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#1 Privately Owned Bank for Pensioners

#1 Privately Owned Bank for Pensioners. In any corner of Russia for people above 45 years old. Moscow. January 201 4. DISCLAIMER.

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#1 Privately Owned Bank for Pensioners

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  1. #1 Privately Owned Bank for Pensioners In any corner of Russia for people above 45 years old Moscow January 2014

  2. DISCLAIMER THE INFORMATION SET FORTH HEREIN has been PREPARED BY SOVCOMBANK (HEREINAFTER, “SCB” OR THE “BANK”) solely to provide limited information concerning the bank’s current operationsas described in this presentation. this information is intended for a general understanding of the bank’s business and development prospects and is not intended for justification for any decision. neither the BANKnor its shareholders nor any associated affiliates shall have any liability or responsibility, whether express or implied, for the accuracy and completeness of this information or assume any obligations in relation to such information, its accuracy, reliability, completeness, or absence. specifically, without prejudice to anything contained below, no responsibility or liability shall be assumed with respect to the achievement or adequacy of any estimates, goals, or forecasts; nothing contained herein shall be interpreted as a promise or performance obligation for the future. the publication hereof and any information related to the analysis of the BANKdoes not contain and shall not be interpreted as containing investment advice of theBANKor its shareholders. neither the BANK nor its shareholders nor any associated affiliates shall be obligated to provide information users with access to any additional information or update this document or correct any inaccuracies that may become evident in the future. the BANKand its shareholders reserve the right to change any information at their own discretion. this document does not contain any proposal to sell securities under any applicable law in any jurisdiction. neither the BANK nor its shareholders shall be liable with respect to any person distributing or owning this document in any jurisdiction. СЭТЫ КАНЦЕЛЯРИИ ДЛЯ СОТРУДНИКОВ (white style)

  3. SOVCOMBANK IN A NUTSHELL In any corner of Russia for people above 45 years old

  4. KEY FACTS ABOUT SOVCOMBANK Client Base Specialization Market Positioning (1) • 1,066,000retail borrowers and over 161,000 retail depositors • 55% pensioners and people above 45 years old • Stable income, high payment discipline, strong demand and high growth, limited customer mobility • Unsecured consumer lending and retail deposits • Clients above 45 years old • Small territories and residential areas • #1privately owned bank by loan portfolio to pensioners • #2by ROAE among specialized consumer lenders (2) • #3by Net Income among specialized consumer lenders (2) • #26by consumer loan portfolio in Russia Geographies Management Team • Small and medium-sized towns and territories in regional markets with population below 100,000 inhabitants, under penetrated in terms of banking services and with low level of competition • 780 small townsin 38 regions across 8 time zones • The close proximity to our customers and their needs • Highly professional management team with proven track record of success in Russian banking sector • Clear development strategy with clear focus on high profitability, sustainable growth and financial delivery Financial Performance Efficiency Risk management • Low-cost distribution network of a federal scale with centralized back-office functions • Strong operating level (79% of total costsare variable) • Scalable platform • Effective control of credit risk • Significant liquidity buffer in profitable low-risk fixed-income instruments • Well capitalized (CAR N1 = 13.5%) (1) Source: IFRS reporting for 1H 2013 (2)Banks-specialists in consumer lending: Russian Standard Bank, Home Credit, The Orient Express, OTP Bank, Renaissance Credit, Asian-Pacific Bank, Tinkoff Credit Systems, Credit Europe Bank

  5. KEY NUMBERS Assets Loans and Deposits CAGR bn rub bn rub Note: CAGR – Compound annual growth rate Revenue = interestand fee and commission income Equity Net income ROAA/ROAE bn rub bn rub Source: IFRS reporting *annual rate based on 9 months data

  6. MARKET POSITIONING Market positioning in banking sector #7 by consumer loan portfolio (1) #5by retail deposit portfolio (1) 2010 2011 2012 3Q 2013 bn rub bn rub 6 months 2013 6 months 2013 #52 #59 #80 #76 Assets #57 #71 #81 #79 Equity Consumer loans #26 #34 #27 #35 Retail deposits #43 #37 #34 #32 Source: Interfax #3by net income (1) #2by return on equity (ROAE) (1) #2 by Loans \ Deposits (1) Consumer loans/Retail deposits bn rub 6 months 2013 6 months 2013 6 months 2013 (1) – IFRS reporting, * - assessment on the basis of historical data under IFRS and RAS BRC - Russian Standard Bank, HCF - Home Credit, VE - The Orient Express, OTP - OTP Bank, RC - Renaissance Credit, ATB - Asian-Pacific Bank, TCS - Tinkoff Credit Systems, CE – Credit Europe Bank

  7. KEY DEVELOPMENT MILESTONES • Acquisition of the Bank by the current management team • Rebranding into inSovcombank • Retail license obtained • Acquisition of a stake in the Bank by Kardan group • Merger with ARKA (regional network of credit agencies) • Development of a consumer lending platform • Commercial launch of consumer lending • Expansion into 30 new regions via over 1,000 mini-offices • Enhancing credit risk management procedures and cost optimization • Development of investment business segment • Active growth and high profitability • Kardan group quit SCB • Rolling up corporate business segment • Rated by Moody's and S&P • Deeper penetration into smaller territories in regional markets • Targeting customers with higher IRR • Debt securities of SCB included into Lombard list of the Central Bank • Acquisition of GE Money Russia announced Total assets of Sovcombank bn rub +27% CAGR +70% CAGR Source: IFRS reporting

  8. BUSINESS STRATEGY • #1 PRIVATELY OWNED BANK FOR ACTIVE ADULTS AND THEIR PARENTS • #1 specialized privately owned Bank for active adult population and pensioners (older than 45) • Top-5 among privately owned specialized players in consumer loans and credit cards • Top-5 among privately owned specialized players by retail deposits • FEDERAL COVERAGE OF SMALL AND MEDIUM TOWNS AND RURAL TERRITORIES • Federal presence and deep penetration into local regional markets of small and medium towns and rural territories with population over 5,000 inhabitants • Located in close proximity to customers and their needs • Low-cost distribution and servicing model • STABLE GROWTH MANAGED TO MAINTAIN PROFITABILITY • Stable managed growth • ROAE above 30% • Further utilization of operating leverage and economy of scale to enhance operating efficiency (C/I < 40%) • Optimization of funding cost • FOCUS ON SUSTAINABILITY OF BUSINESS • Conservative credit, market and liquidity management policies • Liquidity cushion and solid capital position, partially employed in profitable and low-risk fixed income investments • Diversifying funding mix into public debt instruments while maintaining at least 50% share of retail deposits • Maintain ability to adapt for changes in demand and macro environment • Remain cautions on cost of risk

  9. CUSTOMERS For people above 45 years old

  10. UNIQUE CUSTOMER NICHE – active ADULTs AND THEIR PARENTS Stable demand PENSIONERS AND ELDER PEOPLE ABOVE 45+ Stable income • The fastestgrowing segment of the population in Russia • Strong demand for banking services while supply is limited • Low income makes difficult the accumulation for significant purchases • Pensions • Stable salaries • Income from natural economy • Financial support from families Population 45+ (mln people) Percentage of population 45+ in the general population Low competition High payment discipline • Besides national banks and SCB there are no other players with a strong expertise in the segment • Unique brand, product know-how, high level of service help SCB to win customer trust and loyalty • Low risk appetite • High payment discipline • Low level of delinquency Source: Rosstat data and forecasts, SCB estimates

  11. #1 BANK FOR PEOPLE ABOVE 45 Brand • - Strong, well-established and well recognized brand among the target clientele • Long-term investments in marketing and unique advertising expertise Service • Permanent analysis and change of processes according to demand of people above 45 • Specialized training programs to serve pensioners Products • Simple, understandable, affordable products • Affordable interest rates for pensioners and people older than 45 as a result of lower cost of risk Proximity to customers • Wide regional distribution platform • Convenient locations in close proximity to customers • Social projects

  12. SCB FOCUSES ON TARGET SEGMENT Retail portfolio by segments Operating profit by segments Source: IFRS reporting Source: IFRS reporting

  13. MARKETS AND DISTRIBUTION In any corner of Russia

  14. Nationwide REGIONAL FOOTPRINT 780 towns and territories in 38 Federal regions and 8 time zones 96% retail loans ... Retail loan portfolio Coverage of over 60% population • - SCB operations x • - Number of offices SbFD UFD CFD NWFD SFD VFD FEFD 14 ... and 55% retail deposits inregional markets KamchatkaKrai Yaroslavl Obl Vologda Obl 2 3 Moscow and Retail deposit portfolio 29 Kostroma Obl Moscow Obl Sakha Rep 87 31 49 2 Vladimir Obl 3 3 Tula Obl 3 Krasnoyarsk Krai Nizhny Novgorod Obl Lipetsk Obl 20 Moscow 1 7 Sakhalin Obl 155 Ivanovo Obl Khabarovsk Krai Voronezh Obl 24 35 Samara Obl 66 Tyumen Obl Tomsk Obl Amur Obl Chelyabinsk Obl Krasnodar Krai 42 42 48 123 59 7 Irkutsk Obl 11 Omsk Obl 18 4 Rostov Obl 6 86 4 Bashkortostan 87 142 7 Adygea Rep Buryatia Rep Orenburg Obl Kemerovo Obl 104 Primorsky Krai Rep 4 Evreyskaya 165 Novosibirsk Obl АО Stavropol Krai 153 3 33 Zabaykalsky Krai 155 Khakassia Rep Altai Krai Regions 8 Altai Rep Note: Sovcombank, data as of October 1, 2013; SbFD- The Siberian Federal District, CFD - Central Federal District, FEFD - Far Eastern Federal District, SFD - Southern Federal District, UFD - Urals Federal District, VFD - Volga Federal District, NWFD - North-West Federal District Source: Sovcombank, data as of October 1, 2013

  15. «LIGHT» COST-EFFICENT DISTRIBUTION NETWORK ALLOWSTO REACH OUT TO … Expansion of distribution platform viacost-efficient mini-offices «Light» distribution network Offices Mini-offices Points of sale Source: Sovcombank, data as of October 1, 2013 • 1,319mini-offices • 395points of sale • 275offices • 1,148ATMs • 1,520 EFTPOS-terminals Source: Sovcombank, data as of October 1, 2013

  16. … DEFENSIVE REGIONAL MARKETS OF SMALL TOWNS AND RESIDENTIAL AREAS Focus on small towns and territories • Low Competition Retail customer base Sovcombank by towns of residence 0-100 thous. people • High margins 100-300 thous. people 300-700 thous. people • Low level of credit risk >700 thous. people Distribution network of Sovcombank towns of presence • The low mobility of population 0-100 thous. people 100-300 thous. people • Stable income 300-700 thous. people >700 thous. people • Well protected againstpotential competitors 77% of SCB customers lives in towns with populations of below 300 '000 people Source: Sovcombank, data as of October 1, 2013

  17. BUSINESS EFFICIENCY INCREASES DUE TO ECONOMIES OF SCALE Growing efficiency of distribution network Increasing operating efficiency (Cost / Income) Retail loans / Offices (mln RUR) Source: Sovcombank Source: Sovcombank Strong operating leverage OPEX/Offices OPEX breakdown mln RUR per annum Source: Sovcombank Source: Sovcombank

  18. BUSINESS Retail, Dynamic, Quality

  19. QUALITY GROWTH OF RETAIL PORTFOLIO Active growth of customer base Quality growth of retail portfolio 19% 30% 10% 104% 69% 13% 30% 30% '000customers bn rub *Sum of the number of customers by product is different from total number of customers because some customers have more than one product Moderate growth in average loan balances '000 rub Source: Sovcombank

  20. LOW DEBT-CAPACITY UTILIZATION OF SCB CLIENTS Average contractual loan of SCB Average monthly client payment for SCB loan '000 rub '000 rub per month Source: Sovcombank, Ministry of Finance

  21. QUALITY PORTFOLIO AND CONSERVATIVE PROVISIONING POLICY NPL 90+ \ Gross retail portfolio Provisions \ NPL 90+ Source: IFRS reporting Source: IFRS reporting • NPL 90+ is 100% provisioned • NPL 360+ is written-off • Conservative NPL provisioning policy • Total NPL 90+ coverage at 121%

  22. FUNDING AND CAPITAL Solid, Sustainable

  23. FUNDING BASE Funding structure Average cost of funding Debt instruments of SCB ... Credit ratings Ruble bonds 3 000 000 000 RUB Ruble bonds 2 000 000 000 RUB Рублёвые облигации 3 000 000 000 РУБ 11.25% ПЛАНИРУЕТСЯ PLANNED 18/06/201320/06/2016 ... included in the Lombard list of the Central Bank Source: Sovcombank, data as of October 1, 2013 Source: Sovcombank, data as of October 1, 2013

  24. RETAIL DEPOSITS – KEY SOURCE OF FUNDING Over 160,000 retail depositors and 67 bn rub outstanding deposit portfolio An average deposit account is 370,000 rub Over 80% SCB deposits are fully insured and SCB faces a low risk of sudden withdrawal of deposits About 90% of portfolio in RUR to match lending currency mix SCB effectively manages deposit inflows to match loan disbursements as a result of balancing of deposit rate and marketing activity Term deposits are almost 100% of the portfolio Retail deposits Key source of funding Depositors '000 141 160 65 92 113 bn rub Note: The data on the amount indicated including current accounts, number of clients only on term deposits Average cost of retail deposits Over 80% of retail portfolio insured with DIA <=1mln rub >1 mln rub Source: Sovcombank, data as of October 1, 2013 DIA – State Deposit Insurance Agency

  25. SOLID CAPITAL BASE Capital base Capital adequacy (N1) Well positioned amongspecialized consumer lenders • Positive dynamics of equity underRAS and IFRS • The high level of security of capital under RAS and IFRS • Capital adequacy N1 at the level of 13.5%, well above the minimum of 10% Source: Sovcombank, Central Bank of Russia Source: Central Bank of Russia

  26. FINANCIAL PERFORMANCE Efficient, Dynamic

  27. ATTRACTIVE FINANCIAL PERFORMANCE Revenue* (12 months) Revenue* (9 months) +42% +40% +59% +37% Net income (12 months) Net income (9 months) +6% +8% +109% +4% Source: IFRS reporting *Revenue= interestand fee and commission income

  28. KEY FINANCIAL HIGHLIGHTS * Annual rate based on 9 months data Source: IFRS reporting ** Net margin = (net interest and fee income) / earning assets

  29. CONTACT INFORMATION E-mail: aosnos@sovcombank.ru Andrei Osnos, CFO Internet:http://www.sovcombank.ru/about/

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