uralsib financial corporation: the partner of choice in russia · swot analysis strength stability...
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1 October 2006 www.uralsib.com
23rd ABA General Meeting and Seminar
Taiwan
October 2006 www.uralsib.com
URALSIB Financial Corporation:The Partner of Choice in Russia
2 October 2006 www.uralsib.com
COUNTRY AND BANKING SECTOR PROFILE
3 October 2006 www.uralsib.com
Solid economic growth in Russia
2005 2006F 2007F 2008F 2009F
GDP 6,4 6,1 6,1 6,0 5,8
Industrial Production 4,0 4,2 5,2 6,3 6,5
Fixed Investment 10,7 9,8 9,8 10,1 12,2
CPI 10,9 9,7 8,3 7,7 8,5
Real Wages 12,6 12,3 10,1 9,0 7,5
Retail Sales 12,8 12,9 10,5 10,2 10,0
Exports, USD bln. 244 308 300 278 281
Imports, USD bln. 125 153 179 206 240
Current Account, USD bln. 84,0 98,0 80,1 48,9 29,5
Urals Crude, USD bbl. 51,3 61,5 57,7 50,2 45,5
Real Eff. RUR Rate 8,1 10,0 7,0 5,0 6,0
RUR/USD Rate (eop) 28,8 26,6 26,0 26,2 26,0
Source: Rossstat, URALSIB Research, Aug 2006
URALSIB Macro Research for Russia, YoY%
Russia’s sustainable economic growth is the outcome of prudent macroeconomic management, rising investment in the public and private sectors, ample natural resources, vibrant regional economies and a stable political environment.
Russia: 10th world largest economy and 3rd fastest growing of top 30 economies.
4 October 2006 www.uralsib.com
940871,9
265,6 260,40
200400600800
1000
China Japan Russia Taiwan
The outlook of Russian economy is favourable
Source: SberBank Department of External Relations, 07 Aug 2006
Gold and foreign currency reserves, USD bln.
USD 64,53USD 61,43
USD 50,6
50
60
70
2005 January - June2006
June 2006
Average Urals oil price, USD per barrel
Source: Russian Ministry of Finance
Stabilisation fund, USD bln.
1 August 2006
82,14
USD 21,3 bln. loan was repaid to Paris Club on August 2006
Russian Oil surplus revenues are allocated to Stabilisation fund
50,0
100,0
150,0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
F
Foreign sovereign debt, USD bln.
Sources: Finance Ministry,URALSIB Research, 01 Jan 2006
In light of June’s deal to repay USD 21,3 bln. to the Paris Club of sovereign creditors by the end of August, and a number of other, lesser paybacks in the pipeline, we see government external debt plunging to just 1,5% of GDP.
On September 4th 2006, currency long-term rating of Russia was upgraded to BBB+, stable outlook.
5 October 2006 www.uralsib.com
Impressive RTS growth rates
0200400600800
1 0001 2001 4001 6001 800
01.0
9.19
95
01.0
9.19
96
01.0
9.19
97
01.0
9.19
98
01.0
9.19
99
01.0
9.20
00
01.0
9.20
01
01.0
9.20
02
01.0
9.20
03
01.0
9.20
04
01.0
9.20
05
01.0
9.20
06
RTS Index performance
0
50
100
150
200
250
05.0
1.98
05.0
1.99
05.0
1.00
05.0
1.01
05.0
1.02
05.0
1.03
05.0
1.04
05.0
1.05
05.0
1.06
RTS Index capitalisation, USD bln.OIL & GAS Utilities
Telecoms Machinery
Metals & Mining Fertilizers
Food & Beverages Transport
Trade Banks
RTS Index breakdown by sector
Sector Weight in IndexOIL & GAS 52,0%
Utilities 6,5%
Telecoms 9,7%
Machinery 0,8%
Metals & Mining 12,5%
Fertilizers 0,7%
Food & Beverages 1,2%
Transport 0,4%
Trade 0,6%
Banks 15,5%
Note: Before 01.07.04 calculation was based on total capitalisation, starting from 01.07.04 only free float capitalisation is taken into account.
6 October 2006 www.uralsib.com
SWOT Analysis
Strength
Stability has increased dramatically since 1990s financial and economic crisis as the economy has rebounded on the back of high commodity prices and the rouble’s 1998-99 devaluation. The greatly improves situation was rewarded September 2006, when Standard & Poor’s credit rating agency award Russia with BBB+, stable outlook rating.The use of surplus oil revenues to pay down external debt and build up a stabilisation fund will help safeguard public finances in event of a sharp drop in the price of oil.
Weaknesses
The economy’s dependence on the oil sector has been increased by the price of crude in recent years. Given still-limited progress on structural reform, this makes Russia vulnerable to a downturn in commodity prices.Real rouble appreciation, due to nominal currency strength and high domestic inflation, is eroding the competitiveness of the economy.
Opportunities
An acceleration of the structural reform agenda, including support for small and medium-sized businesses, strengthening of the banking sector, administrative reform to tackle red tape and corruption, and revamp of the “natural monopolies”, would go a long way towards developing the non-oil economy and improving long-term growth prospects.
Threats
Although capital flight has slowed dramatically in recent years thanks to increased political and economic stability and the launch of economic reform in Putin’s first term, heightened concerns over the business environment since the Yukos affair risk reversing the trend and also slowing fixed capital expenditure.
Economic performance should continue to be supported over the forecast period by high oil prices.
7 October 2006 www.uralsib.com
East Timor
Russia
1 5362 177
1 197
2002 2005 2010F
Total Lending/GDP (%)
CAGR 02–05 = 8.6%
GDP ($Bn at PPP)
18,1%15,1%8,7%
2002 2005 2010F
CAGR 02–05 = 20.1%
1 6112 187
1 396
2002 2005 2010F
Total Lending/GDP (%)
CAGR 02–05 = 4.9%
GDP ($Bn at PPP)
32,7%28,9%20,1%
2002 2005 2010F
CAGR 02–05 = 12.9%
3 6135 595
2 729
2002 2005 2010F
Total Lending/GDP (%)
CAGR 02–05 = 9.8%
GDP ($Bn at PPP)
13,3%12,8%11,0%
2002 2005 2010F
CAGR 02–05 = 5.2%
8 429
13 501
6 066
2002 2005 2010F
Total Lending/GDP (%)
CAGR 02–05 = 11.6%
GDP ($Bn at PPP)
37,7%37,9%26,2%
2002 2005 2010F
CAGR 02–05 = 13.2%
CAGR 05–10 = 7.2%
CAGR 05–10 = 4.6%
CAGR 05–10 = 6.3%
CAGR 05–10 = 3.2%CAGR 05–10 = 9.1%
CAGR 05–10 = 0.8%
CAGR 05–10 = 9.9%
CAGR 05–10 = -0.1%
Note: Total Lending/GDP (%)
Lending by commercial banks and non-bank financial institutions to the private sector, other financial institutions, central and local government and non-financial public enterprises
Russia’s lending potential
Russia’s capital markets exhibit strong growth potential. The financial sector is still underperforming compared to other BRIC countries.
ChinaIndia
Source: EIU, Monitor Analysis
Brazil
8 October 2006 www.uralsib.com
Income and consumer lending growth
-20 -10 0 10 20
1998
1999
2000
2001
2002
2003
2004
2005
2006F
Population real disposable income, YoY %
Average monthly income, USD
Sources: Rosstat, URALSIB Research
Sources: Rosstat, URALSIB Research
56%
28%
0
10
20
30
40
50
60
Russia Central and ЕasternEurope
2005-2008F Consumer lending growth rates
Source: UniCredit Research
050
100150200250300350400
1998
1999
2000
2001
2002
2003
2004
2005
2006
F
9 October 2006 www.uralsib.com
0
50
100
150
200
250
300
350
2003 2004 2005 2006
Assets Capital
Russian banking sector
Russian banks by Capital, USD bln.
Russian banks by Assets, USD bln.
Assets and capital of Russian banking system, USD bln.
Source: Central Bank of Russian Federation; URALSIB IR Team research
State owned banks
Bank URALSIB
Regional banks
+ -
-
+
+
+
Foreign banks
Capital + +
Product diversification - +
Network + -
Key indicators 2003 2006
Banking assets / GDP 38,3% 45,1%
Banking capital / GDP 5,4% 5,7%
Individual deposits / GDP 9,5% 12,8%
Total loans / GDP 16.6% 25,3%
Source: Central Bank of Russian Federation
Source: Kommersant Money,01 July 2006
10 October 2006 www.uralsib.com
URALSIB FINANCIAL CORPORATION
11 October 2006 www.uralsib.com
URALSIB Financial Corporation structure
Corporate and Retail banking
URALSIB Financial Corporation
Insurance
Investment banking
Leasing Private equity
Asset management
Brokerage
Private banking
Key businesses
URALSIB member companies are leaders in different financial sectors, united by common strategic goals and a shared mission.
Being one of Russia’s best capitalised and most diversified financial institutions, URASLIB Financial Corporation is excellently positioned to take advantage of Russia’s impressive economic growth.
12 October 2006 www.uralsib.com
Asset management
5 mutual funds – over USD 985 mln. invested into Russian equity and debt markets36% share of the open mutual funds marketClient funds under management USD 3.2 bln.Four closed-end funds (equity and real estate) – over USD 380 mln.Over 400 trust management clients – over USD 400 mln.EUROMONEY Awards: Best Mutual Funds Manager in Russia 2004 and Best Asset Manager in Russia 2005
Brokerage
Among top 7 Russian securities tradersAll securities and all marketsLow commission feeSingle investment accountMargin trades Large stake transactionsInvestment valuation upgradeInternet trading
Insurance
Over 1 mln. individual clientsMore than 450 client service centresInsurance Premia USD 280 mln. (41% growth YoY)10% share of the overall insurance market"A+" rating by the Expert RA national rating agency.
Investment banking
Regional ReachDiverse Client Base - almost 100,000 corporate clientsComprehensive Investment banking servicesManagement consulting expertiseLeading brokerage & research Direct investment expertiseBridge financing
Leasing
Over 1000 clients3% share of the Russian leasing market25 leasing company’s branchesAuthorized capital stock - USD 15 mln.Innovative solutionsCooperation with major international banks
Private banking
Foreign financial marketsInheritance lawAlternative investing Luxury lifestyle consultingDiscretionary asset managementInvestments in precious metalsClassical banking productsInsurance servicesEUROMONEY Award: Best Private Banking in Russia 2006
Private equity
Investing in rapidly growing companies that are privately owned, regionally based and with an annual turnover in excess of USD 50 mln.Average investment is in the range of USD 20-30 mln., and aimed at acquiring a 10% to 25% stake together with representation on the board of directors.
Corporate and Retailbanking
Core business of URALSIB Financial Corporation240 000 individual deposits - over USD 1.2 bln.1.7 mln. current accountsFull range of banking servicesSecond after Sberbank largest in Russian networkDeposits USD 5.4 bln. (32%growth YoY)Loans USD 4.6 bln. (45% growth YoY)
Key businesses
URALSIB Financial Corporation is high diversified financial institution.
13 October 2006 www.uralsib.com
FinancialSupermarket
AutoAutoLoansLoans
AutoAutoLeasingLeasing
Mutual FundsProperty,CasualtyInsurance
Life Insurance
MortgagesMortgages
PersonalPersonalLoansLoans
Retail Retail CustomerCustomer
Commercial Commercial BankingBanking
Private Equity
AssetManagement,
Private Banking
Insurance
LeasingLeasing
InvestmentInvestmentBankingBanking
Corporate Corporate CustomerCustomer
FinancialBridge
A Financial Bridgefor Corporates
A FinancialSupermarket for Individuals
One Stop Shop business model
Composition of business set to provide complex financial services for institutional,corporate and retail clients.
14 October 2006 www.uralsib.com
Bank URALSIB at a snapshot
2004 2005 Growth, %
Total assets 5,906 8,337 29
Due to customers 3,196 4,817 34
Loans to customers 3,228 4,617 30
Total liabilities 4,787 6,887 30
Total equity 1,120 1,450 23
Profit before income tax expense 0,077 0,501 553
BANK URALSIB financial highlights, USD bln.
Employees 17 500
Clients 4,6 million
URALSIB Financial Corporation is a leader in the key segments of the Russian financial market. The core of the Corporation, URALSIB Bank, is among the five largest in Russia.
UpgradedDecember 2,
2005
Confirmed rating February 22,
2005
UpgradedNovember 7,
2005
“Ba3”, stable outlook
“B”, positive outlook
“B”, positive outlook URALSIB Bank
• UralSib Bank• IBG NIKoil Bank• Kuzbassugolbank• Avtobank-NIKoil• Bryanskiy Narodny
Source: URALSIB CFS 2005
15 October 2006 www.uralsib.com
INTERNATIONAL BUSINESS
16 October 2006 www.uralsib.com
International business composition
Trade Finance• L/Cs (inc. post-financing and deferred payment) and
Guarantees• Pre-Export & Pos-Import Financing• ECA-covered Financing• Gold Financing (Cash pre-export financing or
Unallocated Gold loans)
Wholesale Funding• Syndicated and bilateral loans
• Eurobonds
• Financing from EBRD and IFC
Product split, USD mln. Geographical split
480
705290
95115
150185
L/C & L/Gs
Syndicated & Bilateralwholesale loansEurobonds
EBRD&IFC
Gold financing
ECA Financing
Pre-export & post-importfinancing
69%
8%
23%
Europe America Asia & Middle East
Total volume of international financing amounts to USD 2,020 million.
Share of the Japanese banks dominates
17 October 2006 www.uralsib.com
Syndicated loans
URALSIB started raising syndicated loans back in 1997, and successfully repaid outstanding facilities following the 1998 crisis. Business was resumed in 2000, and up to now the Bank has successfully raised 14 loans.
MLAs Currency Amount Maturity
THE BANK OF TOKYO-MITSUBISHI, LTD.; DRESDNER KLEINWORT; ING BANK N.V.; NATEXIS BANQUES POPULAIRES; AND SUMITOMO MITSUI BANKING CORPORATION EUROPE LTD.
USD 320 million
10 August 2007; 364 days
COMMERZBANK AKTIENGESELLSCHAFT; RAIFFEISEN ZENTRALBANK ÖSTERREICH AKTIENGESELLSCHAFT; ZAO RAIFFEISENBANK AUSTRIA; STANDARD BANK PLC; SUMITOMO MITSUI BANKING CORPORATION EUROPE LTD
USD 212 million
10 April 2007; 364 days
THE BANK OF TOKYO-MITSUBISHI, LTD.; COMMERZBANK AKTIENGESELLSCHAFT; DRESDNER BANK AG; ING BANK N.V.; RAIFFEISEN ZENTRALBANK ÖSTERREICH AG;SUMITOMO MITSUI BANKING CORPORATION EUROPE LTD.
USD 263 million
24 November 2006; 364 days
Repaid syndicates
ABN AMRO BANK N.V.; THE BANK OF TOKYO-MITSUBISHI, LTD.; COMMERZBANK AKTIENGESELLSCHAFT; DRESDNER BANK AG; ING BANK N.V.
USD 135.5 million
11 July 2006; 364 days
URALSIB is a frequent borrower on the international syndicated loans market. The syndicated loans are trade-related and generally have a maturity of 364 days. The lender's base is diversified by countries and regions, and regional diversification has significantly increased over the past few years. The secondary market has also developed, and the loans are actively traded.
18 October 2006 www.uralsib.com
Banks from Asia and Middle East in Russia
Japan
China Iran
India
Bank of China (ELUOSI)
Industrial CommercialBank of China
Canara Bank
ICICI Bank
State Bank of India
Bank Melli Iran
The Bank ofTokyo-Mitsubishi UFJ, Ltd
Sumitomo Mitsui BankingCorporation
Mizuho
Michinoku
Several banks from this region confirmed their commitment to the Russian market by opening Representative offices and subsidiaries in different regions of the country.
Selected Participants of URALSIB Bank Syndicated loansBanks form Asia and Middle East in Russia
Bank Muscat International Indover Bank
BTMU (Europe) Mashreq Bank
Dubai Bank Melli Bank Plc
Emirates Bank InternationalNational Bank of Egypt
(UK ) Limited
Export-Import Bank of the Republic of China
Shanghai Commercial & Savings Bank Ltd.
Hua Nan Commercial Bank State Bank of India
ICICI Bank EurasiaSumitomo Mitsui Banking
Corporation
19 October 2006 www.uralsib.com
URALSIB Financial Corporation
8, Efremova St., Moscow,119048, Russia
Alexander DementievDeputy Chairman, International Business
Tel.: +7 [495] 723 78 38dem_av@uralsib.ru
Leonid VakeyevDirector, Financial Institutions
Tel.: +7 [495] 723 79 58 leonid.vakeyev@uralsib.ru
Anton ZurDirector, Trade Finance
Tel.: +7 [495] 723 70 95a.zur@uralsib.ru
Alexei KondratievDirector, Investor Relations
Tel.: + [495] 705 90 39 ext. 2733kon_aw@uralsib.ru
International contacts
20 October 2006 www.uralsib.com
Some statements and/or other information included in this document may be deemed to be “forward looking” within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward looking statements include statements concerning the Bank’s plans, objectives, goals, strategies, and future operations and performance, and the assumptions underlying these forward looking statements. The Bank uses the words “anticipates”, “estimates”, “expects”, “believes”, “intends”, “plans”, “may”, “will”, “should”, and any similar expressions to identify forward-looking statements. These forward looking statements are used widely in this presentation, especially in sections the include plans, outlook, projections, trends and forecasts. The Bank has based these forward looking statements on the current view of its management with respect to future events and financial performance. These views reflect the best judgment of the Bank’s management but involve uncertainties and are subject to certain risks the occurrence of which could cause the actual results to differ materially from those predicted in the Bank’s forward-looking statements and from past results, performance or achievements. Although the Bank believes that the estimates and projections reflected in its forward-looking statements are reasonable, if one or more of the risks or uncertainties materialize or occur, or if any of the Bank’s underlying assumptions prove to be incomplete or incorrect, the bank’s actual results of operations may vary from those expected, estimated or projected.
Disclaimer
The statements and financial information of BANK URALSIB (hereinafter called “the Bank”) as well as of its predecessor banks, including but not limited to Avtobank-NIKoilBank, NIKoil IBG Bank, Bryansky Narodny Bank, Kuzbassugolbank, Ural-Siberian Bank, have been derived from audited and/or un-audited consolidated and unconsolidated accounts for some of the previously mentioned banks, as these were available at the time of preparation of this document. Quarterly updates are based on management accounts.
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