INVESTING IN RUSSIA IN 2011/2012:
IT IS NEVER TOO LATE
1
In this presentation:
1. WHAT RUSSIAN MARKET ACTUALLY IS
2. SBERBANK: RUSSIA’S OLDEST & LARGEST
2
1. WHAT RUSSIAN MARKET ACTUALLY IS
3
WHAT RUSSIAN MARKET ACTUALLY IS:
by size
Global Equity Market Capitalization, USD bn
World
USA
UK
Germany
Japan
BRICS
- Brazil
- Russia
- India
- China
- South Africa
MCap
% of total
54.20
16.40
3.49
1.64
3.69
8.31
1.46
0.99
1.46
3.90
0.50
100%
30%
6%
3%
7%
15%
3%
2%
3%
7%
1%
Sources: Bloomberg, Sberbank
4
WHAT RUSSIAN MARKET ACTUALLY IS:
just facts
•
local average daily total turnover USD 2.5 bn
•
ADRs traded at LSE, NYSE & NASDAQ, daily
turnover at USD 1.1 bn
•
MCap at USD 986 bn (beginning of May)
•
the largest in Eastern Europe by cap
•
73% of total turnover performed at MICEX
•
main benchmarks: MICEX (RUB-denom.), RTS
(USD-denom.), RTS Standard (RUB-denom.)
indices
•
MICEX index breakdown: 50% oil & gas (9 issuers),
22% metallurgy and mining (7 issuers), 16%
financials (3 issuers)
•
10 top stocks make up to 80% of turnover and 53%
of total MCap
5
WHAT RUSSIAN MARKET ACTUALLY IS:
still undervalued vs. peers and its pre-crisis self
25
Average Р/Е of MICEX Index
in 2007- mid.2008: 12.4х
20
15
10
P/E of MICEX Index
P/E of MSCI EM
Apr/11
Jan/11
Oct/10
Jul/10
Apr/10
Jan/10
Oct/09
Jul/09
Apr/09
Jan/09
Oct/08
Jul/08
Apr/08
Jan/08
Oct/07
Jul/07
Apr/07
Jan/07
0
2.0
1.9
1.8
1.7
1.6
1.5
1.4
1.3
1.2
1.1
1.0
12/05
04/06
08/06
12/06
04/07
08/07
12/07
04/08
08/08
12/08
04/09
08/09
12/09
04/10
08/10
12/10
04/11
5
MSCI Russia / MSCI…
6
WHAT RUSSIAN MARKET ACTUALLY IS:
correlations
MICEX Index vs. Brent Crude Px
MICEX Index vs. S&P500
7
WHAT RUSSIAN MARKET ACTUALLY IS:
top 10 equities (80% of daily volume, >50% of MCap)
TOP 10 Russian Equity by liquidity
Daily Trading Turnover, 6
MCap as of April, 2011,
months average, USD
USD bn
mn
Sberbank
Gazprom
Norilsk Nickel
LUKoil
Rosneft
VTB
Sberbank priv.
Severstal
RusHydro
SurgutNefteGaz
% of Total Market
563
545
149
129
110
91
74
31
30
27
3%
72.6
167
48
52
86
31
2
17
20
34
0%
Sources: MICEX, Sberbank
8
WHAT RUSSIAN MARKET ACTUALLY IS:
fixed income
•
•
•
•
governmental debt market par volume outstanding at USD 84 bn
local corporate debt at USD 117 bn at par (as of late April, 2011)
average issue par amount USD 150 mn, 380 issuers so far
corp.total return index up 12% over 2010, up 3.5% this year (end of May)
•
•
•
more facts: 3 m USD/RUB NDF yield 3.5-4%
annual CPI within 7-9% range
Russia’s public external debt/GDP at 2.3%, total ext.debt/GDP at 33%
120 bn USD
310
290
100
270
80
250
60
230
210
40
190
20
04/2011
01/2011
10/2010
07/2010
04/2010
01/2010
10/2009
07/2009
04/2009
01/2009
10/2008
07/2008
04/2008
01/2008
10/2007
07/2007
04/2007
01/2007
0
170
150
9
Total Market Volume at par, LHS
Total Return Index, RHS
WHAT RUSSIAN MARKET ACTUALLY IS:
fixed income
Basic curves:
9
%
NDF/CCS curve
8
Govt Z-curves
7
6
5
4
3
Years to maturity
2
0
1
2
3
4
5
6
7
8
9
10
10
WHAT RUSSIAN MARKET ACTUALLY IS:
summary
as of May 16, 2011
MICEX Stock Index
USD/RUB nominal rate
CB RF Currency Basket rate, (EUR+USD)/RUB
USD/RUB NDF 3m IY
USD/RUB NDF 1Y IY
MosPRIME o/n
MosPRIME 3M
Current
1,623
27.8
33.4
4.1
4.7
3.5
4.1
YTD 12 mnth change
change change
vs.
Jun.2007
-4.8
-8.3
-4.8
79
3
42
1
27.0
-7.4
-0.2
37
-7
57
-26
2.3
7.9
13.5
36
-25
28
-65
%
%
%
bps
bps
bps
bps
11
2. SBERBANK: RUSSIA’S OLDEST & LARGEST
12
SBERBANK:
Russia’s Oldest & Largest Commercial Bank
•
about 50% of national retail deposits, 30% of
corporate credit
•
3 times larger by assets than VTB, Russia’s second
largest, and 4.5 times larger than GazpromBank,
Russia’s third by size
•
a top 100 world bank by assets and capital
•
a top 100 world bank by brand value (MBO), ahead
of GS, MS and JPM
•
MCap at USD 80 bn, comparable to Credit Suisse
and SocGen
•
57.6% of equity owned by Central Bank of Russia,
7.58% set to be privatized this year
•
SBRF is Russian top equity by liquidity at
exchanges
13
SBERBANK
Global Comparison: 20 World ‘Strongest’ Banks
Total 1-Tier Capital
Score
to Risk
Weighted
Assets
NonPerforming
Loans, % of
total
Loss
Total deposits
Provisions to
to Total
NonFunding
Performing
Loans
Costs to
Income
1
Oversea-Chinese Banking (Singapore)
11.2
16.3
0.5
120.9
84.1
43.7
2
Svenska Handelsbanken (Sweden)
13.1
16.5
0.1
332.1
30.0
48.0
3
National Bank Of Canada
16.3
14.0
0.3
172.4
71.4
65.3
7
Fifth Third Bancorp (US)
21.0
13.9
2.0
138.2
87.7
62.4
8
Banco Bradesco (Brazil)
21.4
15.1
0.9
268.3
45.0
71.1
9
UBS Switzfrland
21.8
17.8
0.1
62.9
48.4
78.5
13
Credit Suisse Group (Switzerland)
25.2
172.0
0.2
54.6
41.7
74.7
14
JPMorgan Chase (US)
25.9
12.1
0.8
194.9
54.7
53.6
15
Standard Chartered (U.K)
26.1
14.0
0.9
55.8
80.2
56.6
16
Citigroup (US)
26.2
12.9
1.1
192.3
54.5
55.7
20
Sberbank (Russia)
28.7
11.9
5.2
155.3
88.3
41.9
Bloomberg Markets ranking
http://www.bloomberg.com/news/2011-05-09/ocbc-world-s-strongest-bank-in-singapore-with-canadians-dominating-ranking.html
14
SBERBANK:
performance
300
bn USD
bn USD
7.0
6.0
250
5.0
200
4.0
150
3.0
100
2.0
50
1.0
0
0.0
2006
2007
Assets, LHS
2008
Net Loans, LHS
2009
2010
Aftertax Profit, RHS
15
SBERBANK:
performance
0.35
%
%
0.30
3.0%
2.5%
0.25
2.0%
0.20
1.5%
0.15
1.0%
0.10
0.5%
0.05
0.00
0.0%
2006
2007
ROE, LHS
2008
Tier 1 Cap Sufficiency, LHS
2009
2010
ROA, RHS
16
SBERBANK:
financial market client operations
•
a top 10 MICEX exchange operator (fx)
•
fx operations: >20 currencies (RUB, USD, EUR, AUD, BYR, CAD,
CHF, CNY, CZK, DKK, EEK, GBP, JPY, KZT, LTL, LVL, NOK,
PLN, SEK, UAH): TOD, TOM, SPOT
•
hedging: delivery forwards, NDFs, futures, options
•
DCM, ECM
•
asset management
•
retail brokerage, mutual funds, private pension funds
•
expanding corporate investment banking in 2011/2012 via Troika
Dialog acquisition (Russia’s oldest investment company and
brokerage): services for institutional investors and corporates,
more sophisticated products
17
SBERBANK:
portfolio for Petrogrand
•
open in July, 2010, expires July, 2011; base currency: Russian ruble
•
conservative portfolio:
max. 15% equity + bonds and cash
municipal and sub-federal bonds only, one year to maturity
or less; rated by at least one of the three world agencies;
with rating no more than four notches below Russian sovereign;
•
active inter-market arbitrage operations (going cash and hard
currency and back to papers again)
•
as of late May, yields 11% annual return in RUB terms, 22%
USD and 8.2% EUR (because of EUR appreciation vs. USD)
18
SBERBANK:
contacts
Sberbank Of Russia
Treasury & Financial Market Department
Asset Management
19 Vavilova Str., 117997 Moscow, Russia
http://www.sberbank.ru
Sales: +7 (495) 957-5964
Vladimir Zelenov, Irina Finokhina, Svetlana Yashina
19
Disclaimer
This report is not an offer or solicitation to buy or sell any securities or related financial instruments or to participate in any trading strategy. Although the
information and opinions expressed in this report are believed to be accurate as of this date, no express or implied warranties or representation are being
made as to accuracy or completeness. The information and opinions presented have not been tailored to any specific transaction of any third party and
are not a detailed analysis of a specific situation of any third party. Our opinions may change without further notice. The information and opinions
expressed in this report are not a substitute for an independent assessment of an individual’s investment needs and goals. Opinions expressed in this
report may differ or be contrary to the opinions of other units of Sberbank (hereinafter referred to as the Bank) as a result of using different assumptions or
criteria or analysis of information for different purposes.
This document is for information purposes only. Descriptions of any company or companies or their securities or the markets or developments mentioned
herein are not intended to be complete. Any statements regarding past performance are not necessarily indicative of future performance. The Bank, its
affiliates, officers and/or employees and/or related parties may hold interests in or may have performed services for one or more of the companies
mentioned in this report and/or may hold such interests and perform or seek to perform such services in the future subject to the Bank’s internal
procedures aimed at avoidance of conflict of interest.
The Bank or any of its affiliates may act or have acted as market-makers in securities or other financial instruments mentioned herein or securities
underlying such financial instruments or related to those securities. Furthermore, the Bank may have or have had a relationship with or provide or have
provided investment banking, capital markets and/or other financial services to the relevant companies. Employees of the Bank or its affiliates may serve
or have served as officers or directors of the relevant companies subject to the Bank’s internal procedures aimed at avoidance of conflict of interest.
Neither the Bank nor any of its affiliates accept any liability arising from the use of any of the information or opinions expressed in this report.
This report may not be reproduced, distributed or published, in whole or in part, for any purpose without the express written permission of the Bank.
This report may be used by investors within the Russian Federation subject to Russian laws. Foreign investors (including but not limited to those from
Switzerland, the Netherlands, Germany, Italy, France, Sweden, Denmark, and Austria) may use this report provided they are deemed to be institutional
investors under the laws of the country of registration. This report was prepared by the Bank, which is not registered as a broker-dealer by the SEC and is
distributed to persons who by their acceptance thereof confirm that they are a major institutional investor in the US as defined in Regulation 15a–16 of the
US Securities Act of 1934 and understand the risks involved in executing transactions in securities. This report was prepared by the Bank, which is not
registered by the FSA and is not available to private customers in the United Kingdom.
Analyst certification
Each research analyst primarily responsible for the content, in whole or in part, of this research report, certifies that with respect to each security or issuer
that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; and (2)
no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research
analyst in the research report and (3) such research analyst does not perform transactions in securities issued by companies that he or she covers. The
Bank accepts no responsibility for any use of information based on the views of any research analyst in relation to any relevant securities.
20