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1 Presentation August 2010
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Overview 2
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Investment grade credit ratings that are among highest for Russian banks Diversified business model spanning corporate, retail, private banking and asset management Improving outlook for Russian economy and banking sector with long- term growth story intact Extensive distribution network in Moscow and key Russian regions Strong risk profile and balance sheet with relatively low NPLs, conservative provisioning, high collateral and high capital adequacy Track record of strong support from the City of Moscow – the Bank’s largest shareholder and Russia’s wealthiest municipality Solid earnings generation with positive profitability sustained even through crisis Leading and progressively strengthening Russian banking franchise: #5 by net assets and loan portfolio, #3 by retail deposits* 3 Key Investment Highlights *Source: Kommersant Dengi Magazine(№11) figures as of January 1, 2010
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4 * Source: Bank of Moscow IFRS Consolidated Financial Statements as at respective date ** Source: Kommersant Dengi Magazine(№11) figures as of January 1, 2010 Top-5 Russian bank by net assets, capital and loan portfolio** Top-3 deposit taker** Controlled and historically supported by the City of Moscow Wide range of banking services, including corporate and retail lending and deposit services, private banking, investment banking and asset management The Bank serves 9.7 mn retail and 105,000 corporate and public sector customers Ratings Moody’sS&PFitch Bank of Moscow Baa1 (Negative) n/a BBB- (Stable) Russia Sovereign Baa1 (Stable) BBB (Stable) Key Performance Indicators* (RUB bn, %)FY 2007FY 2008FY 2009 Assets528,086801,385825,144 Equity48,59567,65086,596 Deposits350,646406,541428,029 Net Loans351,622516,564534,490 Tier I CAR10.4%9.5%12.8% Total CAR14.8%13.9%18.9% Net Profit10,0466,978717 ROE (%)22.6%11.8%0.9% ROA (%)2.0%1.0%0.1% Bank of Moscow at a Glance
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Moscow-based with wide geographical reach 134 offices and sub-offices and 474 desks at postal offices in Moscow and Moscow Region* The Group operates 68 regional branches which supervise a further 69 full-service sub-branches and 113 sub-branches providing retail services and 8 cash offices located in the territory of Russia* With total 394 outlets throughout the country – presence in 60 regions* Foreign subsidiaries in Belarus, Latvia, Estonia, Ukraine, Serbia and Representative office in Frankfurt * Source: Bank of Moscow as of 1 May, 2010 5 Branch Network
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6 Macroeconomic and Industry Environment
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GDP Growth, Fiscal and Monetary Position Economy and GrowthReal GDP Growth vs. Peer Countries Oil Price and Foreign ReserveMonetary Indicators Source: CBR historical data for Foreign Reserve, Economist Intelligence Unit, June 18, 2010 for other indicators 7
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Business Overview 8
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Top Russian Banks by Capital (RUB, bn) Bank of Moscow’s Market Position Source: Kommersant Dengi Magazine(№11) figures as of January 1, 2010 863 Top Russian Banks by Total Assets (RUB, bn) 7 158 9 3 674 Top Russian Banks by Retail Deposits (RUB, bn) Top Russian Banks by Loan Portfolio (RUB, bn) 5 366 Business Overview
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Bank of Moscow is among the highest rated in the Russian banking sector A2 A3 Baa1 Baa2 Baa3 Ba1 Ba3 A A- BBB+ BBB BBB- BB+ BB BB- B+ Ba2 10 Source: Senior Unsecured Eurobond Ratings Business Overview
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The City of Moscow has been the largest shareholder of the Bank since it was established in 1995 Combined stake of the City of Moscow in the Bank’s share capital is 63.59%, including 46.48% stake of the Property Department of the City of Moscow and 17.11% stake of Stolichnaya Strakhovaya Gruppa, which in turn is controlled by the City of Moscow and the Bank of Moscow Group The City has participated in all of the Bank’s 14 equity issues Mr. Andrey Borodin, Chairman of the Management Board, and Mr. Lev Alaluev, Deputy Chairman of the Board of Directors, indirectly jointly control 20.32% of the Bank Controlled by the City of Moscow 11 Shareholder Structure Property Department of the City Moscow 46.48% OJSC Stolichnaya Strakhovaya Gruppa 17.11% Beneficial Ownership of Mr. Borodin and Mr. Alaluev 20.32% Goldman Sachs International 3.88% Source: Bank of Moscow LLC “GSM” 3.25% OJSC “GSM Investments” 3.16% Credit Suisse International 2.77% Others 3.03%
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BoM has a strong capital position As of December 31, 2009 the Bank’s total capital ratio (Basel 1 Accord) was 18.9%, and Tier 1 ratio was 12.8%* The Bank has been proactively increasing its capitalisation: In July 2009 BoM raised RUB 20 bn in its 13th additional share issue On July 26 2010 14 th issue was successfully registered with the CBR and boosted the capital of the Bank by RUB 21.7 bn. On October 15, 2009 Vnesheconombank (VEB) extended a 10-year subordinated loan to the Bank for RUB 11.1 bn Capital Base* (RUB bn, %)Capital Adequacy 12 min 8% (Basel 1 Accord) *Source: Bank of Moscow, IFRS Consolidated Financial Statements as of December 31, 2009 Business Overview
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Main Business Lines 13 Corporate lending Syndicated loans Trade finance and guarantees Foreign trade and exchange operations Debt Capital Markets (Local and International) Payment and account services Securities trading Precious metals Depositary services Underwriting Research Corporate and Investment Banking Business Overview Private asset management services Fund management services Mutual and pension funds Private Banking Current and deposit accounts Loan services Mortgages Debit and credit cards Money transfers Internet and telephone banking Internet trading (“Mos-broker”) Retail Banking Asset Management & Private Banking
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FOCUS ON MAINTAINING LEADING POSITION AS TOP 5 RUSSIAN BANK AND IMPROVING EFFICIENCY, PROFITABILITY AND CURRENT FRANCHISE AS OPPOSED TO AGGRESSIVE GROWTH 14 Business and Operating Strategy Businesses Focus on acquiring new customers and developing relations with existing ones Continue servicing all client segments, yet pay particular attention to strengthening presence in SME segment Build customer relationships and increase cross-selling, including investment banking products Corporate & Investment Banking Retail Banking Leverage strong retail brand and branch network Continue developing lending and deposits products as a key focus area – grow retail deposits market share Target high net worth individuals, while seeking to provide product diversity and service quality in line with best international practices Private Banking & Asset Management Business Overview Emphasis on raising effectiveness of risk management Control over the quality of the loan and securities portfolio Credit risk diversification and strengthening of underwriting standards Prudent Risk Management Policy Operational Business Efficiency and Market Positions Increase business efficiency Maintain leading positions in the national banking industry Tighten control over costs and expenses Branch Network Retain and strengthen positions in the regions Use the regional network to diversify client and risk concentration Short-term focus on efficiency improvement of existing network, over medium-term potentially resume network organic growth
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Over 105,000 corporate and public sector customers as of December 31, 2009* Focus on strategically important sectors of Russian economy Corporate banking dominates the asset side of the balance sheet Involvement in financing of the key projects of the City of Moscow SME – strategically important sector Increasingly active in trade financing Developing of investment banking services, including underwriting, debt issuance, research Corporate and Investment Banking 15 * Source: Bank of Moscow ** Source: Bank of Moscow IFRS Consolidated Financial Statements as of December 31, 2009 Loan Portfolio to Legal Entities** Business Overview 222.8 281.5 416.4 489.5 Deposits and Accounts of Legal Entities** (RUB bn) 46.6% 7.7% 45.7% 44.0% 9.1% 46.9% 36.9% 10.5% 52.6% 26.5% 17.9% 55.6% 250,6 0.9% 0.8% 1.5% 6.1%
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Business Overview No. 3 retail deposit taker in Russia* RUB 177.5 bn of term deposits and current accounts as of December 31, 2009** Approved by CBR to participate in the Deposit Insurance System, authorized bank of the Deposit Insurance Agency to manage retail accounts of the banks with withdrawn licenses Over 9.7 mn retail customers as of December 31, 2009*** 14.1 mn plastic cards as of July 1, 2010 RUB 88.3 bn – retail loan portfolio (gross) as of December 31, 2009** Wide range of retail services, including Muscovite Social Cards - a combination of a bank debit card, an ID, an insurance identification card and public transportation travel card for Muscovites As at July 1 2010, BoM had 1,842 ATMs in operation Advanced Internet and Telephone banking Retail Banking 16 *Source: Kommersant Dengi (№11) figures as of January 1, 2010 **Source: Bank of Moscow IFRS Consolidated Financial Statements as of December 31, 2009 ***Source: Bank of Moscow Retail Loan Portfolio** (RUB bn) Retail Loan Portfolio Breakdown** (2009) Overview Retail Deposits and Accounts** (RUB bn) Consumer Loans 48,9% Mortgages 31,1% Credit Cards 1,6% Scoring Loans 6,6% Car Loans 11,8% 3.8% 2.9% 5.7% 15.4%
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Business Overview Loan portfolio is diversified by industries and geographically, which is in line with the credit risk management approach More than a half of the Group’s loan book is concentrated beyond the borders of Moscow and Moscow region* Related-party lending, which includes lending to municipal entities of the City of Moscow, accounted for 2.5% of the Group's gross loan portfolio as at 31 December 2009 Loan portfolio is dominated by loans in local currency. Loans in foreign currencies account for 33,3% of total loans to customers* Bank of Moscow’s Loan Portfolio 17 Loan Portfolio Breakdown by Currency* (2009) *Source: Bank of Moscow as of December 31, 2009 **Source: Bank of Moscow, IFRS Consolidated Financial Statements as of December 31, 2009 OverviewLoan Portfolio Breakdown by Industry Sectors** RUB 66,7% USD 25,7% EUR 3,7% Other 3,9% Corporate Loans 88% Construction 13,9% Others 5,2% Financial & Other Services 21,8% Manufacturing 12,5% Trade 10,9% Individuals 15,3% Transport & Comms 4% Fuel& Energy 6,2% State Agencies 3,2% Metallurgy 3,8% Food Industry 2,5%
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Overdue Loans and Allowance for Loans LossesClient Concentration: Twenty Largest Borrowers (RUB bn) Bank of Moscow’s Loan Portfolio (Cont’d) 18 As of December 31, 2009 the provisions totalled RUB 43.3 bn, a 3.4 times growth from the beginning of 2009 As of December 31, 2009 LLPs comprised 7.5% of the loan portfolio compared to 2.4% as of December 31, 2008 NPLs accounted for 3.9% of the Group’s gross loan portfolio The NPLs are 1.9 times covered by provisions Concentration of top 20 borrowers in the total loan portfolio increased to 27.5% due to slowdown of the economy Net loan portfolio 2.0 times over-collateralised as at 31 December 2009 Source: Bank of Moscow, IFRS Consolidated Financial Statements as of December 31, 2009 Business Overview
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Conservative Credit and Market Risk Policies in Place 19 Credit Risk Limited open foreign currency position, stop-loss, country and borrower limits Centralised control over exchange rates in currency operations In accordance with CBR regulations, currency risk exposure cannot exceed 20% of the Group’s equity in all currencies Currency position is controlled by the CBR on a daily basis Currency Risk Managed with the aid of scenario analysis, simulative, optimising and predictive modelling Strict CBR controls on instant (N2) and current (N3) liquidity standards Monitored on a daily basis Liquidity Risk Measured via gap and interest rate sensitivity models Also employ stress testing and scenario analysis techniques Interest Rate Risk Based on recommendations and requirements of CBR, Basel Committee and auditors Single borrower/economic group limits Product type/geographic/industry concentration limits Ongoing monitoring of borrower’s conditions and collateral Centralisation of underwriting standards to address the crisis Vertically integrated risk management system implemented throughout the Bank, including regional branches, with the CRO reporting directly to the Bank’s CEO and the Management Board Credit Committee, Small Credit Committee and Mortgage Committee are authorised to make independent lending decisions Centralized decision making on issuance of retail loan products Business Overview
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20 Issued May-2005 US$300mn Due 2010 Issued Mar-2008 CHF 250mn Due 2011 Issued May-2006 US$500mn Due 2013 Issued Mar-2007 US$105mn Due 2010 Issued Nov-2007 US$600mn Due 2010 Issued Jan-2009 US$30mn& €105mn Due 2011 Issued Dec-2009 US$350mn Due 2011 Issued Nov-2005 US$300mn Due 2015 Issued May-2007 US$400mn Due 2017 Issued Aug-2008 RUB 10,000mn Due 2011 Issued Feb-2008 RUB 10,000mn Due 2013 Within 5 years (2006-2010) the Bank of Moscow raised equivalent of USD 4.25bn and RUB 25bn from the international and local capital markets Repaid International and Local Capital Markets Funding History Business Overview Issued Nov-2006 US$500mn Due 2008 Eurobonds LT2 Debt (Subordinated Eurobonds) Local Bonds Syndicated Loans Issued May-2006 US$400mn Due 2009 Issued May-2008 US$220mn Due 2009 Issued Sep-2004 US$250mn Due 2009 Issued Nov-2006 RUB 5,000mn Due 2009 Issued Mar-2010 US$750mn Due 2015
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Financial Overview 21
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Financial Overview Strong and relatively stable deposit base has always been one of the key advantages of the Bank As of December 31, 2009, customers accounts comprised 58.0% of the Bank’s liabilities Customer accounts increased 5.3% for 12 months of 2009 Reliance on wholesale financing is currently low Access to variety of liquidity facilities AssetsAssets (RUB bn) Overview of Assets and Liabilities 22 Source: Bank of Moscow, IFRS Consolidated Financial Statements as of December 31, 2009. Liabilities Liabilities (RUB bn) Assets well-balanced in terms of risk-return profile Portfolio of securities mostly issued by federal and municipal government agencies and leading Russian corporates in accordance with conservative risk policy Fixed-income instruments dominate trading securities portfolio Over-collateralized loans to customers portfolio 350 480 734 739 343 473 686 735
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Financial Overview Continued diversification of deposit base state funding available through: CBR facilities (unsecured and secured loans, repo transactions), Ministry of Finance deposits and funds of state-owned corporations The Bank is authorised to tender for budget funds of the City of Moscow along with several other banks Growth in Deposits* (RUB bn)Composition of Client Deposit Portfolio Deposit Base 23 By Deposit Type* By Customer Type* *Source: Bank of Moscow, IFRS Consolidated Financial Statements as of December 31, 2009. Current / Demand Accounts 34.5% Term Deposits 65.5% Individuals 41.5% Federal budgets + regional funds 15.5% State-owned organisations 10.5% Other commercial + legal entities 32.5%
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Financial Overview Operating Income (RUB bn) 24 Cost to Income Ratio* (RUB bn, %)Selected Profitability Ratios* Source: Bank of Moscow IFRS Consolidated Financial Statements as of December 31, 2009 Profit and Loss (RUB bn)
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