Vtb · RUS:VTBR

Vtb — Investor Day (May 2016)

44 slides from Vtb's investor day presentation, May 17, 2016

  1. Slide 1: 2016 VTB Group Investor Day

    2016 VTB Group Investor Day London / May 17, 2016

  2. Slide 2: Forward-looking statements disclaimer

    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"). Such forward-looking statements are based on numerous as

  3. Slide 3: VTB Group Overview

    VTB Group Overview Andrey Kostin President and Chairman of VTB Bank Management Board

  4. Slide 4: Impressive growth story and strong competitive positions in all key segments

    IMPRESSIVE GROWTH STORY AND STRONG COMPETITIVE POSITIONS IN ALL KEY SEGMENTS Total assets RUB trln today +29% y-o-y  Leading player in Russia vs market +24% y-o-y − 2nd largest banking group in Russia 13.6 12.2 − 18% market share in Russia 8.8 7.4  Successful growth story 1.1 − 12-fold asset growt

  5. Slide 5: VTB Group corporate developments: mix of mergers and organic growth

    VTB GROUP CORPORATE DEVELOPMENTS: MIX OF MERGERS AND ORGANIC GROWTH Completion of the BoM integration:  Optimisation of costs  Strengthening of internal control and risk management system Organic growth  Revenue synergies: increased cross-sales and strengthening of VTB Bank’s competitive position

  6. Slide 6: VTB Group flexible operating model

    VTB GROUP FLEXIBLE OPERATING MODEL Corporate – Investment Banking Retail Business Mid-Corporate Banking global business line global business line global business line Assets (1) RUB trln 7.6 44% 3.8 22% 0.8 5% Large corporate clients Small corporate clients and individuals Mid-corporate clients (rev

  7. Slide 7: Summary

    SUMMARY 2014 – 2016 Strategy of quality growth 2017 – 2019 New development strategy 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 marke

  8. Slide 8: VTB Group Corporate-Investment Banking

    VTB Group Corporate-Investment Banking Yuri Soloviev First Deputy President and Chairman of VTB Bank Management Board

  9. Slide 9: CIB: 2015 key achievements

    CIB: 2015 KEY ACHIEVEMENTS In 2015 CIB managed to achieve CIB net income and costs dynamics RUB bn  Four-fold year-on-year increase in NOI driven 101.6 by strong revenue growth, tight cost control and a reduction in provisions vs high 2014 24.2 29.9 base -34.2  CIB increased / maintained its leadi

  10. Slide 10: CIB: 2013-2019 market in Russia

    CIB: 2013-2019 MARKET IN RUSSIA CIB loans RUB trln CIB deposits and current accounts RUB trln ~22% ~8% ~23% ~7% CAGR CAGR CAGR CAGR 30-31 29-30 23.8 23-24 23-24 22.8 19.7 19.6 13.6 13.2 2013 2014 2015 2016 (F) 2016F 2019 (F) 2019F 2013 2014 2015 2016 (F) 2016F 2019 (F) 2019F  Significant banking ma

  11. Slide 11: CIB credit business: 2014-2015 highlights

    CIB CREDIT BUSINESS(1): 2014-2015 HIGHLIGHTS Key 2015 achievements Loan portfolio RUB bn +14%  Managed to increase CIB segment loan portfolio by 18% and ensure strong revenue growth +18%  Maintained strong positions in corporate lending; worked with more than 400 active client groups 7,671 6,748 

  12. Slide 12: CIB transactional business: 2014-2015 highlights

    CIB TRANSACTIONAL BUSINESS: 2014-2015 HIGHLIGHTS Deposits and current accounts RUB bn 2015 Key achievements  Overall GTB revenue increase: net operating income grew by 117%, fees and commissions – by 44%, net interest income – by 121% 3,940 3,520  Current account volumes grew by 51% significantly

  13. Slide 13: CIB investment business: market share

    CIB INVESTMENT BUSINESS: MARKET SHARE Product Line Market Share Position3 Comments 2015 Δ from 2013  Significantly strengthen the positions in Client Fixed FX Spot1 22% +7% #1-2 FX market Income FX Derivatives 30% +8% #1-2 Securitisation 75% +22% #1 Equities Cash equities 4% #10  Strengthen the po

  14. Slide 14: IB: 2014-2015 highlights (1/2)

    IB: 2014-2015 HIGHLIGHTS (1/2) Fixed Income  FX and Rates:  VTB has been recognised as the best Russian Foreign Exchange Provider every year by Global Finance magazine  2014 VTB Started trading African and Asian currencies  2015 VTB prints record-high volumes in trading RUBCNY in the onshore int

  15. Slide 15: IB: 2014-2015 highlights (2/2)

    IB: 2014-2015 HIGHLIGHTS (2/2) Equities  The establishment of a ‘true’, integrated Global Equities Product which encompasses Cash Equities, Equity Derivatives Volatility Trading, Repo, Private Equity & Special Situations (PESS) and Infrastructure Capital & Project Finance (IC&PF)  Completed the re

  16. Slide 16: 2015 Global Banking key deals

    2015 GLOBAL BANKING KEY DEALS 16

  17. Slide 17: CIB 2016 key priorities

    d CIB 2016 KEY PRIORITIES CIB market position  Maintain market share in lending and deposits / current accounts Russian banking markets  TOP positions in key IB markets (GB, FX, Infrastructure finance)  Leverage domestic dominant position in advisory  Bespoke approach to international markets fo

  18. Slide 18: VTB Group Retail Banking

    VTB Group Retail Banking Mikhail Zadornov President and Chairman of VTB24 Management Board

  19. Slide 19: Retail banking market in Russia

    RETAIL BANKING MARKET IN RUSSIA Retail loans RUB trln Retail deposits RUB trln +11% Credit cards Car loans Current accounts Term deposits CAGR 34 - 35 Cash loans Mortgage +10% 16% CAGR +18% 26.0 +11% CAGR 23.2 15% CAGR 15 - 15.5 18.6 17.0 17% 11.3 10% 14.3 10.0 10.7 10.9 18% 19% 7.7 10% 10% 42% 19%

  20. Slide 20: VTB Group market position in retail business in Russia

    VTB GROUP MARKET POSITION IN RETAIL BUSINESS IN RUSSIA Retail loans Retail deposits and current accounts +1.0 p.p. +0.5 p.p. +3.9 p.p. +2.0 p.p. 18.8% 17.8% 0.9% 10.7% 11.2% 0.6% Leto / Post Bank Leto / Post Bank 13.9% 2.9% 8.7% 0.2% 0.2% 2.7% & VTB Bank 1.8% 0.1% 1.8% 1.2% 1.2% Ex-Bank of Moscow Ex

  21. Slide 21: Retail business continues to be the key contributor to VTB Group P&L

    RETAIL BUSINESS CONTINUES TO BE THE KEY CONTRIBUTOR TO VTB GROUP P&L AND EFFICIENCY Profitability of VTB Group’s Retail business RUB bn CIR 48% 46% 56% 166.0 157.6 136.2 50.8 37.6 16.9 2013 2014 2015 Net profit Net operating income 21

  22. Slide 22: VTB Group customer base in Russia by entity

    VTB GROUP CUSTOMER BASE IN RUSSIA BY ENTITY VTB Group customer base (active customers) in 2015 mln 1.3 -3.3 19.9 10.4 11.5 -0.5 1.9 9.0 1.1 VTB24 Post Bank BoM De-duplication Banking VTB VTB De-duplication Total (ex-Leto Bank) customers, Insurance Pension customer total Fund base 22

  23. Slide 23: VTB24 customer base by segment

    VTB24 CUSTOMER BASE BY SEGMENT VTB24 customer segments (active customers) thsd 9,033 8,789 1,253 +7 p.p. 1,932 Affluent + HNWI (14%) (21%) 2,466 +7 p.p. Upper mass (28%) 3,133 (35%) Mass 2,526 (29%) -4 p.p. 2,290 Lower mass (25%) 2,544 -10 p.p. (29%) 1,679 (19%) 2013 2015 23

  24. Slide 24: VTB24 loan portfolio structure and risk profile

    VTB24 LOAN PORTFOLIO STRUCTURE AND RISK PROFILE Average loan portfolio RUB bn / % and cost of risk % 4.4% 3.6% Cost of risk 3.2% +11% +4% 1,641 100% 1,577 100% 63 4% 1,422 100% 41 3% 148 9% 8 1% 174 11% Other 78 204 73 5% 14% 5% Small business 68 445 27% 5% 445 28% Credit cards 436 30% 81 5% Cash lo

  25. Slide 25: VTB Group branch and ATM networks in Russia

    VTB GROUP BRANCH AND ATM NETWORKS IN RUSSIA Branch network ATM thsd Post-office branches Leto/Post Bank Leto/Post Bank and ex-BoM Ex-BoM Offices with affluent zones VTB24 +161% +27% Standard offices 4,312 17.0 -4% +11% 13.4 0.4 12.1 2,600 2.0 2.0 1,713 1,649 646 603 630 11.0 10.1 687 +52% 530 576 62

  26. Slide 26: VTB24 internet and mobile banking penetration

    VTB24 INTERNET AND MOBILE BANKING PENETRATION: STRONG GROWTH TO BE CONTINUED IN 2016 Active users of online & mobile banking % of active clients Input of 2H’2015 Input of 1H’2014-1H’2015 Active users of online & mobile banking as of 1H’2014 51.6% 50.8% 1.0% 1.5% 45.2% 3.0% 33.3% 29.4% 28.1% 4.4% 1.1

  27. Slide 27: CRM activities supporting growth of retail business

    CRM ACTIVITIES PLAY INCREASINGLY IMPORTANT ROLE IN SUPPORTING DYNAMIC GROWTH OF RETAIL BUSINESS VTB24 business plans for selected products and CRM Share of CRM Sales of consumer loans RUB mln Sales of credit cards No. of cards Sales of affluent bundles (“Privilege”) No. of bundles +108% +23% +114% 3

  28. Slide 28: Share of clients with salary accounts

    SHARE OF CLIENTS WITH SALARY ACCOUNTS Share of clients with salary accounts, 2014 % of active clients 47.0% 42.0% 36.0% 35.0% 32.0% 32.0% 29.0% 22.0% 19.0% 12.0% 3.0% VTB24 BoM “Branch productivity” benchmarking study by Finalta among Russian banks Russia Average 28

  29. Slide 29: Retail business key strategic initiatives for the next 3 years

    VTB GROUP RETAIL BUSINESS KEY STRATEGIC INITIATIVES FOR THE NEXT 3 YEARS Market share and financial performance  Increase market share (as a Group) both in loans and deposits  + 5% in loans  + 5% in deposits and CA  Maintain high level of financial efficiency / profitability (ROE ~18%) Customers

  30. Slide 30: Post Bank officially launched in April 2016

    POST BANK OFFICIALLY LAUNCHED IN APRIL 2016 Post Bank logo and branch format Key numbers (2023) Key numbers (2023): 15,000 Branches in Post offices >17 mln Customers Top-3 Top-3 retail bank in Russia 30

  31. Slide 31: Post Bank 2016 business plan

    POST BANK 2016 BUSINESS PLAN Loan portfolio (gross) RUB bn Customer deposits RUB bn +62% х8.6 25 126 8 5 Credit cards 15 78 POS 4 Current accounts 3 14 103 20 Cash loans 60 Term deposits 2 1 2015 2016F 2015 2016F Net operating income RUB bn Net profit RUB bn 60% 52% CIR +131% 0.1 15.6 6.7 -1.7 2015

  32. Slide 32: VTB Group Financial Performance and Outlook

    VTB Group Financial Performance and Outlook Herbert Moos Deputy President and Chairman of VTB Bank Management Board

  33. Slide 33: Macro environment significantly deteriorated

    MACRO ENVIRONMENT SIGNIFICANTLY DETERIORATED Oil price USD and exchange rate RUB Inflation and CBR key rate 61.2 12.6% 31.8 38.0 USD/RUB CBR key rate 5.5% 7.9% (avg) (avg) (1) -9% -47% +7.8 p.p. 108.0 +1 p.p. 98.0 Oil price CPI inflation 15.6% (Urals, avg) 52.0 (avg) 6.8% 7.8% 2013 2014 2015 2013 20

  34. Slide 34: VTB significantly improved balance sheet metrics and capital

    VTB SIGNIFICANTLY IMPROVED BALANCE SHEET METRICS AND CAPITAL Total assets RUB bn Customer funding RUB bn 151% 157% +12% 139% +39% LDR 13,642 12,191 +28% +29% 8,769 7,267 5,669 4,383 2013 2014 2015 2013 2014 2015 BIS Group capital RUB bn NPLs (90+) RUB bn 14.7% 14.3% Total CAR 12.0% 115.5% 114.8% NPL

  35. Slide 35: Profitability hit by lower NIM and rise in credit costs

    PROFITABILITY HIT BY LOWER NIM AND RISE IN CREDIT COSTS PARTLY OFFSET BY SOLID FEES GROWTH Net interest income RUB bn Provisions charge (1) RUB bn +10% +178% -35% -17% 275.4 347.3 316.9 289.1 178.1 4.4% 4.0% 99.2 3.4% NIM CoR 2.6% 1.6% 1.8% 2013 2014 2015 2013 2014 2015 Net fee and commission income

  36. Slide 36: 2016 management expectations

    2016 MANAGEMENT EXPECTATIONS Indicator Measurement Optimistic scenario Conservative scenario Marco GDP, nominal % YoY 0.5 -1.2 CPI inflation % YoY 7.0 7.6 Oil price (Urals), average USD/bbl 50 40 CBR key rate, average % 9.1 10.0 Banking sector Loans to legal entities % YoY 5-10 0-5 Loans to individu

  37. Slide 37: VTB Group macro expectations till 2019

    VTB GROUP MACRO EXPECTATIONS TILL 2019 GDP growth Y-o-Y Oil price (Urals), average USD/bbl 60 60 55 ≈2.0-2.5% ≈2.0-2.5% ≈2% 2017F 2018F 2019F 2017F 2018F 2019F CPI inflation Dec / Dec CBR key policy rate EOP 6.5 – 7.5% 5.5 – 6.5% 5.5 – 6.5% 5.5 – 6.5% 4.5 – 5.5% 4.0 – 5.0% 2017F 2018F 2019F 2017F 20

  38. Slide 38: Russian banking sector till 2019

    RUSSIAN BANKING SECTOR TILL 2019 Loans to legal entities RUB trln Loans to individuals RUB trln 2015 2019 2015 2019 13% 14% 18% 23% +10-12% Y-o-Y avg growth rate +10-15% 40 - 41 44 - 45 36 - 37 Y-o-Y avg growth rate 12.0 - 12.5 13.0 - 13.5 15.0 - 15.5 2017F 2018F 2019F 2017F 2018F 2019F VTB market s

  39. Slide 39: VTB Group key financial targets till 2019

    VTB GROUP KEY FINANCIAL TARGETS TILL 2019 Indicator Measurement 2017 – 2019 Loans to legal entities % YoY In line with the market Loans to individuals % YoY Above the market NIM % ≈4.0 CoR % ≈2.0 CIR % 2019: low 40th 2017-2018: >5.0 ROE % 2019: ≈11.0 NPL coverage ratio % Above 100 39

  40. Slide 40: IT and infrastructure development

    IT AND INFRASTRUCTURE DEVELOPMENT Product and channel innovation Simplification of IT landscape  Broadening the list of products and  Unification of corporate support services available through mobile and applications internet banking  Centralised IT architecture management  Omnichannel and seam

  41. Slide 41: Consistent improvement of costs structure

    CONSISTENT IMPROVEMENT OF COSTS STRUCTURE Staff costs and administrative Key initiatives expense RUB bn 2.4% 2.2% 1 Completion of integration of the Bank of Moscow Cost / Avg. assets 1.8% -0.3% 2 Further consolidation of support and control functions 223 222 198 3 Deeper penetration of remote channe

  42. Slide 42: VTB Group risk management function

    VTB GROUP RISK MANAGEMENT FUNCTION Centralised risk management Key developments in 2014–2015 Global CRO VTB Group risk management competence centers  Loan monitoring and pre-work out functions were integrated into centralised risk Deputy CRO Deputy CRO Deputy CRO management system Corporate credit

  43. Slide 43: Funding structure

    FUNDING STRUCTURE Total liabilities structure RUB bn Customer deposits structure RUB bn ≈16,000 12,188 ≈11,000 7,267 69% Customer 60% Current deposits + 9 pp accounts 20% + 2 pp 22% 2015 2019F 2015 2019F Comfortable wholesale debt repayment schedule (1) USD mln International debt repaid and 2,220 bo

  44. Slide 44: Capital management

    CAPITAL MANAGEMENT Tier I CAR (Basel I) Total CAR (Basel I) 14% 13% 13% 12% 13% 11% 10.5% comfort zone threshold 2017F 2018F 2019F 2017F 2018F 2019F Dividend payout RUB bn 33.1 17.9 18.0 15.0 15.0 Dividend payout for 2.8 preference shares 9.2 6.1 15.0 15.0 15.2 15.2 Dividend payout for 9.2 ordinary

VTB Group — Investor Day (May 2016) on 6ix