplaces assessed) VTB Capital organized Children’s Day, a third award at an annual Group-wide HR conference occupational health and safety training annual event when employees’ children for its efforts to promote corporate culture. (over 6 thousand managers and employees received training) Table 17. VTB Group’s select volunteer projects in 2016 preventive medical examinations aimed at dynamic monitoring of the health of employees, timely VTB detection of the effect of diseases, the initial forms Group/ of occupational diseases, early signs of the impact of Company of the harmful and (or) hazardous production factors on the Project Group Description Results health of employees Charity fairs with gifts handmade by children from orphanages on New Year’s Eve; collecting bedclothing for the elderly; • 2 thousand participants buying necessities for orphanages; • 78 greeting cards were prepared preparing greeting cards for lonely elderly • 300 bedding sets and 66 tickets for children’s New people; Year’s Eve parties were bought A Week of Kind Acts VTB Group holding a training on charity literacy • over RUB 483 thousand were raised for children

The New Year Charity Fair Raising funds to pay for developmental • over 300 participants Acts of Kindness VTB24 lessons for children with Down syndrome • approximately RUB 83 thousand were raised

Support for the global Raising humanitarian aid for students of • over 300 participants initiative Giving Tuesday Post Bank three children’s institutions in Moscow • over 250 chocolates, gifts and toys were collected

• over 200 books were donated to the Children’s Hospital under I.M. Sechenov First Moscow State Two charity book fairs VTB Capital Buying books for children’s institutions Medical University, and to the Vasilyevsky orphanage

Support for a home for Collecting necessities for a nursing home in • 4 trips were made elderly people VTB Capital Podborki village • sanitary supplies and medicines were bought

• over 100 participants • food, medicines, clothing, stationery, cleaning supplies Support for an affiliated VTB and New Year presents were collected orphanage Insurance Raising funds for the orphanage • a visit to a local circus show was organized 26 VTB Group hereinafter refers to companies operating in Russia, except as specifically stated otherwise. 27 The injury rate (the number of accidents for the total time worked by employees) is indicated for all VTB Group companies within the framework of the Report. Effective Business for a Balanced Society

The reputation of a reliable financial institution is inherent to the prosperity of the population and development of the regions of its presence VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 4. Social environment

56 57 4. Social environment Figure 13. VTB Bank’s charity expenditures in 2016 Development of the Russian economy

VTB Bank, as a leader on the Russian market of investment banking services, works actively Private and corporate charity is a measure of support for culture and the arts to develop Russia’s economy and supports major society’s economic, moral and cultural level. In our assistance for disadvantaged social groups industry forums and conferences aimed at enhancing organization, corporate social responsibility plays the business environment and attracting investments. a central role. Among our priorities are children’s The Group’s charity and sponsorship efforts are health, education and support for veterans’ based on principles of transparency, continuity In order to improve the financial and banking organizations. We also work closely with long-term and consistency and are in strict compliance system, VTB Bank supported a variety of friends and partners to preserve our cultural heritage. with Russian law and internal regulations. business events in 2016, including: Over the years we may have various partners – and charity recipients are partners for us – but our basic Total financing of charity projects in 2016 came to The 11th International Russian Derivatives Market principles and approaches remain unchanged. RUB 5.1 billion (√), 96% of which was contributed by Conference: “Whether derivatives can insure the For me personally, charity is a duty and an honor. I visit VTB Bank. In 2016, the main focuses of charity and Russian economy?” so many places – from orphanages and universities to sponsorship in terms of the amount of financing were The First Moscow Financial Forum: “The Financial Culture and art (25%) hospitals and new exhibitions at the State Hermitage, sports, culture and the arts, and education. VTB Bank strategy of Russia: Heading for growth” Sports (16%) and as a result I develop new contacts and a better also continued social projects initiated by the Bank The Russia & CIS Trade & Export Finance NGOs (13%) 30 understanding of life in all its aspects. Of course, I’m of Moscow, which was fully integrated with VTB Group Conference : “The Russian global trade market and Education and science (8%) always aware that I only represent the true benefactor, in May 2016. These projects included the intellectual recent events in the light of international sanctions” Bank and professional organizations (7%) VTB Bank. TV game show “What? Where? When?” the Velobike The 26th Congress of the Association of Russian Veterans and people with disabilities (5%) Yuri Levchenko bike rental system, the Bank of Moscow Kremlin Cup Banks: “Anti-crisis strategy and tactics: Cooperation 28 Health service (5%) Deputy Director, Northwest Regional Center, tennis tournament and the Moscow Urban Forum. between banks and regulators” Other (21%) Senior Vice President, VTB Bank (PJSC) Figure 12. VTB Group’s charity expenditures In 2016, VTB Bank also supported major events by company in 2015–201629 (RUB billion) in the nuclear, railway, military technology Corporate social responsibility is an integral 4.1. Development and automobile sectors, among others. part of VTB Group’s policy along with financial 5.1 0.1 0.12 of the business environment performance and commercial success. As a 3.6 socially responsible group, VTB believes that 0.31 0.07 VTB Bank + a financial institution’s economic results and 0.96 Each year, VTB-supported business events bring 4.89 Bank reputation depend on the welfare of the society of Moscow together many distinguished experts, executives and regions in which it operates. VTB Group 2.26 of global companies and investors to discuss key selects charity and sponsorship priorities based trends in the Russian economy. Such events serve on its strategy and capabilities, national priorities 2015 2016 to encourage large-scale investment initiatives and local needs. Our priorities include: and expand the investment potential of Russian VTB Bank and foreign companies. In the current geopolitical improving the financial literacy of the public and Bank of Moscow situation, we believe a constructive dialogue with the developing the business environment VTB24 international financial community is essential. On our support for health care, a healthy lifestyle and sports Other part, we are grateful to all of the participants for their support for education and science interest and commitment. Alexey Yakovitsky CEO, VTB Capital

28 In 2016 the tournament was renamed the VTB Kremlin Cup. 29 The Bank of Moscow’s charity expenditures in 2016 are combined with those of VTB Bank. 30 The Russia & CIS Trade & Export Finance Conference. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 4. Social environment

58 59 Table 18. Key industry events held with the support of VTB Bank in 2016 Strengthening international cooperation strategically important agreements with members of the Russian and foreign business community. Number of participants As one of its main areas of sponsorship, the Group Event Date and venue Main topics and results supports and organizes events aimed at improving In 2016, VTB Bank supported major business Investment attraction to automotive component international relations and bringing investments forums such as the Eastern Economic Forum, the The 10th International industry, development of exports, means of to Russia. Involvement in such international St. Petersburg International Economic Forum, the AutoInvest® 24-26 February, increasing the level of localisation and alternative • over 200 experts Conference 2016 St. Petersburg forms of fuel • about 40 business meetings events allows VTB to reinforce its reputation as International Economic Forum and the International

• 5 thousand participants a reliable financial institution and to conclude Financial and Banking Forum of CIS Member States. The 8th International The role of nuclear energy in the low-carbon power • 508 companies representing Atomexpo Forum 2016 30 May–1 June, Moscow balance of the future 55 countries • 1.5 thousand participants from The 20th St. Petersburg International Economic Forum (VTB Bank) 415 companies The 11th International • 130 speakers In 2016, VTB Bank supported the 20th-anniversary session of the St. Petersburg International Economic Railway Business Forum: Tariff setting, prospects for developing the market • 13 agreements and Forum. Topics of discussion included plans for normalizing relations between Russia and the European Strategic Partnership 1520 1-3 June, Sochi of transport services and international cooperation memorandums signed Union and attracting investments. The numerous events held during the three days of the forum included: • 6 thousand participants from the plenary session “Capitalizing on the New Global Economic Reality,” attended by the presidents of Russia 42 countries • 315 speakers and Kazakhstan and the prime minister of Italy; the SCO Business Forum; the BRICS Business Forum; the B20 • over 500 Russian and foreign Regional Consultative Forum; and summits of energy companies and media. There were also business Urban planning, architecture, economic and mass media The Moscow Urban Forum 30 June–3 July, Moscow strategic city planning • more than 75 events breakfasts, panel sessions, TV debates and other events. The forum was attended by over 12 thousand people • 800 Russian and foreign from 133 countries, upwards of 200 experts, more than 600 speakers and moderators and 86 international companies television channels. As a result, 356 agreements worth RUB 1.46 trillion were signed. • delegations representing the defense establishments of 35 countries The Army International • 500 thousand visitors Military-Technical Prospects for creating modern weaponry, military • 140 thousand m2 of exhibition Forum 2016 6-11 September, Kubinka and special technology pavilions VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 4. Social environment

60 61 Figure 14. Major business forums held in 2016 with the support of VTB Bank and VTB Capital

St. Petersburg, 16-18 June Moscow, 12-14 October Moscow, 18 March The 20th St. Petersburg International The “RUSSIA CALLING” Investment The International Economic Forum Economic Forum (VTB Bank): Forum (VTB Capital): of CIS Member States (VTB Bank): • over 12 thousand participants • over 2 thousand participants • 11 CIS countries and Georgia from 133 countries • 500 investors from 60 countries • 1.5 thousand participants • more than 200 experts • around 1 thousand business • 155 journalists • over 600 speakers and moderators meetings • 356 agreements worth RUB 1.46 trillion were signed

Vladivostok, 2-3 September Minsk, 27-28 October The Eastern Economic Forum The Second International (VTB Bank): Davos, 21 January Financial and Banking Forum • over 3.5 thousand participants Business breakfast with investors for CIS Member States: Minsk • 978 Russian and foreign during the World Economic Forum (VTB Business Meetings (VTB Bank): companies Capital): • 350 representatives of CIS • 1.1 thousand journalists • 70 Russian and foreign investors and non-CIS countries • 214 agreements worth over RUB from 15 countries 1.85 trillion were signed VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 4. Social environment

62 63 Improvement of financial literacy learn the rules of teamwork and create a career Table 19. VTB’s channels of interaction with the public on matters of financial literacy profile, as well as a seminar for parents on career Group companies have a tradition of working guidance for their children (attended by over 200 Channel of interaction YouTube Vkontakte Facebook Odnoklassniki Twitter to improve the financial literacy of the public. employees and their children) In 2016, VTB Bank held its first conference My Future Today, a simulation game on making VTB Group (as a 203 thousand whole) Over 3 million views subscribers on mortgage loans for clients and Moscow informed decisions (attended by over 50 young 20.6 thousand residents pricing mechanisms for apartments adults) VTB Bank subscribers

in new buildings and the future of mortgage a master class on managing personal finances, time 25.6 thousand 30.8 thousand 8.2 thousand lending. VTB24 held a series of free seminars on and a career for students of Rybnoye Boarding School VTB Bank Moscow subscribers subscribers 3.8 thousand subscribers the stock markets for residents of Moscow. (attended by 22 students) 17 thousand 48.9 thousand 13.8 thousand VTB24 Over 11 million views subscribers subscribers subscribers In addition to the adult population, children are Employees of VTB Bank (Belarus) led classes for 21.3 thousand 23.6 thousand VTB Insurance subscribers subscribers 7.3 thousand an important target in our efforts to improve over 700 children from ten schools in Belarus financial literacy. In 2016, the “Children 360°” during International Financial Literacy Week. Program included initiatives in three main 4.2. Support for sports the Bank’s support, the team is a regular competitor areas: financial literacy, communication skills In 2016, the VTB Capital Children’s Academy in major races, including the Dakar and Silk Road and the ability to make informed decisions. was launched – a project involving online rallies. In the 13 stages of the 2016 Dakar Rally, 55 lectures for children in orphanages by VTB VTB Group is active in promoting high-performance trucks covered 9,5 thousand km of mountains, flatland Among the program’s key initiatives in 2016 were: Capital employees. As part of the initiative, sports and popularizing a healthy lifestyle. We’re and wilderness in Argentina and Bolivia. The KAMAZ the best students of the Vasilievsky orphanage involved in organizing major international sports Master team was the silver award winner. In the 2016 the first career guidance forum “Bank of Your visited the investment forum organized by VTB events, and we provide support for sports federations Silk Road Rally (Russia–Kazakhstan–China), KAMAZ Abilities,” including a seminar to help children Capital “RUSSIA CALLING”, where they met with and children’s sports. One of our most socially Master teams took first, second and fourth places. determine their type of personality and thinking, representatives of their chosen professions. important efforts in this area is the construction of sports infrastructure. The reconstruction of Dynamo The 2016 VTB Kremlin Cup tennis tournament32 Stadium, for example – a project unique in the was held with VTB’s support. A special event was The 2nd Russia-Wide Financial Literacy Week for Children and Young Adults (Post Bank) world – is being done with the support of VTB. held ahead of the tournament that allowed clients In 2016, the 2nd Russia-Wide Financial Literacy Week for Children and Young Adults was held as part of the Evgenia Mamsurova of VTB Bank, the former Bank of Moscow and Post Russian finance ministry’s program “Promotion of financial literacy and financial education in the Russian Head of retail and small enterprise business division Bank, as well as students and Moscow residents Federation.” The chief topics of discussion were sustainable consumption, savings, protecting the rights of of Advertising and Marketing department, with social cards to attend the first few days of the financial product consumers and information security. Over 30 Post Bank employees took part in the event. VTB Bank (PJSC) tournament free of charge. The tournament was They held 46 lectures for 1.8 thousand schoolchildren and college students in 19 Russian cities. Post Bank was attended by some 70 thousand spectators, 20% awarded for its contribution to the education of children and young adults in 2016 by the Ministry of Finance. of whom took advantage of the special event. Post Bank also supported the 3rd Russia-Wide Savings Week for the adult population, which included 460 High-performance sports master classes and lectures in 60 constituent entities of the Russian Federation. The event was attended by Group subsidiaries abroad are also active in a total of 14 thousand people from 130 cities. VTB Group actively promotes the development promoting professional sports in their own countries: of professional sports, providing support for international, Russian and other national sports VTB Bank (Georgia) sponsored the Georgian The Internet is another channel of communication up-to-date information on bank products, interviews federations as well as football, hockey and basketball national football team for the first time. It continued that plays an important role in improving the with VTB Group executives and information on clubs31. In 2016, VTB also supported the VTB United its collaboration with the Georgian Gymnastics financial literacy of the public. Group companies VTB-supported projects, as well as advice and League Basketball Tournament as well as the Hoff Federation, the Georgian equestrian and water polo have their own YouTube channels and accounts in recommendations on financial management. Open and 27th VTB Kremlin Cup tennis tournaments. federations, the U18 junior national rowing team and the most popular social networks, where they post children’s rugby, football and alpine skiing clubs. (In In 2016, VTB Bank marked its tenth year of 2016 the Bank was named Business of the Year for its collaboration with the KAMAZ Master rally team. With contribution to the development of sports.);

31 A list of sports organizations that received assistance from VTB in the reporting period can be found on the website www.vtbrussia.ru. 32 Until 2016, the tournament’s title sponsor had been the Bank of Moscow. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 4. Social environment

64 65 VTB Bank (Armenia) continued its support for the the new building. Sports activities were offered to In 2016, VTB’s Northwest Regional Center Art Yerevan Sailing Club (20 recipients); children from disadvantaged families free of charge. sponsored Leningrad Region’s traditional VTB Bank (Germany) continued its collaboration with “Paths of History” run and “Raising Olympians” VTB Bank sees art as a key element of its social the Frankfurt Lions Hockey Team (1.7 million fans in Promoting a healthy lifestyle races involving around a thousand children efforts. To this end, the Bank collaborates with major the region); between 18 months and nine years of age. world museums, such as the Tretyakov Gallery, VTB Bank (Austria) provided assistance to a children’s VTB Group is an active supporter of mass sports the State Hermitage and the Russian Museum. football team training at the International Football and it strives to popularize a healthy lifestyle. For the second time, VTB Insurance was an Academy (30 children received uniforms). official partner of the Moscow Marathon, held In 2016, VTB Bank and the Pushkin State Museum In 2016, VTB Bank continued its support for the on 25 September 2016. The number of runners of Fine Arts, which have collaborated since 2005, Sports infrastructure Velobike project, which is aimed at enhancing increases each year: in 2016, over 7.8 thousand signed a letter of intent to pursue a program of Moscow’s infrastructure and transport system, people ran the 42.2 km distance, and nearly support for exhibition, restoration and publishing, VTB Group supports projects to develop sports promoting a healthy lifestyle and improving 11 thousand people ran the 10 km distance. as well as for the acquisition of artworks for the infrastructure in Russia and Kazakhstan, including the environmental situation by cutting down on the The runners represented 86 countries. museum’s collection. In 2016, this cooperation the construction of football, hockey and volleyball use of personal vehicles. In 2016, the number of included exhibition events devoted to the work arenas. When sports facilities are built, the registered Velobike users grew by 198 thousand VTB Arena Park supported the nonprofit Dynamo of Lucas Cranach the Elder, Albert Marquet, Ilya surrounding area is also developed, thus improving year-on-year to 435 thousand, and the number Foundation for Children’s Programs, which strives Zilberstein and Giovanni Battista Piranesi. the municipal infrastructure in general. of subscriptions grew by 112 thousand to 255 to popularize sports and a healthy lifestyle thousand. The number of bike stations grew to 330 among children. In 2016, the company provided In 2016, for the third year in a row, VTB Bank In 2016, VTB Bank charity donations were used for in 2016 (up from 300 at the end of 2015), and the charitable assistance for the development of (Belarus) supported “The Artist and the City,” renovation work on the Tbilisi gymnastics center, number of rentals nearly doubled to 1.67 million. children’s recreation programs and children’s a unique outdoor exhibition in Minsk. Over which was damaged in a flood in 2015. Around a sports via a network of sports groups. 30 reproductions of paintings by the Belarus thousand gymnasts can train simultaneously in artist Valentin Gubarev were shown.

Table 20. VTB Group’s key projects for the construction and reconstruction of sports infrastructure 4.3. Support for culture and the arts Dynamo Management Company, in cooperation with the Tretyakov Gallery, launched a project to Sports facility Group company Characteristics create a copy of Joseph Chaikov’s Football Players. Preservation of our country’s cultural heritage is a key • 3,463 seats (ice arena) Based on the original sculpture in the Tretyakov VTB Bank • 16,942 m2 (area under development) focus of the Group’s social efforts. We enthusiastically collection, modern 3D scanning technologies Almaty Ice Arena (Kazakhstan) • 327 seats (warm-up rink) support major projects commensurate with the scale will be used to produce a copy that will stand • 26,319 seats (Central Dynamo Stadium) of our operations. In choosing recipients, we focus on near the west terrace of VTB Arena Stadium. • 11,488–14,000 seats (multi-purpose arena) well-known cultural institutions such as the Bolshoi Reconstruction of • 62,800,000 m2 (Dynamo Sports Academy) the Central Dynamo • 8 ha (parking area, green space) and Mariinsky Theater and the Pyotr Fomenko Theater. Stadium and Dynamo Management • 13 residential buildings We also have close, long-term relations with major surrounding area Company • Best Municipal Site with Sports Infrastructure (named by Sports Facilities magazine) museums such as the Tretyakov Gallery, the Hermitage • 3,500 seats • 2 training facilities and the Russian Museum. Match Point • sports and recreation center Alexander Yerofeyev Volleyball Arena VTB Project • 200 athletes can train and compete simultaneously Advertising and Marketing Leader, Department of Public Relations and Marketing, Vice President, VTB Bank (PJSC) The 10th International Moscow Velonotte (VTB Bank) In 2016, VTB Bank was an official partner of the 10th Moscow International Velonotte, held on 16-17 June in Moscow. The tenth Velonotte was dedicated to the memory of Lev Yashin, Princess Diana and Varlam Shalamov. Over 3 thousand participants cycled the 28-km route between Red October and Dynamo stadiums – the first and last in the career of Lev Yashin, the greatest goalkeeper in football history. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 4. Social environment

66 67 Theater Group companies supported major Exhibition of the works of Ivan Aivazovsky (VTB Bank) theatrical events such as: In 2016, VTB Bank supported an exhibition at the Tretyakov Gallery on Krymsky Val to mark the 200th anniversary Support for the theater and music has long been of the birth of the great Russian marine painter Ivan Aivazovsky. 150 paintings and 55 graphic works were an important focus of VTB’s social efforts. Group The Russia-Wide Professional Award “Facets of Mass exhibited as well as porcelain wares, ship models and nautical instruments from 16 museums. The exhibits companies collaborate with major theaters Theater,” 28 March, Moscow (VTB Bank) included Aivazovsky’s four most famous paintings: The Rainbow, The Black Sea, The Ninth Wave and The in Russia and the CIS, including the Bolshoi The 26th Baltic House International Theater Festival, 30 Caucasian Coast. During its four-month run, the exhibition had over 600 thousand visitors. More than a thousand and Mariinsky theaters, the Pyotr Fomenko September–13 October, St. Petersburg (VTB Northwest tours and some 20 special events were organized. 33 Workshop Theater, the Griboyedov Russian Drama Regional Center) Since 2015, VTB Bank has issued co-branded payment cards with the State Tretyakov Gallery. An amount equal Theater in Tbilisi, Georgia, the Liepa Charitable The 13th Baltic Seasons Arts Festival, 16 May–29 to 1 percent of all money spent with these cards goes to the Tretyakov Gallery Support Fund. In August 2016, a Foundation for the Choreographic and Visual October, Kaliningrad (VTB Northwest Regional Center) second series of payment cards was issued to coincide with the Aivazovsky exhibition. Arts, Kurazh Moscow Children’s Theater, etc. The 13th International Baltic Star Award, 3 October, St. Petersburg (VTB Northwest Regional Center) VTB Bank sponsored a number of tours in The Yuri Lyubimov Theater Award, 30 September, Table 21. Major exhibitions held with VTB’s support in 2016 33 2016, including a gala concert of Bolshoi Moscow (VTB24) Ballet stars at the autumn meetings of the Exhibition Date Museum Description and number of visitors International Monetary Fund and the World In addition to their support for the dramatic arts, Group • Some 100 paintings as well as graphic and Bank in Washington, D.C. (8 October), a London companies make an important contribution to opera, decorative works from the collections of the Tretyakov Gallery, the Russian Museum and tour by St. Petersburg’s Eifman Ballet (6-10 ballet and classical and contemporary music. The 24 February– The State Russian Museum, St. other museums December) and a Georgian tour by Moscow’s Bank supported the 2016 Bolshoi Theater premiere of Lev Bakst, 1866-1924 9 May 2016 Petersburg • 128 thousand visitors Pyotr Fomenko Workshop Theatre (1-2 October). Puccini’s Manon Lescaut with Anna Netrebko and Yusif • 48 paintings and over 50 graphic works Eyvazov in the lead roles. As part of its collaboration from the collections of major Russian and The Cranachs: Between the 4 March– The Pushkin State Museum of Fine international museums and private collections with the Perm Opera and Ballet Theater, the Bank also Renaissance and Mannerism 15 May 2016 Arts, Moscow • 144 thousand visitors supported a production of Shostakovich’s comic opera • Paintings, graphic works and documents Orango at the New Opera and the ballet Hypothetically from the collection of the Pushkin Museum of Fine Arts and the Russian State Archive of Murdered at the Teatrium on Serpukhovka. Ilya Zilberstein: For the 110th 30 March– The Pushkin State Museum of Fine Literature and Art Anniversary of His Birth 2 October 2016 Arts, Moscow • 124 thousand visitors 8 June– Spasskaya Tower Festival (VTB Bank) Sculpture, 1960-2000 11 September 2016 The State Tretyakov Gallery, Moscow • Easel works created by a sculptor M. Dronov VTB Group has supported the Spasskaya Tower International Military Music Festival since 2011: in 2016 the event • 150 paintings, 55 graphic works and other drew over a thousand musicians from 12 European and Asian countries, including the Hellenic Air Force and Navy Ivan Aivazovsky: For the 200th 29 July– exhibits from 16 museums Anniversary of His Birth 20 November 2016 The State Tretyakov Gallery, Moscow • Over 600 thousand visitors Massed Band, the Tiroler Kaiserjäger from Austria, the Honor Guard and Band of the Armed Forces of the Republic of

• Over 100 etchings, engravings and drawings Belarus, the Singapore Police Force Band and the Italian Carabinieri Band. The festival culminated in a gala concert of Piranesi’s contemporaries as well as books of military bands on Red Square and a performance by French singer Mireille Mathieu. The festival had upwards of Piranesi: Before and After. 20 September– The Pushkin State Museum of Fine and other exhibits Italy-Russia, 18th-21st Centuries 13 November 2016 Arts, Moscow • 186 thousand visitors 75 thousand guests and over 200 million TV viewers around the world.

• 69 works (49 paintings by Marquet and works by his contemporaries); the pictures were For three years, VTB24 has been a regional partner of Chamber Orchestra performed works by Shostakovich, Albert Marquet: The Open grouped thematically: Marquet and Fauvism, Window. Works from Museums Marquet’s Paris, the Artist’s Travels and the Usadba Jazz Festival. In 2016, the bank provided Boccherini, Mozart, Piazzolla and Haydn at the Jansug and Private Collections in Russia 27 September– The Pushkin State Museum of Fine Marquet in Russia support for the festival’s cultural program in three Kakhidze Center of Music and Culture in Tbilisi. and France 8 January 2017 Arts, Moscow • 143 thousand visitors Russian cities: St. Petersburg (Kirov Park of Culture From the Dinner-Service Storerooms: Decorating the and Recreation on Yelagin Island, over 8 thousand Cinema and the mass media Russian Imperial Table in the • Over 1.2 thousand items, including tableware, guests), Ekaterinburg (the Rastorguyev-Kharitonov Eighteenth to Early Twentieth 8 December 2016– The State Hermitage Museum, clothing, decorative elements, books and Centuries 20 March 2017 St. Petersburg photographs Estate, over 4 thousand guests) and Voronezh Another focus of VTB’s sponsorship efforts (Oldenburg Palace, over 3 thousand guests). is the promotion of cinema and television. 2016 was declared the year of cinema in On 27 April 2016, with the support of VTB Bank Russia, and VTB made a point of providing 33 Until 2016, this had been a project of the Bank of Moscow. (Georgia), Vladimir Spivakov and the Moscow Virtuosi special support for this industry. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 4. Social environment

68 69 In 2016, VTB Bank continued its collaboration with translate the works of Vietnamese authors into Russian. In 2016, VTB Bank took part in the repatriation of completed the museum’s archive of letters, allowing the Culture TV channel and the intellectual game In 2016, four books were published as part of this items from the personal collection of Vladimir Vysotsky a detailed study of the period in the poet’s life when show “What? When? Where?” as well as supporting project: Dostoyevsky’s The Raw Youth, Griboyedov’s and Marina Vladi acquired at the Drouot auction in she lived far from her homeland. It is planned to show a number of film-related cultural events, including: Woe from Wit, a collection of Soviet and Russian Paris. On 25 January, Vysotsky’s birthday, the Bank these letters to the public in 2017 at an exhibition short stories and The Experience of Love, a collection donated two 19th-century icons and original works marking the 125th anniversary of Tsvetayeva’s birth. The 38th Moscow International Film Festival (326 films of short stories by contemporary Russian writers. by Mikhail Zlatkovsky to the City of Moscow and presented) the Vysotsky State Cultural Center and Museum. In 2016, VTB Bank supported projects for the The 24th annual “Window on Europe” Festival of Since 2013, VTB Bank has been the general sponsor restoration of the New Jerusalem Monastery Russian Film in Vyborg (10 films presented) of the publishing project “Classics of World Literature: VTB Bank also acquired 25 previously unpublished ensemble, for the reconstruction and The TEFI television awards (430 entries) Word and Image.” Over three years, this project has letters of Marina Tsvetayeva and her husband to the reorganization of Valaam Monastery’s museum resulted in the publication of 15 classics of world Bogengart family. The letters, which had been in France, exhibits and for the construction of the church In 2016, VTB Bank provided assistance to the literature. In 2016, five books were published with a were donated to the Moscow Department of Culture and of the Icon of Our Lady of Iveron in Moscow. Vertical Film Studio for the film project An Anthology print run of 900 copies each: Selected Russian Proverbs, will be kept in the Tsvetayeva Museum. This donation for Upper-Class Students. The film, to be directed The History of Moscow, The Three Musketeers by by Stanislav Govorukhin, will consist of short love Alexandre Dumas, The Idiot by Fyodor Dostoyevsky and narratives based on works of classical Russian literature. Gulliver’s Travels by Jonathan Swift. The project includes Beringia 2016 (VTB24) donating books to major Russian and foreign libraries. In 2016, VTB24 acted as the official sponsor of the Beringia 2016 Dog Sled Races, whose goal is to preserve the VTB Bank also provided financing to the “Beyond cultural traditions of the indigenous peoples of the North. Sixteen mushers covered a route of some 1.3 thousand Time” Cultural and Ethnographic Foundation for In addition, the following books were published with the km from Petropavlovsk-Kamchatsky to the settlement of Tilichiki, and 47 children took part in the children’s race. the filming of In the Tracks of the Amur Tiger. This support of Group companies in the course of the year: With the support of VTB24, a special category was established, “For Fidelity to the Traditions of the North,” with documentary focuses on the preservation of the prizes funded by the bank. Amur tiger as well as depicting the traditions, beliefs a three-volume edition in the “Lives of Remarkable and way of life of the indigenous peoples of the People” series published by Molodaya Gvardiya Russian Far East, exemplified by the Udege people. (VTB Bank) VTB Bank also provides support to the organizers of 4.4. Support for health care a two-volume set: Two Capitals: St. Petersburg. An mass cultural events. In 2016, the Bank sponsored and education VTB’s Northwest Regional Center supported the Illustrated History for Children, and Moscow. An Moscow City Day, which included around a thousand makers of a documentary film on the musical group Illustrated History for Children (VTB Bank) concerts and performances. There were 212 Kantele, founded in 1936. The film’s goal is to The Publications and Diaries of Vice Admiral Grigori performance venues and 32 fireworks points. It is a very serious and socially important task to help contribute to the preservation of Karelian cultural Shchedrin (VTB24) those who truly need it. Especially children. It isn’t traditions and to popularize the group’s music. Ragtime by Yuri Rost (VTB24) Another focus of VTB’s support for culture is possible to help every sick child individually, but it is the preservation of national traditions and the possible to create conditions in which a great many can VTB’s Northwest Regional Center is also the Preservation of the cultural heritage popularization of traditional arts and crafts. In be helped. general sponsor of the Golden Pen, a professional 2016, VTB’s Northwest Regional Center supported Elena Melikhova journalism competition held for the 21st time in In 2016, VTB Group continued its efforts to preserve the 2016 Kizhi Regatta festival of traditional boats Deputy Head of Advertising and Marketing, 2016. There were over 300 entries, and twelve the cultural heritage and national traditions of the as well as the Starina Folklore and Ethnography Head of Sponsorship and Special Projects, journalists received Golden Pen awards. countries in which it operates and it continued to Forum on the Island of Kizhi, and VTB24 VTB Bank (PJSC) sponsor mass cultural events for the public. sponsored dog sled races in Kamchatka. Preservation of the country’s literary heritage A major two-year project to digitize and systematize In 2016, VTB Bank (Austria) sponsored the Kulinarik & Health care As part of its charity and sponsorship efforts, the TASS news agency’s photo archive was completed Kunst Festival, held from 19 August to 17 September VTB gives special attention to preserving the during the reporting period. With the Bank’s support, in St. Anton am Arlberg. Over the course of a month, An important focus of VTB’s social efforts is country’s literary heritage and popularizing over 860 thousand photographs were digitized and the festival had around 7 thousand visitors from 14 support for health care institutions, participation the work of Russian writers abroad. entered in TASS’s news photography database. A countries. Forty distinguished chefs, 17 wine makers in charitable initiatives and projects to raise commemorative photo album, The Whole Country, and over 30 creative artists were featured in some 40 funds for the treatment of those in need. In 2016, the Bank continued its sponsorship of a project was produced to mark the project’s completion. events devoted to the classical and culinary arts. to translate Russian literature into Vietnamese and to VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 4. Social environment

70 71 In 2016, VTB Bank took part in a comprehensive plan was automatically translated into an amount In the spring, the first group of 25 students began demonstrated their level of corporate finance for the socioeconomic development of the Republic of of money to be donated for the treatment of studying the department’s first subject: the Career knowledge to representatives of major companies. Karelia, timed to coincide with the 100th anniversary children with cancer. Over RUB 300 thousand Accelerator. As part of their study, the students of the republic’s formation, by providing charitable in charitable assistance was collected. visited a dealing center, treasury, technical floor and VTB’s Northwest Regional Center provided assistance to three medical institutions: the Gubkin data-processing center at the Bank’s head office. financial assistance to Kaliningrad State Technical Maternity Clinic, the Sortavala Central Regional Group companies support numerous health- University for the 2016 Innovative Entrepreneurship Hospital and the Children’s Republican Hospital. related charity initiatives, including: With VTB Bank as a partner, Lomonosov Moscow Conference, which was held as part of the 4th State University held the 2016 Growth Driver International Baltic Sea Forum. The topic of For 13 years, as part of the “World without Tears” support for the Downside Up Foundation, which Championship. During this event, students made discussion was the university’s role and tasks in program, VTB Bank has helped health care provides psychological and educational assistance presentations, defended their calculations and implementing the National Technology Initiative. institutions acquire necessary medical equipment to children with Down syndrome and their relatives and pharmaceuticals. In 2016, VTB Bank provided (VTB24) RUB 43 million in charitable funds to hospitals in funds to be used by the Armenian Mothers Foundation Management of the Future 2016 (VTB Bank) 22 cities throughout Russia. World without Tears for the construction of a Dream House center for The fifth conference of talented students and leading Russian companies was held in 2016 as part of the Bank’s was also supported by VTB Bank (Belarus), which children with cerebral palsy and assistance for the “Gift longstanding collaboration with the Higher School of Management of St. Petersburg State University. Over 100 helped three medical institutions in 2016. of Life” Foundation for Children with Cancer (VTB Bank students represented 40 Russian institutions of higher education. The event was also attended by students from [Armenia]) eight foreign institutions (including the Stockholm School of Economics, Yale University, Shanghai University, For the tenth time in 2016, VTB’s Northwest Regional assistance for Tabletochki Charitable Foundation so that Bocconi University, and HEC Paris) and prominent representatives of Russian business. A novelty this year was Center supported the charitable initiative From Heart children with cancer can be treated abroad (VTB Bank the TED presentation format: accounts based on actual experience and success stories. Students also competed to Heart, timed to coincide with the International Day [Ukraine]) to solve the business case “New horizons of VTB Group’s retail business.” The conference included a job fair for the Protection of Children. Artwork by students of funds to be used by Asyp Bala Charitable Organization where students could learn about the programs of VTB Junior and VTB Growth. Over 30 applications were Upper Secondary School No. 190 and the Shtiglits to help sick children (VTB Bank [Kazakhstan]) submitted for these programs. Academy was exhibited as part of an event held on 8 June in the St. Petersburg Legislative Assembly. A total Education of 109 pictures were exhibited and later donated to 4.5. Support for vulnerable children and children without parental support. Municipal Hospital No. 31 and Raukhfus Municipal Education is one of the Group’s social priorities. social groups The main goal of the initiative is to increase the Children’s Hospital No. 19. During this initiative’s VTB sees its main task as improving the quality number of adoptions from orphanages. The project ten-year history, medical institutions in St. Petersburg of financial and economic education and allows would-be adoptive parents to learn about have received over 900 pictures by young artists. enhancing the education infrastructure. VTB traditionally helps those who need it most, children in orphanages and make an informed including children without parental support, veterans choice before meeting with a child. With the Bank’s In 2016, VTB24 collaborated with the Konstantin In 2016, VTB Bank provided support to major and the disabled. support, 200 video profiles were created in 2016. Khabensky Charitable Foundation in launching the institutions of higher education, including the Elena Melikhova program “Small Business with a Big Heart.” The Higher School of Management of St. Petersburg Deputy Head of Advertising and Marketing, In 2016, VTB’s Northwest Regional Center supported special service allows small businesses to use the State University, the Financial University under the Head of Sponsorship and Special Projects, a joint project of the “Point of Support” Charitable Bank Client Online application to make quick and Government of the Russian Federation, Lomonosov VTB Bank (PJSC) Fund and the State Hermitage: the In_Inbreathe convenient cash transfers for charitable purposes. Moscow State University, the Far Eastern Federal Photo Exhibition. Well-known St. Petersburg On 1 June, International Children’s Day, the first University, St. Petersburg State University, etc. photographers exhibited works telling the stories of results of this collaboration were summed up, and VTB’s social policy is aimed, among other 12 Paralympians. The bank also provided charitable over RUB 4.8 million in funds had been collected. In early 2016, with VTB Bank’s support, a Bank things, at supporting vulnerable segments of funding for equipment needed for the exhibition. Automation and Information Technologies Department the population. Special attention is traditionally VTB Insurance also works with the Konstantin was opened in the School of Applied Mathematics given to the disabled, veterans, children from To call attention to the needs of veterans living Khabensky Foundation, and in 2016 they and Information Technologies of the Financial disadvantaged families and orphans. alone, Dynamo Management Company held the jointly sponsored a charity initiative at a sports University under the Government of the Russian Dynamo Mile Charity Race on 22 May in Moscow. exhibition timed to coincide with the Moscow Federation. The Bank was motivated by the urgent In 2016, VTB Bank supported a project of the Video Over 100 runners took part in the event. The funds Marathon. A treadmill was set up at the exhibition, need to prepare young professionals for practical Profile Charity Foundation to create a Russia-wide raised were used to equip several residential and any visitor could run a set distance, which work in the area of bank information technologies. search system with information on orphaned care homes for veterans and the disabled. Caring about the Environment Today to Make a Better Tomorrow

VTB pays great attention to enhancing its environmental consciousness and supporting nature conservation initiatives VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 5. Natural environment

74 75 5. Natural environment Figure 15. Electricity consumption at Group disposal. Cost savings from the use of compactors companies, MWh/employee per year, in 2015-16 with a capacity of 20 m3 totaled more than 40% in monetary value. Other green business initiatives 6.05 5.85 pursued by the Bank promote the collection of Our bank is committed to socially responsible A responsible approach to property management is an fluorescent and mercury-containing lamps and essential element of the Group’s sustainable development tubes, car tires, old office equipment and household practices and prioritizes projects focusing on 3.41 3.16 2.89 environmental and natural resource sustainability, policies. VTB pursues the following objectives in this area: 2.65 appliances for treatment and disposal. The Bank which are critical to life on our planet and our own collected 121 tires for recycling in 2016. lives. Additionally, we take a responsible approach to Better energy efficiency the consumption of resources, striving to improve our Robust waste management and sorting In the reporting year, VTB Group also focused on the VTB Bank + VTB24 Other performance each year. Real estate portfolio efficiency Bank of Moscow optimization of its real estate portfolio prompted Aleksandr Gogolev Environmentally sustainable transport fleet by the ongoing integration processes of the Bank 2015 Senior Vice President of VTB Bank Lower paper consumption of Moscow. VTB continued work to move the head 2016 and Head of LLC VTB Ecology Environmental awareness campaigns offices of its entities to modern, more energy efficient business centers. In particular, it launched the process In 2016, VTB Bank implemented new initiatives under its VTB Bank has put three containers for used batteries to relocate the offices of several companies to the Environmental protection is in the focus of the Energy Saving and Efficiency Program launched in 2013, and 30 containers for the separate collection of Nevskaya Ratusha Business Center in St. Petersburg Group’s CSR activities. VTB pursues two major upgrading lighting systems in the elevator halls and plastic, glass and metal at its head office. In 2016, and the Eurasia Tower in Moscow, attempting to goals as part of its commitment to environmental stairways of the West Tower that houses its head office. the Bank collected and handed over 300 kilograms sell their previously occupied properties at the sustainability: improving its energy efficiency and To reduce energy consumption, the Bank installed energy of used batteries, 5 m3 of metal, 5.4 m3 of plastic, same time. Eight properties with a total area of supporting environmental projects and initiatives. saving equipment at its premises, as well as lighting 4.7 m3 of glass and more than 100 tons of paper around 8 thousand m2 were sold in 2016. In 2016, VTB made an important step in promoting controls to adjust lighting levels for day and night use. to waste management companies for treatment and environmental values as it established a separate legal entity called VTB Ecology for the centralized VTB Group has also been steadily reducing fuel management of environmental projects. VTB Ecology consumption by replacing old cars with more The use of taxis in place of company cars (VTB Bank) is also responsible for driving the development of environmentally friendly vehicles and introducing In 2016, the Bank’s head office and its regional offices in Yekaterinburg, Samara and Nizhny Novgorod ran a new environmental instruments at the level of the changes to usual routes. Following the integration phase, pilot project to reduce the use of the corporate car fleet by encouraging employers to travel by taxi. The pilot Group, including instruments in green finance34. the car fleet previously operated by Bank of Moscow (in was a success, resulting in the development of a proposal for a three-stage reduction of the corporate car fleet the Moscow Region) was reduced by approximately 30%, across the Bank’s regional offices by 257 vehicles. with the combined car fleet totaling 300 vehicles at the 5.1. Sustainable business practices end of 2016. In addition, average maintenance costs lowered by 17.2% per corporate car in 2016, brought Figure 16. Gasoline consumption at Group Figure 17. Paper consumption at Group companies, down by the gradual installation of GPS tracker devices. companies, L/employee per year, in 2015-16 kg/employee per year, in 2015-2016 Better efficiency is a primary concern for VTB today. Overall, fuel consumption at the Group reduced by 8% 139.9 138.3 That is exactly why the Group’s top priorities include 63.9 62.2 to 5 833.3 thousand liters (√) in the reporting period. 58.1 improving the efficiency of its property management. 50.8 43.6 We have historically placed a strong focus on enhancing As part of green business practices, VTB is also committed 38 our resource and energy efficiency performance, with 66.7 to reducing paper consumption, which it strives to make 58.3 56.3 56.8 VTB actively promoting the implementation of innovative headway by increasing the usage of electronic documents technologies in natural resource sustainability. and encouraging employees to print on both sides of the Sergei Kovalev paper. Paper consumption at the Group totaled 4,161 tons Head of Administration and Senior Vice President VTB Bank + VTB24 Other VTB Bank + VTB24 Other in 2016, a year-on-year increase of 10.9% that was mainly Bank of Moscow Bank of Moscow of PJSC VTB Bank due to the expansion of Post Bank’s branch network. 2015 2015 2016 2016 34 Green finance instruments, also known as green bonds, are debt instruments used for raising capital for environmental protection, climate change and resource sustainability projects. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 5. Natural environment

76 77 Table 22. Resource consumption and greenhouse gas emissions at the Group in 2015-16 5.2. Financial support the commercial banking business and establish for environmental projects a dedicated legal entity whose staff would have Resource 2015 2016 a sound understanding of environmental project Total electricity consumption, thousand MWh 300.7 274.9 (√) requirements and green finance principles, as Total fuel consumption, thousand liters 6,343.9 5,833.3(√) The establishment of VTB Ecology within the Group, well as broad business competencies, especially

Paper consumption, tons 3,749.6 4,161 (√) a separate legal entity combining environmental and in banking and investment activities. The

Direct greenhouse gas emissions, tons CO2-equivalent 15,091.91 16,067.22 business competencies for the centralized support of establishment of VTB Ecology has allowed the environmental projects, was a landmark event in 2016. Group to centralize the development, management Indirect greenhouse gas emissions, tons CO2-equivalent 217,894.1 192,472 Promoting the development of mechanisms to raise and implementation of its environmental projects. financing for environmental projects is also very much As a socially responsible business, VTB VTB plans to take further action in 2017 in the focus as the green bond market shows steady The main objective of the new entity is to aims to raise awareness on sustainable to improve its business management practices growth. VTB is an advocate of developing green finance contribute to the development and adaptation consumption among its employees and from the environmental sustainability practices in Russia. of financial mechanisms that could enable the regularly conducts environmental training: perspective. The plans focus on the following: Elina Manilova private sector (e.g. financial institutions) to finance Director, Special Programs Support Service, environmental projects, including through green Employees of VTB Bank’s Administrative Upgrading the heat supply units by install VTB Bank bonds. In April 2016, VTB Ecology experts took Department undertake annual training in temperature sensitive equipment at the part in a panel discussion “Green money for green environmental protection, safety and the Lesozavodsk Front Office and the Yaroslavl In recent years, VTB has been placing an increased products: should the new costs be considered sustainable use of resources to provide hands-on Regional Front Office focus on environmental initiatives. In an effort to a contribution to social well-being or a growth assistance with current issues to their coworkers in Installation of LED lamps address new environmental challenges, the Group driver?” It was held at the Ecotech forum. other departments; Disposal of around 40 idle real estate properties decided to extend the traditional boundaries of VTB24 employees undertook a training course with a total area of 90 thousand square meters in Environmental Requirements for Companies, Further movement of the offices of the Group Reporting and Charges for a Negative companies to the Eurasia Tower in Moscow Conservation of Big Cats in Russian regions (VTB Bank and VTB Ecology) Environmental Impact. Promotion of electric vehicles In 2016, VTB continued cooperation with WWF, supporting its effort to conserve the population of snow Installation of extra containers for separate leopards, Siberian tigers, Amur and Persian leopards. The key objectives of the joint project are the following: collection of waste, including used batteries Designating new protected areas and preserving existing protected areas in the Far East, Altai-Sayan and Conducting of environmental awareness campaigns Caucasian regions Enhancing the legal framework on the conservation of big cats Improving living conditions for local communities Stepping up the clampdown on poachers

VTB Bank has pledged to provide US$5 million during a five-year period, with the first installment in the amount of US$1 million disbursed in September 2016. Special equipment for research was delivered to the Ubsunurskaya Kotlovina Nature Reserve, the Altai and Katun Nature Reserves and the Saylyugemsky and Tunkinsky National Parks, as well as funding for regular patrols and anti-poaching raids. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 5. Natural environment

78 79 coordinating and implementing a series of Plant a Tree as a Gift to a Friend (Post Bank) Arctic contamination action projects. Post Bank provided further partnership support to the Maraquia online project aimed at encouraging tree Driving the development of Russia’s nascent planting in Russia. Under the project, bank customers can pay for the planting of trees in 12 national parks securities market is a key priority for VTB In addition, the 2016 year saw the first results across the country. In June 2016, Post Bank signed an agreement with the Russian Ministry of Natural Ecology. At its meeting on 24 December 2016, of a renewable energy project under which a Resources and Environment to extend the project coverage to all protected areas in Russia. Post Bank earned the State Council of the Russian Federation wind-diesel hybrid power station was built to the Best Media Manager in Russia prize at the 16th Media Business National Awards for this initiative. adopted a resolution calling for the development replace an old diesel-powered generator in of green finance instruments in Russia. the Murmansk Region. The cleaner source of energy helped reduce emissions tenfold, from In 2017, the Year of Ecology in Russia, the In 2016, VTB also continued activities as the 3.5 tons to 0.35 tons per year, while annual Group plans the following activities: Russian execution agency for the Arctic Council costs decreased by RUB 327.6 thousand. Project Support Instrument, with VTB Ecology The project costs totaled RUB 4.1 million. Further cooperation with the WWF under its wild cat conservation project Participation in new projects run by NEFCO and the Reduction of black carbon emissions: Heat infrastructure reconstruction at the Valdai Cluster (VTB Bank and Arctic Council VTB Ecology) Implementation of waste management initiatives In 2016, new activities were undertaken under a black carbon reduction project launched at the Valdai Cluster in November 2014. The initiative’s key objective is to provide alternative energy sources for eight remote localities in order to decrease their dependence on fuel from external suppliers, reduce air pollution, and secure safe and quality energy supply. Project costs have already exceeded EUR 190 thousand.

In 2016, VTB also made charitable contributions Assistance to the Klinskoye District Animal to initiatives aimed at preserving biodiversity, Protection Society with the construction which included: of a shelter for abandoned animals

Assistance to the Amur Tiger Research and Conservation Center with efforts to conserve and increase the population of Amur tigers VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 6. About the Report

80 VTB Bank share 81 6. About the Report ownership Full name Type of activity as at 31 December 2015

CIS and Georgia This 2016 VTB Group Social Report is the ninth Non-financial reports are published PJSC VTB Bank (Ukraine) Bank 100 % non-financial report published by VTB Bank. by VTB Bank annually and are part of Subsidiary Organization JSC VTB Bank (Kazakhstan) Bank 100 % the Group’s annual reporting. VTB Bank (Armenia) CJSC Bank 100 % The main objective of the Report is to CJSC VTB Bank (Belarus) Bank 100 %

inform stakeholders about VTB Group’s Scope of the Report OJSC VTB Bank (Azerbaijan) Bank 51 % CSR activities in the reporting period. VTB Bank (Georgia) Bank 97.14 % Companies are included in the scope of The reporting period of this Report is the the Report on the following grounds: Europe calendar year beginning on 1 January 2016 VTB Bank (Austria) AG37 Bank 100 % and ending on 31 December 2016. Controlling interest (more than 50% of voting shares) VTB Bank (France) SA Bank 96.3 % held by VTB Bank VTB Bank (Deutschland) AG Bank 100 % Their economic, social, and environmental materiality VTB Bank JSC Belgrade Bank 100 %

Asia and Africa The scope of this Report includes the following companies:3536 Banco VTB Africa, SA (Angola) Bank 50.1 % 37 VTB Bank share ownership The financial information on VTB Group in this This Report complies with the G4 Sustainability Full name Type of activity as at 31 December 2015 Report is presented as stated in VTB Bank’s Reporting Guidelines (core level). To comply Russia consolidated financial statements as of 31 with the Guidelines, VTB Group identified VTB Bank (PJSC)35 Bank - December 2016, prepared in accordance with material aspects using a procedure that VTB24 (PJSC) Bank 99.97 % International Financial Reporting Standards consisted of the following steps: CJSC Holding VTB Capital36 Finance 100 % (IFRS), unless otherwise indicated. PJSC Post Bank (formerly, PJSC Leto Bank) Bank 50 % Interviews with leaders of relevant business units

HALS-Development PJSC Real estate 98.11 % Approach to determining the contents Surveys of the Group’s top managers and of the Report and material aspects stakeholders JSC VTB Leasing Leasing 100 % Review of non-financial reports issued by Russian VTB Insurance, Ltd. Insurance 100 % This Report presents information on the and foreign peer companies VTB Factoring, Ltd. Factoring 100 % Group’s sustainable development and CSR Analysis of the Group’s internal communication JSC NPF VTB Pension Fund Pension fund 100 % activities. A number of quantitative indicators channels and media coverage CJSC VTB Specialized Depository Non-bank custodial institution 100 % presented in this Report refer only to the Bank’s Review of internal regulations MultiCarta LLC Processing center 100 % performance due to the specific nature of Expert assessment of identified sustainability topics LLC VTB DC Finance 100 % reporting systems and difficulties in collecting for completeness and balance

CJSC MC Dynamo Real estate 75 % relevant information across the Group.

LLC VTB Real Estate Real estate 100 %

CJSC VTB Registrar Registrar 100 %

35 Including branches in Shanghai (China) and New Delhi (India). 36 Including the subsidiaries CJSC VTB Capital and VTB Capital plc. 37 Including the subsidiaries VTB Bank (Deutschland) AG and VTB Bank (France). VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 6. About the Report

82 83 Based on its analysis, the Group developed a matrix Independent assurance of the Report VTB Group’s material indicators subject to independent assessment of relevant topics that reflects the most material aspects for sustainable reporting based on their The Bank engages independent appraisers to review Indicator Description influence on both internal and external stakeholders. selected indicators presented in the Report. The These refer to charitable contributions made by Group companies (within the scope of the Report) in the reporting period. In cases where charitable donations were made in foreign assessment focused on material indicators of VTB currency, they were converted into rubles using the average exchange rate of the Bank of This Report covers the identified material aspects, Group’s CSR activities in the reporting period. Charitable donations, RUB Russia for the year. disclosing approaches to management, results for The number of sales offices is determined by adding up the offices of Group banks, excluding Sales offices retail desks and POS terminals. the reporting period and performance assessment Significantly lower electricity consumption in 2016, This refers to paper consumption by all companies of the Group (within the scope of the findings. Topics which are not considered relevant which decreased by 16 million kWh year-on-year, Report) in the reporting period. The amount of paper consumed was determined by converting are not subject to disclosure in sustainability was largely due to a different method used by VTB24 the number of paper packs used into metric tons. In cases where there was no information on the weight of an A4 or A3 sheet pack, average values were used (2.5 kg and 4.8 kg, reports according to the Guidelines. However, to calculate power consumption across its network Paper consumption, tons respectively). this Report addresses some of them, since in 2015. If VTB24 is excluded, the Group’s electricity This refers to fuel consumption by all companies of the Group (within the scope of the Report) they may be important to stakeholders. consumption fell by 7% year-on-year in 2016, Fuel (gasoline and diesel fuel) consumption, 1000 L in the reporting period, which was limited to the fuel consumed by vehicles on their books.

owing largely to optimized processes as a result This refers to electricity consumption (kWh) by all companies of the Group (within the scope Information for this Report was collected of the merger of Bank of Moscow with VTB Bank. of the Report) in the reporting period. The amount of electricity consumed at some locations Electricity consumption leased from VTB Bank has been included into VTB Bank’s total electricity consumption. and consolidated by the relevant functionaries of VTB Group companies. Average headcount is determined by adding up the number of employees of Group companies in each calendar day of the reporting period, including weekends and holidays, and dividing this sum by the number of calendar days in the month. Average headcount in the reporting period is determined by summing the average headcount in each month of the reporting period and dividing this sum by the number of months in the reporting period. Part-time employees as defined by their employment contracts are counted proportionally to the number of hours they worked. Average headcount in the reporting period excludes women who were on maternity leave or extended child-care leave and employees who were on unpaid leave to undertake a course of study at an educational institution or take entrance exams to be admitted to an educational Average headcount institution.

This refers to the accident frequency rate across all companies of the Group (within the scope of the Report) in the reporting period. Accident frequency rate indicates the number of Accident frequency rate accidents to total time worked.

This refers to the lost time injury rate across all companies of the Group (within the scope of the Report) in the reporting period. Lost time injury rate indicates the total time lost due to Lost time injury rate work-related injuries. VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 7. Appendices

84 7. Appendices VTB Group company Business association 85 VTB Pension Fund National Association of Non-Governmental Pension Funds

British Bankers’ Association (BBA) American Chamber of Commerce in Russia (AmCham) Russian National Association of Securities Market Participants (NAUFOR) 7.1. Membership in business Corporate Counsel Association Russo-British Chamber of Commerce (RBCC) associations Emerging Markets Private Equity Association (EMPEA) International Capital Market Association (ICMA) Association of Foreign Banks (AFB) VTB Group company Business association VTB Capital Russian National SWIFT Association (ROSSWIFT) Agency for Loan Guarantees National Securities Market Association (NSMA) Association of Russian Banks (ARB) VTB Registrar National Settlement Depository Asia-Pacific Economic Cooperation Advisory Council Professional Association of Registrars, Transfer Agents and Depositories International Chamber of Commerce (ICC) VTB Specialized Depository National Association of Non-Governmental Pension Funds National Council on Corporate Governance (NCCG) National Financial Market Council (NFMC) MC Dynamo Russian Managers Association Russian Union of Industrialists and Entrepreneurs (RSPP) VTB Bank CIS Financial and Banking Council (FBC) Independent Association of Banks of Ukraine Professional Association of Registrars and Depositories Association of Russian Banks (ARB) Ukrainian Interbank Payment Systems Members Association (EMA) Russian Managers Association (RMA) VTB Bank (Ukraine) Ukrainian Credit Banking Union National Securities Market Association (NSMA) VTB24 Nonprofit Partnership for the Development of Financial Market RTS (NP RTS) National Chamber of Entrepreneurs of the Republic of Kazakhstan Financial Institutions’ Association of Kazakhstan Agency for Strategic Initiatives Kazakhstan Stock Exchange National Payment Council Association Kazakhstan Deposit Insurance Fund Association of Bill Market Participants Society for Worldwide Interbank Financial Telecommunication (S.W.I.F.T. CSRL) Franco-Russian Dialogue Association Damu Entrepreneurship Development Fund Association of the Regional Banks of Russia (Association Russia) Council of Representatives of Banking Ombudsman Association of Russian Banks (ARB) VTB Bank (Kazakhstan) Association of Taxpayers in Kazakhstan Business Council for Cooperation with Cyprus under the Chamber of Commerce and Industry of the Russian Federation National Confederation of Entrepreneurs of Azerbaijan Republic International Capital Market Association Azerbaijan Banks Association Moscow International Business Association (MIBA) Azerbaijani-Russian Chamber of Business Cooperation Moscow Chamber of Commerce and Industry (MCCI) VTB Bank (Azerbaijan) United States - Azerbaijan Chamber of Commerce Russian National Association of Securities Market Participants National Foreign Exchange Association VTB Bank (Armenia) Union of Banks of Armenia (UBA) National Securities Market Association Association of Belаrussian Banks Moscow City Civic Chamber Association of Securities Market participants of the Republic of Belarus Civic Chamber of the Moscow Region VTB Bank (Belarus) Belarusian Chamber of Commerce and Industry (BelCCI) Public Council under the Ministry of Finance of the Russian Federation Special Economic Zones OJSC VTB Bank (Georgia) Association of Banks of Georgia Professional Association of Registrars, Transfer Agents and Depositories Regional Association of Employers “Moscow Confederation of Industrialists and Entrepreneurs Austrian Federal Economic Chamber (Employers)” (MCIE(E)) Austrian Bankers’ Association Russian Union of Industrialists and Entrepreneurs (RSPP) VTB Bank (Austria) Federation of Austrian Industry Bank of Moscow Trilateral Commission for Social and Labor Relations in the Central Federal District Auditing Association of German Banks (Prufungsverband deutscher Banken) Hals-Development First National Organization of Builders Association of Foreign Banks in Germany (VAB) Association of Foreign Bank Representatives in Germany (VRAB) Association of Life Insurance Companies Hessen Bankers Association (Bankenverband Hessen) All-Russian Insurance Association Federal Association of German Banks (BdB) Interregional Union of Medical Insurers VTB Bank (Germany) Deposit Protection Fund (Einlagensicherungsfonds) National Union of Liability Insurers Russian Association of Motor Insurers (RAMI) French Banking Federation Russian Association of Aviation and Space Insurers (RAASI) French Bankers Association Russian Antiterrorism Insurance Pool (RATIP) Franco-Russian Dialogue Association VTB Insurance Russian Nuclear Insurance Pool (RNIP) Association of Foreign Banks in Paris VTB Bank (France) Financial Professions Center Association of Factoring Companies (AFC) VTB Factoring Factors Chain International (FCI) VTB Bank (Belgrade) Belgrade Chamber of Commerce VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 7. Appendices

86 7.2 GRI content index External 87 Indicator Definition Report section / notes Report page assurance Aspect boundary within the organization for each External G4-20 material aspect Section 6. About the Report 80-81 Indicator Definition Report section / notes Report page assurance Aspect boundary outside the organization for General standard disclosures G4-21 each material aspect Section 1. About VTB Group 18

Strategy and analysis Restatements of information provided in previous G4-22 reports, and the reasons for such restatements Section 6. About the Report 82 Statement from the most senior decision-maker of the organization about the relevance Significant changes from previous reporting of sustainability to the organization and G4-23 periods in the scope and aspect boundaries Section 6. About the Report 80-81 the organization’s strategy for addressing Statement of the President and Chairman of G4-1 sustainability the Management Board of VTB Bank 8-9 Stakeholder engagement List of stakeholder groups engaged by the Organizational profile G4-24 organization Section 1. About VTB Group 18 G4-3 Name of the organization Contact information 92 Basis for identification and selection of G4-4 Primary brands, products, and services Section 2. Market environment 26, 34-39 G4-25 stakeholders with whom to engage Section 1. About VTB Group 17-18

G4-5 Location of the organization’s headquarters Contact information 92 Organization’s approach to stakeholder engagement, including frequency of engagement Number of countries where the organization Section 1. About VTB Group 10 G4-26 by type and by stakeholder group Section 1. About VTB Group 18-23 G4-6 operates Section 6. About the Report 80-81 Key topics and concerns that have been raised G4-7 Nature of ownership and legal form Section 6. About the Report 80-81 G4-27 through stakeholder engagement Section 1. About VTB Group 18-23

Section 1. About VTB Group 10 Report profile G4-8 Markets served Section 6. About the Report 76 G4-28 Reporting period Section 6. About the Report 80 Section 1. About VTB Group 10-11 + Section 2. Market environment 24, 26-29, 35-36 (number of sales G4-29 Date of most recent previous report Section 6. About the Report 80 G4-9 Scale of the organization Section 6. About the Report 80-81 offices) G4-30 Reporting cycle Section 6. About the Report 80 10 + (average G4-10 Number of employees Section 3. Internal environment 44 headcount) Contact point for questions regarding the report G4-31 or its contents Contact information 92 The Group’s procurement policy is available at http://www.vtb.ru/group/purchases/ “In accordance” option the organization has The procurement record for local suppliers G4-32 chosen and GRI content index Section 6. About the Report 81-82 G4-12 Organization’s supply chain is not kept. G4-33 External assurance Section 6. About the Report 82-83 Significant changes during the reporting period regarding the organization’s size, structure or Section 1. About VTB Group Governance G4-13 ownership Section 6. About the Report 80-81 Section 1. About VTB Group G4-34 Governance structure www.vtb.ru 10-13 The Group does not explicitly use the G4-14 Precautionary approach or principle precautionary principle. Remuneration policies for the highest governance http://www.vtb.ru/group/ G4-51 body and senior executives documents/#regulation Externally developed economic, environmental VTB Group joined the Banks Against Money and social charters, principles, or other initiatives Laundering Declaration. Ethics and integrity to which the organization subscribes or which it VTB Bank joined the Anti-Corruption Charter G4-15 endorses of Russian Business. Organization’s values, principles, standards and Section 1. About VTB Group G4-56 norms of behavior http://www.vtb.ru/group/mission/ 13-14 Memberships of associations (such as industry associations) and national or international Specific standard disclosures G4-16 advocacy organizations Appendix 7.1 84-85 Economic category Identified material aspects and boundaries Economic performance Entities included in the organization’s G4-17 consolidated financial statements Section 6. About the Report 80-81 G4-EC1 Direct economic value generated and distributed Section 1. About VTB Group 11

Section 1. About VTB Group 14-15 Coverage of the organization’s defined plan G4-18 Process for defining the Report content Section 6. About the Report 81-82 G4-EC3 obligations Section 3. Internal environment 49

List of all the material aspects identified in the G4-19 process of defining report content Section 1. About VTB Group 15 VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 7. Appendices

88 External External 89 Indicator Definition Report section / notes Report page assurance Indicator Definition Report section / notes Report page assurance

Indirect economic impacts Diversity and equal opportunity

Development and impact of infrastructure Composition of governance bodies and investments and services supported, with breakdown of employees per employee category these investments and services being primarily according to gender, age group, minority group Section 3. Internal environment G4-EC7 commercial, in-kind or pro bono engagements Section 4. Social environment 56-71 G4-LA12 membership and other indicators of diversity http://www.vtb.ru/group/management/ 45

Significant indirect economic impacts, including Society G4-EC8 the extent of impacts Section 2. Market environment 26-29, 34-35 Local communities Environmental category Not applicable to Group financial Materials companies. MC Dynamo organizes regular meetings + Percentage of operations with implemented local with FC Dynamo Moscow supporters. G4-EN1 Materials used by weight or volume Section 5. Natural environment 74-76 (paper consumed) community engagement, impact assessments, Hals-Development participates in public G4-SO1 and development programs hearings on its projects. Энергия

+ (electric Anti-Corruption energy and fuel Communication and training on anti-corruption G4-EN3 Energy consumption within the organization Section 5. Natural environment 74-76 consumed) G4-SO4 policies and procedures Section 1. About VTB Group 16-17 G4-EN5 Energy intensity Section 5. Natural environment 74-76 Product responsibility G4-EN6 Reduction of energy consumption Section 5. Natural environment 74-76 Product and service labeling

Social category Results of surveys measuring customer Employment G4-PR5 satisfaction Section 2. Market environment 38

Total number and rates of new employee hires Financial services indicators and employee turnover by age group, gender and Section 3. Internal environment Interactions with clients, investors and business G4-LA1 region (partially disclosed) 45 partners regarding environmental and social Benefits provided to full-time employees that FS5 risks and opportunities Section 5. Natural environment 77-79 are not provided to temporary or part-time Percentage of the portfolio for business lines by G4-LA2 employees Section 3. Internal environment 49 FS6 specific region, size and by sector Section 2. Market environment 26-27

Labor/management relations Monetary value of products and services The minimum notice period is defined by designed to deliver a specific social benefit for Minimum notice periods regarding operational the applicable laws of the countries of FS7 each business line broken down by purpose Section 2. Market environment 34-41 changes, including whether these are specific in operation and is strictly observed by all Access points in low-populated or economically G4-LA4 collective agreements Group companies FS13 disadvantaged areas by type Section 2. Market environment 35-36

Occupational health and safety Initiatives to improve access to financial services Type of injury and rates of injury, occupational FS14 for disadvantaged people Section 2. Market environment 34-39 diseases, lost days, and absenteeism, and total + Insurance Section 2. Market environment 38-39 number of work-related fatalities, by region and (accident G4-LA6 gender Section 3. Internal environment 53 frequency rate) Charity and Training and education sponsor- Average hours of training per year per employee VTB Group in 2016 4 ship Charity and sponsorship Section 4. Social environment 56-71 G4-LA9 by gender, and by employee category Section 3. Internal environment 46 VTB Social Report 2016 About VTB Group Market environment Internal environment Social environment Natural environment About the Report Appendices 7. Appendices

90 91 7.3. Independent Assurance Report on the relevant sustainability reporting Board for Accountants, which is based on the Indicators value for the year ended 31 December principles, scope and methods. fundamental principles of honesty, objectivity, 2016, in order to verify that the data was collected, professional competence and due diligence, prepared, collated and reported in a proper manner. Identification of the criteria confidentiality and professional behavior. Our evidence gathering procedures are more limited The criteria of our engagement are disclosed in the Summary of the work performed than for a reasonable assurance engagement, chapter About the Report on page 82 of the Report. and therefore less assurance is obtained than We believe that these criteria are appropriate Our engagement was conducted in accordance in a reasonable assurance engagement. given the purpose of our assurance engagement. with the International Standard on Assurance Audit report38 on Selected Sustainability Indicators Engagements (ISAE) 3000, Assurance Conclusion for the year ended 31 December 2016 Management responsibilities Engagements Other than Audits or Reviews of Historical Financial Information and, accordingly, Based on the procedures performed and Translation of the original report issued in The management of the Bank is responsible for included the following procedures: evidence obtained, nothing has come to our Russian; corresponds to, and should be read preparation of the Report and for fair disclosure attention that causes us to believe that the in conjunction with the 2016 VTB Group of the Indicators for the year ended December analysis of the Bank’s internal regulatory documents Indicators do not represent fairly, in all material Social Report prepared by VTB Bank 31, 2016 included in the Report in all material related to sustainability policies, activities and respects, in accordance with the criteria of our respects and in compliance with the sustainability relevant reporting; assurance engagement set out in the chapter To the Supervisory Council of PJSC VTB Bank reporting principles, scope and methods. This interviews with the managers and specialists “About the Report” on page 82 of the Report. responsibility includes designing, implementing responsible for sustainability policies, activities Identification and description and maintaining internal controls relevant to the and reporting where relevant to the Indicators at the Translation of the original report issued of the subject matter preparation of Indicators that are free of material headquarters of the Bank, VTB24 PJSC; in Russian; corresponds to, and should be misstatements. The management of the Bank understanding the process of reporting on the read in conjunction with the 2016 VTB Group At the request of PJSC VTB Bank (the “Bank”) is also responsible for selecting and applying Indicators by analyzing the process used for reporting Social Report prepared by VTB Bank. we have obtained a limited level assurance appropriate reporting principles and using on sustainability issues; on the following seven material sustainability relevant measurement and evaluation methods. review of sustainability reports of selected national performance indicators disclosed in the VTB and international financial institutions; Group Social Report 2016 (the “Report”) and Our Responsibilities review of a selection of corporate and external identified in it by the symbol √ (the “Indicators”): publications with respect to the Bank sustainability Our responsibility is to independently express policies, activities and related events in 2016; Signed: Petr Tsebernyak Average headcount (page 10 of the Report); a conclusion that the Indicators have been identification of sustainability issues material for the Injury rate (page 53 of the Report); fairly stated, in all material respects. Bank based on the procedures described above and Ernst & Young LLC Number of sales offices including number of sales analysis of their reflection in the Report; offices in underpopulated and economically We apply the International Standard on Quality review of the data samples regarding Indicators at Moscow, underdeveloped regions of Russia (page 10 Control 1, and therefore, we support an exhaustive the Bank and its subsidiaries including a review on of the Report) quality control system, also confirmed by a sample basis of documentated evidence of the 20 March 2017 Charitable donations made (page 56 of the Report); documented policies and procedures for compliance Electric energy consumed (page 76 of the Report); with ethical requirements, professional standards Fuel (petrol and diesel) consumed (page 76 and applicable legal and regulatory requirements. of the Report); Information about the subject of the independent assurance Paper consumed (page 76 of the Report). We comply with the independence requirement Name: VTB Bank Entered in the Unified state register of legal entities August 17, 2012 and assigned state registration number 1027739609391. and other ethical requirements of the Code of Location: 29 Bolshaya Morskaya, Saint-Petersburg, 190000, Russia The Indicators have been selected and Ethics for Professional Accountants issued by Information about the assurance provider prepared by Bank management based the Council on International Ethics Standards Name: Ernst & Young Limited Liability Company Entered in the Unified state register of legal entities December 5, 2002 and assigned state registration number 1027739707203. Location: Russia, 115035 Moscow, Sadovnicheskaya emb., 77, bld. 1. Ernst and Young LLC is a member of non-profit partnership ‘Russian Audit Chamber’ (decision of the Council of NP RAC of 21.12.2009, protocol №55). 38 Report on engagement which provides a limited level of assurance; Engagement is conducted in accordance with International Standard on Ernst and Young LLC is included in the master copy of the register of auditors and audit organizations with the primary registration number 11603050648. Assurance Engagements (ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, issued by IFAC. VTB Social Report 2016

92 Contact Details

VTB Bank (PJSC)

Address: 29 Bolshaya Morskaya Str., St. Petersburg, 190000 Russia

Telephones: +7 (800) 200 77 99, +7 (495) 739 77 99

Fax: +7 (495) 258 47 81

Website: www.vtb.com, www.vtbrussia.ru

E‑mail: [email protected]

Please send your comments and suggestions regarding this Report to Elena Melikhova, Deputy Head of Advertising and Marketing Division, Head of Sponsorship and Special Projects Unit, VTB Bank:

E‑mail: [email protected]

Telephone: +7 (495) 775 54 54, ext. 1 46 48