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January 2010

Investor Presentation. January 2010. Contents. Contents. Contents. Russian Federation overview. REGION OVERVIEW. Russian Federation. General information: Capital - Moscow Area - 17 075 400 sq km Population – 142 mln Government: Federal semi-presidential democratic republic

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January 2010

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  1. Investor Presentation January 2010

  2. Contents

  3. Contents

  4. Contents

  5. Russian Federation overview REGION OVERVIEW

  6. Russian Federation • General information: • Capital - Moscow • Area- 17 075 400 sq km • Population– 142 mln • Government: Federal semi-presidential democratic republic • Main ethnic groups - Russians (79,8%), Tatars (3,8%), Ukrainians (2%) • Official language – Russian • GDP (for 2010): USD 44 491,4 bln • International ratings of the Russian Federation: • Fitch: BBB/Negative outlook • Moody’s: Baa1/Stable outlook • S&P: BBB/Stable outlook • Banking system: • Russian banking system assets for 2010 increased by 14,8% compared with 2009 and totaled RUR 33, 804 trillion according to the data of the Central Bank of the Russian Federation. • Loans, deposits and other funds increased by 11,6% and made up RUR 22,166 trillion in 2010. • Loans to non-financial institutions grew by 12,1% up to RUR 14,063 trillion. Arrears under these loans reached RUR 743 bln (5,3%). Loans to individuals grew by 14,3% and totaled RUR 4,084 trillion. Arrears under these loans totaled RUR 282 bln (6,9%). • In 2010 total volume of investment into securities increased by 35% compared with 2009 and made up RUR 5,829 trillion.

  7. Key macroeconomic indicators

  8. Key macroeconomic indicators

  9. Key macroeconomic indicators Export, Import Volume Dynamics and Consolidated budget of Russian Federation Consumer Retail Turnover and Average Salary Dynamics

  10. Indicators of financial stability of the Banking sector

  11. Indicators of financial stability of the Banking sector

  12. Dynamics of key indicators of banking sector in Russia

  13. Republic of Tatarstan overview REGION OVERVIEW

  14. Republic of Tatarstan • General information: • Capital - Kazan • Area- 67836 sq.km • Administrative-territorial units(43 districts, 22cities, 14regional centers) • Population- 3 778 500people • Urban population -75% • Main ethnic groups - Tatars (52,9 %),Russian(39,5%) • Official languages – Russian, Tatar International ratings of the Republic of Tatarstan: Fitch: BBB-/Stable outlook Moody’s: Ba1/Negative outlook

  15. Economic potential of Republic of Tatarstan

  16. Indicators of credit organizations The World Bank published the first sub-national research “Doing business in Russia-2009”, according to which Kazan (Tatarstan) has the most favorable conditions for doing business among 10 largest Russian cities.

  17. Monetary and credit indicators mln USD • Banking sector of the Republic of Tatarstan remains one of the largest and stably functioning in the banking services market of the Russian Federation. • Almost every third company in the republic uses banking loans as investment source (across all Russia – every fifths).

  18. Loans Period structure of the credits did not change a lot: long term investments dominate in aggregate credit portfolio of the financial institutions in Tatarstan, which differentiates the republic from quite a number of regions where banks prefer short term and quick payback investments. Long term credits hold 64,5% of total loan portfolio (as of 01.10.2010; as of 1.01.2010 – 64%).

  19. Paid-in charter capital and deposit dynamics

  20. Bank’s overview BTA-KAZAN AT A GLANCE

  21. Bank’s profile

  22. Milestones Strengthened position of Volga-Kama Joint Stock Bank in the market. Due to large range of Bank products significantly increased the number of bank clients Active development of business in Tatarstan and the Volga Federal District. Subsidiary offices of Bank in Naberezhnye Chelny and Nizhnekamsk cities Increase in the authorized capital of the bank by 810 mln RUR (approx. USD 33 mln ) Volga-Kama Joint Stock Bank was registered on the basis of the Tatar branch of the Youth Commercial Finist-bank Volga-Kama Joint Stock Bank entered the banking group Ak Bars Bank Bank is actively expanding its presence in Kazan (Tatarstan) 1994-1996 2000-2001 2005-2006 2007-2008 1991 2003-2004 Significant positive dynamics of key financial indicators  Bank decided to change name to BTA-Kazan, and to increase the Bank's capital to 1,002 mln RUR (approx. USD 35 mln). Changing of the name associated with the emergence of the strategic partner – one of the largest banks in Kazakhstan - JSC BTA Bank The first public offering of shares of Volga-Kama Joint Stock Bank Volga-Kama Joint Stock Bank signs general agreement with the Small Enterprise Assistance Funds (SEAF) BTA-Kazan in 2007 became the leader in terms of growth of assets in Tatarstan Opened several branches in Tatarstan

  23. Achievements 1993-1998 1993-1994 Developed, mastered and introduced advanced technologies, offering to clients a wide range of banking services. 1995-1997 One of the first Tatarstan banks to enter the market of plastic cards starting with Visa-card, later issue of Russia's largest plastic systems Union-card. During 1998 crisis Volga-Kama Joint Stock Bank fully complied with its obligations to depositors, clients, budget and off-budget funds. 2000-2003 2000-2001 Retained all pre-crisis development programs, and worked to improve the quality of customer services, optimization and improvement of services. New program for crediting small businesses was implemented, thus further strengthening financial position of the Bank. 2002 The amount of credit investment reached RUR 200 mln (approx USD 6.3 mln). 2003 Funds obtained from the customers increased by 77%, whereas in general growth among the banks was only 45%. Funds obtained from the legal entities grew by almost 76%. The volume of individuals' deposits in 2003 increased by 65%. The growth rate of obtained deposits is much higher than the mean of banks of Tatarstan (about 42%).

  24. Achievements 2006-2008 2006 Net profit of BTA-Kazan for year 2006 was RUR 66.7 mln (approx USD 2.5 mln). Portfolio of retail loans reached RUR 751 mln (USD 28.5 mln). BTA-Kazan showed impressive growth rates of assets and took 12th place in terms of growth among the CIS banks with assets over USD 100 mln 2007 During 2007, 5 new offices were opened. The Bank was assigned international credit rating «B», forecast "Positive“ by rating agency Fitch Ratings. Second position in the most comfortable banks in the region. Bank was awarded the Public Prize in the field of business "Business Elite of the Volga Region" in nomination “For the high dynamics of development”. 2008 The net profit of BTA-Kazan in 2008 totaled RUR 255 mln (approx USD 10.2 mln) which allowed the Bank to take 5th place by net profit among banks of Tatarstan. 2009-2010 2009 As at 1H2009 the Bank was included in the rank of 30 Russian banks with highest assets growth rate. The Bank takes 7th position by assets among Tatarstan banks. Assets have grown by more than 25% during 2009 and amount to USD 510 mln Total loan portfolio has grown to USD 258 mln Corporate loan portfolio has increased by 23% and amounts to USD 36 mln Individual deposits amount to USD 116 mln which is 1.5 times more than last year. Corporate deposits portfolio has increased by 67% during the year and accounts to USD 76 mln 2010 BTA-Kazan becomes Federal Customs Service’s authorized bank. In July 2010 Fitch Ratings has assigned the Bank high long-term rating «B-» with «Stable» outlook. BTA-Kazan and international payment system CONTACT become partners. The Bank continues network development, expanding its geography. In 2010 2 operational offices started working in Ufa and Samara and 2 brunch offices in Moscow and Saint Petersburg.

  25. Shareholders structure

  26. Management Board Mudaris Idrisov Chairman of the Management Board Ruslan Alimov Deputy Chairman of the Management Board Marat Begenov First Deputy Chairman of the Management Board Elvira Alekseeva Deputy Chairman of the Management Board Lutsiya Khasbiullina Deputy Chairman of the Management Board

  27. Key correspondents and partners

  28. Strategy BTA-KAZAN AT A GLANCE

  29. Mission and Strategy Capitalization growth, scale and sustainability of business for the shareholders Reliability, quality, effectiveness, efficiency and accessibility to clients Transparency and stability for strategic partners and potential investors • Key Stakeholders • Customers, Shareholders, Employees • Key Customers • Retail clients and corporate, small and medium enterprises • Key Goals in Tatarstan • To achieve 5% share by assets in banking sector of Tatarstan • To increase assets amount to USD 3.3 bln as well as to enhance key performance figures of the Bank by three times

  30. Key Competitive Advantages Extensive experience gained in both Tatarstan and Russian markets enables BTA-Kazan to effectively compete with key local rivals. Intimate knowledge of the local market and customers’ needs create a strong basis to address competitive challenges from foreign commercial banks. Innovative culture and continuous improvement of its product line and technologies help the Bank to stay in sync with the market. Broad and expanding network of strategic partners increases stability of the Bank’s income and sets the stage for further revenue growth and diversification.

  31. Competitive positioning BTA-KAZAN AT A GLANCE

  32. Market share of BTA-Kazan in Tatarstan

  33. Extensive Branch Network in Tatarstan • As of January 1, 2011 BTA-Kazan has 32 structure units in Tatarstan: • 2 brunch offices in Moscow and Saint-Petersburg • 11 subsidiary offices on the territory of Kazan • 9 subsidiary offices on the territory of Republic of Tatarstan • 7 operational offices on the territory of Privolzhsky Federal Distric • 3 out of office cash counter • BTA-Kazan’s large and effective branch network in Tatarstan helps serve the needs of all client groups. • The branches and retail units are strategically located to maximize branch profitability. • Subsidiary offices in Tatarstan are operating in the following cities: Almetievsk, Bugulma, Elabuga, Zelenodolsk, Nizhnekamsk, NaberezhnieChelni. • Branch personnel is well-trained and fully empowered to serve clients’ needs. • Strength of local teams coupled with lasting relations with its clients allows BTA-KAZAN to retain its leadership positions.

  34. Development Plans Russian Federation Saint-Petersburg Moscow Kazan Kazakhstan • In 2011 the Bank plans to open: • Operational offices in Moscow, Nizhniy Novgorod, Murmansk, Rostov-na-Donu, • Tyumen, Surgut and Chelyabinsk • Brunch offices in Krasnodar and Ekaterinburg

  35. Strong Position in the Target Sectors

  36. Financial Overview BTA-KAZAN AT A GLANCE

  37. Profitability and Cost Control BTA-Kazan has been able to retain good growth rates of Net Interest Income and Net Interest Margin, while maintaining fine Cost/Income ratio Note: for 2009 data please see Financial Overview part

  38. Asset Quality and Loan Structure Assetquality Loan structure Cash and obligatory reserves Investment Securities Loans and advances from credit organizations Debt securities issued Loans to customers Others Customers accounts Others

  39. Selected Financial Metrics (by RSA)

  40. Key Performance Measures

  41. Key Performance Measures BTA-Kazan has been able to show permanent positive increase in Key Performance Measures

  42. Risk Management • RISK MANAGEMENT

  43. Main Tasks Ensure acceptable risk exposure adequate to cost of capital and growth rate Create proper credit risk management structure • Implement a systematic approach to risk assessment and management • Early identification and development of due measures to reduce credit risks • Quantitative assessment and minimization of risks at all stages of the credit process • Improvement of contractor’s credit risk and loan portfolio management methods • Credit products and procedures of risk assessment (standardization and formalization)

  44. Credit Risk Management Policy

  45. Stages of Credit Risks Assessment Assessment of credit rating of the borrower and calculation of risk-premiums Calculation of limits for each borrower Loan portfolio analysis Calculation of the portfolio limits Creation of adequate risk provisions Decision making of risk acceptance and assessment of accepted credit risk level Credit Risks Monitoring Continuous credit risk monitoring of each borrower, homogeneous groups, loan portfolio. Analysis of divergences and NPLs, Development of measures, to improve portfolio’s structure and quality High quality of credit portfolio

  46. Stages of Credit Risks Assessment Research, analysis of credit applications (corporate business credit risk dept., SME risk dept., bank risks dept.) Consideration of credit application within the bank’s portfolio, control over limits. Forming proper reserves and provisions to ensure high quality of loan portfolio To prevent issuance of high-risk loans and reduce the number of NPLs Crediting products risk analysis in development and implementation stage

  47. Loan Portfolio Quality Large loans are reviewed individually Provisions are created for each loan, based on three criteria: • Financial position of the borrower; • Collateral value; • History of service. Other loans reviewed in pools • Strong Reserve Cover Ratio and Collection Rate; • Less than 3.3% of total assets of the Bank are classified as doubtful; • 99.3% of total loan portfolio is secured. Provisions are created based on loss ratios for each industry pool.

  48. Diversified loan portfolio & Sources of funding Trade Client’s funds Issued notes Individuals Services Others Bank’s funds Construction Other industries Own funds Manufacturing

  49. Services BTA-KAZAN AT A GLANCE

  50. Services for individuals • BTA-Kazan now offers the entire range of services for individual clients, including: • Deposits • All kinds of lending for individuals (including mortgages, car loans, consumer loans, etc) • Mortgage credits restructuring • Plastic cards • Payment services • Services on the securities market • Leasing of individual bank security boxes • Precious metal coin sales • In order to maintain the position of an advanced technology bank under the fierce competition in the retail sphere, we are constantly developing new banking products, as well as new forms of proposal for clients. Страница 18

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