Gazprombank2001eng.Pdf

Gazprombank 2001 Annual Report Chairman’s letter To Shareholders, Clients, And Business Partners 58 Major Performance Indicators In 2001 60 Business Profiley 65 Gazprombank & Gas Industry 77 Management Improvement 80 Franchise Development 85 Charity & Sponsorship 88 Development Priorities 90 Financial Statements 93 Reference Information 104 Chairman’s Letter To Shareholders, Clients, And Business Partners I am pleased to present Gazprombank's 2001 annual report to you. Established in 1990 as an industry's specialized bank, Gazprombank has grown hugely since then. Last year Gazprombank made another important step on its way to becoming a universal bank of national significance. Gazprombank consistently improves the quality of its services and expands their range, keeping in line with the world's leading banks. n addition to gas industry enterprises, which are Gazprombank's major strategic business partners, our clients now comprise Russia's major foreign trade and insurance companies, pension funds, and leading enterprises of the domestic industry. The number of the Bank's small and medium-sized corporate customers has also increased significantly. The fact is also that more and more private customers give credence to Gazprombank. As a result, in 2001 the Bank joined with confidence the top three Russian banks in respect of individual customers' deposits. Year 2001 is characterized by relative stabilization of the Ruble, declining interest rates and growing competition in the banking sector. As a result, Gazprombank paid special attention to efficiency of its operations. This focus implies new higher standards of corporate governance, introduction of more effective risk and cost management mechanisms, higher transparency of the Bank for shareholders and clients and more emphasis on International Accounting Standards. A significant step in that direction is Gazprombank's reorganization into a joint-stock bank, that took place in 2001. Gazprombank is a well-recognized bank outside of Russia. It is successfully doing business not only with a large number of Russian companies and banks, but also by many leading international financial institutions. One proof is the recent successful placement of Gazprombank's Eurobonds on international capital markets. The placement was organized with the help of several leading European banks. In 2001 Moody’s Investors Service confirmed Gazprombank's ratings, which are the highest that a Russian bank can currently have, while The Banker magazine awarded Gazprombank with The Bank of the Year in Russia award. We thank our shareholders, clients and business partners for their trust in Gazprombank, wish them success and hope for further fruitful cooperation. Yu. I. Lvov, Chairman of the Board of Management major performance indicators in 2001 major performance indicators in 2001 Financial Highlights Gazprombank's major performance indicators improved significantly in 2001. Total assets, • Pre-tax profit has increased nearly twofold compared to the previous year billion Rubles to 1.1 billion Rubles, its all-time record; • Total assets grew 1.4 times to 117.5 billion Rubles; • Shareholders' equity grew 1.1 times to over 20.1 billion Rubles; • Charter capital amounts to 13.3 billion Rubles. Gazprombank's resource base was growing steadily in 2001. During that period, the balances of corporate client accounts grew 1.7 times to 38.3 billion Rubles, while individual clients' deposits grew 1.7 times to 9.3 billion Rubles. In 2001 Gazprombank's outstanding customer loans reached 59.3 billion Rubles, while its securities portfolio reached 7.1 billion Rubles. Shareholders' equity, billion Rubles Charter capital, Pre-tax profit, billion Rubles billion Rubles 61 Gazprombank's Market Position According to Russian rating agencies, Gazprombank is one of the leading banks in the Russian banking sector. More specifically, Gazprombank is: Number 2 Russian bank in respect of: • corporate client account balances; • long-term lending; • market value of securities kept in its custody. Number 3 Russian bank in respect of: • total assets; • individual account holders' deposits. Number 4 Russian bank in respect of: • plastic card accounts balances. Number 5 Russian bank in respect of: • shareholders' equity. Gazprombank accounts for: • 4% of assets and shareholders' funds of Russia's banking system; • 5% of total outstanding loans granted by Russian banks; • 13% of outstanding loans originated by Russian banks for over twelve months; • 36% of outstanding loans originated by Russian banks for over three years; • more than 5% of individual clients' deposits in Russian banks (Sberbank excluded). The list of the world's top 1000 banks published in the July 2001 issue of The Banker magazine contained Gazprombank as Number 415 bank worldwide, Number 156 bank in Europe and Number 3 bank in Central and Eastern Europe ranked according to Tier 1 capital. Gazprombank's reliability and stable position has been confirmed by many Russian rating agencies, more specifically: Reiting – A1 Group (the highest reliability category); Expert – financial strength group 1; Finansy Rossii – A++ (the highest reliability level). International rating agency Moody's Investors Service assigned Gazprombank a foreign currency long-term deposit rating of B1, which equals Russia's sovereign rating. Gazprombank's Depositary was rated AAA (highest reliability group) by the Financial Research Development Fund under PARTAD in its Russian depositary reliability rating. 62 major performance indicators in 2001 Assets And Liabilities Structure Gazprombank's assets continued to grow in 2001 and increased 1.4 times to 117.5 billion Rubles. The share of banking assets increased to 70%. As a result, the share of initial operational reserves declined to 15%. In 2001, as ever, lending was the main line of resource allocation for Gazprombank, with loans accounting for 64.4% of its assets. Loans were provided mostly to enterprises and organizations, Liabilities structure which accounted for 80% of Gazprombank's total outstanding loans. (average for the year) In 2001, Gazprombank's securities portfolio grew from 5% to 7% of its total assets, with significant changes in Gazprombank's trading portfolio structure. In 2000, Gazprombank's trading portfolio consisted mostly of government securities. In 2001, its structure changed in favor of corporate securities and promissory notes. As a result, their share in Gazprombank's assets increased to 4%. The structure of Gazprombank's liabilities did not change significantly in 2001, with placements from other lending institutions accounting for 7% of its liabilities and clients' funds accounting for more then 50%, including individual account holders' deposits at 7%. Gazprombank's debt instruments accounted for more than 13% of its liabilities. As for borrowing from other banks, the share of loans from non-resident 1. Term liabilities – 34,8% banks decreased by the end of 2001 because Gazprombank decided to give 2. Demand deposits – 26,6% up some expensive financial sources. As the balance in customers' current 3. Shareholders' funds – 19,6% accounts increased Gazprombank managed to decline interbank market 4. Other liabilities – 19,0% borrowings from Russian banks. Other liabilities grew mostly due to an increase in the letter-of-credit coverage and an increase in deferred income on the long-term loans. Assets structure (average for the year) 1. Outstanding loans – 64,4% 2. Initial operational reserves – 15,3% 3. Securities portfolio – 7,3% 5. Other assets – 13,0% 63 Client Base Growth At present, Gazprombank provides banking services to virtually all major enterprises and institutions of Russia's gas industry, their allied and partner companies, Number of the corporate as well as to enterprises from armament, metallurgical, food processing customers' accounts, thousand and other industries. Head office To attract new customers, Gazprombank continuously improves its banking products and introduces new specialized ones for its customers, including large and medium-sized companies, export-geared enterprises and companies with substantial regional structures. A number of Gazprombank's services are very much in demand. They include integrated cash and settlement services in Russia and abroad, securities management, international transactions and export and import contract settlement servicing. Considerable efficiency increase in servicing customers based on customizing their needs was ensured by its Personal Manager Service. A wide range of financial instruments, including expert advice, are available to our customers for allocation their temporarily uncommitted funds. In 2001, the number of Gazprombank's corporate customers grew by 29%, exceeding 18.6 thousand, while the balances in their accounts grew by 63%. Gazprombank's branch offices provide banking services to about 90% of Gazprombank's corporate customers. Number of the corporate In 2001, Gazprombank acquired a number of large-scale customers customers' accounts, thousand from different industries of the economy, such as: Gazprombank branches • petrochemical and oil-refining industries – Slavneft, OAO Severnaya Neft, Korus Group and Far Eastern Alliance; • metallurgy - éÄé Mechel, éÄé VILS, ZAO Stupino Metallurgical Company; • military-industrial complex – éÄé Oboronitelnye Sistemy, MKB Fakel, FGUP Ural Optical and Mechanical Plant, PO Oktyabr; • food processing industry – ZAO Prodimpex, éÄé Rusagro, Razgulyai Group; • other industries – Tekhnopromexport Foreign Trading Association,

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