WORLD WITHOUT BOUNDARIES ANNUAL REPORT 2017 ANNUAL REPORT 2017 ANNUAL REPORT 2017 EMEA FINANCE AWARDS ‘BEST M&A DEAL OF YEAR’ TO EXPOBANK FOR ACQUISITION OF JSCB YAPI KREDI BANK MOSCOW (JSC) At its annual Achievements Awards ceremony, EMEA Finance Magazine that covers capital and financial markets in Europe, Middle East and Africa recognized this acquisition as the Best M&A Deal in 2017. Alexey Sannikov, CEO of Expobank LLC: “The Best M&A Deal of the Year nomination means our activities being assessed high. This turns into a good tradition and yet again proves our team’s competency and professionalism”. In 2016 году Expobank was also recognized the best in this category and was awarded the Best M&A Deal of the Year for purchase of the Russian subsidiary of The Royal Bank of Scotland. 4 5 EXPOBANK ANNUAL REPORT 2017 Contents GENERAL The Report has been prepared by Expobank Limited Liability Company (‘Expobank’). INFORMATION The consolidated data cover 1 2 3 4 the period from 01 January to 31 December 2017. 3 Key Topics Core Business CONTACT DETAILS The report highlights the development Offering a full range of banking services strategy, strategic priorities and perfor- to corporate clients and affluent private Address: mance indicators included in Expobank’s customers are among the Bank’s priorities, 2018-2020 strategy. as well as acquisition and consolidation 29 Kalanchevskaya Street, SUMMARY STRATEGIC CORPORATE FINANCIAL of banking assets. The Bank operates bldg.2, Moscow, 107078 REPORT GOVERNANCE STATEMENTS Standards under General License for Banking Operations No.2998 of 06 February 20122 The report has been prepared based issued by the Bank of Russia (CBR). General information Address of the Chairman Corporate governance: Independent auditor’s on Expobank 2017 IFRS Statements. 5 • 23 • 48 • 64 • Expobank participates in the govern- of the Board of Directors principles and structure report Tel.: 9 • Assets and partner banks and Chairman of the Ratings ment’s deposit insurance programme Management Board 52 • Board of Directors 66 • Summary consolidated introduced by Federal Law No.177-FZ +7 (495) 228 31 31 10 • Geographical footprint and its Committees statement of financial The Bank has been rated dated 23 December 2003 ‘On Insurance 26 • Overview of Russian position of Household Deposits with Russian 14 • Key events in 2017 economy as of 2017 year 55 • CEO and Management high by leading rating end Board 68 • Consolidated statement Banks’. of comprehensive income agencies. 29 • Bank development strategy 58 • Risk Management, for the year ended Email: and strategic priorities till Control and Audit 31 December 2017 In October 2017 Fitch Ratings affirmed 2020 Expobank’s International Long-Term IDR [email protected] 60 • Disclosures 70 • Summary consolidated 34 • Expobank Premier statement of changes at “B+”, Outlook Stable. in equity 35 • Treasury In March 2018 Analytical Credit Rating 71 • Summary consolidated Agency (ACRA) assigned Expobank’s credit 37 • Corporate Banking statement of cash flows rating at “ВВВ+(RU)”, Outlook Stable. 24/7 Information Centre: 39 • M&A 73 • Notes The ratings reflect the Bank’s high return + 7 (495) 231-11-11 42 • Information Technologies on equity, capital adequacy and strong liquidity position1. + 7 (800) 500-07-70 43 • Foreign Trade 44 • Sustainable Development Website: expobank.ru APPENDICES 77 • Glossary 1 78 • Contact information As of 31 March 2018. 2 As replacement of License No.2998 of 02 December 79 • Disclaimer and Scope of Report 2008. NEW ACCESS POINTS — NEW OPPORTUNITIES WITHOUT 1 BOUNDARIES SUMMARY IN NOVEMBER 2017 EXPOBANK SUCCESSFULLY AMONG CLOSED AN M&A DEAL ON ACQUISITION OF 100% 12.7 SHARES IN JSCB YAPI KREDI BANK MOSCOW (JSC) тоp 10 FROM YAPI VE KREDI BANKASI A.Ş., ONE OF THE RUB BLN BIGGEST TURKISH BANKS. EQUITY RUSSIAN BANKS EMEA FINANCE RECOGNIZED THIS ACQUISITION IN EFFICIENCY AS ‘DEAL OF THE YEAR’. FOR EXPO TEAM, IT HAS BEEN THE 8TH DEAL OF BUYING AN ASSET FROM AN INTERNATIONAL FINANCIAL INSTITUTION FOR THE LAST SEVERAL YEARS. 61.2 RUB BLN ASSETS TEMA ISTANBUL MIXED-USE COMPLEX Istanbul, Turkey EXPOBANK SUMMARY 8 9 1 Expobank Today ANNUAL REPORT 2017 ASSETS AND PARTNER BANKS Expobank EXPOBANK IS RATED PRIORITY Assets HIGH BY LEADING RATING AREAS Today AGENCIES and partner banks Offering a full range of bank- ing services to corporate clients and affluent private IGOR KIM customers are among the An international strategic th In 2017 Expobank was Bank’s priorities, as well investor with 20-year тоp • 100 7 among the best most 15 as acquisition and consolida- experience in the Russian efficient and profitable Expobank LLC is a private bank banks having scored tion of banking assets. and European banking from top 100 Russian banks th OFFICES 7 in the rating of the Expobank’s Management Team has sectors in net profits, equity and most efficient banks, ACROSS an extensive experience in acquisition net assets1 and was among the of financial assets and loan portfolios, and most profitable Russian RUSSIA also deep competences in structuring tailor banks A technology platform has been made deals in the corporate segment. built in Expobank that ensures the launch of new business ideas as fast as possible • Chairman of the Board of Directors, Expobank LLC (Russia) 1 Source: Banki.ru, as of 01 December 2017 2 RoAE — Return on Average Equity • Chairman of the Supervisory Board, Expobank CZ (Czech Republic) 600 12.7 54.0 • Chairman of the Board of Directors, AS Expobank (Latvia) Mr. Kim has successfully completed over 30 M&A deals both with Russian and global Expobank is a responsible financial institutions: Barclays (UK), Santander (Spain), Morgan Stanley (USA), employer with a headcount RUB BLN RUB BLN West LB (Germany), LBBW (Germany). Mr. Kim’s latest deals were the acquisitions of over 600 people EQUITY of WestLB Vostok from WestLB AG, FB-Leasing from VR Leasing AG (later merged to INCOME- Expobank LLC) and LBBW Bank CZ a.s. that was renamed to Expobank CZ. In March The Bank has high capital 2015, Expobank purchased ‘MAK-Bank’ LLC that also merged with Expobank LLC. adequacy and maintains a great EARNING ASSETS In 2016 acquisitions of the Russian and Kazakhstan subsidiaries of The Royal Bank share of highly liquid assets in its of Scotland (RBS) were completed. RBS Russia was merged to Expobank LLC while balance sheet RBS Kazakhstan was renamed to JSC Bank ExpoCredit. 2 ROaE : PARTNER BANKS: 36,000 SERBIA, 16.6% OF PRIVATE NIM: CUSTOMERS CZECH In 2017 JSCB Yapi Kredi Bank Moscow (JSC), a Russian RE PUBLIC, subsidiary of Turkish YKB, was acquired, with its merger to Expobank completed in Q1 2018. 4.4% 7,000 LATVIA OF CORPORATE CLIENTS EXPOBANK SUMMARY 10 11 1 Expobank Today ANNUAL REPORT 2017 GEOGRAPHICAL FOOTPRINT Partner banks form EXPOBANK LLC, EXPOBANK JSC BELGRADE, Geographical footprint new access points RUSSIA SERBIA to global financial centers for Russian EXPOBANK CZ, AS EXPOBANK, clients, provide CZECH REPUBLIC LATVIA operational efficiency and consultancy expertise LUXEMBURG PRAGUE CZECH REPUBLIC RIGA LATVIA SAINT PETERSBURG MOSCOW BELGRADE SERBIA KALUGA RUSSIA PERM SURGUT YUZHNOWSAKHALINSK KEMEROVO YEKATERINBURG UFA KRASNOYARSK NOVOSIBIRSK HONG KONG EXPOBANK SUMMARY 12 13 1 Expobank Today ANNUAL REPORT 2017 ASSETS AT A GLANCE Assets at a glance POSITION AMONG FINANCIALS3 RATINGS RUSSIAN BANKS1 EXPOBANK LLC FitchRatings Assets as of 2017 year end RUB 61.2 bln Net assets Equity RUB 12.7 bln th Capital adequacy ratio 17.9% 40 15 RUB 61,202 mln B+ Return on equity 16.6 % IN NET PROFIT BRANCHES (International scale) focuses on offering services to corporate clients and affluent private customers, and also AND OFFICES Equity against net assets on asset acquisition and consolidation (M&A deals). For two years in succession Expobank Affirmed in October 2017 was recognized as the Best Bank Operating in Russia by EMEA Finance Europe Banking Awards. The Bank has been operating in the Russian banking market since 1994 (General RUB 12,705 mln License No.2998 of 06 February 2012 issued by the Bank of Russia). Loan portfolio ACRA EXPOBANK CZ RUB 26,018 mln Assets as of 2017 year end EUR 988 mln Equity EUR 120 mln 11 Customer deposits BBB+ Capital adequacy ratio 28.2% CITIES RUB 43,288 mln (National scale) has been operating in the Czech banking market since 1991. The bank is focused on provi- Assigned in March 2017 sion of complex products and services. This covers corporate banking services including d treasury services, real-estate financing and export and trade financing as well as a broad 73 15 Comprehensive income range of private and personal banking services. Expobank CZ takes pride in being able to Ratings have never offer custom-made solutions and in its great care to detail when providing its clients with IN EQUITY REGIONS2 smart products and services. RUB 2,052 mln been downgraded ROaE EXPOBANK JSC BELGRADE Assets as of 2017 year end EUR 126.6 mln 16.6% Equity EUR 22.6 mln Capital adequacy ratio 31.04 % 1 According to Banki.ru ranking as of 01 January 2018, together with consolidated JSCB Yapi Kredi Bank Expobank JSC Belgrade has been present in the Serbian market since 1990; it has 7 branch- th 6 Moscow (JSC) es in 6 cities (Belgrade, Pančevo, Novi Sad, Šabac, Čačak, Niš) and 170 employees. 83 2 Regions covered by car lending Expobank CZ is the majority owner of Expobank JSC Belgrade.The Bank has been operat- FEDERAL 3 IFRS, as of 01 January 2018 ing as Expobank JSC Belgrade since June 2017. IN NET ASSETS DISTRICTS A key element of the strategy in Serbia is working with small and medium-sized enter- prises and helping them to grow their businesses, including by supporting trade with the EU and Russia.