TRUST Investment Bank & National Bank TRUST
1st Half 2007 Results and Business Strategy
20 September 2007
2
This presentation has been prepared and issued by National Bank TRUST and TRUST Investment Bank (collectively and jointly known as “TRUST”). This publication is intended for professional and institutional customers. Any information in this presentation is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by TRUST with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. This presentation is for information purposes, it is not intended to be and should not be construed as an offer or solicitation to acquire, or dispose of any of the securities or issues mentioned in this presentation. TRUST and/or its subsidiaries may use the information in this presentation prior to its publication to its customers. TRUST or its employees may also own or build positions or trade in any such securities, issues, and derivatives thereon and may also sell them whenever considered appropriate. TRUST may also provide banking or other advisory services to interested parties. TRUST accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this presentation.
Disclaimer
3
4 Group Strategy
5 Group Business Overview
2 Rationale for Merger
3 Group History & Structure
1 Executive Summary
6 Group Risk Management
7 Group Financial Forecasts
8 Group Merger Implementation Plan
4
Executive Summary
• The shareholders of Investment Bank TRUST (“IBT”) and National Bank TRUST (“NBT”) announced the merger of the two banks on July 17th, 2007
• The merger will optimise both the capital and asset structure of the merged bank
• Although the merged bank will be a universal bank, the focus of growth will be on the retail and SME portfolios
• The branch expansion plan will be largely completed by the end of 2008 allowing management to greater focus on achieving higher ROAE targets
• Including the announced and funded RUB3.4bn capital increase of NBT, the merged bank will have sufficient capital for at least 24 months and will be in the top 20 financial institutions in Russia by capital and assets
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Executive Summary: NBT’s Stand Alone ProfileWhat We Are:
NBT provides full range of commercial banking services to corporate and private clients. Bank primarily focuses on Retail and SME loans to corporate and individual customers and federal / municipal governmental entities. NBT is a member of Deposit Insurance System.
Key Clients:
Mass Retail segment, Trade and Service Industries, SME
Current Geographical Coverage:
Strong presence in cities with population of over 100,000 and satellite towns of large cities
Strategic Goal:
In the next two years to become a TOP 5 Russian retail and SME bank in Russian regions with high growth potential based on• Size of assets• Number of clients• Coverage of branch network
NBT in Figures:
1H 2007 IFRS (RUB mln.)• Total Assets: 54,977• Net profit (6 month): 145• Shareholders’ equity: 5,497• Loan portfolio: 32,676
Branch Network as of 20 September, 2007:171 offices in 118 cities of Russia and in process of opening 42 offices by the end 2007
Employees: 6,357
Ratings:“B1”, outlook “Positive” by Moody’s“B-” , outlook “Positive” by Fitch
6
Executive Summary: TIB’s Stand-Alone ProfileWhat We Are:
TIB provides a full range of investment banking services to corporate and institutional clients. The Bank’s primary focus is to act as an intermediary between second and lower tier corporate Russia and domestic and international investors. Key products include DCM, ECM, Hybrids, Securitizations, Real Estate, Corporate Finance, Investment Banking and Principal Investments.
Key Clients:
Primary: Second and lower tier Russian & Ukrainian corporates with an appropriate size within the next 18 months to be seen as a qualified issuer of debt or equity to investors.
Investors: Global Hedge Funds, International and Domestic Banks, Insurance Companies, Pension Funds, Private Clients and Asset Managers
Location:
Moscow based with FSA registered office in London with plans of expansion to Asia (licensed office in Hong Kong) within next 12 months.
Strategic Goal:
In the next two years:• Remain in top 3 domestically owned banks in fixed income
credit product (CLNs, Eurobonds, Hybrids)• Move into top 3 domestically owned banks participating in
IPOs, by number of deals • Retain research leadership in Fixed Income and Second Tier
Equity
TIB in Figures:
H1 2007 IFRS (RUB mln.)• Total Assets: 43,647• Net loss (6 month): (36)• Shareholders’ equity: 6,633
2007 YTD League Tables:1st Qtr 2007, #2 CLNs (37.5%)1st Qtr 2007, #2 Domestic Owned Bank, Eurobonds (1.3%), #17 overall1H 2007: #1 Domestic owned Bank, Eurobonds and CLN1H 2007: #3 Domestic Owned Bank, IPOs
Employees: 409
Ratings:“B1”, outlook “Positive” by Moody’s
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4 Group Strategy
5 Group Business Overview
2 Rationale for Merger
3 Group Structure
1 Executive Summary
6 Group Risk Management
7 Group Financial Forecasts
8 Group Merger Implementation Plan
8
Rationale for Merger• Focus remains to grow branch network to cover all cities with population greater than 100,000
people. However the management recognises that the expansion plan will discontinue by the end of 2008
– Further asset growth and diversification, namely across retail and SME
• ROAE is forecasted to start to pick up in 2007 and normalize during 2008
• Release app. $150mln of capital from Investment Bank TRUST by optimising asset structure through spin-off of the proprietary position to an asset management structure – needed in 12 months time (including current capital increase)(1)
• Yukos deposits no longer represent a material component of the group balance sheet (2)
• Become one of the top 20 Russian banks and reduce cost of funding
– For every 50bp improvement to overall effective funding rate the earnings of the merged bank will increase by approximately $13mln leading to an improved ROE of additional app. 2.1%
• Recognised cost synergies of at least $7.5mln per year; headcount reduction of 80 people
• Merger advisors: Merrill Lynch as exclusive financial advisor, Allen & Overy as legal counsel and KPMG as auditors and financial advisors
(1) See page 47 for further information(2) See page 55 for further information
9
Group Strategy
Group Business Overview
Rationale for Merger
Group History & Structure
Executive Summary
Group Risk Management
Group Financial Forecasts
Group Merger Implementation Plan
10
NBT’s History
1995–2002 2005 20062003–2004
• NBT (AKB “Menatep SPb”) was founded as a 50/50 JV between Yukos (Menatep) and Gazprom
• Servicing Menatep and Gazprom
• In 2002 Menatep purchased Gazprom’s stake
• 2003 IBT management takes over management of NBT
• May 2004 - Management Buyout (IBT management)
• Re-branding of TRUST: The Two Banks
• Hired professional retail banking team
• May 2005 – MBO fully paid
• Branch Network & Product Expansion
• Hired team from one of the top SME banks’ in Russia
• Continue Branch Network & Product Expansion
• Leading Retail and SME Bank
“New Era”
• March 2005 – First Auto Loan• April 2005 – First Cash Loan• July 2005 – Retail loan program available at
all branches
• March 2006 – First SME Loan• April 2006 – Credit Cards program launched• October 2006 – First Mortgage Loan
2005-present
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TIB’s History
1998–2003 2006 – 1H2007 Beyond2003–2004
• Bank was founded by Group Menetep
• Leading Fixed Income and Investment Bank in Russia
• May 2004 - Management Buyout (IBT management)
• Re-branding of TRUST: The Two Banks
• September 2006, hired new CEO
• Restructured institution to meet the demands of clients and investors
• Built equity platform (trading, research, sales)
• Opened regulated sales office in London
• Execution of broader product range
• Derivatives platform (JV)• Expanded distribution with
non-exclusive relationships with international banks and funds
• Alternative Investments (Private Equity, Hedge Fund and Asset Management)
• Open regulated sales office in Asia
“New Era”
• Summer 2006 – Institutional Investor Ranked Research Team
• Sept. 2006 – TIB $150m, Reg S Eurobond placed. First Capital Markets Transaction post the MBO
• Dec 2006 – First Subordinated CLN placed (BSP)
• Jan 2007 – Announced Bank restructuring and staff upgrade program
• April 2007 – First non-group Eurobond lead manger role• May 2007 – First Official IPO role (Nutritec & Dixy)
2H2006 to Present
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Management company TRUST (Russia)
Management company TRUST (Russia)
National bank TRUST (Russia)National bank TRUST (Russia)
TRUST Investment Bank (Russia)TRUST Investment Bank (Russia)
68,10%
68,38%99,35%
Current Shareholding Structure
Yurov Ilia – 18,1699%Beliaev Sergei – 3,8225%Fetisov Nikolai – 1,1589% Terzyan Artashes – 1,031%
Yurov Ilia – 18,1699%Beliaev Sergei – 3,8225%Fetisov Nikolai – 1,1589% Terzyan Artashes – 1,031%
Beliaev Sergei
Beliaev Sergei
Othershareholders
Othershareholders
YurovIlia
YurovIlia
Terzyan Artashes
Terzyan Artashes
Fetisov Nikolai
Fetisov Nikolai
Othershareholders
Othershareholders
0,55%
Other shareholders
Other shareholders
7,44%
TIB Holdings Limited (Cyprus)
TIB Holdings Limited (Cyprus)
21,55%16,44% 21,55% 32,33%8,12%
Beliaev SergeiBeliaev Sergei
Fetisov NikolaiFetisov Nikolai
Yurov IliaYurov Ilia
Neaspal Investments
Limited (Cyprus)
Neaspal Investments
Limited (Cyprus)
Winsala Investments
Limited (Cyprus)
Winsala Investments
Limited (Cyprus)
100% 100%
Zaploma Investments
Limited (Cyprus)
Zaploma Investments
Limited (Cyprus)
100%
13,66%9,12%9,12%
YurovIlia
YurovIlia
0,1% 24,18%
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Management company TRUST (Russia)
Management company TRUST (Russia)
National bank TRUST (Russia)National bank TRUST (Russia)
68,10%
89,24%
Pro-forma Post Merger Shareholder Structure
Yurov Ilia – 5,99%Beliaev Sergei – 1,25%Fetisov Nikolai – 0,38% Terzyan Artashes – 0,34%
Yurov Ilia – 5,99%Beliaev Sergei – 1,25%Fetisov Nikolai – 0,38% Terzyan Artashes – 0,34%
Beliaev Sergei
Beliaev Sergei
Othershareholders
Othershareholders
YurovIlia
YurovIlia
Terzyan Artashes
Terzyan Artashes
Fetisov Nikolai
Fetisov Nikolai
Othershareholders
Othershareholders
2,8%
TIB Holdings Limited (Cyprus)
TIB Holdings Limited (Cyprus)
21,55%16,44% 21,55% 32,33%8,12%
Beliaev SergeiBeliaev Sergei
Fetisov NikolaiFetisov Nikolai
Yurov IliaYurov Ilia
Neaspal Investments
Limited (Cyprus)
Neaspal Investments
Limited (Cyprus)
Winsala Investments
Limited (Cyprus)
Winsala Investments
Limited (Cyprus)
100% 100%
Zaploma Investments
Limited (Cyprus)
Zaploma Investments
Limited (Cyprus)
100%
13,66%9,12%9,12%
7,96%
Calculation based on the following numbers•NBT BV multiple = 2.5 X IBT multiple•Total equity NBT, thousand RUR 5492425•Total equity IBT, thousand RUR 6651134
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Merged Bank Organisational StructureBoard of Directors
Chairman: Yurov
CEO & Chairman ofManagement Board
Eggleton
Retail
SME
Network
Origination
Markets
Research
Sales & Syndicate
Asset Management
PresidentFetisov
Management CommitteeChairman: Fetisov
CRO COOCFO Treasury HRRetail Bank
Investment & Corporate
Bank Committee Chairman: Eggleton
CIO
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Group Management Structure (Post Merger)
Board of DirectorsChairman: Yurov
RetailRisk
Commitments CommitteeTechnology Committee
ProductsCommittee
Corporate Risk
SME Risk
Investment &Corporate Banking
CommitteeChairman: Eggleton
Management CommitteeChairman: Fetisov
ALCO CommitteeChairman: Eggleton
Credit CommitteeChairman: Yurov
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Biographies – Shareholders and CEOName Biography
Ilya Yurov (Chairman of the Board of Directors)
Mr Yurov has been the Chairman of NBT and IBT’s Board of Directors since 2003. Previously, he was the Chairman of IBT’s Management Board, where he was responsible for the general management of IBT’s activities. Prior to that, Mr Yurov worked for Bank MENATEP (Moscow) and for a French investment company, Compagnie Parisienne de Re´escompte S.A. Mr Yurov graduated from the Moscow Institute of Aviation in 1993 and TRESOFI Business School (France) in 1995
Sergey Belyaev (Member of the Board of Directors)
Mr Belyaev has been a member of NBT and IBT’s Board of Directors since 2003. He has been working at the banks since 1999. Previously, he worked for Rosestbank and AvtoVAZbank. Mr Belyaev graduated from Samara State University in 1992
Nikolay Fetisov (Member of the Board of Directors, President and Chairman of the Management Committee)
Mr Fetisov has been a member of NBT and IBT’s Board of Directors since 2003. He has been working at the banks since 2001. Prior to that, Mr. Fetisov worked for Cargill Financial Markets, DLJ International, and Credit Suisse First Boston Ltd. Europe. Mr Fetisov graduated from the Moscow Institute of Engineering and Physics in 1992 and has an MBA from the University of Minnesota
Artashes Terzyan (Member of the Board of Directors)
Mr Terzyan has been a member of NBT and IBT’s Board of Directors since 2003. He has been working at the banks since 2001. Prior to that, Mr Terzyan worked for Royston Investments Limited, Chase Manhattan Bank, Tokai Bank Europe, DLJ International and Commerzbank. Mr Terzyan graduated from Yerevan State University in 1982 and has a PhD in Computational Mathematics which he received from the Moscow State University in 1988
Michael Eggleton (Member of the Board of Directors, CEO and Chairman of the Management Board)
Mr Eggleton joined NBT and IBT as the member of the Board of Directors in September 2006. He has over 15 years of banking experience with 14 years of direct experience in Emerging Markets (including living in Russia for 10 out of the past 14 years). From June 2004 until August 2006, he was Managing Director, member of the European Operating Committee and Head of Emerging Markets (CEEMEA) at Merrill Lynch. Prior to this he was a Managing Director at Credit Suisse First Boston where he was responsible for various Emerging Markets regions, including CIS, CEE, Turkey and Israel. During his tenure, he has lived in Russia, Turkey, Egypt and London and was the Chairman and General Manager of CSFB in Moscow, Turkey and Egypt. Mr Eggleton holds an undergraduate degree from the University of San Diego and a graduate degree from the San Diego State University
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4 Group Strategy
5 Group Business Overview
2 Rationale for Merger
3 Group History & Structure
1 Executive Summary
6 Group Risk Management
7 Group Financial Forecasts
8 Group Merger Implementation Plan
18
Group Strategy• Upon the completion of the merger, become and remain one of top 20 Russian banks based on capital,
assets, number of clients and branch network in Russian regions with long term recurring ROAE of >20%
– In top 5 banks by full city coverage by end of 2008– In top 5 banks by portfolio and number of retail clients within 3 years– In top 5 SME banks by loan portfolio by the end of 2007 – In top 2 Russian-owned banks league table for CLNs and Eurobond – In top 3 Russian-owned banks league table for IPO by 2009 – At least 2 Institutional Investor ranked team members
• Continue to provide a full range of banking and investment services to its existing corporate clients, but primarily focus on the retail and SME clients in order to grow the balance sheet while remaining a leader of financial intermediation of Russian corporate sector to international and domestic investors
• Reduce leverage and absolute MTM securities portfolio across both banks by spinning off IBT proprietary position into asset management JV with internationally recognised partner
• Focus on ROAE growth through deceleration of branch expansion by the end of 2008 and increased product penetration through the network
• Utilise the experience of the management and sales department, the large regional network and cross-selling opportunities to increase the scope and depth of its banking business
• Continue to introduce new risk management systems to make operations within the retail and SME sectors of the business more efficient
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4 Group Strategy
5 Group Business Overview
2 Rationale for Merger
3 Group History & Structure
1 Executive Summary
6 Group Risk Management
7 Group Financial Forecasts
8 Group Merger Implementation Plan
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SME
Integrated Multi-Product Platform
CORPORATERETAIL
• Auto loans
• Cash loans
• Consumer loans
• Credit cards
• Savings products
• Current accounts
• Funds transfer
• Safe custody
• Debit cards
• Focus on car loans, cash loans and mortgage lending
• Micro loans
• Medium loans
• Small loans
• Overdrafts
• Factoring
• Payments and cash management
• Savings products
• Diversify and standardise product lines
• Working capital facilities
• Collateralised loans
• Overdrafts
• Trade finance
• Export-import finance
• Payments and cash Management
• Treasury products
• Savings products
• Reclassify loans less than RUB 30mln to SME, and focus corporate business on loyal client base
• Further reclassify loans less than RUB 75mln to SME in 2008
• Asset management
• Commercial banking
• Debt products
• Equity products
• Hybrid and structured products
• Fixed income
• Equities
• Derivatives
• Corporate finance
• Broaden the product and services base
• Focus on mid-cap companies
CAPITALMARKETS
Investment and Corporate Banking
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Retail Banking
• Enter TOP 5 by portfolio and number of clients within 3 years
• Offer the widest and most flexible product lines
• Focus on mass market segment of clients living in the Russian regions
• Serve clients in all cities with the population of over 100,000
Number of Clients in Portfolio (‘000)
Net Retail Portfolio Size (RUB bn)
Retail Deposits (RUB bn)
Retail Strategy
CAGR: 48%
66.094.0 112.0
157.019.023.0
27.0
29.0
85.0
128.0
234.0
48.0
19.0
11.0
158.0
1Q 06 2Q 06 3Q 06 4Q 06
183.0
30.0
281.0
68.0
1Q 2007
Cash Auto Cards
211.0
33.0
341.0
97.0
2Q 2007
2.3 3.2 3.4 3.42.2
4.18.3 8.94.5
7.3
11.7 12.3
2004 2005 2006 1Q 07
4.3
17.5
21.8
3.1
12.7
15.8
07B 08E
Call Deposits Term Deposits
3.5
10.0
13.5
2Q 07
3.4 4.7 4.6 6.5 7.91.93.2 5.1
5.2 5.35.38.1
10.012.2
0.50.3
0.2
0.0513.9
1Q 06 2Q 06 3Q 06 4Q 06 1Q 07
24.4
7.7
2.8
1.6
5.7
1.1
40.6
14.2
6.7
23.6
0.8
07B 08E
Cash Auto Cards Mortgage
10.3
5.7
16.9
0.6
2Q 07
0.1
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SME Banking
• Hired professional team from one of the top Russian SME banks in 2005
• At 30.06.2007 SME loans accounted for 13.5% of NBT’s total loan portfolio
• Even though SME lending was launched in March 2006, in 2006 NBT was ranked 9th among Russian banks by loan portfolio
• Number of clients at the end of June 2007 reached 8,207 comparing to 3,842 at the end of 2006. It is expected to reach 15,000 by the end of 2007.
• Factoring business is expected to reach RUB6bn by the end of 2007 and RUB10bn by the end of 2008
SME Loans Classification as of 2Q07
SME Portfolio Size (RUB mln)
Type Loan Size, USD ‘000
Duration, Months
Yield, %
Average Loan size, USD ‘000
Micro up to 50 up to 24 up to 28 16.7
Small 50 - 250 up to 36 up to 20 83.6
Medium 250 - 1,000 up to 36 up to 18 395.8
SME Strategy
Overview
• Diversify SME loan portfolio
• Increase the range of banking services to SME clients
• Standardise the products
• Increase service efficiency
• Be in top 5 SME bank by loan portfolio by the end of 2007
(1) Doesn’t include factoring (2) Off balance sheet factoring of RUB 3.3bn as of 2Q 2007 , currently RUB3.5bn
(1)
(2)
4,1349,386
11,372
20,12718,144
2,638
5,187
34,700
2007B 2008E
1,73422 296
66948 540718 2,274
1Q2006 2Q2006 3Q2006 4Q2006
512,376
858
3,285
1Q2007
Micro Small & factoring Medium
1562,890
1,353
4,399
2Q2007
(2)
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Pro- forma Corporate Banking
• Number of corporate clients as of 31 July 2007 was c.13,400 (compared to 13,800 corporate customers as of 31 December 2006)
• Reorganization: focus on relationship with medium-sized clients (up to RUB 5bn annual turnover), interested in multiple value-added banking services, while small clients are redirected to SME banking
• Cross-sell opportunities for capital market products to regional customer base
• Approximately $300mln higher yielding structured deals (collateralised) to be retained on Balance Sheet as support to distribution, however this business is not active through the end of the 2nd quarter.
• Widening of existing product range
Net Corporate Loans (RUB bn)
Corporate Deposits (RUB bn)
Overview
(1) Expected budget due to withdrawal of Yukos-related deposits during 2007
CAGR: 8%
7.9
17.7 13.1
2004 2005 2006
14.4
1Q 07
18.723.8
07B 08E
14.0
2Q 07
16.819.9 21.1
1.0
10.5 9.6
17.8
30.730.4
2004 2005 2006
21.6
9.7
31.3
1Q 07
(1)
11.8
20.6
10.1
12.1
32.7
21.9
07B 08E
Call Deposits Term Deposits
16.2
13.1
29.3
2Q 07
(1)
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Capital Markets
• The Bank provides various services including:
– Lending and structured lending
– Private placements
– Corporate finance
– Capital markets (ECM and DCM)
– Client flow trading
– Research
– Sales
– Asset management
• National and international presence through:
– 450 international clients
– 400 domestic clients
• Institutional Investor ranked research team members
StrategyOverview
• Diversify revenue stream and investor base by expanding products and services
• Focus on mid-cap companies providing bridge to global capital markets
• Focus on origination to distribution model
• $13.5m of risk free origination income, including $11.2mln of fee income for 1H 2007 vs. less than $7mln for all 2006. Adjusted Target $25mln for full year 2007
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DEAL FLOW
Investment & Corporate Banking Committee
CAPITAL MARKETS OVERLAY
Origination Markets Sales
Fixed Income & Equity
ProductsInvestment
Banking and Structured
Solution
Origination DistributionStructured Solutions
Prinicpal Investments
Real Estate
Financial Institutions
Corporate
TRUST INTERNATIONAL Global Syndication & IBT
Alternative Investment Products
IBSS Legal Counsel
Transaction Management
Group
Domestic Syndication
Research
Macro & Quantitative
Analysis
Fixed Income
Equity
DCM & Private
Placements
Corporate Finance and Investment Banking
Real Estate
Cap
ital
Mar
kets
Securitization
ECM, Hybrids & Private
Placements
DCM & Private Placements
Sales & Distribution
• Proprietary (Asset Management JV)
• Client Flow
• Repo
• Derivatives (negotiating JV)
• Corporate Book (Lending & Structured Credit) Fixed Income
• Primary/Secondary
• Flow
Equity
• Primary/ Secondary
• Flow
Treasury
• Funding
• Treasury Products
• Alternative Investments
Head of International Sales
Coordination
Head of Domestic Sales
Coordination
26
Nationwide Branch Network (Domestic Distribution)
Network Expansion Targets
Source: NBT estimates
* - at the end of December 2006 with the exception of NBT
Critical Regional Indicators (as of September 20, 2007)
The bank owns app. 80% of the branches
The average branch reaches break-even at app. 2 years
As of 2005
As of 2006
As of 20/09/07
As of 2007
(planned) As of 2008 (planned)
Regions 47 50 55 59 70
Cities 74 77 118 150-160 220
Sales offices 125 128 171 190-200 300
NBT Branch Network
-255075
100125150175200225250275300325350
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Em
plo
yees
City Coverage
Full Branches
Total Branches
Employees
MBO Today
Top 10 Banks in RF Cities as of September 20, 2007
Target area of regional expansion
No Bank # of Cities
1 Sberbank 938
2 Russian Agricultural Bank 268
3 Rosbank 220
4 Russky Standard 175
5 VTB 118
6 National bank Trust 1187 Uralsib 104
8 Vozrozhdenie Bank 74
9 VTB Retail 73
10 Investsberbank 73
*
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Established and Recognised Global Platform (International Distribution)
Israel
Chile
USA
USA
South Africa
SpainGreece
UK
Portugal
Germany
Luxembourg
Latvia
Switzerland
Italy
Thailand
Singapore
Philippines
Hong Kong
KazakhstanFrance
EstoniaSweden
Denmark
Turkey
28
4 Group Strategy
5 Group Business Overview
2 Rationale for Merger
3 Group History & Structure
1 Executive Summary
6 Group Risk Management
7 Group Financial Forecasts
8 Group Merger Implementation Plan
29
Group Risk Management Architecture
ALCO
Risk Management Decision Mechanism
Board of Directors
Management Committee Credit Committee
Risk Management Monitoring and Reporting Groups
Trader Support
Middle Office
Back Office
Accounting
Corporate Risk
SME Risk
Retail Risk
Independent Risk
Financial Direction
Internal Audit
Compliance
DAKS
ALCO
Risk Management Decision Mechanism
Board of Directors
Management Committee Credit Committee
Risk Management Monitoring and Reporting Groups
Trader Support
Middle Office
Back Office
Accounting
Corporate Risk
SME Risk
Retail Risk
Independent Risk
Financial Direction
Internal Audit
Compliance
DAKS
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Risk Management StrategyRisk type Specific Areas Focus
Credit Risk
Retail lending
SME lending
Corporate lending
Origination strategies, scoring systems, portfolio management
KYC, close monitoring of payments, score based approach
Conservative approach, internal rating systems
Liquidity Risk
Business lines
Treasury
Structural liquidity
Growing deposit base, increasing its stability and diversification
Gap management, securities portfolios, short-term liquidity
Securitisation, eurobonds
Market Risk
Interest rate risk
Foreign exchange
Proprietary trading
Overall for the whole balance sheet with Funds Transfer Pricing
Minimised, managed on a daily basis
Within established limits
Operational Risk (incl.
Compliance)
Operational risk
Compliance
Basel 2 standardised method
All CBR regulations
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Pro-forma Credit Portfolio Diversification
Priv olz hs k y j
13.1%
Siberia
9.6%
Central
20.9%
Ural
10.4%
North-Wes t
9.1%
South
17.7%
Wes t
14.5%
Far Eas t
4.7%
Loan Portfolio Regional Breakdown as of 2006YE
Central19.5%
West17.7%
South17.4%
Privolzhskyj11.1%
Siberia8.4%
Ural7.3%
North-West17.1%
Far East1.5%
Far Eas t3%
West12%
Central55%
Ural7%
South5%
North-West1%
Siberia6%
Privolzhskyj11%
Privolzhskyj15.6%
Siberia6.0% West
24.6%
South7.9%
North-West21.2%
Ural3.9%
Central20.8%
Privolzhskyj13.2%
Siberia12.2%
Far East2.5%
West16.2%
South14.0%
North-West8.6%
Ural11.2%
Central22.0%
Retail SME Corporate
Loan Portfolio Regional Breakdown as of 2Q 2007
Central53.8%
West12.3%South
6.9%
Privolzhskyj9.0%
Siberia7.8%
Ural5.5%
Far East2.0%
North-West2.7%
32
Top 10 Credit Concentration - NBT
Credit Portfolio Diversification (Cont’d)Industry Breakdown as of 2006YE
52.1%
13.6%
7.4%
5.0%
4.4%3.6%0.3%
1.4%1.7%
4.6%5.2%
0.6% 0.1% Trading Enterprises
Financial Intermediaries
Manufacturing
Engineering and Metal Processing
Construction
Energy
Chemicals and Petrochemicals
Oil and Gas
Transport
State Administrations
PharmaceuticalsOther
Individuals
Industry Breakdown as of 2Q 2007
Trading Enterprises
Financial Intermediaries
Manufacturing
Engineering and Metal Processing
Construction
Energy
Chemicals and Petrochemicals
Oil and Gas
Transport
State Administrations
PharmaceuticalsOther
Individuals
* Fully repaid as at 30.06.2007 (total amount is RUR 1 945 mln)
Top 10 Credit Concentration - IBT
58,4%
14,8%
5,5%
5,5%
2,5%1,7%
0,7%
1,4%0,6%
5,0%3,7%
0,1%0,1%
33
Credit Portfolio QualityNon-Performing Loans / Total Loans (%) Provisions / Non-Performing Loans (%)
Retail NPL / Total Loans (%) SME NPL / Total Loans (%) Corporate NPL / Total Loans (%)
3.80%
6.67% 6.98%
5.23% 5.16%
2005 2006 2Q 2007 2007B 2008E
62.85%61.33%
70.20% 72.23%77.12%
4.19% 4.28%3.62% 3.70%
5.12%
2005 2006 2Q 2007 2007B 2008E
Provision / NPL Provision / Gross Loans
11.33%11.68%
10.60%
10.00%
2006 2Q 2007 2007B 2008E
Auto 25.7% 24.9% - -
Cash 35.8% 33.6% - -
Eff
ecti
ve
Inte
rest
Rat
e
Blended - - 28.0% 21.75%
Small 21.0% 19.7% - -
Micro 23.4% 22.8% - -
Blended - - 18.38% 16.38%
- - - -
- - - -
Blended 13.6% 11.5 % 16.50% 16.25%
0.25%0.33%
0.54%
1.30%
2006 2Q 2007 2007B 2008E
1.80%
2.22% 3.00%2.50%
2006 2Q 2007 2007B 2008E
34
Managing Retail Credit Risk
Risk management targets:
1. Probability of default – 11%
2. Expected losses – 5%-7%
3. Risk based pricing
4. Further diversification of the portfolio
Measures applied in 2006/2007
• The reorganisation of retail risk management department was completed.
• “Welcome calls” were introduced in order to identify frauds at the earliest possible stage.
• Anti-fraud training and equipment were provided to the retail banking employees to improve their capabilities of spotting fraudulent customers.
• Credit products were modified or eliminated to avoid high risk combinations, for instance 0% equity auto loans. Credit documentation requirements were standardised and clarified.
Auto Cash Level of defaulted loans
AUTO CASH
0%
2%
4%
6%
8%
10%
12%
14%
16%
06.2005 12.2005 06.2006 12.2006 06.2007
Credit cards
0%
2%
4%
6%
8%
10%
12%
14%
06.2005 12.2005 06.2006 12.2006
FPD, first payment default rate
TPD, third payment default rate
SPD, second payment default rate
0%
5%
10%
15%
20%
25%
06.2005 12.2005 06.2006 12.2006 06.2007 06.2007
35
4 Group Strategy
5 Group Business Overview
2 Rationale for Merger
3 Group History & Structure
1 Executive Summary
6 Group Risk Management
7 Group Financial Forecasts
8 Group Merger Implementation Plan
36
NBT - Financial Overview
by IFRS 2004 2005 2006 1Q07Actual
(unaudited)
1H07Actual
(reviewed)
Capital 3,545 4,193 4,337 4, 419 5, 497
Assets 29,715 39,360 44,669 48,057 54,977
Loans (gross) 9,553 17,262 25,934 29,117 34,136
Loan / total assets, % 32% 44% 58% 61% 62%
Amount due to customers 22,257 30,564 34,868 38,349 38,787
Net operating income 2,319 3,615 4,284 1,234 2,290
Pretax profit 856 847 303 125 116
Net interest margin 9.2 8.3 9.8 11,5 11,4
ROAA 1.1 0.8 0.5 0,7 0,7
ROAE 9.3 7.5 4.5 7,4 6,6
Cost / Income before provisions
87.3 68.1 77.4 74.0 81.2
Cost / Income 70.3 74.4 91.7 88.0 94.9
CAR 24.1 17.0 14.2 14.7 19.2
Key indicators, RUR mln
Key financial ratios, %
Headcount 2,698 3,505 5,529 5,860 6,357
37
IBT-Financial Overview by IFRS 2004 2005 2006 1Q07
Actual (unaudited)1H07Actual
(reviewed)
Capital 5,808 6,233 6,669 6,683 6,633
Assets 23,101 28,347 47,396 49,541 43,646
Financial assets at fair value 9,982 13,888 34,528 35,119 31,441
FA at FV / total assets, % 43% 49% 73% 71% 72%
Payables under repurchase agreements
2,432 7,013 21,842 24,277 18,333
Net operating income 2,027 2,262 1,784 293 707
Pretax profit 265 938 265 14 (36)
Net interest margin 5.8 4.4 3.2 2.1 1.9
ROAA 1.1 2.8 0.5 0.1 -0.2
ROAE 9.3 12.1 2.8 0.8 -1.1
Cost / Income before provisions 87.3 53.0 73.0 93.1 100.5
Cost / Income 70.3 58.5 85.1 95.4 100.4
Key indicators, RUR mln
Key financial ratios, %
Headcount 537 436 475 387 409
38
Timeline: Convergence of Expense to Revenue Generation Capacity
Branch Expansion Versus Employee Growth Analysis of Expense Mismatch
-40.0%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
180.0%
FY03 FY04 FY05 1Q06 1H06 3Q06 FY06 1Q07 1H07 M807 3Q07E FY07E FY08E
% C
han
ge
fro
m M
BO
Change in Branches from MBO Change in employees post MBO
MBO Today
"Negative ROE effect"
This is one of the main profitability drivers of the bank.
39
Total assets & loan portfolio. RUR mln.
Cash and cash equivalents
11.3%
Loans to customers74.3%
Other assets1.6%
Financial assets through prof it and loss
8.9%
Property, equipment and intangibles
3.9%
Cash and cash equivalents
28.2%
Loans to customers59.5%
Other assets2.8%
Property, equipment and intangibles
4.8%
Financial assets through prof it and loss
4.8%
2006
Other Assets
3.0%Cash and cash
equiv alents
23.2%Property , equipment
and intangibles
4.4%
Loans to customers
55.6%
Financial assets at
f air v alue through
prof it and loss
13,8%
Increasing loan portfolio in assets structure 2006 vs.1Q07
2007 Budget2Q 2007
NBT – Total assets and Loan portfolio
40 06954 977
16 248
32 705
37.2%
101.3%
10 000
20 000
30 000
40 000
50 000
60 000
1H2006 1H2007
Total assets Total loan portfolio (net)
44 669
67 193
24 847
49 918
50.4%
100.9%
10 00020 00030 00040 00050 00060 00070 00080 000
2006 2007B
Total assets Total loan portfolio (net)
40
Natinal Bank TrustReturn on Interest Bearing Assets
19.1%
10.9%
13.7%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Y05 Q106 Q206 Q306 Q406 Q107 Q207 MJul07MAug07 Q307E Q407E
Period
Ret
urn
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
50,000,000
Inte
rest
Bea
rin
g A
sset
s (R
UR
)
Annualized EIR (period) Annual EIR Interest Bearing Assets
Reduction ofYukos-Related
Deposits
41
NBT Net Interest Margin less LLP
National Bank TRUSTNet Interest Margin less Loan Loss Provisions
9.3%
7.6%
6.5%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
Y05 Q106 Q206 Q306 Q406 Q107 Q207 Q307E Q407E
Annualized NIM less LLP (period) Annual NIM less LLP
Reduction ofYukos-Related
Deposits
42
Retail
51.8%
Corporate
34.7%
SME
13.5%
Retail52.6%
SME22.1%
Corporate25.3%
Corporate
71.3%
Retail
28.7%
Retail50.0%
Corporate41.3%
SME8.7%
NBT - Loan portfolio structure
Changes in loan portfolio structure
20062005 2Q07
93% of retail and SME business is conducted in the Regions
2007 Budget
43
NBT – Deposit Analysis (Corp and Retail)
NBT Deposit Analysis (rur)Jan'07 Jan'07 Jan'07 Feb'07 Feb'07 Feb'07 Mar'07 Mar'07 Mar'07 Apr'07 Apr'07 Apr'07 May'07 May'07 May'07 Jun'07 Jun'07 Jun'07 Jul'07 Jul'07 Jul'07 Aug'07 Aug'07 Aug'07 Dec'07
Act Budget % of Act Budget % of Act Budget % of Act Budget % of Act Budget % of Act Budget % of Act Budget % of Act Budget % of Budget
Retail Budget Budget Budget Budget Budget Budget Budget BudgetTerm deposistsMoscow 2,029,694,197 2,029,694,197 100% 2,027,473,221 2,027,473,221 100% 2,050,499,301 2,050,499,301 100% 2,084,516,287 2,084,516,287 100% 2,253,365,001 2,117,711,898 106% 2,369,922,081 2,189,174,211 108% 2,425,895,920 2,260,636,524 107% 2,572,783,242 2,332,098,836 110% 2,617,948,087Other regions 6,568,762,278 6,568,762,278 100% 6,678,353,319 6,678,353,319 100% 6,838,993,106 6,838,993,106 100% 6,996,130,222 6,996,130,222 100% 7,181,070,462 7,604,405,411 94% 7,501,397,898 7,927,185,116 95% 7,991,457,271 8,260,667,727 97% 8,475,337,781 8,594,608,297 99% 9,936,217,036Total 8,598,456,475 8,598,456,475 100% 8,705,826,540 8,705,826,540 100% 8,889,492,407 8,889,492,407 100% 9,080,646,509 9,080,646,509 100% 9,434,435,463 9,722,117,310 97% 9,871,319,979 10,116,359,327 98% 10,417,353,191 10,521,304,251 99% 11,048,121,023 10,926,707,133 101% 12,554,165,123
Call depositsMoscow 1,532,049,342 1,517,918,434 101% 1,586,595,662 1,572,750,589 101% 1,574,895,905 1,558,570,377 101% 1,493,021,289 1,474,165,686 101% 1,523,295,347 1,887,586,125 81% 1,579,452,536 1,887,586,125 84% 1,421,082,682 1,887,586,125 75% 1,439,830,157 1,887,586,125 76% 1,887,586,125Other regions 1,618,242,828 1,314,441,850 123% 1,666,405,555 1,373,831,984 121% 1,785,869,503 1,419,623,012 126% 1,846,910,301 1,383,856,851 133% 1,814,991,409 1,347,664,946 135% 1,938,557,718 1,347,664,946 144% 1,893,632,025 1,347,664,946 141% 1,918,613,554 1,347,664,946 142% 1,347,664,946Total 3,150,292,170 2,832,360,284 111% 3,253,001,217 2,946,582,573 110% 3,360,765,408 2,978,193,389 113% 3,339,931,590 2,858,022,537 117% 3,338,286,756 3,235,251,071 103% 3,518,010,254 3,235,251,071 109% 3,314,714,707 3,235,251,071 102% 3,358,443,711 3,235,251,071 104% 3,235,251,071
Total Retail 11,748,748,645 11,430,816,759 103% 11,958,827,757 11,652,409,113 103% 12,250,257,815 11,867,685,796 103% 12,420,578,099 11,938,669,046 104% 12,772,722,219 12,957,368,381 99% 13,389,330,233 13,351,610,398 100% 13,732,067,898 13,756,555,322 100% 14,406,564,734 14,161,958,204 102% 15,789,416,194MOM Change 210,079,112 291,430,058 170,320,284 352,144,120 616,608,014 342,737,665 674,496,836in USD 8,238,397 11,428,630 6,679,227 13,809,573 24,180,706 13,440,693 26,450,856
CorporatesTerm deposistsMoscow 2,411,423,936 2,372,300,000 102% 2,913,597,772 2,383,422,727 122% 2,905,392,501 2,395,245,455 121% 3,168,818,596 2,414,768,182 131% 3,143,894,648 2,432,190,909 129% 4,010,340,686 2,485,713,636 161% 5,223,812,743 2,582,474,044 202% 5,368,967,628 2,527,603,773 212% 2,438,609,867Other regions 2,847,525,414 3,567,940,000 80% 3,001,861,228 3,597,280,909 83% 3,127,068,499 3,819,621,818 82% 3,314,970,404 3,815,962,727 87% 3,376,000,352 3,925,803,636 86% 4,001,558,314 4,103,244,545 98% 4,139,273,257 4,260,735,617 97% 4,254,291,877 4,305,651,821 99% 5,080,546,515Total 5,258,949,350 5,940,240,000 89% 5,915,459,000 5,980,703,636 99% 6,032,461,000 6,214,867,273 97% 6,483,789,000 6,230,730,909 104% 6,519,895,000 6,357,994,545 103% 8,011,899,000 6,588,958,182 122% 9,363,086,000 6,843,209,661 137% 9,623,259,505 6,833,255,593 141% 7,519,156,382
Call depositsMoscow 8,286,786,767 14,237,800,000 58% 8,285,744,504 13,710,527,272 60% 8,173,445,713 11,715,354,544 70% 7,828,104,731 10,004,381,816 78% 7,613,211,801 7,707,609,088 99% 7,883,137,198 7,735,899,996 102% 6,825,999,674 6,239,441,401 109% 8,545,192,913 6,248,368,689 137% 6,256,439,744Other regions 11,956,586,129 4,261,200,000 281% 13,061,595,496 4,243,472,728 308% 11,149,175,287 4,206,045,735 265% 7,117,694,269 4,237,011,546 168% 5,799,613,946 4,255,912,846 136% 5,812,537,802 4,393,615,868 132% 5,443,203,326 4,455,703,801 122% 6,814,126,093 4,508,241,832 151% 5,211,608,773Total 20,243,372,896 18,499,000,000 109% 21,347,340,000 17,954,000,000 119% 19,322,621,000 15,921,400,279 121% 14,945,799,000 14,241,393,362 105% 13,412,825,748 11,963,521,933 112% 13,695,675,000 12,129,515,864 113% 12,269,203,000 10,695,145,202 115% 15,359,319,006 10,756,610,521 143% 11,468,048,517
Total Corporate 25,502,322,246 24,439,240,000 104% 27,262,799,000 23,934,703,636 114% 25,355,082,000 22,136,267,552 115% 21,429,588,000 20,472,124,271 105% 19,932,720,748 18,321,516,479 109% 21,707,574,000 18,718,474,045 116% 21,632,289,000 17,538,354,863 123% 24,982,578,511 17,589,866,114 142% 18,987,204,898MOM Change 1,760,476,754 (1,907,717,000) (3,925,494,000) (1,496,867,252) 1,774,853,252 (75,285,000) 3,350,289,511in USD 69,038,304 (74,812,431) (153,940,941) (58,700,677) 69,602,088 (2,952,353) 131,383,902
TOTAL Deposits 37,251,070,891 35,870,056,759 104% 39,221,626,757 35,587,112,749 110% 37,605,339,815 34,003,953,348 111% 33,850,166,099 32,410,793,317 104% 32,705,442,967 31,278,884,860 105% 35,096,904,233 32,070,084,443 109% 35,364,356,898 31,294,910,185 113% 39,389,143,244 31,751,824,318 124% 0 34,776,621,093MOM Change 1,970,555,866 (1,616,286,942) (3,755,173,716) (1,144,723,132) 2,391,461,266 267,452,665 4,024,786,346in USD 77,276,701 (63,383,802) (147,261,714) (44,891,103) 93,782,795 10,488,340 157,834,759
RetailTerm deposistsMoscow 24% 24% 100% 23% 23% 100% 23% 23% 100% 23% 23% 100% 24% 22% 110% 24% 22% 111% 23% 21% 108% 23% 21% 109% 21%Other regions 76% 76% 100% 77% 77% 100% 77% 77% 100% 77% 77% 100% 76% 78% 97% 76% 78% 97% 77% 79% 98% 77% 79% 98% 79%
Call depositsMoscow 49% 54% 91% 49% 53% 91% 47% 52% 90% 45% 52% 87% 46% 58% 78% 45% 58% 77% 43% 58% 73% 43% 58% 73% 58%Other regions 51% 46% 111% 51% 47% 110% 53% 48% 111% 55% 48% 114% 54% 42% 131% 55% 42% 132% 57% 42% 137% 57% 42% 137% 42%
CorporatesTerm deposistsMoscow 46% 40% 115% 49% 40% 124% 48% 39% 125% 49% 39% 126% 48% 38% 126% 50% 38% 133% 56% 38% 148% 56% 37% 151% 32%Other regions 54% 60% 90% 51% 60% 84% 52% 61% 84% 51% 61% 83% 52% 62% 84% 50% 62% 80% 44% 62% 71% 44% 63% 70% 68%
Call depositsMoscow 41% 77% 53% 39% 76% 51% 42% 74% 57% 52% 70% 75% 57% 64% 88% 58% 64% 90% 56% 58% 95% 56% 58% 96% 55%Other regions 59% 23% 256% 61% 24% 259% 58% 26% 218% 48% 30% 160% 43% 36% 122% 42% 36% 117% 44% 42% 106% 44% 42% 106% 45%
YUKOS RELATED COMPANY AUCTION EFFECT
44
1H2006 to 1H2007 2006 to 2007
Cash and cash
equivalents0.5%
Loans to customers
21.2%
Other3.4%
Financial assets
through profit and loss74.8%
Financial
assets
through profit
and loss
72.9%
Other
8.5%Loans to
customers
6.7%
Cash and
cash
equivalents
12.0%
TRUST Investment Bank - Assets structure
2007 Budget1H072006
32 581
43 647
21 629
31 441
34.0%
45.4%
10 000
20 000
30 000
40 000
50 000
1H2006 1H2007
Total assets Financial assets at fair value
47 39641 973
34 52827 285
-11.4%
-21.0%
10 000
20 000
30 000
40 000
50 000
2006 2007B
Total assets Financial assets at fair value
Financial assets through profit and loss
72.0%
Other10.9%
Loans to customers
6.2%
Cash and cash equivalents
10.9%
45
NBT – 1H07 Effective Interest Rates
Effective interest rates (month to date)July 2007 June 2007 May 2007 April 2007 March 2007 Jan-Feb 2007 Dec 2006
Corporate customers (both banks)Corporate customers 11.5% 11.2% 11.2% 11.6% 12.3% 11.5% 11.3%
Small/Medium/MicroSmall 19.3% 19.1% 18.0% 19.4% 21.3% 21.0% 21.0%Medium 15.0% 15.5% 15.2% 15.6%Micro 22.7% 22.7% 22.8% 22.8% 22.9% 22.8% 23.4%
RetailAuto 23.7% 24.3% 24.3% 24.5% 24.0% 26.1% 25.7%Cash 32.8% 33.0% 33.0% 33.0% 32.5% 35.1% 35.8%CreditCards 39.3% 38.2% 38.5% 38.9% 38.6% 40.8% 39.4%Mortgage 12.7% 12.8% 12.3% 12.6% 12.9% 12.2% 13.8%
Corporate, time deposits 7.6% 7.9% 8.4% 8.0% 9.0% 8.2%
Individuals, time deposits 10.4% 10.8% 10.4% 10.8% 10.3% 10.5%
Corporate, current accounts* 0.9% 0.7% 1.2% 1.5% 1.1% 1.4%
Individuals, current accounts 0.7% 0.7% 0.7% 0.7% 0.7% 0.7%
Debt securities issued 9.1% 9.1% 9.2% 9.3% 9.3% 9.3%
Eurobond 9.8% 9.9%
Subordinated loans 11.3% 11.3% 6.7%
* Decrease in May is related to Yukos outflow
46
Corporate debt
securities
43%
OFZ
36%
Eurobons of RF
0%
Other
21%
Corporate debt
securities
60%
OFZ
5%
Eurobons of RF
20%
Other
15%
Corporate debt
securities
58%OFZ
17%
Eurobons of RF
11%
Other
14%
TRUST Investment Bank - Financial assets at fair value structure
Changes financial assets at fair value structure
20062005 1H07
47
Rating breakdown of Securities Portfolio - IBT
Currency bonds portfolio rating breakdown
52%
1%
3%
7%
16%
9%
2%
2% 8%
BBB+/Baa1 (incl.sovereign)
BBB/Baa2
BB+/Ba1
BB/Ba2
BB-/Ba3
B+/B1
B/B2
B-/B3
No rating
Ruble bond portfolio rating breakdown
21%
0%
1%
1%
19%
1%6%4%3%
44%
BBB+/Baa1 (incl.sovereign)BBB/Baa2
BBB-/Baa3
BB+/Ba1
BB/Ba2
BB-/Ba3
B+/B1
B/B2
B-/B3
No rating
Ruble bond without rating portfolio breakdown
2%
18%
2%
1%
37%
9%
13%
18%
Banks
Electric utilities
Municipality
OFZ Futures
Private enterprises
State enterprises
Subfederal financialinstitutions
Subfederalgovernments
48
TRUST Investment Bank - Liabilities structure
Payables under
REPO
53%
Customer accounts
19%
Short term interbank
10%
Long term financing
8%
Other
10%
Payables under REPO
49%
Customer accounts
21%
Short term interbank
12%
Long term financing
10%
Other8%
Funding structure
1H072006 2007
Payables under REPO
66%
Customer accounts
9%
Short term interbank
6%
Long term financing
12%
Other7%
49
Pro-forma Key Ratios; Merged Bank Targets
2007B 2008E 2009E
ROAA 1.4% 2.4% 2.5% ROAE 10.2% 17.5% 20.3% Cost / Income ratio (pre-provisions) 65.0% 56.0% 52.2% CAR 20.6% 18.2% 16.1% Total assets growth 20.0% 35.0% 33.0% Net interest margin 5.4% 6.1% 5.7% Average loans / Average deposits 107.5% 169.7% 189.8% Operating costs / Average assets 6.2% 6.1% 5.3%
Number of cities present 150 220 220
Total Headcount 8,200 9,100 9,500
3 year plan has not been amended due to current market conditions
50
Pro-forma Trading Securities (RUB mln) - Proprietary
Pro-forma Securities Portfolio – Optimising for the Future
Pro-forma Trading Securities (RUB mln) – Client Flow Business
• In order to optimise the asset structure of the bank and allow the expansion of the retail and SME business, the bank has decided to reduce its position in trading securities to 10% of total assets by the end of 2009
% of total assets
19,691 35,688
11,57516,215
16,258
5,799941
1,6901,525
1,376
2005 2006
36,181
17,089
15,434
2,3961,262
1Q 2007
17,704 10,575
Treasury and Asset Management
6,3022,227
6,302
2,228
6,120
5,100
2007B 2008E
Government and municipal bonds Corporate bonds
Equities Asset Management & Other
1,494 4,974 4,948
1,357
4,604
370
137
2%
5%
2005 2006
4,422
526
5%
1Q 2007
6,056 7,650
5,4836,885
765
574
5%
5%
2007B 2008E
Total
Equities
Corporate bonds
27,897
11,016
12,949
2,4201,512
2Q 2007
6,181
6%
2Q 2007
6,181
51
Pro-forma Funding Structure
Increasingly Diversified Funding Structure
2006 2007 Budget 2008E
2006 2Q 2007 2008E 2009E
• $400-500mln funding from securitisation
• $150-300mln new Eurobonds issued
• $100mln raised in syndicated loans (new)
• $50-100mln of other securities issued (new)
3Q-4Q 2007
• $400-500mln funding from securitisation
• $350mln new Eurobonds issued
• $100mln raised in syndicated loans
• $50-100mln of other securities issued
• €150-200mln securitisation bond
• $100mln private placement
• $100mln one year syndicated loan
• $20mln NBT sub-debt (Mar)
• $50mln NBT CLNs (Apr)
• $200mln NBT Eurobond (May)
• €150mln funding from securitisation (May)
• $100mln CLN by NBT (Dec)
• $150mln Eurobond by IBT (Sep)
2Q 2007
Amounts due to
customers
47%
Funding from
securitisation
1%
Payables under
repurchase
agreements
19%
Amounts due to
credit institutions
6%
Shareholdes '
equity
12%
Other l iabil i ties
3%
Debt securities
12%
52
Total Shareholders Equity (RUB mln)
Pro-forma Capital Structure
• Management estimates that after the merger,
National Bank TRUST would reach TOP 20
Russian banks in terms of assets
• 1.5bln of 3.4bln of announced capital increase
has been provided. The remaining 1.9bln will
be provided by the end of October
• Significant room to overperform asset growth
targets in model
• RUB 7bln capacity for tier 2 subdebt issuance
Capital Adequacy Ratio
Tier 1 Ratio Total Capital Ratio
BIS Requirements (8%) Central Bank (10%)
Comments
CAGR: 29%
12,130
23,367
19,057
15,997
2Q 2007 2007B 2008E 2009E
20.6%
18.2%16.1%16.0% 15.3%
17.6%16.89%
13.16%
2Q 2007 2007B 2008E 2009E
14.73%12.24%
1Q 2007
53
Investment Banking Optimal Asset Structure as Department in Merged Bank
USD Mln Risk Weighting
Corporate bonds - client flow trading 300 130%
Asset management 200 100%
Corporate bridges 150 100%
Structured corporate loans 300 100%
Total assets 950 1,040
Total shareholders equity (current) 279
Tier 1 capital (current) 305
Tier 1 CAD 29%
Required CAD 15%
Excess CAD 14%
Excess capital to be transferred to NBT 149
IBT Asset Structure
NBT
54
Pro Forma Related Party Transactions
Transactions with related parties:
• Carried out on an arm's-length basis
• Subject to the same approval procedures and limits as transactions with unrelated parties
Amounts Due to RP Customers Loans to RP
1120
248
722
374
4.00%
0.66%
1.69%
0.80%
2004 2005 2006 1H2007
728
543647 610
6.03%
2.62%
2.31%1.72%
2004 2005 2006 1H2007
55
Pro-forma Employee Structure
• Post merger, the group expects a minimal impact to its headcount due to different business operations of the banks being merged; however due to spin-off of proprietary and alternative investments combined with synergies and back office redundancy will lead to savings of at least $7.5mln a year
• Expected redundancies of appr. 80 people due to merger (23 front office, 57 back/middle office)
• In light of the bank’s network expansion plans, management anticipates to have approximately 3,000 new employees to grow the business in 2007 and 2008. The new employees will receive introductory training to ensure that high standards are maintained
• Headcount not due to increase significantly after 2009
Employee Structure
Total: 5,631 Total: 6,766 Total: 8,200 Total: 9,100
2006 2Q 2007 Pro-Forma 2007 Pro-Forma 2008
82%94%
18%6%
6,357409
IBT NBT
56
4 Group Strategy
5 Group Business Overview
2 Rationale for Merger
3 Group History & Structure
1 Executive Summary
6 Group Risk Management
7 Group Financial Forecasts
8 Group Merger Implementation Plan
57
Indicative Timetable: Expected Completion in 2Q 2008
Announced Merger to market, staff and regulators on 17 July 2007
Engaged A&O as legal counsel
Finalizing Capital Increase of National Bank TRUST by late October 2007
Informal Discussions with regulator on Merger
Official request will be filed with CBR during October 2007
58
APPENDIX
59
Yukos Deposits
60
Yukos Related Deposits
NBT and Yukos RD (Rub bln and % )
0
5
10
15
20
25
30
0%
10%
20%
30%
40%
50%
60%
Corporate Current Account Non Restricted Yukos Restricted Yukos All current accounts
% YRD vs Corp C/Acs % All YRD vs All Current
TRUST Group and Yukos RD (Rub bln. and % )
0
5
10
15
20
25
30
35
0%
10%
20%
30%
40%
50%
60%
70%
Corporate Current Account Non Restricted Yukos Restricted Yukos
All current accounts % YRD vs Corp C/Acs
% All YRD vs All Current
Post Yukos related company auctions the Unfrozen Yukos-Related deposits have effectively
been reduced to zero
61
Historical Financials of NBT and IBT
62
Balance Sheet (RUB mln)
NBT IBT
2005 22006 2Q 2007 2005 22006 2Q 2007
Cash and cash equivalents 13,970 11,147 16,326 5,350 5,696 4,774
Amounts due from credit institutions 15 15 15 1,891 1,320 519
Trading securities 7,302 6,150 2,655 13,887 34,529 31,441
Net loans to customers 16,379 24,847 32,676 4,381 3,166 2,695
Total retail loans 4,691 12,715 - - -
Corporate 11,688 9,891
SME - 2,241 - - -
Property, equipment and intangibles 1,203 1,965 2,633 417 604 582
Tax and other assets 484 546 672 2,421 2,081 3,635
Total Assets 39,360 44,670 54,977 28,347 47,396 43,646
Amounts due to credit institutions 2,875 1,126 1,423 3,959 3,983 4,395
Payables under repurchase agreements - - - 7,013 21,842 18,333
Amounts due to customers 30,564 34,868 38,787 7,235 7,899 7,637
Retail 7,299 11,886 176 - -
Corporate 23,265 22,867 7,059
SME - - - - - -
Funding from securitisation - - - - - - Obligations to return securities received as
collateral - - - 846 1,885 2,092
Debt securities issued 1,002 3,713 8,640 2,714 4,914 4,312
Tax and other liabilities 726 625 630 348 204 244
Total Liabilities 35,167 40,333 49,480 22,114 40,727 37,013
Shareholders' Equity 4,193 4,337 5,497 6,233 6,669 6,633
16,93411,343
4,399
13,48225,305 7,899 7,637
4,381 3,166 2,695
63
Income Statement (RUB mln)
NBT IBT
2005 22006 2Q 2007 2005 22006 2Q 2007
Interest income 2,726 4,622 3,337 1,354 2,383 1,558
Due from credit institutions 208 321 243 145 290 143
Debt securities and other financial instruments 615 679 179 555 1,581 1,126
Reverse repurchase agreements - - 117 117 62
Loans to customers 1,904 3,622 2,915 440 395 226
Interest expense (788) (1,373) ( 1,140) (659) (1,439) ( 1,077)
Due to credit institutions (73) (27) (26) (125) (237) (153) Repurchase agreements - - - (301) (739) (617)
Deposits by customers (634) (1,247) (870) (109) (225) (116)
Debt securities issued (81) (99) (244) (123) (238) (153)
Net interest income 1,938 3,249 2,197 695 944 481
Provision for impairment (304) (665) (417) (238) (295) 7
Net interest income after provisions 1,634 2,584 1,780 457 649 488
Fee and commission income 876 925 461 187 318 290
Fee and commission expense (163) (159) (96) (51) (45) (27)
Net Fees and commissions 713 766 365 136 274 263
Total operating income 3,310 3,619 2,290 2,262 1,784 707
Operating expense (2,463) (3,317) ( 2,174) (1,324) (1,518) (748)
Salaries and benefits (1,318) (1,855) (1,288) (828) (946) (442)
Administrative expenses (815) (1,148) (687) (359) (426) (256)
Depreciation and amortization (153) (165) (115) (77) (95) (40)
Other expenses (178) (148) (84) (61) (51) (10)
Profit before taxation 847 303 116 938 265 (41)
Income tax expense (558) (111) 29 (213) (87) 5
Net income 288 192 145 726 178 (36)
-
64
Russian Banking Sector Overview
65
533
339257
19013010585
52.8%
45.1%42.1%42.3%
38.3%35.3%
32.3%
0
100
200
300
400
500
600
2000 2001 2002 2003 2004 2005 2006
0%
10%
20%
30%
40%
50%
60%
Total Assets Asset/GDP
Russian Banking Sector: Summary
• Retail lending is increasingly the focus for banks and, despite explosive growth in consumer credit, Russia still lags behind emerging market peers. There is potential for several years of further strong growth in credit card, auto credit, as well as mortgage lending as personal income levels rise
• Mortgages, although quickly becoming a mass product, still account for only 0.75% of GDP vs. 5.3% in Kazakhstan and 7.3% in Poland and amid enormous demand for new housing, still make up only c.10% of total retail loans
• Mortgage lending is forecasted to grow by 80% in 2007• There is increasing emphasis on providing banking services in the under-banked
regions as economic wealth spreads into the regions responsible for much of Russia's industrial output
• The key constraints for all Russian banks are capital and funding. With some of the leading private banks growing at over 100% per annum, sourcing capital is challenging
• VTB successfully listed in May 2007 and several other banks have IPO in the pipeline
• In 2006, total NPLs of the banking system has increased by 2.5x from $765m as of January 2006 to $2.0bn whereas lending to individuals rose by 75% in 2006
Banking Sector Summary Total Assets
Total Deposits
Source: RosStat, CBR
Key Banking Statistics
2002 2003 2004 2005 2006
Assets GDP 38.3% 42.3% 41.9% 45.1% 52.8%
Loans GDP 16.6% 20.3% 22.8% 25.2% 30.2%
Retail loans GDP 1.3% 2.3% 3.6% 5.5% 7.8%
Retail loans / total Income 2.1% 3.4% 5.6% 8.7% 12.3%
Deposits GDP 19.6% 22.7% 24.4% 26.9% 31.8%
Retail deposits GDP 9.5% 11.5% 11.6% 12.7% 14.2%
Retail deposits / total income 15.1% 17.1% 18.0% 20.4% 22.5%
Capital /Assets 14.0% 14.6% 13.3% 12.7% 12.1%
With the fast growth of retail lending, an increasing number of banks
face capital constraints as the capital ratio decreases to the minimal level acceptable by the CBR
144 96 7152322216
178
10678
47343026
31.8%26.9%
24.4%22.7%19.6%17.7%16.0%
0
50
100
150
200
250
300
350
2000 2001 2002 2003 2004 2005 2006
0%
5%
10%
15%
20%
25%
30%
35%
Retail Deposits Corporate Deposits Deposits/GDP
$bn %
$bn %
66
Source: Deutsche Bank Equity Research (20-Sep-06) and Merrill Lynch Research (23-May-06)
Total Deposits MortgagesTotal Banking Assets
Russian Banking Sector: Forecasts by Product
Car Loans Corporate LoansCredit Cards
67
Note: Total banking assets, loans and deposits data as of 31 December 2005 unless otherwise statedSources: European Banking Federation, Bank of Ukraine, Economist Intelligence Unit and broker research(1) Includes Bulgaria, Czech Republic, Hungary, Poland, Romania, Slovakia and Ukraine(2) Includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Norway, Netherlands, Portugal, Spain, Sweden, Switzerland and the United Kingdom
Total Loans in % of GDP Total Deposits in % of GDPBanking Assets in % of GDP
Russian Banking Sector: Benchmarking (1
)
(1)
(1)
(2)
(2)
(2)
68
Top Russian BanksMain Financial Indicators of Top 20 Banks, as at April 1, 2007
Source: Interfax(1) Includes capital increase of RUB 3.4bn