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Credit Bank of Moscow 2019 Annual Report

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Credit Bank of Moscow 2019 Annual Report APPROVED by the General Shareholders’ Meeting of CREDIT BANK OF MOSCOW Minutes No. ______ dated ____.____.2020 CREDIT BANK OF MOSCOW 2019 ANNUAL REPORT Correctness of information was confirmed by the Audit * Pre-approved Panel of CREDIT BANK OF MOSCOW by the Supervisory Board of CREDIT BANK OF MOSCOW Minutes No. dated _________2020 TABLE OF CONTENTS KEY EVENTS ......................................................................................................................................... 3 KEY FINANCIAL PERFORMANCE INDICATORS ........................................................................... 5 MISSION AND VALUES ....................................................................................................................... 7 STRATEGIC REPORT ........................................................................................................................... 8 1. Address of the Chairman of the Supervisory Board ................................................................... 8 2. Address of the Chairman of the Management Board. ............................................................... 10 3. Management Responsibility Statement ..................................................................................... 12 4. Economy and banking sector .................................................................................................... 13 5. Business model. Competitive advantages. Position in the industry. ......................................... 18 6. Strategy ..................................................................................................................................... 24 7. Risk Management ..................................................................................................................... 26 OVERVIEW OF OPERATIONS .......................................................................................................... 44 1. Corporate business .................................................................................................................... 44 2. Retail business .......................................................................................................................... 53 3. Investment banking business .................................................................................................... 59 FINANCIAL RESULTS ........................................................................................................................ 66 1. Key financial results ................................................................................................................. 66 2. Key results ................................................................................................................................ 68 3. Income statement analysis ........................................................................................................ 69 4. Structure of Assets and Liabilities ............................................................................................ 77 CORPORATE GOVERNANCE SYSTEM........................................................................................... 87 1. Controlling Shareholder’s Memorandum ................................................................................. 87 2. Corporate governance system ................................................................................................... 88 3. General Shareholders’ Meeting ................................................................................................ 92 4. Supervisory Board .................................................................................................................... 95 5. Chairman of the Management Board and the Management Board ......................................... 119 5. Internal control system ............................................................................................................ 127 FOR SHAREHOLDERS AND INVESTORS. .................................................................................... 133 SUSTAINABLE DEVELOPMENT .................................................................................................... 140 1. Human resources ..................................................................................................................... 140 2. Corporate culture .................................................................................................................... 144 3. Information technologies ........................................................................................................ 144 4. Society .................................................................................................................................... 148 5. Environmental management. .................................................................................................. 149 CONTACTS ........................................................................................................................................ 153 APPENDICES ..................................................................................................................................... 155 Appendix 1 ...................................................................................................................................... 155 Statements under IFRS ................................................................................................................... 155 Appendix 2 ...................................................................................................................................... 167 Statements under RAS .................................................................................................................... 167 Appendix 3 ...................................................................................................................................... 167 List of interested party transactions made in the reporting year (2019) ......................................... 167 List of major transactions made in the reporting year (2019) ......................................................... 170 Appendix 4 ...................................................................................................................................... 171 Report on Compliance with Principles and Recommendations of Corporate Governance Code ... 171 2 KEY EVENTS Key events – 2019 Month Event January CBM launched a new product for corporate customers – notional cash pooling February CBM placed its debut euro-nominated EUR 500 mln 5.15% 5-year senior Eurobond. CBM launched a new product for corporate customers – “Automatic Overnight”. CBM became a partner of the Russian Franchise Association. March CBM was topped the list of Russian banks in the Forbes 'World’s Best Banks 2019' ranking. CBM successfully placed a USD 500 mln 7.121% 5.25-year senior Eurobond. April CBM signed an up to USD 500 mln syndicated loan facility with 12 major lenders from Europe, the USA, the Middle East and Asia. Expert RA upgraded CBM’s credit rating to “ruA”, stable outlook. May CBM became the sole privately-owned Russian bank on the Forbes Global 2000 list of the world’s largest public companies. June Fitch Ratings upgraded CBM’s rating to BB, stable outlook. CBM paid out its first dividends to shareholders: the total dividend payout was RUB 2,979 million. July CBM was listed by The Banker among the Top 1000 World Banks 2019 by first tier capital, ranking 7th domestically and 11th in the Central and Eastern Europe. CBM joined FinTeсh Association (AFT). CBM presented its first 2018 Sustainability Report based on GRI standards. CBM implemented a new electronic real-time FX trading platform. September CBM was ranked by Forbes among Russia’s 200 largest privately-owned companies as the 2nd largest financial sector player. Euromoney’s Cash Management Survey – 2019 placed CBM first in the Best Service category. 3 October CBM was the first Russian bank to receive an ESG1 rating: Rating-Agentur Expert RA GmbH assigned it a ВВВ ESG rating. Fulfilling its comprehensive strategy to develop corporate social and environmental responsibility programmes, CBM became a partner of the World Wildlife Fund (WWF), and signed a partnership agreement with Moscow Zoo. CBM’s Mudrost (Wisdom) card won the Frank Banking Award 2019 as the best bank card for pensioners. CBM launched a new product for legal entities and sole proprietors — loans secured upon commercial property. CBM’s EUR 500 mln 5-year 5.15% Senior Eurobond was named the ‘Most Innovative Bond Deal’ by the British magazine International Finance. November CBM placed 2.75 bln shares in an SPO totalling RUB 14.7 bln to improve its capital structure and quality. CBM bought back USD 150 mln in the aggregate principal amount of its subordinated Eurobond issues (CBOM27 and CBOM-perp), of which, after a partial redemption, USD 440 mln and USD 540 mln remain outstanding, respectively. CBM obtained the Chinese national scale credit rating of АА+ from China Lianhe Credit Rating Co. December The new MKB Online mobile banking app won a Runet Prize award in the Mobile Application of the Year nomination. CBM signed an up to CNY 2 bln syndicated loan, becoming the first privately-owned Russian bank to receive funding from Chinese financial institutions. CBM was ranked by Cbonds among the top 5 domestic bond arrangers in 2019: more than 80 deals aggregating around RUB 900 bln in principal amount. 1 ESG – Environmental, Social, Governance 4 KEY FINANCIAL PERFORMANCE
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