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Retail Banking Market in Russia

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Retail Banking Market in Russia 10 41 115 2016 VTB Group Investor Day 153 153 255 212 225 240 161 11 72 153 51 102 221 221 221 London / May 17, 2016 10 41 115 153 153 255 212 225 240 161 11 72 153 Some of the information in this presentation may contain projections or other forward-looking statements regarding future events or the future financial performance of JSC VTB Bank ("VTB") and its subsidiaries (together with VTB, the "Group"). 51 Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the 102 environment in which the Group will operate in the future. We caution you that these statements are not guarantees of future performance and involve risks, uncertainties and other important factors that we cannot predict with certainty. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecasted in the forward-looking statements. 221 These forward-looking statements speak only as at the date of this presentation and are subject to change without notice. We do not intend to 221 update these statements to make them conform with actual results. 221 10 41 115 VTB Group Overview 153 153 255 212 225 240 161 11 72 153 51 102 Andrey Kostin 221 President and Chairman of VTB Bank Management Board 221 221 10 IMPRESSIVE GROWTH STORY AND 41 STRONG COMPETITIVE POSITIONS IN ALL KEY SEGMENTS 115 Total assets RUB trln today 153 +29% y-o-y . Leading player in Russia 153 vs market +24% y-o-y − 2nd largest banking group in Russia 255 13.6 12.2 − 18% market share in Russia 8.8 7.4 . Successful growth story 212 1.1 − 12-fold asset growth for the past 225 ten years 240 2005 2012 2013 2014 2015 . Well-established universal banking model VTB market share in Russia 161 − leading Russian banking group with strong positioning in all key 11 Customer loans Customer deposits segments: CIB, Retail banking, 72 Insurance, Leasing, Factoring, etc. 17% 19% 13% . Extensive branch network Legal entities 7% 153 − over 1,900 branches in Russia 51 2005 2015 2005 2015 − presence in 22 countries 102 18% 11% . Solid client base 5% Individuals 2% – over 20 mln active retail and corporate customers 221 2005 2015 2005 2015 221 221 4 10 VTB GROUP CORPORATE DEVELOPMENTS: 41 MIX OF MERGERS AND ORGANIC GROWTH 115 Completion of the BoM integration: 153 . Optimisation of costs 153 255 . Strengthening of internal control and risk management system Organic growth . Revenue synergies: increased cross-sales and strengthening of VTB Bank’s competitive positions 212 225 240 161 2004 2005 2008 2010 2011 2013 2016 11 72 Launch of Post Bank, a joint venture between VTB and Russian Post 153 M&A deals 51 . A wide network of outlets and an extensive client base 102 . Access to pensioners base . VTB Group expertise and infrastructure 221 221 221 5 10 VTB GROUP FLEXIBLE OPERATING MODEL 41 115 Corporate – Investment Banking Retail Business Mid-Corporate Banking 153 global business line global business line global business line 153 255 Assets (1) RUB trln 7.6 44% 3.8 22% 0.8 5% Large corporate clients Small corporate clients and individuals Mid - corporate clients (revenue > RUB 10 bn) (revenue <RUB 0.3 bn) (revenue RUB 0.3 – RUB 10 bn) 212 Broad corporate client base with 225 . #2 Retail bank in Russia . Separate global business line and long term relationships with leading profit centre since 2014 Network: 1,648 outlets and 240 Russian companies across all . 13 thousand ATMs economic sectors . Wide regional franchise . Post bank . #2 Corporate bank in Russia 161 . #1 Investment bank in Russia 11 72 Corporate Centre 153 Risk Audit and IT Finance HR Admin Legal PR Compliance Security 51 management 102 221 221 (1) Second number represents share of each global business line in VTB Group’s total assets, % 221 6 10 SUMMARY 41 115 2014 – 2016 Strategy of quality growth 2017 – 2019 New development strategy 153 153 255 Maintaining position of Сorporate-Investment Maintaining position of Сorporate-Investment 1 1 banking while further improving its efficiency banking while further diversifying CIB business mix Outperforming the market growth in Retail Outperforming the market growth in Retail banking, 212 2 banking, and further increasing the share of Retail 2 and further increasing the share of Retail in the 225 in the Group’s business mix Group’s business mix 240 Prioritising Mid-Corporate banking as a Outperforming the market growth in Mid-Corporate 3 separate operating segment and profit centre while 3 banking in loans and transaction fee income while 161 further increasing the market share in Russia further growing customer base 11 72 Further consolidation of VTB Group governance Enhancement of Group level risk management 4 4 structure and enhancement of Group level risk and controls management and controls 153 Focusing on operating efficiency and stringent Focusing on operating efficiency and stringent cost 5 5 51 cost control control 102 Transitioning the Group to unified functional and Prioritising investments in technological platform 6 6 221 technological platforms development and innovations 221 221 7 10 41 115 VTB Group Corporate-Investment Banking 153 153 255 212 225 240 161 11 72 153 51 102 Yuri Soloviev 221 First Deputy President and Chairman of VTB Bank Management Board 221 221 CIB: 2015 KEY ACHIEVEMENTS 10 58 212 252 248 41 75 225 25 164 In 2015 CIB managed to achieve CIB net income and costs dynamics RUB bn 115 140 240 33 74 254 253 198 216 235 . Four-fold year-on-year increase in NOI driven 101.6 194 225 76 132 193 by strong revenue growth, tight cost control 120 185 155 186 219 and a reduction in provisions vs high 2014 29.9 base 24.2 146 183 219 153 118 -34.2 205 223 240 153 141 . CIB increased / maintained its leading market 81 131 189 153 188 position in loans (~23%), deposits (~14%), current accounts (~15%) and across all 2014 2015 investment banking products Net profit Net operating income . Improved portfolio mix: increase share of Oil CIB structure of net operating income before and Gas, Metals and Mining, Retail, Telecom, provisions Chemicals and lower exposure to Construction, Utilities, Public Sector . Year-on-year 30% increase of fees and 15% commissions driven by cross-sell and new product development 9% 45% 45% 76% NII 2014 NCI 2015 10% Other Incomeincome 9 CIB: 2013-2019 MARKET IN RUSSIA 10 58 212 252 248 41 75 225 25 164 115 140 240 33 74 CIB loans RUB trln CIB deposits and current accounts RUB trln 254 253 198 216 235 194 225 76 132 193 ~22% ~8% ~23% ~7% 120 185 155 186 219 CAGR CAGR CAGR CAGR 30-31 29-30 146 183 219 153 118 23.8 23-24 23-24 205 223 240 153 141 22.8 19.7 81 131 189 153 188 19.6 13.6 13.2 2013 2014 2015 20162016F (F) 20192019F (F) 2013 2014 2015 20162016F (F) 20192019F (F) . Significant banking market growth in 2013-2016 driven by currency impact, closed international capital market and low risk appetite of foreign banks to Russia; . We expect slower market growth in 2016-2019 both in lending and deposit / current accounts markets in Russia due to low investment demand and high interest rates. 10 CIB CREDIT BUSINESS(1): 2014-2015 HIGHLIGHTS 10 58 212 252 248 41 75 225 25 164 Key 2015 achievements Loan portfolio RUB bn 115 140 240 33 74 +14% . Managed to increase CIB segment loan portfolio by 18% and 254 253 198 216 235 ensure strong revenue growth 194 225 76 132 193 +18% 120 185 155 186 219 . Maintained strong positions in corporate lending; worked with more than 400 active client groups 7,671 6,748 146 183 219 153 118 . Kept leading position: VTB market share of CIB Russian 6,139 5,186 205 223 240 153 141 credit portfolio rose from 19.3% in 2013 to 23% in 2015 81 131 189 153 188 . International franchise development: VTB Group established itself as one of the leading lenders and arrangers of private financings in Sub-Saharan Africa and arranged some 2014 2015 strategic financing transactions in CEEMEA and Asia (including debt restructurings, holding company financings Loans and advances to legal entities (net) and event driven transactions) CIB loans and advances (net) . VTB has extended its presence in infrastructure finance by moving forward with the financing of a landmark toll road construction project and several new deals in mining, airport and shipping finance . VTB has taken the leading position in terms of volume of deals approved under the Government investment projects support program (P-1044) . Development of Trade Finance franchise and further build-up relations with counterparties from 55 countries . Since 2013 Trade Finance business volume has been increased by 7.0x . Became one of the key partner banks for Russian Export Credit Agency (EXIAR) (1) Key products in L&D segment are Credit, Leveraged Finance and Investments, Infrastructure credits and project finance, Trade finance, Leasing 11 CIB TRANSACTIONAL BUSINESS: 2014-2015 HIGHLIGHTS 10 58 212 252 248 RUB bn 41 75 225 25 164 Deposits and current accounts 2015 Key achievements 115 140 240 33 74 . Overall GTB revenue increase: net operating income grew by 117%, fees and commissions – by 44%, net interest income – by 121% 254 253 198 216 235 3,940 194 225 76 132 193 3,520 . Current account volumes grew by 51% significantly higher than 120 185 155 186 219 3,212 market growth 2,152 .
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