Druvis Murmanis Managing Director Russia, Hansabank 2 Economy and - - PowerPoint PPT Presentation

Druvis Murmanis

Managing Director Russia, Hansabank Capital Markets Day

Tallinn, September 8, 2005

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• Economy and Russian Banking market Q2 2005
• Business development
• Financial highlights for Russian Unit

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• GDP growth – 5.9% in H1 2005, Inflation 8.5% in 7 month
• Political and social developments

– Increase of presidential powers – Parliament election reforms

• Government finance and debt

– Budget surplus target for 2005 was 1.5% from GDP (OIL 28 USD barrel), currently realized surplus is 10% from GDP – CB currency reserves up 24 billion in H1 2005 to 148 billion USD – More liberal tax regime – Lower social tax, stable individual income tax – Federal borrowing down from 6.3% to 5.1% from GDP. – Government external debt decreases ahead of schedule from 160 bil (1998) to 100 bil USD (H1 2005) – Current account surplus 6.4% from GDP

• Public sector debt and private capital flow

– Private sector external debt raised from 28 bil to 121 bil USD(1998-2005) – Capital flight from Russia dropped to 5-6 bil USD in H1 2005 compared with 10-12 bil USD in H1 2004 – FDI inflow 9.4 bil USD in H1 2005

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• Assets of banking system rose by 18% in H1 2005 (~217 bil EUR)
• Loan portfolio of banking system has grown by 17% (~119 bil EUR). Loan to

Assets Ratio is stable at 55% level.

• Central Bank of Russia is considering to introduce more strict rules for lending to

related companies

• Deposit base has grown by 14% (total portfolio ~131 billion EUR)
• Record number of banks has been closed by central bank starting from 2005.
• Mergers and acquisitions processes are continuing. Uralsib, Vneshtorgbank,

KMB, Impexbank.

• Market shares:

– TOP 30 banks market share has grown by 1% to 67% – Sberbank has 64% share on deposits market (~62 bil USD) and 33% on loans market (~ 52.7 bil USD)

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5 943 84 OAO Hansabank 52

• 17.6

87 National Bank Trast 51 145 87 Rossija 50 44.2 434 International Moscow Bank 10 13.4 438 Rosbank 9 74.2 444 Raiffeisenbank 8 30.8 502 MDM bank 7 8.9 525 Bank Moskwi 6 0.1 708 Alfabank 5

• 3.3

749 International Industrial Bank 4 1.2 1 128 Gazprombank 3 32.3 2 170 Vneshtorgbank 2 29.2 6 500 Sberbank 1 Change % Equity, 30.06.05 Bank

EUR in mil

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HB Russia

AS Hansa Leasing Russia (Estonia) OOO Hansa Leasing (Russia) ООО Hansa Leasing Kaliningrad Trade finance (Estonia) OAO Hansabank (Russia) Lending business (Booked in Baltic countries)

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• To complete restructuring of KVEST bank

– Acquisition completed end of February – Equity has been increased by EUR 84 M – end of June – New IT system implementation – Entering deposit insurance system

• Implementing new policies and procedures
• Audited by Central bank

– Hansabank group Risk management systems and principles implementation

• Credit risks
• Market risks
• Operational risks

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• Expanding leasing business
• Establishing corporate banking division

– Corporate financing – Nordic-Baltic corporate desk – Trade finance – Factoring

• Establishment of Kaliningrad and St Petersburg offices

– Leasing operations are running – Premises have been found – Key people have been hired – Bank branches will be opened December 2005

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• HR development

– Intensive recruiting – 90 people are working in Russia, 50+ more expected this year – Salary system – Performance management system – HR administration

• Marketing

– Marketing strategy – PR – Sales support

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• Net profit, €7.2m for 1H05 (+55% yoy)
• Revenues €11.6m for 1H05 (+68% yoy)
• Expenses €2.7m for 1H05 (+239% yoy)
• Loan portfolio €283m, +€80m ytd
• 1H05 ROE 54% (68% in 1H04), NIM 6.2% (6.6%), C/I 23% (11%)

Highlights:

• Increasing loan book, margins still high
• Change in provisioning principles
• Increase in operating expenses

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n.m. 7 691 Other income +55% 4,625 7,187 Net income 3,656 560 783 6,903 342 1,099 5,455 1H 04

• 20%

473 Provisions +41% 1,546 Net fees +5% 359 Trading income +68% 11,587 Total revenue +239% 2,659 Operating expenses +33% +65% Change YOY 8,991 Net interest income 4,854 EVA 1H 05

EUR in thousands

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n.a. 0.4 0.4 HLK 245% 6 18 21 Bank loans 39% 151 169 210 Leasing

• 6%

122 118 115 HLR 233% 28 77 94 HL 40% 14% Change YTD 46 77 52 Trade finance 223 264 283 Total loans Dec 04 Mar 05 June 05

EUR in millions

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AS Hansa Leasing Russia 3,119 Trade Finance 2,098 OOO Hansa Leasing 2,176 HL Kaliningrad

• 52

Banking

• 154
• 500

500 1 000 1 500 2 000 2 500 3 000 3 500 EUR in thousands

Building a leading Nordic-Baltic bank