1. finance
2. bank

Investor Presentation
October 2014
Disclaimer
This presentation contains “forward-looking statements”, which are statements related to the future business and financial performance and future
events or developments involving CREDIT BANK OF MOSCOW. Such forward-looking statements are based on the current expectations and
certain assumptions of CREDIT BANK OF MOSCOW management, and, therefore, should be evaluated with consideration taken into of risks and
uncertainties inherent in CREDIT BANK OF MOSCOW‟s business. A variety of factors, many of which are beyond CREDIT BANK OF MOSCOW‟s
control, can materially affect the actual results, which may differ from the forward-looking statements.
This presentation includes information presented in accordance with IFRS, as well as certain information that is not presented in accordance with
the relevant accounting principles and/or that has not been the subject of an audit. CREDIT BANK OF MOSCOW does not make any assurance,
expressed or implied, as to the accuracy or completeness of any information set forth herein. Past results may not be indicative of future
performance, and accordingly CREDIT BANK OF MOSCOW undertakes no guarantees that its future operations will be consistent with the
information included in the presentation. CREDIT BANK OF MOSCOW accepts no liability whatsoever for any expenses or loss connected with the
use of the presentation. Please note that due to rounding, the numbers presented may not add up precisely to the totals provided and percentages
may not precisely reflect the absolute figures.
Information contained in the presentation is valid only as at the stated date on the cover page. CREDIT BANK OF MOSCOW undertakes no
obligation to update or revise the information or any forward-looking statements in the presentation to reflect any changes after such date.
This presentation is for information purposes only. This presentation does not constitute an offer or sale of securities in any jurisdiction or otherwise
constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities of CREDIT BANK OF MOSCOW. If
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information.
2
CBM at a Glance
Introduction
Roman Avdeev – Controlling Shareholder
Reputable Minority Shareholders
Born in 1967 in Odintsovo, Moscow Region
Education: Lipetsk State Technical University (1996) and
Moscow International University of Business and
Information Technologies (1994)
EBRD
7.5%
RBOF
4.6%
IFC
2.9%
Pursued entrepreneurship in late 1980s, key investments
include:
•
Credit Bank of Moscow (“CBM”) which constitutes the
main investment in Mr. Avdeev‟s portfolio
•
Also owns 81.1% stake in pharmaceutical company
Veropharm and has interests in real estate
Roman I. Avdeev2
85.0%
Establishing CBM Business
Acquired 7.5% stake in CBM
for RUB2.9 Bn in 2012
Mr. Avdeev acquired CBM in 1994 and participated in day-to-day operational
management until 2008
Acquired 7.5% stake in CBM
for RUB2.9 Bn in 2012
Chairman of the Supervisory Board from August 1999 to January 2008
Since 2008 Mr. Avdeev is a member of the Supervisory Board with oversight over key
strategic decisions
Continuously provided support to CBM‟s growth with equity injections, including
RUB4.5 Bn in 2011 and RUB7.1 Bn in 20131
Led CBM through key stages of its development, with focus on establishing CBM‟s
corporate culture, business principles and high standards of corporate governance
1
2
Russian
Bank
Opportunity
Fund (RBOF)
Established in 2012 by IFC,
Russian government and
VEB to invest in mid-sized
commercial banks in Russia
IFC transferred to RBOF its
4.6% stake in CBM in 2012
Initial investment in the form of subordinated debt which was subsequently converted into equity in 2013
Stake held through “Rossium Concern”, LLC
4
CBM at a Glance
Key Highlights
#14 bank in Russia by total assets1
#4 privately owned bank in Russia by total assets1
Strategic focus on Moscow Area2
Corporate banking, servicing over 15,000 active corporate
banking customers3
Retail banking, servicing over 740,000 retail banking
customers3
61 offices, and 30 cash offices, c.5,700 payment terminals
(ranked #24) and 766 ATMs (#35) in Moscow Area2
Approx. 4,700 employees3
Credit ratings: BB from Fitch, BB- from S&P, B1 from
Moody‟s
Key Financials
Balance sheet (RUB Bn)
Total Assets
Gross Loans
Customer Deposits
Shareholder‟s Equity
Key Ratios
NPL 90+ / Gross Loans
Tier 1 (Basel III) 6
Income Statement (RUB Bn)
Net interest income
Net Income
Key Ratios
RoAA
RoAE
Net Interest Margin
Cost / Income
2012
2013
1H2014
308.7
205.9
189.0
39.3
454.2
317.9
274.9
50.7
486.7
356.9
295.4
54.9
1.0%
13.4%
1.3%
10.2%
1.9%
10.5%
6m2012
6m2013
6m2014
5.5
2.2
7.7
3.8
10.9
4.2
1.8%
15.5%
5.1%
43.1%
2.3%
18.6%
5.2%
32.8%
1.8%
16.1%
5.1%
34.0%
Source: IFRS financial statements
#1
Best bank in Russia, Awards for Excellence 2014,
by Euromoney magazine
#1
Bank of The Year 2013 by Banki.ru
Business Segment Contribution (1H2014)
Gross Customer Loans
Revenues
Retail
Retail
33.0%
67.0%
Source: Company data,
1
2
3
4
5
6
7
Interfax-100 ranking as of 1 July 2014
Moscow Area represents Moscow and the Moscow Region
As of 1 July 2014
As of 1 January 2013 (RBC rating)
As of 1 July 2013, according to RBC and company data
Calculated according to Basel III regulations for 2013 and 1H2014
Corporate Revenues include International business, Treasury and Cash Operations
56.2%
43.8%
Corporate7
Corporate
RUB357 Bn
RUB30.4 Bn
5
Delivering Sustainable Profitable Growth
CBM is the Fastest Growing Bank Since 2008
Among Top 20 by Assets
Robust Loan Growth…
(RUB Bn)
Total Asset growth 2008-1H2014 (x)
128%
109%
108%
CAGR 2009-1H2014
106%
112%
117%
49%
346
309
CBM
7.9x
NCC
5.1x
Rossiya
201
159
4.3x
VTB24
104
3.8x
1
3.8x
Otkritie
58
1
KHMB
2009
2010
2011
2012
2013
% Net Loans/Deposit Ratio
Net Loans
1H2014
Source: IFRS financial statements
Sberbank
2.6x
BOM
2.5x
VTB
2.5x
Alfa
…Whilst Maintaining Attractive Profitability
(RUB Bn)
1.8%
2.9x
2.3%
1.8%
18.6%
16.1%
15.5%
3.8
4.2
2.2
2.3x
RSHB
2.2x
GPB
2.1x
BSPB
2.1x
Ak Bars
1.8x
RSB
1.8x
PSB
1.7x
UniCredit
1.6x
Rosbank
Raiffeisen
1H2012
Net Income
1H2013
% RoAA
RoAE
1H2014
Source: IFRS financial statements
1 NOMOS-BANK was renamed into Otkritie Bank in June 2014. Otkritie Bank is on standalone
basis, excluding Bank of Khanty-Mansiysk,
Uralsib
1.5x
1.3x
0.8x
Source: Interfax-100 ranking for 1H2014 and 2008, RAS
6
Superior Performance vis-à-vis Russian Peers
Growth
Margin
Asset CAGR (2008-1H2014)
Net Interest Margin (1H2014)
46%
34%
Mid-Sized
Russian
Universal
Banks
Efficiency
15%
12%
5.2%
5.1%
42%
5.8%
32%
48%
Source: Company data, IFRS financial statements, Other companies‟ data
1 Calculated as Net Income for a period divided by opening and closing average of Total Assets
59%
5.7%
4.3%
0.4%
2.4%
2.2%
2.0%
2.0%
1.3%
-1.1%
1.4%
3.7%
19%
0.9%
50%
6.4%
21%
1.0%
47%
4.4%
4%
1.7%
41%
9%
ROAA1 Range (2010-1H2014)
34%
5.1%
11%
Russian
Listed
Large Caps
Cost/Income Ratio (1H2014)
4.8%
10%
Foreign
Owned
Universal
Banks
Return on Assets
42%
50%
1.9%
0.0%
3.3%
2.3%
1.7%
1.6%
0.0%
3.2%
1.6%
7
Moscow Area Opportunity
Moscow: A Large and Attractive Market …
One of the World‟s Largest Cities by Area
Largest City in Europe by Population
Population (2012 unless otherwise stated, MM)
Occupies area of 2,500
km2, twice the area of
New York City and 1.6x
London 1
12.0
8.2
3.5
Moscow city
Moscow City
Moscow region
(excludes Moscow city)
xx GDP per Capita (US$ „000)
6 11 40 3
98
82
67
South-East
Asia
GDP of Moscow Region for 2012 (US$75 Bn)
Developed
Markets
EMEA Emerging
Markets
49
Philippines
7
Hong Kong
Thailand
Chile
South
America
Malaysia
30
18
Colombia
42
Argentina
Hungary
Israel
Czech Rep.
11 10
8
Egypt
5 11 5
39
Poland
9
Finland
19
Portugal
New
Zealand
Philippines
Hong Kong
Thailand
Chile
South
America
275
Austria
403 316 284
Moscow Area[]3
EMEA Emerging
Markets
Colombia
Hungary
Czech Rep.
Israel
Poland
New
Zealand
Finland
Portugal
Developed
Markets
16
280
255 195
129
Egypt
417
11 8
477 378
Malaysia
14 36 3 19 13
524 292
Argentina
49 49 20 41
Austria
Moscow Area
Paris 3
Rome
(MM, 2013)
265 212 186
1.
2.
3.
4.
5.
Madrid
2.2
Population Comparison 4
(US$ Bn, 2013)
454 5
Berlin
2.6
Source: Rosstat, Eurostat
GDP Comparison 4
24
London 2
3.2
South-East
Asia
Population of Moscow Region (7 MM)
Source: Moscow City Government, Eurostat
As at 2011
As at 2010
Source: Moscow City Government, Moscow Region Government, Rosstat, EIU data
Moscow Area GDP calculated as estimated Moscow GDP for 2013 of US$379 Bn (based on PwC report “From Moscow to Sao Paulo – Emerging 7 cities report 2013”) and the latest available Moscow
Region GDP for 2012 of US$75 Bn (RUB2.4 Trn converted into US$ using USDRUB FX rate 32.27)
9
… With a Wealthy Economy and Population…
In Line with Western European Levels of GDP per
Capita …
GDP per Capita (2012, US$ „000)
41.2
40.7
… Being Russia‟s Wealthiest Region …
GDP per Capita
Average Monthly Spending
(2012, US$ „000)
32.2
(9M 2013, US$)
1,243
14.0
32.5
32.2
573
29.0
Moscow City
14.0
Moscow City
Germany
France
Italy
Spain
Russia
Russia
Moscow City
Russia
Source: Moscow City Government
Source: Rosstat
Unemployment
Proportion of Population with
Higher Education
(2012)
(2012)
48.0%
5.5%
29.0%
Source: Moscow City Government
0.8%
… With a Consumer Oriented Economy
Moscow City
Moscow City
Russia
Source: Rosstat, Standard & Poor‟s
Russia
Source: Moscow City Government
(2012)
9%
3%
5%
Low Delinquency Rates vs. Russia‟s Top 30 Regions
Retail and Wholesale Trading
Real Estate
9%
37%
Manufacturing
(1 July 2014, %)
7.4
Transportation and Communications
16%
Budget Enterprises
9.9
8.9
3.8
2.8
4.8
3.2
3.3
3.3
6.9
4.2
0.9
3.1
2.2
2.5
Construction
Other
21%
Source: Moscow City Government
Consumer
Moscow City
POS
Credit Cards
Min - Russia's Top 30 Regions
Mortgage
Car Loans
Max - Russia's Top 30 Regions
Source: National Bureau of Credit Histories
10
… with Continued Strong Growth Potential
Moscow‟s Fast Economic Growth Expected to
Continue
Key Highlights
Moscow GDP expected to expand by 44% by 2025 1
11.1% projected personal income CAGR 2012-2016 2
Population Growth vs. Russia
GDP Per Capita: Growth vs. 2010
(2012, %)
(x)
Higher population growth of 0.9% in Moscow vs. 0.1% in
Russia in 2012 3
0.9%
2.1x
40% R&D investments growth in 2007-2012 4
1.3x
Over US$100 Bn investment required to develop
infrastructure by 2030 4
0.1%
Continued push by government to position Moscow as an
international financial centre
Main host city for FIFA World Cup 2018
Moscow
Russia
2010
Source: Rosstat
2016
2025
Source: Moscow City Government
Strong Growth in Banking Assets…
…With Clear Long Term Leadership Amongst
Emerging Cities1
Moscow City and Moscow Region Banking Assets (RUB Trn)
GDP Forecast (US$ Bn)
547
CAGR 2009-2013
455
38.9
379
33.3
19.5
339
310
27.6
228
22.1
189
272
188
247
188
126
123
58
2009
2010
2011
2012
Source: CBR
1
2
3
4
PWC report “From Moscow to Sao Paulo – Emerging 7 cities report 2013”
Moscow Strategy in 2014-2016
Rosstat
Moscow City Government
2013
Moscow
City
GDP 2013
Beijing
Sao Paolo Mexico City
Istanbul
Jakarta
Mumbai
GDP 2025
Source: PWC
11
Business Model Highlights
Universal Bank Focused on Resilient Russian
Consumer Market
Corporate
About 70% of CBM
portfolio73%
focused on
resilient Russian
Consumer2
Gross Corporate Loan Portfolio, 1H2014
(%)
Other
Pharmaceutical
Property rental
Industrial
construction
Financial
Services
Gross Retail Loan Portfolio, 1H2014
(%)
Credit Card Loans
Construction
Auto Loans
14% 10%
4%
4%
4%
5%
5%
8%
Textiles
Retail
10%
9%
9%
Food and
Farm
Mortgage Loans
4%
14%
Metallurgy
9%
9% 9%
Auto
73%
Electronics
General Purpose Loans
Oil and Chemicals
Total: RUB239 Bn
Total: RUB118 Bn
Source: IFRS financial statements
Source: IFRS financial statements
Retail and Wholesale Trading Is One of Highest Growing
Industries in Russia
Moscow Area Remains The Least Leveraged Region in Russia1
Average annual growth in 2003-2013 (%)
(Loans per capita / Average wage)
7.3
6.1
5.8
4.2
Wholesale
and retail
trading
Source: Rosstat
1
2
Real
estate
3.5
Const- Transport and Industry
ruction infrastructure
3.3
3.1
Other
Mining
1.3
1.5
1.7
1.7
1.7
1.8
2.0
2.0
2.1
2.1
Moscow Kras- TatarSt
Kras- Rostov Yekate- Bash- Novo- ChelyaArea nodar stan Peter- noyarsk Region rinburg kiria sibirsk binsk
Region
sburg Region
Region
Region Region
Source: National Credit History Bureau
Top-10 regions by total size of consumer loans in 2013 according to National Credit History Bureau
Calculated as Retail and Wholesale Trading and Residential Construction parts of corporate portfolio plus Retail Business portfolio as of 30 June 2014 (as per IFRS financial statements)
13
Strong Corporate Banking Platform with a Niche Focus
on Retail and Wholesale Customers
Gross Loan Portfolio Evolution
Highlights
(RUB Bn)
Over 15,000 active corporate customers1
CAGR 2009-1H2014
Strong and
Quality
Customer Base
239.1
Strategic focus on retail and wholesale
trading sector
220.0
Focus on large and medium sized
corporates
155.5
132.8
Leader positions in international trade
finance
88.3
50.1
Business
Focused on
Growth
Strategy and organisational structure
designed to deliver above market growth
Focus on increasing contribution of
larger corporates
2009
2010
2011
2012
2013
1H2014
Source: IFRS financial statements
International Trade Finance Transactions
(USD Bn)
2.0
1.7
Well-diversified loan portfolio
Risk
Management
as Key Priority
Focus on shorter term lending
Synergies with cash handling business,
enabling effective credit monitoring
Source: Company data
1
2
As of 30.06.2014
Estimated share in corporate gross loan portfolio (1H2014)
0.8
0.9
2011
2012
0.4
0.2
0.2
2008
2009
2010
2013
1H2014
Source: IFRS financial statements
14
Cash Handling – Strategic Synergies with Corporate
Banking Business
Cash Handling Market Share2
(Moscow, Jan-Sep 2013)
Strategic Synergies with CBM Business
Value for
Customers
High demand service for retail trade
customers
(% Share by Amount of Cash Handled)
Serves as an entry point to start new
customer relationships and enhance
customer loyalty
Rosinkas
Powerful tool for monitoring customer cash
flows
Strategic
benefits to
CBM
Other
5%
Alfa-Bank
11%
6%
26%
Vozrozhdenie 8%
12%
Inkakhran
Permanent customer balances allow for
direct debiting in case of distress situation
19%
13%
CBM
Servicing CBM‟s network of payment
terminals and ATMs
VTB Group
(incl. Bank of Moscow)
Almost 80%
#2
Highlights1
of retailers in Moscow
do not accept plastic
cards as means of
payment3
#2 largest cash
handling service
provider in Moscow2
Over 1,000 customers, of which 38 are banks
Over 180 cash handling routes
Over 250 armored vehicles with various carrying capacity
Best-in-class equipment including high-tech audio/video recording
and surveillance systems, as well as integrated logistics systems
Sberbank
Cash Handled Volumes Dynamics
(RUB Bn)
732
VW T5
VW CRAFTER/
VW CRAFTER LONG
RENAULT
MASTER
VOLVO 6616
422
FORD CARGO
505
274
6m2010
Source: Company data
1 As of 30.06.2014
2 Interfax Cash Handling Services report for 3Q 2013
3 2GIS directory, 2014
897
6m2011
6m2012
6m2013
6m2014
15
Growing Retail Franchise
Highlights
Significant Loan Growth…
(RUB Bn)
Approx. 740,000 retail banking customers1
CAGR 2009-1H2014
Focus on high margin consumer loans – 73% of the portfolio
Differentiated risk appetite based on customer segmentation
Tight underwriting policies
33%
118
24%
Careful risk selection focused on high quality customers
Proper infrastructure for efficient customer acquisition and
service
31%
98
17%
18%
17%
50
30
18
10
2009
2010
2011
2012
2013
1H2014
Significant potential of the Moscow Area retail banking market
Gross Retail Loan Portfolio
Gross Retail Loans as a % of Total
Source: IFRS financial statements
Focus on Quality Customer Segments, That Offer
High Growth Potential
Focus on High Yield Retail Products
(% of new originations)
(1H2014)
New Customers:
Walk-in Customers
• Penetration3: 0.6%
• Approval rate2: 17%
New Customers:
Positive Credit History
• Penetration3: 1.0%
• Approval rate2: 42%
New Customers:
Corporate Employees
• Penetration3: 3.4%
• Approval rate2: 42%
Active Existing Customers
• Penetration3: 3.8%
• Approval rate2: 70%
11%
14%
20%
26%
General Purpose Loans
4%
Credit Cards
Other Existing Customers
22%
21%
• Penetration3: 3.8%
• Approval rate2: 62%
Mortgages
73%
Auto Loans
Target Customer Segments
Corporate channel
Source: Company data
1
2
3
9%
As of 30 June 2014
Refers to the general purpose loan portfolio only
Active clients in each segment divided by potential client base in each segment
Source: IFRS financial statements
16
Leading Payment Terminal Network as a Unique
Acquisition Tool
Highlights
Leading Payment Terminal Network with Enhanced Functionality
#2 largest payment terminal network in
Moscow with c.5,700 devices in high traffic
locations on 3,500 streets of Moscow
www.mkb.ru
(495) 777-4-888
Superior functionality in comparison to
competitors‟ devices
Cost
efficiency
Advertising
and
acquisition
channel
Risk
management
tool
Payment terminal is
effectively a “mini-branch”
which only costs
US$ 4,000 to set up
Automates part of routine
tasks releasing front-desk
personnel capacity
Payment services attract
new customers
Promotes brand awareness
and product awareness
#4
Open a Deposit?
Apply for a Loan?
Get a Credit Card?
Mobile Top Up
Internet and
Cable Providers
Pay Fines
Repay Loan
Pay Utility Bills
Other Services
Online Shopping
/ Online Wallet
CBM Services
Cash-in
Card Balance
Information
Ranked #4 media
channel by media
reach1 in Russia
Continuous data collection
Ability to understand
consumer patterns
C.60% of loan applicants
have used payment terminal
network of the Bank in the
past
Source: Company data, RBC
1 As of February 2012, according to Synovate Comcon
2 As at the end of 2013 according to J‟son & Partners Consulting
Every 3rd
banking terminal in Moscow Area belongs to CBM2
17
Efficient Multichannel Distribution and Service
Platform
…Complemented by Well Developed Alternative
Channels
Established Branch Network…
61 offices and 30 cash offices in Moscow Area1
Convenient locations in high traffic areas, operating 7 days a week with
extended hours
Pirogovskiy
Pushkino
Ivanteyevka
Boltino
Gribki
Tarasovka
Belyaninovo
Dolgoprudny
Bryokhovo
Powerful risk management tool
Yunost
Mystishchi
Sverdlovskiy
Serkovo
Losino-Petrovsky
Otradnoye
Medvezhyi
Ozera
Nakhabino
Monino
Balashikha
Krasnogorsk
Golyevo
Arkhangelskoye
Elektrostal
Reutov
Moscow
Razdory
Kupavna
Elektrougli
Barvikha
Mamonovo Zarechye
Yudino
Lyubertsy
Odintsovo
Kokoshkino
Kotelniki
Moskovsky Mamyri
Razvilka
Antonovka
Sosenki
Popovka
Ptichnoye
Rodniki
Forminskoye
Vatutinki
Vidnoye
Krasnaya
Pakhara
Shiskin Les
Znamya
Oktyabrya
Erino
Shchapovo
Lytkarino
Gori
Leninskiye
Podsobnogo
khozyaystva
Troitsk
Khripan
Malakhovka Bykovo
Dzerzhinsky Oktyabrsky
Salaryevo
Pavlovskoye
Bykovo
Domodedovo
Pokrov
Domodedovo
Podolsk Aleksandrovka
766 own ATMs with broad functionality
ATMs
Over 3,600 ATMs of partner Banks
Internet
and
Kraskovo
lino
Lesnoy
Gorodok
Mobile
Source: Company data
1 As of 1 July 2014
2 As of 1 January 2013 according to RBC rating
3 By Markswebb in 2013
4 As of 1 July 2014
Ranked #2 in Russia by online remote banking3
Over 455,000 Internet bank users, +24% in 1H 2014
45,400 online applications in 1H 2014
Ostrovtsy Zhukovskiy
Verkhnee
Myachkovo
Novoye
Chulkovo
Call
Sofyino
Volodarskogo
Centre
Over 132,000 incoming servicing calls per month4
Over 59,000 outgoing telemarketing calls per month4
Konstantinovo
Mechta
Denezhnikovo
Voskresenskoye
DSA
Offices
Effective acquisition and service channel
Fryazino
Yubileyny
Veshki
Sgonniki
Yurlovo
Terminals
Remote Channels
Krasnaya
Gorka
Chernaya
Zelenograd Gryaz
Rozhki
Gorki-2
Payment
Lobnya
Lunyovo
c. 5,700 payment terminals – ranked #2 in Moscow
by number of payment terminals2
Cash Offices
(Bank at Work)
Untapped opportunity – currently only 3.4% of target
employees of corporate customers are retail banking
customers of CBM
Target customer base of 1.6 MM potential customers
18
CBM Delivers Best-in-Class Risk Management
Practices
Disciplined Approach to Risk Management
NPL Ratio Benchmarking1,2
NPL Coverage ratio
(%, 1H2014)
Deep understanding of Moscow market
dynamics
Efficient Risk
Selection
1.6
1.0
1.4
1.0
1.1
1.2
Clear segregation of duties between
sales and risk underwriting
Sophisticated in-house scoring models
based on best-in-class international
software (SAS)
1.0
4.8
Involvement of risk management
department at an early stage of
underwriting process
Centralised risk management with
underwriting in the CBM‟s headquarters
1.8
5.9
Targeting high quality customers
Risk metrics among most important KPIs
Strong
Underwriting
Expertise
3.5
3.1
3.4
3.4
3.8
3.8
1.9
1.2
Alfa
CBM
Unicredit Sberbank Nomos Raiffeisen PSB
BSPB
VTB
Source: Company data, Companies‟ IFRS financial statements
CBM Demonstrated Resilience Through the Cycle
4.9
1.8
172%
0.9
1.0
2.1
209%
239%
213%
102%
2.2
162%
3.0%
Unique Risk
Management
Tools
1.5%
Cash handling serves as effective risk
management tool for corporate customers
Efficient utilisation of payment
terminals for retail underwriting and
targeted customer acquisition
2009
2010
CBM NPLs
1.9%
1.1%
1.0%
2011
2012
1.3%
2013
1H2014
Coverage Ratio
Cost of risk, %
Source: IFRS financial statements for CBM
1
2
NPL Ratio calculated as total amount of NPL 90+ overdue loans divided by Gross Loan Portfolio
Alfa, Unicredit are calculated based on YE 2013 IFRS financial statements.
19
Operational Excellence
Operating Efficiency Levers…
Reducing costs through reliance on
remote service channels
Improving office productivity
Offices network is able to handle 25%
more customers without substantial
investment required1
Improving operational efficiency
Emphasis on terminal network which
is fast to roll-out and easy to relocate
Fully centralised front-office IT
system based on Siebel 8
Introduction of “united product”
bundle – approved customers will be
able to use products without additional
visits to the office
Further centralisation of business
processes across customer origination,
underwriting and back-office functions
…Driving Improving Cost Efficiency
Cost / Assets Ratio
Cost / Income Ratio
(%)
(%)
48
68
70
76
100
103
41.1%
39.8%
2.9%
2.4%
2.3%
2.5%
2.1%
36.0%
2.0%
34.3%
34.0%
31.2%
2009
2010
2011
2012
2013
1H2014
2009
2010
2011
2012
2013
1H2014
Total Assets per Employee, RUB MM (period-end)
Source: IFRS financial statements
1
Company estimates
20
High Standards of Corporate Governance
Full Compliance with Best International Corporate
Governance Practices
Audit Panel

Audit Panel reports directly to shareholders
Supervisory Board

6 INEDs out of 12 Board members

2 representatives of minority shareholders

INEDs have been present on the Board since
2008

Audit and Risk committee

Compensation, Corporate Governance and
Nominations Committee

Strategy and Capital Markets Committee

The Board also controls Internal Audit and
Control Division

Beneficiaries are fully disclosed on CBM‟s
corporate website
IFC
RBOF 2.9%
4.6%
EBRD
7.5%
Committees
Ownership
disclosure
William
Owens
Roman I. Avdeev1
85.0%
Corporate and
Financial
information
disclosure

#4
by quality of IFRS disclosures

#1
Annual report in financial sector in Russia 3

2
IFRS statements audited on annual basis and
reviewed on a quarterly basis
Source: Company data
1 Stake held through “Rossium Concern”, LLC
2 2013, according to Fitch
3 2012, according to RCB.ru journal
CBM Supervisory Board
 Chairman of the
Supervisory Board
 Served as INED for multiple
companies, including
Roman
FESCO
Avdeev
 17 years of KPMG
experience
 Served on boards of
RESO-Garantia and
Richard
Glasspool Sobinbank
Brendan
Walsh
 Head of AMEX‟s Global
Commercial Cards division
in EMEA
 Member of the European
Payments Council
Bernard
Sucher
 Member of the Board of
Directors of Aton
 Member of Board of
Directors of UFG Asset
Management
Andrew
Gazitua
 >20 years of investment
banking experience in
Europe
 Board member of Web
Financial Group
 >30 years of investment
banking experience in
Europe
Nicholas  Board member of
TBC Bank
Haag
- Independent Directors
Thomas
Grasse
Mikhail
Kuznetsov
 Controlling shareholder
of CBM
 EBRD representative
 Board member on Board
of Directors in other banks
in Russia, Central Asia
and the EU
 IFC/RBOF representative
 INED for OJCS "Russian
meat products“ and OJSC
“Energosetproject”
 Chairman of the
Management Board of
CBM
Vladimir
Chubar
 Ex President of CBM
 President of LLC "MCB
Capital"
Alexander
Nikolashin
 Deputy Vice-President
of LLC "MCB Capital"
Anton
Avdeev
- Representatives of Minority
Shareholders
21
Track Record of Sustainable Profitable Growth
Gross loan portfolio
(Rub Bn)
(Rub Bn)
(Rub MM)
+73%
318
41%
+97%
357
51
55
3,825
2,152
2013
1H2014
2012
2013
1H2014
1H2012
2.3%
15.5%
1.8%
1.8%
1H2013
1H2013
1H2014
ROAE
ROAA
1H2012
4,243
39
206
2012
Net income
Equity
1H2014
NIM
1H2012
18.6%
1H2013
16.1%
1H2014
Cost of risk
Cost/Income
43.1%
5.1%
5.2%
32.8%
5.1%
34.0%
2.1%
2.2%
2013
1H2014
1.0%
1H2012
1H2013
1H2014
Source: audited IFRS accounts for 2011-2013, reviewed IFRS 1H2012-1H2014
1H2012
1H2013
1H2014
2012
22
Strong Balance Sheet Growth
Highlights
Strong Growth of Total Assets
 Total assets grew by 7% in the first half of 2014 and reached
RUB 487 Bn
(RUB Bn)
― Retail portfolio demonstrated fast growth of 20% in the first
half of 2014
― Corporate portfolio increased by 9% in the first quarter of
2014
 Corporate loans constitute c.68% of net loan portfolio, while the
share of retail loans increasing (32% in 1H2014 vs. 30% in
YE2013)
 RUB loans represent 85% of total loan
portfolio1
 Top 20 lending customers account for 28% of total loan
7%
47%
487
454
141
309
145
107
49
93
19%
111
90%
152
42%
216
9%
235
2012
Corporate Loans
2013
1H2014
Growth Rates
portfolio1
Healthy Asset Structure
Net Loan Portfolio Structure
(1H 2014)
Due from Other Banks 1%
(1H 2014)
Financial Assets
Property and Equipment
1%
Other
1%
12%
Cash and
Cash Equivalents
14%
71%
Other
Retail Loans
Auto Loans
3%
Credit Card Loans
Mortgage Loans
5%
Consumer Cash Loans
23%
1%
68%
Loans
Corporate
Source: audited IFRS accounts for 2011-2013 and reviewed IFRS 1H2014
1
As of 30 June 2014
23
High Quality Loan Book Conservatively Provisioned
Corporate
Retail
Portfolio Quality
Portfolio Quality
(RUB Bn)
(RUB Bn)
0.4%
0.9%
0.6%
868%
1242%
753%
239
220
2.0%
240
2.0%
3.1%
5.3%
5.7%
102%
116%
105%
118
5.6%
5.3%
120
2,4
98
1.9%
6,0
4.6%
156
50
60
120
4,0
1,2
3.9%
3.3%
0.3%
0.2%
0.2%
0
3.2%
0,0
2012
2013
Gross Loans
% LLP / NPL 90+
NPL 90+
% Cost of Risk
2,0
2012
2013
Gross Loans
%
1H2014
Loan Loss
Provisions
NPL 90+
%
LLP / NPL 90+
Cost of Risk
Retail NPLs and LLPs, by Product
Collateral Structure
(1H2014, % of gross loans)
(1H2014 , Net of Impairment)
Guarantees and No Collateral
(Including Loans
Secured by
Cash Collected)
40%
0
1H2014
Loan Loss
Provisions
105%
Real Estate
5.3
60%
6.3
5.6
19%
1.8
17%
CBM Own Debt
1%
Securities
8% 11%
Equipment Vehicles
Goods
4%
Claims for Receivables
Source: audited IFRS accounts for 2011-2013 and reviewed IFRS 1H2014
Retail Total
NPL
111%
45%
LLP
2.6
1.0
Auto Loans
%
6.9
1.7
Mortgage Loans
Cash Loans and
Credit Card Loans
LLP / NPL 90+
24
Well Balanced Funding Structure
Liabilities Breakdown
(1H2014)
Customer Deposits
(RUB Bn)
Funding from CBR
2%
Other Liabilities
1%
Funding from Credit Institutions
12%
Debt Securities
Issued
140
112%
275
117%
295
140
155
107
135
140
2012
2013
1H2014
106%
189
250
Corporate Deposits
17%
7%
45%
500
82
36%
70
0
0
Retail Deposits
32%
Retail Deposits
Corporate Deposits
Net Loans/Deposits Ratio
Deposits Growth
Source: audited IFRS accounts for 2012-2013 and reviewed IFRS 2Q2014
Source: reviewed IFRS 2Q2014
Debt Repayment Schedule
Breakdown of Deposits by Type (1H2014)
40
(RUB Bn) 36
Corporate
14
Retail
Current
Current
9%
20%
22
35
10
4
10
2015
Domestic Bonds
2016
2017
Euro Bonds
80%
2018
Syndicated Loans
Term
Term
5
91%
2019+
Securitization
Source: Company data, nominal values
Source: reviewed IFRS 1H2014
Attractively Positioned by Credit Ratings vs. Key Peers
Fitch/S&P/Moody‟s
Source: Companies‟ filings
BBB-/BB+/Ba1
BB/BB-/B1
BB-/BB-/Ba3
-/BB-/Ba3
BB-/-/Ba3
B+/B+/B2
-/B+/B2
25
High Capital Position
IFRS Capital Adequacy Ratio1
RAS Capital Adequacy Ratios
(RUB bln)
12.3%
15.8%
14.7%
13.4%
45.0
12.4%
7.6%
10.5%
53.4
71.1
12.0%
Min N1.0=10%
14.3%
10.2%
49.1
12.9%
7.5%
73.2
8.0%
8.0%
Min N1.2=5.5%
38.2
2012
Tier I Capital
Min N1.1=5%
2013
Capital Adequacy Ratio
1H2014
Total Basel Capital
2011
2012
Old regulation 215-P
Tier 1 CAR
N1.0 ratio
2013
1 Sep 2014
New regulation 395-P
(Basel III)
N1.1
N1.2
Capital Injections Since 2010
 Subordinated loan from Black Sea Trade and Development Bank:
US$20 MM
 US$500 MM subordinated Eurobond issue
 Other subordinated loans (domestic subordinated bond issues):
RUB3.0 Bn and RUB2.0 Bn
 Tier I capital injections by the current shareholders in the amount
of RUB17.6 Bn
Source: audited IFRS accounts for 2011-2013 and reviewed IFRS 1H2014
1) Data as of 1H2014 and YE2013 is calculated according to Basel III
26
Strategy Highlights
Accelerating Market Consolidation Underpins Growth
Opportunity
Well Capitalised Privately-Owned Banks With Sound
Business Models Will Benefit Most…
A Trend Toward Fewer and Larger Banks …
# of Banks
Top-20 Banking Groups, %
1 200
80
Change, 2008-1H2014, %
Private Banks‟ Market Shares by total assets, 2Q 2014, %
2.6%
Alfa
Nomos
1 000
2.3%
70
PSB
800
60
2007
2008
# of Banks
2009
2010
2011
2012
CBM
2013
1.3%
0.8%
+0.1p.p.
+1.5p.p.1
-0.3p.p.
+0.6p.p.
Top-20 Banking Groups, % of Sector Assets
Sources: CBR, INTERFAX, Moody‟s Investors Service
…With Most Significant Consolidation Expected
Among Privately-Owned Universal Banks
BSPB
0.8%
--- 0.0p.p.
Rossiya
0.8%
+0.4p.p
.
% Share by Total Assets
0.6%
Uralsib
0.6%
-1.0p.p.
MDM
0.5%
-0.6p.p.
State-Owned
6
57%
35%
-0.2p.p.
Russian Standard Bank
Privately-Owned
Universal
>800
3% 6%
Retail Specialists
10
Source: INTERFAX
1
Petrocommerce
Foreign
7
0.4%
-0.2p.p.
# Number of banks in
the category
Source: INTERFAX-100 ranking for 1H2014 and 2008, RAS
Nomos‟ market share is pro-forma of Otkritie and Bank of Khanty-Mansiysk; increase in market share is mostly M&A driven
28
Strategic Pillars In The Medium Term
Objective
To be one of the top Private Russian Banks
Providing Full Range of High Quality
Banking Services to Moscow Area Customers
Core Market
Strategic Focus on Moscow Area Consumer
Corporate
Preferred choice for high quality large and
medium-sized corporates, belonging to target
segments of CBM
Growth
Pillars
Maintaining key focus on retail and wholesale
trading industry
Expand servicing of Russian blue-chip clients
Further develop new commission products to
increase commission income and ensure
strong cross-sell efficiency
Drivers
Above market growth
Decreasing funding
costs
Retail
Further strengthen position as bank of “first
choice” for retail customers in Moscow area
Substantially increase share of retail loans in
total portfolio
Expand into new acquisition channels and
customer segments
Enhance service quality and promote brand
value
Focus on enhancing
operating excellence
and productivity
Maintaining strong
balance sheet
29
Appendix I: Russian Macroeconomics and
The Banking Sector
Russia: Macroeconomic Fundamentals
Solid GDP Historical Growth and
GDP per Capita…
… Supported by Strong
Macroeconomic Fundamentals…
… With Low Unemployment and
controllable Inflation
Real GDP Growth (CAGR 2010-2013)
Current Account Balance as % of GDP (2013)
Unemployment (2013)
4.9%
2.3%
3.1%
1.8%
13.5%
9.7%
2.7%
(1.2%)
1.8%
7.6%
(1.6%)
(2.1%)
Turkey
Russia
4.8%
4.8%
(7.5%)
0.2%
Source: EIU
10.5%
(0.2%)
Poland Romania Hungary Czech
Rep.
GDP per Capita (US$, 2013)
Russia Hungary Romania Czech
Rep.
Poland
Turkey
Russia Romania Czech
Rep.
Turkey Hungary Poland
Source: EIU
Source: EIU
Budget Deficit (2013)
Inflation (Russia)
18,510
14,740
13,600
12,800
16%
10,740
2.6%
8,670
2.9%
3.0%
1.2%
0.0%
Czech
Rep.
Source: EIU
Russia
Poland Hungary Turkey Romania
Poland
Source: EIU
0.5%
Russia
Turkey Romania Czech Hungary
Rep.
12%
10.9%
8.8%
8%
6.5%
4%
'05A '06A '07A '08A '09A '10A '11A '12A '13E
A
Source: Rosstat
31
Appendix II: Additional Materials
Balance sheet
Key Financial and Operating Metrics
RUB Bn
2012
2013
Assets
309
454
487
Gross loans
206
318
357
Corporate
156
220
239
50
98
118
Interbank loans
13
10
5
Securities
37
56
60
Equity
39
51
55
189
275
295
82
140
155
107
134
140
40
85
74
1.0%
1.3%
1.9%
2.4x
2.1x
1.6x
1.0%
2.1%
2.2%
Tier I capital (IFRS)
13.4%
10.2%
1
10.5%1
Total capital (IFRS)
15.8%
14.7%1
14.3%1
6m2012
6m2013
2.2
3.8
5.1%
5.2%
5.1%
43.1%
32.8%
34.0%
ROAA
1.8%
2.3%
1.8%
ROAE
15.5%
18.6%
16.1%
Retail
Customer accounts
Corporate
Retail
CAR
Asset
quality
Wholesale funding
NPL 90+ / Gross loans
NPL 90+ coverage
Cost of risk
Profitability
Net income
NIM
Cost/Income
1H2014
CAGR'12-1H14
35%
44%
33%
77%
-48%
38%
25%
35%
53%
20%
51%
6m2014
4.2
Source: audited IFRS accounts for 2012-2013 and reviewed IFRS accounts for 2Q2012-2Q2014
1 Calculated according to Basel III
33
Balance Sheet
RUB MM
2012
2013
1H2014
CAGR'12-1H14
Assets
Cash and cash equivalents
47,459
67,065
64,306
2,546
2,799
3,019
12%
Due from credit institutions
12,521
10,466
4,730
-48%
Financial instruments at fair value through profit or loss
31,685
37,412
45,542
27%
5,448
18,534
14,558
93%
201,235
308,941
345,743
43%
6,080
6,079
6,761
7%
Obligatory reserves with the CBR
Available-for-sale securitites
Loans to customers
PPE
Other assets
Total assets
22%
1,755
2,606
2,069
12%
308,727
454,202
486,730
35%
-
14,566
6,665
n.a.
Liabilities and equity
Deposits by the CBR
Deposits by credit institutions
35,184
24,398
50,107
27%
Deposits by customers
189,014
274,872
295,428
35%
Debt securitites issued
40,014
84,554
74,176
51%
2,609
1,880
2,088
-14%
126
197
224
47%
Deferred tax liability
Current tax liability
Other liaibilities
2,489
3,077
3,140
17%
269,435
403,544
431,827
37%
13,540
15,330
15,330
9%
Additional paid-in-capital
9,019
9,769
9,769
5%
Revaluation surplus for buildings
1,116
1,116
1,116
0%
16
(38)
(37)
n.a.
15,601
24,481
28,725
50%
39,292
50,658
54,902
25%
308,727
454,202
486,730
35%
Total liabilities
Equity
Share capital
Revaluation reserve for available-for-sale securitites
Retained earnings
Total equity
Total liabilities and equity
Source: audited IFRS accounts for 2012-2013 and reviewed IFRS accounts for 1H2014
34
Income Statement
CAGR„6m12-6m14
6m2012
6m2013
6m2014
Interest income
13,026
18,832
25,991
41%
Interest expense
(7,504)
(11,101)
(15,107)
42%
Net interest income
5,523
7,731
10,885
40%
(1,023)
(2,736)
(3,745)
91%
4,499
4,995
7,140
26%
Fee and commission income
1,743
3,080
4,026
52%
Fee and commission expense
(179)
(270)
(724)
101%
3,925
134
(65)
n.a.
Net realized gain on available-for-sale assets
1
27
(71)
n.a.
Foreign exchange gains, net
7
303
239
484%
State deposit insurance scheme contributions
(178)
(232)
(270)
23%
Other operating income, net
(41)
270
235
n.a.
1,357
3,313
3,371
58%
Salaries and employment benefits
(1,691)
(2,150)
(2,866)
30%
Administrative expenses
(1,106)
(1,240)
(1,718)
25%
Depreciation of property and equipment
(166)
(228)
(263)
26%
Provision for impairment of other assets and credit related commitments
(198)
129
79
(3,489)
(4,767)
23%
4,819
5,743
46%
(993)
(1,500)
3,825
4,243
RUB MM
Provision for loan impairment
Net interest income after provision for impairment
Net (loss) gain on financial instruments at fair value though profit or loss
Non-interest income
Non-interest expense
Income before income tax
Income tax
Net income
(3,162)
2,695
(542)
2,152
n.a
40%
Source: reviewed IFRS accounts for 1H2012-1H2014
35
Solid Fee and Commission Income Growth
Fee and Commission Income Structure
Income from Insurance Contracts Processing
(Totals are in RUB M)
(RUB M)
1,743
5%
10%
23%
77%
3,080
31%
8%
17%
16%
11%
8%
15%
15%
23%
19%
18%
15%
26%
313%
1 200
996
4%
1,033
1 000
800
600
241
400
200
32%
14%
4,026
26%
0
6m2013
6m2014
6m2012
6м2012
6м2013
6м2014
Insurance contracts processing Cash collection delivery
Settlements and wire transfers
Guarantees and letters of credit
Plastic cards
Other
6m2012
6m2013
6m2014
Insurance Contracts Processing Y-to-Y Growth
Fee & Commission Income Y-to-Y
Cash Handling
Plastic Cards
(RUB M)
(RUB M)
700
24%
600
500
554
10%
607
800
46%
700
447
669
175%
600
500
400
400
243
300
300
200
200
100
166
100
0
0
6m2012
6m2013
6m2014
Cash Handling Delivery Y-to-Y Growth
Source: IFRS financial statements for the six-month period ended June 30, 2012, June 30, 2013 and June 30, 2014
6m2012
6m2013
6m2014
Plastic Cards Commissions Y-to-Y Growth
36
Concentrations: focus on diversification and
maintaining healthy concentration levels
Related party lending (% of total assets)
Largest exposures
30%
28%
28%
26%
0.20%
17%
17%
2011
2012
10 largest exposures
0.12%
0.14%
20%
2013
17%
1H2014
0.09%
2011
2012
2013
1H2014
20 largest exposures
Source: audited IFRS accounts for 2012-2013 and reviewed IFRS accounts for 1Н2014
37
International Capital Markets Transactions
Eurobond issues
October 2006
October
2006
July 2007 2011
August
January 20132013
February
Awards
EMEA
Finance
July
2007
January
May 2013
2013
Senior
Unsecured
US$100m
Eurobond
10.25% coupon
Senior
Unsecured
US$200m
Eurobond
8.25% coupon
Senior
Unsecured
US$500m
Eurobond
7.70% coupon
Subordinated
Tier II
US$500m
Eurobond
8.70% coupon
Due October
2009
Due August
2014
Due February
2018
Due November
2018
Achievement
Awards
JulyEuromoney
2007
JulyGlobal
2007 Banking &
magazine
Finance Review
#1
#1
#1
Best Financial
Institution Bond
in 2013
Highly
commended CEE
deal in 2013
Best Eurobond issuer
and the best Russian
borrower on syndicated
loan market in 2013
Syndicated loans
October 2006 2007
September
October
2006
August
2008
October
2006
October
2010
October
2006
October
2011
October 20062012
November
October
2006
March
2014
Loan facility in
amount of US$50m,
arranged by a
syndicate of Asian,
European and US
banks
Due September
2008
Loan facility in
amount of US$100m,
arranged by a
syndicate of 12
European and US
banks
Due August
2011
US$170m A/B loan:
US$40m 5-year “A”
loan from IFC,
US$130m 1 year “B”
loan from
syndicate of
13 banks
CBM fully refinanced
the “B” loan and
obtained a new
US$131m 1 year “B”
loan
Loan facility in the
amount of US$500m,
arranged by a
syndicate of 18 banks
Due November
2012
Loan facility in
amount of US$308m,
arranged by a
syndicate of 16
European and US
banks
Due November
2013
October
2006
January
2005
October 2006 2005
September
October
2006
August
2006
October 2006 2006
September
October
May2006
2007
October
2006
August
2007
Loan facility in
amount of US$10m,
arranged by a
syndicate of Asian,
European and US
banks
Due July
2005
Loan facility in
amount of US$40m,
arranged by a
syndicate of
European banks
Loan facility in
amount of US$20m,
arranged by a
syndicate of Asian,
European banks
Loan facility in
amount of US$53m,
arranged by a
syndicate of Asian,
European banks
Loan facility in
amount of US$30m,
arranged by a
syndicate European
banks
Due September
2006
Due August
2007
Due September
2007
Loan facility in
amount of US$80m,
arranged by a
syndicate of Asian,
European and US
banks
Due May
2008
Due September
2015
Due February
2009
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