Orient Express Bank
Company Presentation
December 2010
Orient Express Bank: Summary (1/2)
1,386,000 borrowers
RUB bn
obtained retail loans from the Bank
Assets
Capital
34.1
5,7
52.4
7.4
65.5
7.8
150,000 depositors
Loans
Deposits
25.4
18,5
37.5
41.1
50.8
48.5
0.8
0.1
0.2
entrusted their savings to the Bank
Net income
11,000 SMEs and entrepreneurs
2008
2009
1H 2010
Source: OEB consolidated IFRS statements
have accounts with the Bank
Russian Federal Districts
7,000 loans
granted by the Bank to SMEs and entrepreneurs
Home markets - retail
lending market share 12%
464 offices
throughout Russia
179 towns and cities
with population of 30,000 - 10,000,000
16 M&A transactions
7 closed transactions since 2009
2
Orient Express Bank: Summary (2/2)
• Incorporated in 1991 and until 2005 operated under the name
Dalvneshtorgbank.
Loan Portfolio, July 2010
• One of the largest, most rapidly developing retail banks in
Russia. One of the best known brands in the Far Eastern and
East Siberian banking sectors.
SME loans
9%
• Ranks among the top 10 banks in Russia by branch network
size. OEB has leading positions in the Far Eastern and Siberian
federal districts, with a retail lending market share of about 12%.
• In 2009, the Bank’s assets amount to RUB 52.4,
representing 50% growth over 2008. Bank’s capital grew by
30% in the same period.
91%
Retail loans
• OEB is one of the Russia’s leading banks in terms of growth
rates:
Ranks 1st among the top 100 Russian banks in 2006-2009 by
business growth.
1H 2010 Major Balance Sheet Items*, RUB bn.
The Bank currently has over 6,000 employees.
104.7%
11.9%
65,5
50,8
48,5
7,8
**RBC and Interfax ratings
Loans
Deposits
Assets
Capital
Source: OEB consolidated IFRS statements
3
KPIs
Asset Dynamics, RUB bn
Deposit Dynamics, RUB bn
75
60
75.4
60.5
50
60
40
52.4
45
41.1
30
30
34.1
20
25.5
15
18.5
10
9.5
0
0
2006
2007
2008
2009
2010E
5.7
2006
Loan Portfolio Dynamics, RUB bn
2007
2008
2009
2010E
ROE and NIM Dynamics
60
100%
56.3
50
11.8
85,7%
80%
55,0%
40
60%
37.5
30
20
21.9
40%
25.4
20%
10
15,2%
7.0
0
2007
2008
2009
2010E
2006
Source: OEB
4
20,0%
7,9%
1,4%
0%
2006
20,2%
14,6% 16,8%
2007
2008
2009
ROE
NIM
11,9%
2010E
OEB Competitive Advantages
•
Widespread Network
•
•
High Growth Rates
Wide Range of Products
HQ Loan Portfolio
Sound Deposit Base and High
Margin
Stable Funding Base
Strong Management Team
The Bank ranks among the top 10 Russian banks by branch network. As of July 2010, the
Bank’s network comprised of 464 offices.
Widespread network focused on regions with low banking penetration.
Since 2006 the Bank’s assets have grown almost 5.5 times, and its share capital increased
5-fold, due both to organic growth and successful M&A transactions.
The Bank’s M&A experience encompasses 16 transactions: 9 acquisitions and 7 mergers.
•
•
•
The Bank has great experience in retail lending.
The Bank has one of the most profitable product lines in its sector and a below average
overdue retail loan level.
•
•
High loan portfolio quality due to conservative risk management.
NPL provisions ratio of 93.4%.
•
•
Decrease of loan to deposit ratio since 2007 (target level is 100%).
Despite the difficult economic environment, 2009 NIM amounted to 7.9%.
•
Liabilities structure funding based on “self-financing”: based on attracting customer
funds.
•
•
Strong management contributes to the Bank’s strategic goals.
Professional team with good M&A experience
5
OEB Rankings
3447
Sberbank
387
VTB 24
143
Bank of Moscow
122
Gazprombank
Raiffeisenbank
104
Rosbank
102
10th by Network Size
7th by Unsecured Loans
19th by Individual Deposits
77
VTB 24
53
KhKF-Bank
45
Alfa-Bank
31
OTP Bank
27
Sberbank
Russian Agricultural
Bank
Rosbank
Bank of Moscow
378
371
MDM Bank
25
AK bars
OEB
Russian Agricultural
Bank
Promsvyazbank
86
Rosbank
83
Sovkombank
Uralsib
76
Uralsib
Alfa-Bank
76
Transkreditbank
13
558
400
25
92
1,523
Uralsib
Russian Agricultural
Bank
Rusfinans Bank
MDM Bank
20,006
314
Promsvyazbank
244
Gazprombank
235
OEB
234
6
VTB 24
227
12
7
Vozrozhdenie
60
Gazbank
6
Raiffeisenbank
227
Trust
54
Credit Europe Bank
6
Uniastrum Bank
224
BSP
52
Trust
6
Svyaz - Bank
221
Binbank
45
Uniastrum Bank
4
Petrovsky Bank
220
Petrocommerz
43
ATB
4
Rus-Bank
197
Nomos Bank
40
Rus-Bank
3
MIB
191
MIB
39
Raiffeisenbank
3
Transkreditbank
171
OEB
38
KhMB
3
Vozrozhdenie
169
UBRR
35
Finam Bank
2
KhKF-Bank
161
Source: RBC rating: top 500 banks by individual
deposits in 1Q 2010, RUB bn
Source: RBC rating: Largest banks by unsecured
loan portfolio as of January 1, 2010, RUB bn
6
Currently, Bank’s network
has doubled
Source: RBC rating: top 100 Russian banks by
branch network in 1H 2009
Historical Development (1/2)
Organic Growth:
After the merger with Etalon
Bank, a large retail bank with
presence in most Russian
regions was created
First bond issue, of
RUB1.5 bn
Over 7.5x
deposit growth
Incorporation of
Dalvneshtorgbank
(the original name
of Orient Express
bank)
1991
New management team
headed by Mr. Sergey
Vlasov
2000
2001
2005
DVTB changed its
name to Orient
Express Bank
RUB denominated
Eurobond issue
for RUB5.4 bn for
2 years
4.3x loan
portfolio
increase
2006
2007
2009 resulted in 50% asset
growth
and 30% increase in capital
2008
2009
2010
In 2008 the Bank’s balance sheet
grew1.4x
1st by ROE
(RBC rating)
Bank’s own capital increased almost
3-fold
90% funding from own resources
7
The Bank
develops actively
and grows faster
than the market
Historical Development (2/2)
M&A:
Merger of
Kamabank to
OEB
• The Bank’s business grew due in part to M&A transactions.
• Ample M&A experience: 16 completed transactions, including 9 acquisitions and 7 mergers.
Merger of RPSB
to OEB
Merger of Etalonbank
to OEB
Acquisition of
Yuzhniy Region
Bank
Incorporation of
DVTB (historical
name of Orient
Express bank)
1991
1991
Acquisition
of DVTB by
current
shareholders
2000
2000
Acquisition of
Mezhtorgbank
Portfolio investor
Renaissance
enters the Bank’s
capital
Acquisition of
Mass Media
Bank
Acquisition of
Zheldorbank
Acquisition of
CMB
Merger of KB Dvizhenie
to OEB
Acquisition of
Etalonbank
2001
2001
2005
2005
2006
2006
2007
2007
2008
2008
Merger of Etalonbank and
Mass Media Bank to
Zheldorbank. Name changed
to Etalonbank
Merger of
Mezhtorgbank to
Zheldorbank
Acquisition of RBSB
8
2009
2009
Acquisition of
Santander
2010
2010
Merger of Yuzhniy
Region Bank to RPSB
Acquisition of
Kamabank
Successful M&A Experience
June 2009
•
Pre-merger indicators:
 Assets
 Capital
 Loans
 Deposits
RUB12.3 bn
RUB1.9 bn
RUB5.1 bn
RUB4.6 bn
• After the merger, the Bank’s POS
network increased by 32 offices in the
Central federal district
October 2009
November 2009
• Pre-merger indicators :
•
 Assets
 Capital
 Loans
 Deposits
 Assets
 Capital
 Loans
 Deposits
RUB 1.3 bn
RUB 0.3 bn
RUB 1.0 bn
RUB 0.8 bn
• After the merger, the Bank’s POS network
increased by 8 offices
Pre-acquisition indicators:
RUB4.0 bn
RUB1.1 bn
RUB2.8 bn
RUB1.4 bn
• After the merger, the Bank’s POS network
increased by 13 offices in the Volga federal
district
July 2010
• Pre-acquisition indicators :
 Assets
 Capital
 Loans
 Deposits
RUB2.8 bn
RUB2.3 bn
RUB0.1 bn
RUB0.1 bn
• After the merger, the Bank’s POS network
increased by 22 offices in six federal districts
M&A Strategy:
The Bank’s strategy implies the creation of a large and efficient federal-scale bank focused on retail and SME banking;
Having a scalable business model and professional M&A-experienced team, the Bank can integrate the acquired assets within a minimal
timeframe;
The Bank acquires regional and niche players which have a complimentary sales network and a distinct customer base to ensure that
consolidation enables positive synergy;
Active M&A business allows the Bank to out pace market average growth levels.
9
OEB’s Position in the Covered Markets
•
Orient Express Bank was ranked 48th in terms of net asset value as of July 2010, according to Interfax.
•
In August 2010, Moody’s assigned the Bank a rating of «B2/Stable».
•
Orient Express dominates the retail lending market in the Far Eastern Federal District and the Siberian Federal District, with a
market share of 11.7%. The Bank’s share of the whole Russian market is estimated to be around 2.2%.
OEB’s Share of the Retail Lending Market
OEB’s Share of the Household Deposits Market
12%
6%
11.7%
11.5%
10%
5%
10.0%
8%
9.0%
6%
3%
4%
2%
2%
1.7%
1.7%
1.9%
2.2%
1%
5.0%
4.8%
4%
3.6%
2.9%
0.4%
0.3%
0.7%
0.7%
0%
0%
2007
2008
2009
1H 2010
2007
2008
Total covered area
Eastern covered area*
Total covered area
Eastern covered area
Source: OEB
10
2009
1H 2010
Branch Network
• Orient Express Bank is in the Top 10 largest banks by branch network:
 464 offices in 179 cities and towns across Russia
 280 ATMs, including 211 ATMs away from bank premises
• The Bank covers five out of Russia’s eight federal districts
• The Bank is developing its branch network both by opening new offices and acquiring regional banks
Regional Loan Portfolio Structure, 1H 2010
Volga Federal
District and
Southern Federal
District
Central Federal
District
3.5%
7.1%
Northwestern
Federal District
10.5%
OEB Covered Area
Far Eastern Federal
District
36.8%
42.1%
Siberian Federal
District
Existing points of sales
The Bank focuses its activity on regions
11
Proposed points of sales (next 3 years)
Loan Indebtedness Dynamics by Products
Cash Loan Indebtedness Dynamics, RUB bn
Car Loan Indebtedness Dynamics, RUB bn
40
6
37,3
5
30
28,8
20
3
2
10
4,9
4
29,6
12,1
3,3
3,2
2009
1H 2010
2,3
1
0
0
2007
2008
2009
1H 2010
2007
Credit Cards to Loyal Borrowers, ths
Individual Deposit Balances, RUB bn
60
140
50
120
48,5
40
117,3
100
80
36,8
30
2008
81,5
60
20
40
10
11,5
15,0
0
0
2007
2008
37,8
20
2009
1H 2010
10,4
2008
12
1П 2009
2009
1П 2010
Corporate Structure
Shareholder Structure
Sergey Vlasov
Baring Vostok
Fund
• Transparent ownership
structure
• Independent from any
FIGs
Igor Kim
IFC
• Diversified shareholder
structure
2.53%
Other
Renaissance
Funds
Aleksandr Taranov
Board of Directors
Mr. Sergey Vlasov
Mr. Kirill Nifontov
Mr. Artyom
Kozovoy
Mr. Andrey
Bekarev
• Considerable experience
in banking
Andrey Bekarev
Mr. Aleksey Grigoriev
Chairman
Mr. Philippe Delpal
Mr. Eric Rajendra
Head of Audit
Committee
Head of Strategy
Committee
Mr. Sergey
Nazarov
Mr. German Tsoy
Mr. Aleksandr
Taranov
Mr. Konstantin
Dzhambinov
Head of Indemnification
Committee
Management Board
Mr. Vladislav
Pershin
Mr. Kirill Nifontov
Mr. Sergey Vlasov
Chairman
Ms. Elena Kalinina
Ms. Marina
Baiborodina
Ms. Lyudmila
Proskurina
Mr. Alexander
Nesterenko
13
• The Board of Directors
controls the Bank’s
development strategy
- independent BoD
members, joined in
2010.
• The Management
Board is the Bank’s
collegial executive
body
• The MB Chairman is
the Bank’s sole
executive body
Management Board of the Bank
S.N. Vlasov
Management Board
Chairman
V.V. Pershin
First Deputy
Management Board
Chairman
Responsible for retail
business
Since 2005:
Since 2006: First
Management Board Deputy Management
Chairman, Orient
Board Chairman,
Express Bank OJSC Orient Express Bank
1998: Management OJSC
Board Chairman, Far- 2005: Management
Eastern Mutual Credit Board Member,
Bank
Rosbank (OJSC
1993: Management JSCB)
Board Chairman,
2003: Management
Zabaikalzolotobank Board Chairman, First
Mutual Credit Bank
(JSC)
K.V. Nifontov
Deputy Management
Board Chairman
Responsible for M&A
E.L. Kalinina
Deputy Management
Board Chairman
Responsible for the
Bank’s network
A.V. Nesterenko
Deputy Management
Board Chairman
Responsible for VIP
Department
M.N. Baiborodina
Deputy Management
Board Chairman
Responsible for SME
L.S. Proskurina
Chief Accountant
Since 2009: Deputy
Management Board
Chairman, Orient
Express Bank OJSC
2008: Management
Board Chairman,
Etalonbank OJSC
2005: Counselor to
the Management
Board Chairman,
Zheldorbank JSCB
2004: Managing
Director,
Uralvneshtorgbank
OJSC
Since 2009: Deputy
Management Board
Chairman, Orient
Express Bank OJSC
2005: Network
Development
Director,
Dalvneshtorgbank
JSCB
2004: Director, FarEastern Mutual Credit
Bank
Since 2010: Deputy
Management Board
Chairman, Orient
Express Bank OJSC
2005: Deputy
Management Board
Chairman, Bank
Capital Credit
Association
2002: First Deputy
Management Board
Chairman, First OVK
OJSC
Since 2007: Deputy
Management Board
Chairman, Orient
Express Bank OJSC
2005: Management
Board Chairman,
Mass Media Bank
OJSC
2005: Management
Board Chairman,
Mezhtorgbank JSCB
2004: First Deputy
General Director,
Sibacadembank
OJSC
Since 2007: Chief
Accountant,
Management Board
Member, Orient
Express Bank OJSC
2005: CFO,
Dalvneshtorgbank
JSCB
2001: Chief
Accountant, FarEastern Mutual Credit
Bank
17