110118 russian banks renaissance

8/7/2019 110118 Russian Banks Renaissance

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dakova1

Russian banksOutlook for 2011

David Nangle+7 (495) 258 [email protected]

Svetlana Kovalskaya

+7 (495) 258 [email protected] Armen Gasparyan+7 (495) 258-7770 [email protected] Kirill Rogachev+7 (495) 258-7770 [email protected]

Sector updateEquity Research

18 January 2011

BanksRussia

Macroeconomic trends and sector dynamics form a favourablebackdrop for Russian banks in 2011, in our view:

1) Macro recovery is under way. An oil price above $90/bbl, a stable rouble, lowinflation (although picking up), and the ongoing recovery in consumer/producerconfidence/demand are all net positive for the banking sector.

2) Credit growth is back. Mid-2010 marked a turnaround in the credit growthcycle, and the annualised sector loan growth over April-November was 18%,which bodes well for 2011, in our view .

3) Asset quality has turned the corner , to be viewed as a positive goingforward. NPLs are peaking (declining in places), provisioning charges throughthe P&L are clearly trending down from the highs of 2009-1H10, and weexpect provision write-backs to start in 2011.

4) Margin pressure: Past the worst. We expect the asset mix to improve and adegree of lagged reduced cost of funding to feed through and help in 2011. Apotential turnaround in lending rates in 2011, an expectation supported byrecent statements from the Central Bank of Russia (CBR) regarding a possiblerate hike, would be a welcome positive.

Sberbank is our top pick for 2011 and our favourite vs VTB in thelarge-cap pair trade, for the following key reasons:

1) A clearer and superior write-back story. Sberbank was more conservative

in its provisioning policy through the crisis (as at 9M10, its 90-day NPLs were141% covered by loan loss reserves vs 101% at VTB), and managementexpects write-backs to start in 2011 and last for three-to-four years. At VTB,provision releases (if any) are more a 2012-2013 story.

2) Sberbank is better positioned for a NIM recovery , as it has a higherproportion of retail term deposits in its funding (47% at Sberbank vs 13% atVTB), of which a significant part is due to re-price downwards in early 2011.

3) Share price performance: Sberbank’s commons rose 23% vs VTB’s 40% in2010.

4) Valuations. We estimate the forward RoE of Sberbank/VTB at 28%/13%,while VTB’s P/B 2011E discount to Sberbank is minimal, at 8%.

5) Sberbank is a fundamentally more attractive option, with a clearer-cut

investment case, in our view. The VTB story is now all about M&A, whereprice is an issue and near-term execution risk should not be ignored.

Bank St Petersburg (BSPB) convertible prefs: Our mid-capfavourite. Following the recent rally in BSPB common stock and laterVozrozhdenie, we currently see the most value in BSPB convertible prefs. BSPBprefs’ premium to commons is now just 4% (vs our fair premium of 16% and thehistoric average of 20%). The dividend yield is a healthy 7% (vs virtually zero forcommons), and the record date is imminent (likely in March 2011).

Summary valuation

Bloombergticker Price, $ MktCap,

$mnTargetprice, $ Rating P/E

2011E,xP/E

2012E,x

EPSgrowth

2011E, %

EPSgrowth

2012E,%

P/B2011E x

P/B2012E,x

RoE2011E,%

RoE2012E,%

Sberbank SBER RU 3.56 76,850 4.6 BUY 7.7 7.3 92.6 5.1 1.9 1.6 27.8 23.4Sberbank pref SBERP RU 2.51 2,510 3.7 BUY 5.4 5.1 92.6 5.1 1.3 1.1 27.8 23.4VTB VTBR LI 7.27 38,024 6.27 SELL 14.2 11.6 40.1 22.2 1.7 1.6 13.0 14.2Vozrozhdenie VZRZ RU 51.4 1.221 51 BUY 11.6 8.5 479 36.8 1.8 1.5 17.2 19.7BSPB STBK RU 5.81 1,640 6.3 HOLD 8.5 6.9 115 23.2 1.8 1.5 23.2 23.3BSPB conv pref BSPBP RX 6.02 393 7.3 BUY 8.8 7.1 115 23.2 1.8 1.5 23.2 23.3

Source: Bloomberg, Renaissance Capital estimates

Important disclosures are found at the Disclosures Appendix. Communicated by Renaissance Securities (Cyprus) Limited, regulated by the Cyprus Securities & ExchangeCommission, which together with non-US affiliates operates outside of the USA under the brand name of Renaissance Capital.

Figure 1: 2010 price performance ($, %)

Source: Bloomber , Renaissance Ca ital estimates

7%

14%

20%

23%

23%

40%

91%

99%

0% 30% 60% 90% 120%

Sberbank pref

Bank Vozrozhdenie

MSCI EMEA Financials

RTS Index

Sberbank

VTB

Bank St Petes conv

Bank St Petes

Figure 2: P/B (x) 2011E


1.7

1.7

1.7

1.8

1.8

1.9

1.0 1.2 1.4 1.6 1.8 2.0

EMEA Banks

GEM Banks

VTB (GDRs)

Bank St Petes

Bank Vozrozhdenie

Sberbank



18 January 2010 Russian banks Renaissance Capital

Figure 1: Loan growth, YoY, %

Source: CBR, Renaissance Capital estimates

Figure 2: Sector NPLs, % of gross loans

Source: CBR, Renaissance Capital estimates

Figure 3: Russian listed banks’ prov isioning charges, % of gross loans, IFRS

Source: Company data, Renaissance Capital estimates

Figure 4: Russian listed banks' NPLs, % of gross loans, IFRS*


Figure 5: Key CBR rates and inflation Figure 6: Nominal average rates, RUB**

Source: CBR, Renaissance Capital estimates Source: CBR, Renaissance Capital estimates

* Under banks’ respective definitions: Sberbank and VTB: 90-day overdue NPLs ; Bank St Petersburg and Vozrozhdenie: 1-day overdue NPLs** All rates are on loans/deposits with maturity up to 1 year. Retail deposit rate ex. demand deposits. Spread between average corporate loan rate and average retail deposit rate (ex .demand deposits)

-20%-10%

0%10%20%30%40%50%60%70%

J a n - 0 8

M a r - 0 8

M a y - 0 8

J u l - 0 8

S e p - 0 8

N o v - 0 8

J a n - 0 9

M a r - 0 9

M a y - 0 9

J u l - 0 9

S e p - 0 9

N o v - 0 9

J a n - 1 0

M a r - 1 0

M a y - 1 0

J u l - 1 0

S e p - 1 0

N o v - 1 0

Corporate Retail

0%1%2%3%4%5%6%7%8%

D e c - 0 5

D e c - 0 7

J a n - 0 9

M a r - 0 9

M a y - 0 9

J u l - 0 9

S e p - 0 9

N o v - 0 9

J a n - 1 0

M a r - 1 0

M a y - 1 0

J u l - 1 0

S e p - 1 0

N o v - 1 0

NPLs corporate NPLs retail NPLs total

0%1%2%

3%4%5%6%7%8%9%

1 Q 0 8

2 Q 0 8

3 Q 0 8

4 Q 0 8

1 Q 0 9

2 Q 0 9

3 Q 0 9

4 Q 0 9

1 Q 1 0

2 Q 1 0

3 Q 1 0

Sberbank VTB

Bank St Petersburg Vozrozhdenie

0%

2%

4%

6%

8%

10%

12%

1 Q 0 8

2 Q 0 8

3 Q 0 8

4 Q 0 8

1 Q 0 9

2 Q 0 9

3 Q 0 9

4 Q 0 9

1 Q 1 0

2 Q 1 0

3 Q 1 0

Sberbank VTBBank St Petersburg Vozrozhdenie

0%2%4%6%8%

10%12%14%16%

1 Q 0 7

2 Q 0 7

3 Q 0 7

4 Q 0 7

1 Q 0 8

2 Q 0 8

3 Q 0 8

4 Q 0 8

1 Q 0 9

2 Q 0 9

3 Q 0 9

4 Q 0 9

1 Q 1 0

2 Q 1 0

3 Q 1 0

N o v - 1 0

D e c - 1 0

Inflation (CPI), YoY CBR Refinancing rate

CBR Deposit rate (Tom-next)

0%2%4%6%8%

10%12%14%

16%18%

J a n - 0 8

M a r - 0 8

M a y - 0 8

J u l - 0 8

S e p - 0 8

N o v - 0 8

J a n - 0 9

M a r - 0 9

M a y - 0 9

J u l - 0 9

S e p - 0 9

N o v - 0 9

J a n - 1 0

M a r - 1 0

M a y - 1 0

J u l - 1 0

S e p - 1 0

N o v - 1 0

Retail deposit rate Corporate loan rate Spread

Sector trends



3

Renaissance Capital Russian banks 18 January 2010

Stock price performance: Pair trades

Figure 9: Sberbank commons vs Sberbank prefs vs VTB –Relative share price performance since 1 January 2010


Figure 10: Vozrozhdenie vs BSPB commons vs BSPB convertible prefs –Relative share price performance since 1 January 2010


Figure 11: VTB vs Sberbank – P/B 2011E discount since 1 January 2010


Figure 7: Vozrozhdenie vs BSPB – P/B 2011E premium sinc e 1 January 2010


Figure 8: Sberbank: prefs to commons dis count si nce 1 January 2010


Figure 14: Bank St Petersburg: Conv prefs to co mmons premium s ince1 January 2010


-40%-30%-20%-10%

0%10%20%30%40%50%60%

J a n - 1 0

F e b - 1 0

M a r - 1 0

A p r - 1 0

M a y - 1 0

J u n - 1 0

J u l - 1 0

A u g - 1 0

S e p - 1 0

O c t - 1 0

N o v - 1 0

D e c - 1 0

J a n - 1 1

Sberbank Sberbank pref VTB

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

J a n - 1 0

F e b - 1 0

M a r - 1 0

A p r - 1 0

M a y - 1 0

J u n - 1 0

J u l - 1 0

A u g - 1 0

S e p - 1 0

O c t - 1 0

N o v - 1 0

D e c - 1 0

J a n - 1 1

Vozrozhdenie BSPB BSPB conv pref

8%

0%

5%

10%

15%

20%

25%

30%

J a n - 1 0

F e b - 1 0

M a r - 1 0

A p r - 1 0

M a y - 1 0

J u n - 1 0

J u l - 1 0

A u g - 1 0

S e p - 1 0

O c t - 1 0

N o v - 1 0

D e c - 1 0

J a n - 1 1

2%

-20%-10%

0%

10%20%30%40%50%60%70%80%90%

J a n - 1 0

F e b - 1 0

M a r - 1 0

A p r - 1 0

M a y - 1 0

J u n - 1 0

J u l - 1 0

A u g - 1 0

S e p - 1 0

O c t - 1 0

N o v - 1 0

D e c - 1 0

J a n - 1 1

29%

10%

15%

20%

25%

30%

35%

J a n - 1 0

F e b - 1 0

M a r - 1 0

A p r - 1 0

M a y - 1 0

J u n - 1 0

J u l - 1 0

A u g - 1 0

S e p - 1 0

O c t - 1 0

N o v - 1 0

D e c - 1 0

J a n - 1 1

4%

0%

10%

20%

30%

40%

50%

60%

J a n - 1 0

F e b - 1 0

M a r - 1 0

A p r - 1 0

M a y - 1 0

J u n - 1 0

J u l - 1 0

A u g - 1 0

S e p - 1 0

O c t - 1 0

N o v - 1 0

D e c - 1 0

J a n - 1 1




4

Figure 15: Sberbank summary sheet, RUBmnBalance sheet , RUBmn 2008 2009 2010E 2011E 2012E Balance sheet ratios , % 2009 2010E 2011E 2012E Assets Loans/assets 68.5 66.9 68.7 70.9Interbank 499,049 495,099 594,119 576,295 605,110 Deposits/liabilities 76.5 78.4 78.0 77.4Securities 493,678 1,064,135 1,596,203 1,755,823 1,843,614 Loans/deposits 89.4 85.4 88.1 91.6Net loans 5,077,882 4,864,031 5,422,228 6,344,501 7,529,005 Equity/assets 11.0 11.6 13.1 14.0Gross loans 5,280,167 5,443,845 6,153,435 7,007,755 8,154,631Interest-earning assets 6,070,609 6,423,265 7,612,550 8,676,619 9,977,729 Capital ratios, % 2009 2010E 2011E 2012ETotal assets 6,736,482 7,105,066 8,099,775 9,233,744 10,618,805 Tier 1 11.5 11.4 12.7 13.4

Tier 2 6.6 5.1 4.4 3.7Liabilities Total 18.1 16.5 17.1 17.1Interbank 302,539 53,947 107,894 107,894 113,289Securities 834,203 758,873 591,921 591,921 621,517 Asset quality 2009 2010E 2011E 2012EDeposits 4,795,232 5,438,871 6,347,799 7,202,972 8,216,778 NPLs, RUBmn 464,156 513,279 401,175 317,277Interest-bearing liabilities 5,931,974 6,251,691 7,047,614 7,902,787 8,951,584 NPL reserves, RUBmn 579,814 731,206 663,254 625,626Total liabilities 6,736,482 7,105,066 8,099,775 9,233,744 10,618,805 NPLs/gross loans, % 8.53 8.34 5.72 3.89Shareholders’ equity 750,162 778,162 941,962 1,208,444 1,490,536 Reserves/NPLs, x 1.25 1.42 1.65 1.97

Credit charge, % 7.25 3.00 - 0.40

Inco me statement, RUBmn 2008 2009 2010E 2011E 2012E Margins, % 2009 2010E 2011E 2012EInterest income 619,952 814,962 782,497 838,892 951,372 Asset margin 13.05 11.15 10.30 10.20Interest expense (241,795) (312,245) (305,279) (325,783) (368,423) Liability margin 5.13 4.59 4.36 4.37Net interest income 378,157 502,717 477,218 513,109 582,948 NIM 8.05 6.80 6.30 6.25Net fee income 86,194 101,089 124,339 149,207 179,049 Spread 7.92 6.56 5.94 5.83Trading income (13,201) 54,348 32,812 31,622 34,784Other income 7,255 (10,081) 5,041 5,545 6,099 Cost s, % 2009 2010E 2011E 2012ETotal revenues 458,405 648,073 639,410 699,483 802,880 Cost/income 35.4 42.4 46.7 47.0Staff costs (132,962) (128,624) (155,796) (188,902) (216,218) Cost/avg assets 3.31 3.57 3.77 3.80Other costs (88,777) (100,653) (115,379) (137,565) (161,472) Effective tax rate 18.3 20.0 20.0 20.0Total costs (221,739) (229,277) (271,175) (326,468) (377,689)Operating profit 236,666 418,796 368,235 373,015 425,191 Profitabi lity ratios , % 2009 2010E 2011E 2012EProvisioning charge (97,881) (388,932) (173,959) 0 (30,325) RoAE 3.2 18.1 27.8 23.4Other pre-tax items (8,864) 0 0 0 0 RoAA 0.4 2.0 3.4 3.2

Pre-tax profit 129,921 29,864 194,276 373,015 394,866Tax (32,175) (5,468) (38,855) (74,603) (78,973) Other P&L ratios, % 2009 2010E 2011E 2012EMinorities 0 0 334 0 0 Int inc/revenues 77.6 74.6 73.4 72.6Other post-tax gains/losses 0 0 0 0 0 Fees/revenues 15.6 19.4 21.3 22.3Net profi t 97,746 24,396 155,755 298,412 315,893Trading income/revenues 8.4 5.1 4.5 4.3Dividend on ordinary shares 10,841 2,928 15,575 29,841 31,589 Fees/staff costs 78.6 79.8 79.0 82.8Dividend on pref shares 650 630 1,090 2,089 2,211 Fees/total costs 44.1 45.9 45.7 47.4

Payout ratio, % 12.0 10.0 10.0 10.0

Key YoY growth rates , % 2008 2009 2010E 2011E 2012E No of: 2006 2007 2008 2009Loans (4.2) 11.5 17.0 18.7 Employees 243,620 251,208 259,999 252,398Interest-earning assets 5.8 18.5 14.0 15.0 Branches 857 791 734 602Deposits 13.4 16.7 13.5 14.1 Mini/sub branches 19,244 19,499 19,675 19,103Interest-bearing liabilities 5.4 12.7 12.1 13.3 ATM's na 12,808 17,511 22,907Assets 5.5 14.0 14.0 15.0Fee income 17.3 23.0 20.0 20.0Revenues 41.4 (1.3) 9.4 14.8Costs 3.4 18.3 20.4 15.7Operating profit 77.0 (12.1) 1.3 14.0Net profit (75.0) 538.4 91.6 5.9EPS (75.0) 538.4 91.6 5.9

Per share data, RUB 2008 2009 2010E 2011E 2012ENo of ordinary shares, mn 21,585 21,587 21,587 21,587 21,587EPS 4.33 1.08 6.90 13.21 13.99DPS 0.48 0.13 0.69 1.32 1.40BVPS 33.2 34.5 41.7 53.5 66.0


State (CBR)60%

Float40%

Sberbank forecasts, RUB




5

Figure 16: Sberbank summary sheet, $mnBalance sheet , $mn 2008 2009 2010E 2011E 2012E Balance sheet ratios, % 2009 2010E 2011E 2012E Assets Loans/assets 68.5 66.9 68.7 70.9Interbank 16,986 16,484 20,920 20,221 21,011 Deposits/liabilities 76.5 78.4 78.0 77.4Securities 16,803 35,430 56,204 61,608 64,014 Loans/deposits 89.4 85.4 88.1 91.6Net loans 172,835 161,945 190,924 222,614 261,424 Equity/assets 11.0 11.6 13.1 14.0Gross loans 179,720 181,250 216,670 245,886 283,147Interest-earning assets 206,624 213,859 268,048 304,443 346,449 Capital ratios, % 2009 2010E 2011E 2012ETotal assets 229,288 236,560 285,203 323,991 368,709 Tier 1 11.5 11.4 12.7 13.4Liabilities Tier 2 6.6 5.1 4.4 3.7Interbank 10,297 1,796 3,799 3,786 3,934 Total 18.1 16.5 17.1 17.1Securities 28,394 25,266 20,842 20,769 21,580Deposits 163,214 181,084 223,514 252,736 285,305 Asset quality 2009 2010E 2011E 2012EInterest-bearing liabilities 201,905 208,147 248,155 277,291 310,819 NPLs, $mn 15,454 18,073 14,076 11,017Total liabilities 229,288 236,560 285,203 323,991 368,709 NPL reserves, $mn 19,305 25,747 23,272 21,723Shareholders’ equity 25,533 25,909 33,168 42,402 51,755 NPLs/Gross loans, % 8.53 8.34 5.72 3.89

Reserves/NPLs, % 1.25 1.42 1.65 1.97Credit charge, % 7.25 3.00 - 0.40

Income statement, $mn 2008 2009 2010E 2011E 2012E Interest income 24,988 25,798 27,360 29,487 33,207 Margins, % 2009 2010E 2011E 2012EInterest expense (9,746) (9,884) (10,674) (11,451) (12,859) Asset margin 13.05 11.15 10.30 10.20Net interest income 15,242 15,914 16,686 18,035 20,347 Liability margin 5.13 4.59 4.36 4.37Net fee income 3,474 3,200 4,348 5,245 6,250 NIM 8.05 6.80 6.30 6.25Trading income (532) 1,720 1,147 1,111 1,214 Spread 7.92 6.56 5.94 5.83Other income 292 (319) 176 195 213Total revenues 18,477 20,515 22,357 24,586 28,024 Cost s, % 2009 2010E 2011E 2012EStaff costs (5,359) (4,072) (5,447) (6,640) (7,547) Cost/Income 35.4 42.4 46.7 47.0Other costs (3,578) (3,186) (4,034) (4,835) (5,636) Cost/avg assets 3.3 3.6 3.8 3.8Total costs (8,937) (7,258) (9,482) (11,475) (13,183) Effective tax rate 18.3 20.0 20.0 20.0Operating profit 9,539 13,257 12,875 13,111 14,841Provisioning charge (3,945) (12,312) (6,082) 0 (1,058) Profitabi lity ratios , % 2009 2010E 2011E 2012EOther pre-tax items (357) 0 0 0 0 RoAE 3.2 18.1 27.8 23.4Pre-tax profit 5,237 945 6,793 13,111 13,782 RoAA 0.4 2.0 3.4 3.2

Tax (1,297) (173) (1,359) (2,622) (2,756)Minorities 0 0 12 0 0 Other P&L ratios, % 2009 2010E 2011E 2012EOther post-tax gains/losses 0 0 0 0 0 Int inc/revenues 77.6 74.6 73.4 72.6Net profit 3,940 772 5,446 10,489 11,026 Fees/revenues 15.6 19.4 21.3 22.3Dividend on ordinary shares 437 93 545 1,049 1,103 Trading income/revenues 8.4 5.1 4.5 4.3Dividend on pref shares 26 20 38 73 77 Fees/staff costs 78.6 79.8 79.0 82.8

Fees/total costs 44.1 45.9 45.7 47.4Payout ratio, % 12.0 10.0 10.0 10.0

Key YoY growth rates, % 2008 2009 2010E 2011E 2012E Loans (6.3) 17.9 16.6 17.4 No of: 2006 2007 2008 2009Interest-earning assets 3.5 25.3 13.6 13.8 Employees 243,620 251,208 259,999 252,398Deposits 10.9 23.4 13.1 12.9 Branches 857 791 734 602Interest-bearing liabilities 3.1 19.2 11.7 12.1 Mini/sub branches 19,244 19,499 19,675 19,103Assets 3.2 20.6 13.6 13.8 ATM's na 12,808 17,511 22,907Fee income (7.9) 35.9 20.6 19.2Revenues 11.0 9.0 10.0 14.0Costs (18.8) 30.6 21.0 14.9Operating profit 39.0 (2.9) 1.8 13.2Net profit (80.4) 605.2 92.6 5.1EPS (80.4) 605.1 92.6 5.1

Per share data, $ 2008 2009 2010E 2011E 2012E No of ordinary shares, mn 21,585 21,587 21,587 21,587 21,587EPS 0.17 0.03 0.24 0.46 0.49DPS 0.02 0.00 0.02 0.05 0.05BVPS 1.1 1.1 1.5 1.9 2.3


State (CBR)60%

Float40%

Sberbank forecasts, $




6

Figure 17: VTB summary sheet, RUBmnBalance sheet , RUBmn 2008 2009 2010E 2011E 2012E Balance sheet ratios, % 2009 2010E 2011E 2012E Assets Loans/assets 64.0 66.5 68.6 72.8Interbank 671,500 553,500 498,150 547,965 575,363 Deposits/liabilities 43.4 49.1 52.5 55.4Securities 131,800 330,400 330,400 379,960 417,956 Loans/deposits 147.2 135.3 130.6 131.3Net loans 2,555,600 2,309,900 2,640,511 3,106,951 3,724,492 Equity/assets 13.9 13.9 13.7 13.8Gross loans 2,650,300 2,544,800 2,925,850 3,388,669 3,998,718Interest-earning assets 3,358,900 3,193,800 3,469,061 4,034,876 4,717,811 Capital ratios, % 2009 2010E 2011E 2012ETotal assets 3,697,400 3,610,800 3,971,880 4,527,943 5,116,576 Tier 1 14.8 15.3 15.1 15.1Liabilities Tier 2 5.9 5.7 5.0 4.5Interbank 1,237,400 757,900 568,425 568,425 596,846 Total 20.7 21.0 20.1 19.6Securities 786,400 681,000 749,100 824,010 885,811Deposits 1,101,900 1,568,800 1,950,905 2,379,281 2,836,978 Asset quality 2009 2010E 2011E 2012EInterest-bearing liabilities 3,125,700 3,007,700 3,268,430 3,771,716 4,319,635 NPLs, RUBmn 248,600 273,460 246,114 221,503Total liabilities 3,697,400 3,610,800 3,971,880 4,527,943 5,116,576 NPL reserves, RUBmn 234,900 285,339 281,718 274,227Shareholders’ equity 389,400 502,300 551,516 620,087 704,503 NPLs/gross loans, % 9.77 9.35 7.26 5.54

Reserves/NPLs, x 0.9 1.0 1.1 1.2Credit charge, % 5.96 1.95 1.00 0.75

Income statement, RUBmn 2008 2009 2010E 2011E 2012E Interest income 245,200 373,700 334,809 367,693 424,505 Margins, % 2009 2010E 2011E 2012EInterest expense (131,600) (221,500) (161,574) (176,343) (205,688) Asset margin 11.4 10.1 9.8 9.7Net interest income 113,600 152,200 173,234 191,350 218,817 Liability margin 7.2 5.1 5.0 5.1Net fee income 16,300 21,000 24,780 32,214 41,878 NIM 4.6 5.2 5.1 5.0Trading income 14,200 (11,000) 12,460 14,558 16,014 Spread 4.2 4.9 4.8 4.6Other income 4,900 3,300 2,810 3,219 3,630Total revenues 149,000 165,500 213,284 241,341 280,340 Cost s, % 2009 2010E 2011E 2012EStaff costs (36,500) (40,300) (52,950) (66,372) (77,742) Cost/income 46.2 44.9 47.9 48.0Other costs (31,000) (36,100) (42,900) (49,335) (56,735) Cost/avg assets 2.1 2.5 2.7 2.8Total costs (67,500) (76,400) (95,850) (115,707) (134,477) Effective tax rate 12.7 19.0 19.0 19.0Operating profit 81,500 89,100 117,434 125,634 145,862Provisioning charge (63,200) (154,700) (53,339) (31,573) (27,703) Profitabi lity ratios , % 2009 2010E 2011E 2012EOther pre-tax items (200) (2,700) (1,000) 0 0 RoAE (14.2) 10.4 13.0 14.2Pre-tax profit 18,100 (68,300) 63,095 94,062 118,159 RoAA (1.7) 1.4 1.8 1.9

Tax (13,500) 8,700 (11,988) (17,872) (22,450)Minorities 200 (3,800) 3,577 0 (1,914) Other P&L ratios, % 2009 2010E 2011E 2012EOther post-tax gains/losses 0 0 0 0 0 Int inc/revenues 92.0 81.2 79.3 78.1Net profit 4,800 (63,400) 54,685 76,190 93,795 Fees/revenues 12.7 11.6 13.3 14.9Dividend on ordinary shares 3,006 6,067 5,468 7,619 9,380 Trading income/revenues (6.6) 5.8 6.0 5.7Dividend on pref shares na na na na na Fees/staff costs 52.1 46.8 48.5 53.9

Fees/total costs 27.5 25.9 27.8 31.1Payout ratio, % (9.6) 10.0 10.0 10.0

Key YoY growth rates, % 2008 2009 2010E 2011E 2012E Loans (9.6) 14.3 17.7 19.9 No of: 2006 2007 2008 2009Interest-earning assets (4.9) 8.6 16.3 16.9 Employees 28,466 35,945 41,992 40,447Deposits 42.4 24.4 22.0 19.2 Branches 506 583 693 649Interest-bearing liabilities (3.8) 8.7 15.4 14.5 Mini/sub branches 272 349 327 292Assets (2.3) 10.0 14.0 13.0 ATM's na na na naFee income 28.8 18.0 30.0 30.0Revenues 11.1 28.9 13.2 16.2Costs 13.2 25.5 20.7 16.2Operating profit 9.3 31.8 7.0 16.1Net profit (1,420.8) (186.3) 39.3 23.1EPS (1,249.8) (163.7) 39.3 23.1

Per share data, RUB 2008 2009 2010E 2011E 2012E No of ordinary shares, mn 3,362 5,230 5,230 5,230 5,230 EPS 1.43 (16.42) 10.46 14.57 17.93DPS 0.89 1.16 1.05 1.46 1.79BVPS 115.82 96.04 105.45 118.56 134.70


State85.5%

Free float14.5%

VTB forecasts, RUB




7

Figure 18: VTB summary sheet, $mnBalance sheet , $mn 2008 2009 2010E 2011E 2012E Balance sheet ratios , % 2009 2010E 2011E 2012E Assets Loans/assets 64.0 66.5 68.6 72.8Interbank 22,856 18,429 17,540 19,227 19,978 Deposits/liabilities 43.4 49.1 52.5 55.4Securities 4,486 11,000 11,634 13,332 14,512 Loans/deposits 147.2 135.3 130.6 131.3Net loans 86,984 76,907 92,976 109,016 129,323 Equity/assets 13.9 13.9 13.7 13.8Gross loans 90,208 84,728 103,023 118,901 138,844Interest-earning assets 114,326 106,336 122,150 142,073 166,120 Capital ratios , % 2009 2010E 2011E 2012ETotal assets 125,848 120,220 139,855 158,875 177,659 Tier 1 14.8 15.3 15.1 15.1Liabilities Tier 2 5.9 5.7 5.0 4.5Interbank 42,117 25,234 20,015 19,945 20,724 Total 20.7 21.0 20.1 19.6Securities 26,767 22,674 26,377 28,913 30,757Deposits 37,505 52,232 68,694 83,484 98,506 Asset quality 2009 2010E 2011E 2012EInterest-bearing liabilities 106,389 100,140 115,086 132,807 152,100 NPLs, $mn 8,277 9,629 8,636 7,691Total liabilities 125,848 120,220 139,855 158,875 177,659 NPL reserves, $mn 7,821 10,047 9,885 9,522Shareholders’ equity 13,254 16,724 19,420 21,757 24,462 NPLs/gross loans, % 9.77 9.35 7.26 5.54

Reserves/NPLs, % 0.94 1.04 1.14 1.24Credit charge, % 5.96 1.95 1.00 0.75

Income statement, $mn 2008 2009 2010E 2011E 2012E Interest income 9,883 11,830 11,707 12,924 14,817 Margins, % 2009 2010E 2011E 2012EInterest expense (5,304) (7,012) (5,649) (6,198) (7,179) Asset margin 11.4 10.1 9.8 9.7Net interest income 4,579 4,818 6,057 6,726 7,638 Liability margin 7.2 5.1 5.0 5.1Net fee income 657 665 866 1,132 1,462 NIM 4.6 5.2 5.1 5.0Trading income 572 (348) 436 512 559 Spread 4.2 4.9 4.8 4.6Other income 198 104 98 113 127Total revenues 6,006 5,239 7,457 8,483 9,785 Cost s, % 2009 2010E 2011E 2012EStaff costs (1,471) (1,276) (1,851) (2,333) (2,714) Cost/income 46.2 44.9 47.9 48.0Other costs (1,249) (1,143) (1,500) (1,734) (1,980) Cost/avg assets 2.1 2.5 2.7 2.8Total costs (2,721) (2,418) (3,351) (4,067) (4,694) Effective tax rate 12.7 19.0 19.0 19.0Operating profit 3,285 2,821 4,106 4,416 5,091Provisioning charge (2,547) (4,897) (1,865) (1,110) (967) Profitab ility ratios , % 2009 2010E 2011E 2012EOther pre-tax items (8) (85) (35) 0 0 RoAE (14.2) 10.4 13.0 14.2Pre-tax profit 730 (2,162) 2,206 3,306 4,124 RoAA (1.7) 1.4 1.8 1.9

Tax (544) 275 (419) (628) (784)Minorities 8 (120) 125 0 (67) Other P&L ratios , % 2009 2010E 2011E 2012EOther post-tax gains/losses 0 0 0 0 0 Int inc/revenues 92.0 81.2 79.3 78.1Net profit 193 (2,007) 1,912 2,678 3,274 Fees/revenues 12.7 11.6 13.3 14.9Dividend on ordinary shares 121 192 191 268 327 Trading income/revenues (6.6) 5.8 6.0 5.7Dividend on pref shares na na na na na Fees/staff costs 52.1 46.8 48.5 53.9

Fees/total costs 27.5 25.9 27.8 31.1Payout ratio, % (9.6) 10.0 10.0 10.0

Key YoY growth rates, % 2008 2009 2010E 2011E 2012E Loans (11.6) 20.9 17.3 18.6 No of: 2006 2007 2008 2009Interest-earning assets (7.0) 14.9 16.3 16.9 Employees 28,466 35,945 41,992 40,447Deposits 39.3 31.5 21.5 18.0 Branches 506 583 693 649Interest-bearing liabilities (5.9) 14.9 15.4 14.5 Mini/sub branches 272 349 327 292Assets (4.5) 16.3 13.6 11.8 ATM's na na na naFee income 1.2 30.3 30.7 29.1Revenues (12.8) 42.3 13.8 15.3Costs (11.1) 38.6 21.4 15.4Operating profit (14.1) 45.6 7.5 15.3Net profit (1,137.3) (195.3) 40.1 22.2EPS (1,003.0) (170.4) 40.1 22.2

Per share data, $ 2008 2009 2010E 2011E 2012E No of ordinary shares, mn 3,362 5,230 5,230 5,230 5,230 EPS 0.06 (0.52) 0.37 0.51 0.63DPS 0.04 0.04 0.04 0.05 0.06BVPS 3.94 3.20 3.71 4.16 4.68


State85.5%

Free float14.5%

VTB forecasts, $




8

Figure 19: Vozrozhdenie summary sheet, RUBmnBalance sheet , RUBmn 2008 2009 2010E 2011E 2012E Balance sheet ratios , % 2009 2010E 2011E 2012E Assets Loans/assets 58.5 60.8 65.0 68.5Interbank 21,554 30,822 24,658 23,425 26,938 Deposits/liabilities 77.7 81.4 82.3 81.5Securities 11,401 11,068 22,136 22,136 19,922 Loans/deposits 75.3 74.7 79.0 84.0Net loans 94,575 85,205 97,310 119,717 146,299 Equity/assets 11.2 10.5 10.8 11.4Gross loans 99,332 94,644 109,017 131,602 158,174Interest-earning assets 127,530 127,095 144,104 165,277 193,159 Capital ratios, % 2009 2010E 2011E 2012ETotal assets 141,211 145,603 160,163 184,188 213,658 Tier 1 15.5 13.3 13.1 13.3Liabilities Tier 2 3.5 2.9 2.6 2.4Interbank 24,697 4,368 2,184 2,402 2,763 Total 19.0 16.2 15.7 15.7Securities 10,377 10,942 8,754 8,754 9,629Deposits 90,336 113,129 130,350 151,514 174,176 Asset quality 2009 2010E 2011E 2012EInterest-bearing liabilities 125,410 128,439 141,287 162,670 186,568 NPLs, RUBmn 9,362 10,766 8,761 6,558Total liabilities 141,211 145,603 160,163 184,188 213,658 NPL reserves, RUBmn 9,439 11,707 11,885 11,875Shareholders’ equity 15,065 16,286 16,810 19,964 24,313 NPLs/gross loans, % 9.89 9.88 6.66 4.15


Income statement, RUBmn 2008 2009 2010E 2011E 2012E Interest income 14,511 16,954 13,560 15,469 17,922 Margins, % 2009 2010E 2011E 2012EInterest expense (6,017) (8,628) (8,136) (7,735) (8,961) Asset margin 13.32 10.00 10.00 10.00Net interest income 8,494 8,326 5,424 7,735 8,961 Liability margin 6.80 6.03 5.09 5.13Net fee income 4,128 3,729 3,990 4,788 5,746 NIM 6.54 4.00 5.00 5.00Trading income 557 775 346 381 419 Spread 6.52 3.97 4.91 4.87Other income 151 166 158 173 191Total revenues 13,330 12,996 9,918 13,077 15,317 Cost s, % 2009 2010E 2011E 2012EStaff costs (4,144) (3,431) (3,824) (4,463) (5,053) Cost/income 48.7 69.5 60.5 57.8Other costs (2,885) (2,894) (3,065) (3,449) (3,794) Cost/avg assets 4.41 4.51 4.60 4.45Total costs (7,029) (6,325) (6,889) (7,913) (8,847) Effective tax rate 36.6 20.0 20.0 20.0Operating profit 6,301 6,671 3,030 5,164 6,469Provisioning charge (2,199) (4,752) (2,342) (1,203) (1,014) Profitabi lity ratios , % 2009 2010E 2011E 2012EOther pre-tax items 0 0 0 0 0 RoAE 7.8 3.3 17.2 19.7Pre-tax profit 4,102 1,919 687 3,961 5,455 RoAA 0.8 0.4 1.8 2.2

Tax (965) (702) (137) (792) (1,091)Minorities 0 0 0 0 0 Other P&L ratios, % 2009 2010E 2011E 2012EOther post-tax gains/losses 0 0 0 0 0 Int inc/revenues 64.1 54.7 59.1 58.5Net profit 3,137 1,217 550 3,169 4,364 Fees/revenues 28.7 40.2 36.6 37.5Dividend on ordinary shares 11 11 12 12 12 Trading income/revenues 6.0 3.5 2.9 2.7Dividend on pref shares 3 3 3 3 3 Fees/staff costs 108.7 104.3 107.3 113.7


Key YoY growth rates, % 2008 2009 2010E 2011E 2012E Loans (9.9) 14.2 23.0 22.2 No of: 2006 2007 2008 2009Interest-earning assets (0.3) 13.4 14.7 16.9 Employees 5,767 6,042 6,500 6,111Deposits 25.2 15.2 16.2 15.0 Branches 60 60 55 55Interest-bearing liabilities 2.4 10.0 15.1 14.7 Mini/sub branches 88 109 114 114Assets 3.1 10.0 15.0 16.0 ATM's 470 550 550 550Fee income (9.7) 7.0 20.0 20.0Revenues (2.5) (23.7) 31.9 17.1Costs (10.0) 8.9 14.9 11.8Operating profit 5.9 (54.6) 70.5 25.3Net profit (61.2) (54.8) 476.2 37.7EPS (61.2) (54.8) 476.2 37.7

Per share data, RUB 2008 2009 2010E 2011E 2012E No of ordinary shares, mn 23.7 23.7 23.7 23.7 23.7EPS 125.3 48.6 22.0 126.5 174.3DPS 0.46 0.46 0.50 0.50 0.50BVPS 601.6 650.3 671.2 797.2 970.9


Dmitry Orlov,Chairman

30.7%

Otar Margania

18.7%JPM

InternationalConsumer

Holding Inc.9.4%

Other management

3.6%

Free float37.6%

Vozrozhdenie forecasts, RUB




9

Figure 20: Vozrozhdenie summary sheet, $mnBalance sheet , $mn 2008 2009 2010E 2011E 2012E Balance sheet ratios, % 2009 2010E 2011E 2012E Assets Loans/assets 58.5 60.8 65.0 68.5Interbank 734 1,026 868 822 935 Deposits/liabilities 77.7 81.4 82.3 81.5Securities 388 369 779 777 692 Loans/deposits 75.3 74.7 79.0 84.0Net loans 3,219 2,837 3,426 4,201 5,080 Equity/assets 11.2 10.5 10.8 11.4Gross loans 3,381 3,151 3,839 4,618 5,492Interest-earning assets 4,341 4,232 5,074 5,799 6,707 Capital ratios, % 2009 2010E 2011E 2012ETotal assets 4,806 4,848 5,640 6,463 7,419 Tier 1 15.5 13.3 13.1 13.3Liabilities Tier 2 3.5 2.9 2.6 2.4Interbank 841 145 77 84 96 Total 19.0 16.2 15.7 15.7Securities 353 364 308 307 334Deposits 3,075 3,767 4,590 5,316 6,048 Asset quality 2009 2010E 2011E 2012EInterest-bearing liabilities 4,269 4,276 4,975 5,708 6,478 NPLs, $mn 312 379 307 228Total liabilities 4,806 4,848 5,640 6,463 7,419 NPL reserves, $mn 314 412 417 412Shareholders’ equity 513 542 592 700 844 NPLs/gross loans, % 9.89 9.88 6.66 4.15


Income statement, $mn 2008 2009 2010E 2011E 2012E Interest income 585 537 474 544 626 Margins, % 2009 2010E 2011E 2012EInterest expense (243) (273) (284) (272) (313) Asset margin 12.52 10.19 10.00 10.00Net interest income 342 264 190 272 313 Liability margin 5.66 5.43 4.49 4.51Net fee income 166 118 140 168 201 NIM 6.15 4.08 5.00 5.00Trading income 22 25 12 13 15 Spread 6.86 4.76 5.51 5.50Other income 6 5 6 6 7Total revenues 537 411 347 460 535 Cost s, % 2009 2010E 2011E 2012EStaff costs (167) (109) (134) (157) (176) Cost/income 48.7 69.5 60.5 57.8Other costs (116) (92) (107) (121) (132) Cost/avg assets 4.15 4.59 4.60 4.45Total costs (283) (200) (241) (278) (309) Effective tax rate 36.6 20.0 20.0 20.0Operating profit 254 211 106 182 226Provisioning charge (89) (150) (82) (42) (35) Profitabi lity ratios , % 2009 2010E 2011E 2012EOther pre-tax items 0 0 0 0 0 RoAE 7.3 3.4 17.2 19.7Pre-tax profit 165 61 24 139 190 RoAA 0.8 0.4 1.8 2.2

Tax (39) (22) (5) (28) (38)Minorities 0 0 0 0 0 Other P&L ratios, % 2009 2010E 2011E 2012EOther post-tax gains/losses 0 0 0 0 0 Int inc/revenues 64.1 54.7 59.1 58.5Net profit 126 39 19 111 152 Fees/revenues 28.7 40.2 36.6 37.5Dividend on ordinary shares 0 0 0 0 0 Trading income/revenues 6.0 3.5 2.9 2.7Dividend on pref shares 0 0 0 0 0 Fees/staff costs 108.7 104.3 107.3 113.7


Key YoY growth rates, % 2008 2009 2010E 2011E 2012E Loans (11.9) 20.8 22.6 20.9 No of: 2006 2007 2008 2009Interest-earning assets (2.5) 19.9 14.3 15.7 Employees 5,767 6,042 6,500 6,111Deposits 22.5 21.9 15.8 13.8 Branches 60 60 55 55Interest-bearing liabilities 0.2 16.3 14.7 13.5 Mini/sub branches 88 109 114 114Assets 0.9 16.3 14.6 14.8 ATM's 470 550 550 550Fee income (29.1) 18.2 20.6 19.2Revenues (23.4) (15.7) 32.5 16.3Costs (29.3) 20.3 15.5 11.0Operating profit (16.9) (49.8) 71.4 24.4Net profit (69.5) (50.1) 479.2 36.8EPS (69.5) (50.1) 479.2 36.8

Per share data, $ 2008 2009 2010E 2011E 2012E No of ordinary shares, mn 23.7 23.7 23.7 23.7 23.7EPS 5.05 1.54 0.77 4.45 6.08DPS 0.02 0.02 0.02 0.02 0.02BVPS 20.5 21.7 23.6 28.0 33.7


Dmitry Orlov,Chairman30.7%

Otar Margania

18.7%JPM

InternationalConsumer

Holding Inc.9.4%

Other management

3.6%

Free float37.6%

Vozrozhdenie forecasts, $




10

Figure 21: Bank St Petersburg summary sheet, RUBmnBalance sheet , RUBmn 2008 2009 2010E 2011E 2012E Balance sheet ratios, % 2009 2010E 2011E 2012E Assets Loans/assets 67.1 70.8 74.1 76.6Interbank 49,991 23,101 19,636 21,599 22,679 Deposits/liabilities 74.7 69.2 69.8 69.3Securities 4,994 33,562 35,240 38,764 40,702 Loans/deposits 89.9 102.3 106.2 110.5Net loans 144,883 158,200 183,461 228,504 281,169 Equity/assets 10.7 10.7 11.1 11.5Gross loans 150,724 174,110 204,663 249,763 302,145Interest-earning assets 199,868 214,863 238,336 288,867 344,551 Capital ratios, % 2009 2010E 2011E 2012ETotal assets 215,715 235,606 259,167 308,409 367,006 Tier 1 10.7 9.9 10.1 10.4Liabilities Tier 2 4.5 4.2 3.8 3.4Interbank 41,919 25,208 27,729 29,809 35,771 Total 15.2 14.1 13.9 13.8Securities 14,270 8,264 22,314 27,223 32,667Deposits 139,824 175,990 179,373 215,247 254,407 Asset quality 2009 2010E 2011E 2012EInterest-bearing liabilities 196,014 209,463 229,416 272,279 322,845 NPLs, RUBmn 12,810 11,443 10,298 9,269Total liabilities 215,715 235,606 259,167 308,409 367,006 NPL reserves, RUBmn 15,910 21,202 21,260 20,976Shareholders’ equity 18,805 25,285 27,851 34,196 42,162 NPLs/gross loans, % 7.36 5.59 4.12 3.07


Income statement, RUBmn 2008 2009 2010E 2011E 2012E Interest income 19,130 25,598 24,246 26,624 31,671 Margins, % 2009 2010E 2011E 2012EInterest expense (9,627) (15,177) (12,123) (12,916) (15,835) Asset margin 12.34 10.70 10.10 10.00Net interest income 9,503 10,421 12,123 13,707 15,835 Liability margin 7.49 5.52 5.15 5.32Net fee income 1,386 1,489 1,661 1,976 2,352 NIM 5.03 5.35 5.20 5.00Trading income 103 2,942 924 1,003 1,153 Spread 4.86 5.18 4.95 4.68Other income 100 193 (97) (111) (128)Total revenues 11,093 15,046 14,612 16,575 19,212 Cost s, % 2009 2010E 2011E 2012EStaff costs (2,060) (1,706) (2,310) (2,763) (3,264) Cost/income 25.1 31.0 32.1 32.0Other costs (1,791) (2,067) (2,223) (2,557) (2,876) Cost/avg assets 1.7 1.8 1.9 1.8Total costs (3,852) (3,773) (4,533) (5,320) (6,140) Effective tax rate 15.9 20.0 20.0 20.0Operating profit 7,241 11,273 10,079 11,255 13,072Provisioning charge (3,396) (10,512) (5,871) (2,272) (1,932) Profitabi lity ratios , % 2009 2010E 2011E 2012EOther pre tax items 0 0 0 0 0 RoAE 2.9 12.7 23.2 23.3Pre-tax profit 3,845 761 4,208 8,983 11,141 RoAA 0.3 1.4 2.5 2.6

Tax (1,071) (121) (842) (1,797) (2,228)Minorities 0 0 0 0 0 Other P&L ratios, % 2009 2010E 2011E 2012EOther post-tax gains/losses 0 0 0 0 0 Int inc/revenues 69.3 83.0 82.7 82.4Net profit 2,774 640 3,366 7,186 8,912 Fees/revenues 9.9 11.4 11.9 12.2Dividend on ordinary shares 40 31 34 72 178 Trading income/revenues 19.6 6.3 6.0 6.0Dividend on pref shares 2 2 2 2 2 Fees/staff costs 87.3 71.9 71.5 72.1Dividend on convertible pref shares (0) (0) 764 767 767 Fees/total costs 39.5 36.6 37.2 38.3

Payout ratio, % 4.8 1.0 1.0 2.0Key YoY growth rates, % 2008 2009 2010E 2011E 2012E Loans 9.2 16.0 24.6 23.0 No of: 2006 2007 2008 2009Interest-earning assets 7.5 10.9 21.2 19.3 Employees 1,334 1,875 2,182 2,263Deposits 25.9 1.9 20.0 18.2 Branches 9 11 4 5Interest-bearing liabilities 6.9 9.5 18.7 18.6 Mini/sub branches 20 21 32 31Assets 9.2 10.0 19.0 19.0 ATM's 282 329 405 434Fee income 7.5 11.5 19.0 19.0Revenues 35.6 (2.9) 13.4 15.9Costs (2.0) 20.1 17.4 15.4Operating profit 55.7 (10.6) 11.7 16.1Net profit (76.9) 425.7 113.5 24.0EPS (77.1) 335.0 113.5 24.0

Per share data, RUB 2008 2009 2010E 2011E 2012E No of ordinary shares, mn 282.2 282.2 282.2 282.2 282.2EPS 9.2 2.1 9.2 19.6 24.3DPS 0.1 0.1 0.1 0.3 0.6BVPS 62.2 68.8 75.8 93.1 114.7


Alexander V.Savelyev

33.6%

Ludmila I.Stepanova

15.7%

Yuriy I.Pilipenko

8.0%

Valery N.Puzikov

4.9%

Sergey V.Matvienko

4.1%

Michail B.Kenin3.6%

Maxim U.Vorobyov

2.7%

Others1.9%

Free float25.5%

Bank St Petersburg forecasts, RUB




11

Figure 22 Bank St Petersburg summary sheet, $mnBalance sheet , $mn 2008 2009 2010E 2011E 2012E Balance sheet ratios , % 2009 2010E 2011E 2012E Assets Loans/assets 67.1 70.8 74.1 76.6Interbank 1,702 769 691 758 787 Deposits/liabilities 74.7 69.2 69.8 69.3Securities 170 1,117 1,241 1,360 1,413 Loans/deposits 89.9 102.3 106.2 110.5Net loans 4,931 5,267 6,460 8,018 9,763 Equity/assets 10.7 10.7 11.1 11.5Gross loans 5,130 5,797 7,206 8,764 10,491Interest-earning assets 6,803 7,154 8,392 10,136 11,964 Capital ratios , % 2009 2010E 2011E 2012ETotal assets 7,342 7,844 9,126 10,821 12,743 Tier 1 10.7 9.9 10.1 10.4Liabilities Tier 2 4.5 4.2 3.8 3.4Interbank 1,427 839 976 1,046 1,242 Total 15.2 14.1 13.9 13.8Securities 486 275 786 955 1,134Deposits 4,759 5,860 6,316 7,553 8,834 Asset quality 2009 2010E 2011E 2012EInterest-bearing liabilities 6,672 6,974 8,078 9,554 11,210 NPLs, $mn 427 403 361 322Total liabilities 7,342 7,844 9,126 10,821 12,743 NPL reserves, $mn 530 747 746 728Shareholders’ equity 640 842 981 1,200 1,464 NPLs/gross loans, % 7.36 5.59 4.12 3.07


Income statement, $mn 2008 2009 2010E 2011E 2012E Interest income 771 810 848 936 1,105 Margins, % 2009 2010E 2011E 2012EInterest expense (388) (480) (424) (454) (553) Asset margin 12.34 10.70 10.10 10.00Net interest income 383 330 424 482 553 Liability margin 7.49 5.52 5.15 5.32Net fee income 56 47 58 69 82 NIM 5.03 5.35 5.20 5.00Trading income 4 93 32 35 40 Spread 4.86 5.18 4.95 4.68Other income 4 6 (3) (4) (4)Total revenues 447 476 511 583 671 Cost s, % 2009 2010E 2011E 2012EStaff costs (83) (54) (81) (97) (114) Cost/income 25.1 31.0 32.1 32.0Other costs (72) (65) (78) (90) (100) Cost/avg assets 1.7 1.8 1.9 1.8Total costs (155) (119) (159) (187) (214) Effective tax rate 15.9 20.0 20.0 20.0Operating profit 292 357 352 396 456Provisioning charge (137) (333) (205) (80) (67) Profitabi lity ratios , % 2009 2010E 2011E 2012EOther pre-tax items 0 0 0 0 0 RoAE 2.9 12.7 23.2 23.3Pre-tax profit 155 24 147 316 389 RoAA 0.3 1.4 2.5 2.6

Tax (43) (4) (29) (63) (78)Minorities 0 0 0 0 0 Other P&L ratios , % 2009 2010E 2011E 2012EOther post-tax gains/losses 0 0 0 0 0 Int inc/revenues 69.3 83.0 82.7 82.4Net profit 112 20 118 253 311 Fees/revenues 9.9 11.4 11.9 12.2Dividend on ordinary shares 1.6 1.0 1.2 2.5 6.2 Trading income/revenues 19.6 6.3 6.0 6.0Dividend on pref shares 0.1 0.1 0.1 0.1 0.1 Fees/staff costs 87.3 71.9 71.5 72.1Dividend on convertible pref shares (0.0) (0.0) 26.7 27.0 26.8 Fees/total costs 39.5 36.6 37.2 38.3

Payout ratio, % 4.8 1.0 1.0 2.0Key YoY growth rates, % 2008 2009 2010E 2011E 2012E Loans 6.8 22.6 24.1 21.8 No of: 2006 2007 2008 2009Interest-earning assets 5.2 17.3 20.8 18.0 Employees 1,334 1,875 2,182 2,263Deposits 23.1 7.8 19.6 17.0 Branches 9 11 4 5Interest-bearing liabilities 4.5 15.8 18.3 17.3 Mini/sub branches 20 21 32 31Assets 6.8 16.3 18.6 17.8 ATM's 282 329 405 434Fee income (15.6) 23.2 19.6 18.2Revenues 6.5 7.3 14.0 15.1Costs (23.1) 32.7 18.0 14.6Operating profit 22.3 (1.2) 12.3 15.3Net profit (81.9) 480.7 114.6 23.2EPS (82.0) 380.4 114.6 23.2

Per share data, $ 2008 2009 2010E 2011E 2012E No of ordinary shares, mn 282.2 282.2 282.2 282.2 282.2EPS 0.37 0.07 0.32 0.69 0.85DPS 0.01 0.00 0.00 0.01 0.02BVPS 2.12 2.29 2.67 3.27 3.98


Alexander V.Savelyev

33.6%

Ludmila I.Stepanova

15.7%

Yuriy I.Pilipenko

8.0%

Valery N.Puzikov

4.9%

Sergey V.Matvienko

4.1%

Michail B.Kenin3.6%

Maxim U.Vorobyov

2.7%

Others1.9%

Free float25.5%

Bank St Petersburg forecasts, $



12


Analysts certification

This research report has been prepared by the research analyst(s), whose name(s) appear(s) on the front page of this document, to provide background information about theissuer or issuers (collectively, the “Issuer”) and the securities and markets that are the subject matter of this report. Each research analyst hereby certifies that with respect tothe Issuer and such securities and markets, this document has been produced independently of the Issuer and all the views expressed in this document accurately reflect his or her personal views about the Issuer and any and all of such securities and markets. Each research analyst and/or persons connected with any research analyst may haveinteracted with sales and trading personnel, or similar, for the purpose of gathering, synthesizing and interpreting market information. If the date of this report is not current, theviews and contents may not reflect the research analysts’ current thinking.

Each research analyst also certifies that no part of his or her compensation was, or will be, directly or indirectly related to the specific ratings, forecasts, estimates, opinions or views in this research report. Research analysts’ compensation is determined based upon activities and services intended to benefit the investor clients of RenaissanceSecurities (Cyprus) Limited and any of its affiliates (“Renaissance Capital”). Like all of Renaissance Capital’s employees, research analysts receive compensation that isimpacted by overall Renaissance Capital profitability, which includes revenues from other business units within Renaissance Capital.

Important issuer disclosures

Important issuer disclosures outline currently known conflicts of interest that may unknowingly bias or affect the objectivity of the analyst(s) with respect to an issuer that is thesubject matter of this report. Disclosure(s) apply to Renaissance Securities (Cyprus) Limited or any of its direct or indirect subsidiaries or affiliates (which are individually or collectively referred to as “Renaissance Capital”) with respect to any issuer or the issuer’s securities.

A complete set of disclosure statements associated with the issuers dis cussed in the Report is available using the ‘Stock Finder’ or ‘Bond Finder’ for individualissuers on the Renaissance Capital Research Portal at:http://research.rencap.com/eng/default.asp

Sberbank/Sberegatelny Bank Rossiiskoi Federatsii RIC: SBER.MMRenaissance Capital is either a market maker or on a continuous basis is willing to sell to/buy from customers on a principal basis the securities or related securities of theissuer at prices defined by Renaissance Capital. Vozrozhdenie Bank RIC: VZRZ.MMRenaissance Capital is either a market maker or on a continuous basis is willing to sell to/buy from customers on a principal basis the securities or related securities of theissuer at prices defined by Renaissance Capital. VTB Bank OJSC RIC: VTBRq.LRenaissance Capital is either a market maker or on a continuous basis is willing to sell to/buy from customers on a principal basis the securities or related securities of theissuer at prices defined by Renaissance Capital. Bank Saint Petersburg/ Bank Sankt-Peterburg OAO RIC: STBK.RTSRenaissance Capital is either a market maker or on a continuous basis is willing to sell to/buy from customers on a principal basis the securities or related securities of theissuer at prices defined by Renaissance Capital.

Investment ratings

Investment ratings may be determined by the following standard ranges: Buy(expected total return of 15% or more); Hold(expected total return of 0-15%); and Sell(expectednegative total return). Standard ranges do not always apply to emerging markets securities and ratings may be assigned on the basis of the research analyst’s knowledge of the securities.

Investment ratings are a function of the research analyst’s expectation of total return on equity (forecast price appreciation and dividend yield within the next 12 months, unlessstated otherwise in the report). Investment ratings are determined at the time of initiation of coverage of an issuer of equity securities or a change in target price of any of theissuer’s equity securities. At other times, the expected total returns may fall outside of the range used at the time of setting a rating because of price movement and/or volatility.Such interim deviations will be permitted but will be subject to review by Renaissance Capital’s Research Management.

Where the relevant issuer has a significant material event with further information pending or to be announced, it may be necessary to temporarily place the investment ratingUnder Review. This does not revise the previously published rating, but indicates that the analyst is actively reviewing the investment rating or waiting for sufficient informationto re-evaluate the analyst’s expectation of total return on equity.

If data upon which the rating is based is no longer valid, but updated data is not anticipated to be available in the near future, the investment rating may be Suspended untilfurther notice. The analyst may also choose to temporarily suspend maintenance of the investment rating when unable to provide an independent expectation of total returndue to circumstances beyond the analyst’s control such as an actual, apparent or potential conflict of interest or best business practice obligations. The analyst may not be atliberty to explain the reason for the suspension other than to Renaissance Capital’s Research Management and Compliance Officers. Previously published investment ratingsshould not be relied upon as they may no longer reflect the analysts’ current expectations of total return.

If issuing of research is restricted due to legal, regulatory or contractual obligations publishing investment ratings will be Restricted. Previously published investment ratingsshould not be relied upon as they may no longer reflect the analysts’ current expectations of total return. While restricted, the analyst may not always be able to keep youinformed of events or provide background information relating to the issuer.

If for any reason Renaissance Capital no longer wishes to provide continuous coverage of an issuer, investment ratings for the issuer will be Terminated.A notice will bepublished whenever formal coverage of an issuer is discontinued.

Where Renaissance Capital has not expressed a commitment to provide continuous coverage and/or an expectation of total return, to keep you informed, analysts may preparereports covering significant events or background information without an investment rating ( Unrated).

Your decision to buy or sell a security should be based upon your personal investment objectives and should be made only after evaluating the security’s expected performanceand risk.

Disclosures appendix




13

Renaissance Capital equity research distribution ratingsInvestment Rating Distribu tionRenaissance Capital Research BankingBuy 159 40% Buy 17 36%Hold 60 15% Hold 5 11%Sell 16 4% Sell 4 9%Under Review 12 3% Under Review 0 0%Suspended 0 0% Suspended 0 0%Restricted 0 0% Restricted 0 0%Unrated 152 38% Unrated 21 45%

399 47

Investment Banking Relationships*Renaissance Capital Research BankingBuy 3 50% Buy 17 36%Hold 3 50% Hold 5 11%Sell 0 0% Sell 4 9%Under review 0 0% Under Review 0 0%Suspended 0 0% Suspended 0 0%Restricted 0 0% Restricted 0 0%Unrated 0 0% Unrated 21 45%

6 47*Companies from which RenCap has received compensation within the past 12 months.NR – Not RatedUR – Under Review

Sberbank – Share price, target price and rating history

Source: Renaissance Capital, prices local market close or the mid price if illiquid market

Vozrozhdenie Bank – Share price, target price and rating history


0%10%20%30%40%50%60%70%80%90%100%

0

1

2

3

4

5

6

S e p - 0 7

O c t - 0 7

N o v - 0 7

D e c - 0 7

J a n - 0 8

F e b - 0 8

M a r - 0 8

A p r - 0 8

M a y - 0 8

J u n - 0 8

J u l - 0 8

A u g - 0 8

S e p - 0 8

O c t - 0 8

N o v - 0 8

D e c - 0 8

J a n - 0 9

F e b - 0 9

M a r - 0 9

A p r - 0 9

M a y - 0 9

J u n - 0 9

J u l - 0 9

A u g - 0 9

S e p - 0 9

O c t - 0 9

N o v - 0 9

D e c - 0 9

J a n - 1 0

F e b - 1 0

M a r - 1 0

A p r - 1 0

M a y - 1 0

J u n - 1 0

J u l - 1 0

A u g - 1 0

S e p - 1 0

O c t - 1 0

N o v - 1 0

D e c - 1 0

Restricted Suspended Unrated Under Review Buy Hold Sell Last Price Target Price

0%10%20%30%40%50%60%70%80%90%100%

0102030405060708090

S e p - 0 7

O c t - 0 7

N o v - 0 7

D e c - 0 7

J a n - 0 8

F e b - 0 8

M a r - 0 8

A p r - 0 8

M a y - 0 8

J u n - 0 8

J u l - 0 8

A u g - 0 8

S e p - 0 8

O c t - 0 8

N o v - 0 8

D e c - 0 8

J a n - 0 9

F e b - 0 9

M a r - 0 9

A p r - 0 9

M a y - 0 9

J u n - 0 9

J u l - 0 9

A u g - 0 9

S e p - 0 9

O c t - 0 9

N o v - 0 9

D e c - 0 9

J a n - 1 0

F e b - 1 0

M a r - 1 0

A p r - 1 0

M a y - 1 0

J u n - 1 0

J u l - 1 0

A u g - 1 0

S e p - 1 0

O c t - 1 0

N o v - 1 0

D e c - 1 0




14


VTB Bank – Share price, target price and rating history


Bank Saint Petersburg/ Bank Sankt-Peterburg – Share price, target price and rating history


0%10%20%30%40%50%60%70%80%90%100%

0

2

4

6

8

10

12

S e p - 0 7

O c t - 0 7

N o v - 0 7

D e c - 0 7

J a n - 0 8

F e b - 0 8

M a r - 0 8

A p r - 0 8

M a y - 0 8

J u n - 0 8

J u l - 0 8

A u g - 0 8

S e p - 0 8

O c t - 0 8

N o v - 0 8

D e c - 0 8

J a n - 0 9

F e b - 0 9

M a r - 0 9

A p r - 0 9

M a y - 0 9

J u n - 0 9

J u l - 0 9

A u g - 0 9

S e p - 0 9

O c t - 0 9

N o v - 0 9

D e c - 0 9

J a n - 1 0

F e b - 1 0

M a r - 1 0

A p r - 1 0

M a y - 1 0

J u n - 1 0

J u l - 1 0

A u g - 1 0

S e p - 1 0

O c t - 1 0

N o v - 1 0

D e c - 1 0


0%10%20%30%40%50%60%70%80%90%100%

0123456789

S e p - 0 7

O c t - 0 7

N o v - 0 7

D e c - 0 7

J a n - 0 8

F e b - 0 8

M a r - 0 8

A p r - 0 8

M a y - 0 8

J u n - 0 8

J u l - 0 8

A u g - 0 8

S e p - 0 8

O c t - 0 8

N o v - 0 8

D e c - 0 8

J a n - 0 9

F e b - 0 9

M a r - 0 9

A p r - 0 9

M a y - 0 9

J u n - 0 9

J u l - 0 9

A u g - 0 9

S e p - 0 9

O c t - 0 9

N o v - 0 9

D e c - 0 9

J a n - 1 0

F e b - 1 0

M a r - 1 0

A p r - 1 0

M a y - 1 0

J u n - 1 0

J u l - 1 0

A u g - 1 0

S e p - 1 0

O c t - 1 0

N o v - 1 0

D e c - 1 0

J a n - 1 1




Renaissance Securities (Cyprus) Ltd.

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Head of Equity ResearchDavid Nangle

+ 7 (495) 258 [email protected]

Banking+ 7 (495) 258 7748David Nangle(Global)Milena Ivanova-Venturini (Central Asia)Armen Gasparyan (Russia)Svetlana Kovalskaya (Russia)Kirill Rogachev (Russia)Ilan Stermer(South Africa)Naeem Badat (South Africa)Adesoji Solanke(Sub-Saharan Africa)

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Alexandra Serova

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110118 russian banks renaissance

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