14.10.2010 value added investment opportunities, randolph koppa

Value Added Investment Value Added Investment OpportunitiesOpportunities

Mr. Randolph S. Mr. Randolph S. KoppaKoppaPresidentPresident

Trade and Development Bank of MongoliaTrade and Development Bank of Mongolia

““ Mongolia Investment Summit 2010Mongolia Investment Summit 2010””Hong Kong 14 October 2010Hong Kong 14 October 2010

Infrastructure needs offer opportunities forInfrastructure needs offer opportunities forHigh Tech SolutionsHigh Tech Solutions

Power

• Wind

• Coal gas

• Solar

Page 4

Infrastructure investments will openInfrastructure investments will openopportunities for Value Added Solutionsopportunities for Value Added Solutions

• Rail

• Road

• Air

Page 14

Present Transport NetworkPresent Transport Network

Page 15

Railway Development by 2015Railway Development by 2015

Page 16

Value Added from Mining: Value Added from Mining: SainshandSainshand

Page 17

Investor PresentationOctober 2010

Value Added Investment Opportunities in Financial Sector

DisclaimerDisclaimer

This presentation has been prepared by Trade and Development Bank of Mongolia LLC (“TDB”) for selected recipients for information purposes only. ING Bank N.V.,

Singapore Branch makes no representation or warranty (express or implied) of any nature nor is any responsibility or liability of any kind accepted with respect to

the truthfulness, completeness, fairness, reasonableness or accuracy of any information, projection, representation or warranty (expressed or implied) or omission

in this presentation. No information contained herein has been independently verified by ING Bank N.V., Singapore Branch.

This presentation is not a complete description of TDB and may not contain all of the information that you may consider material. This presentation contains certain

"forward-looking statements". Such forward-looking statements may include words or phrases such as "believes", "expects", "anticipates", "intends", "plans",

"foresees" or other words or phrases of similar import. Similarly, statements that describe objectives, plans or goals for both itself and for any of its business

components are also forward-looking statements. All such forward-looking statements are not guarantees of future performance and involve known and unknown

risks, uncertainties and other factors which may cause the actual results to be materially different from those contemplated by such forward-looking statements.

Such forward-looking statements are made based on management's current expectations or beliefs as well as numerous assumptions made by, and information

currently available to, management. Neither TDB nor any third party nor any of their respective affiliates, shareholders, directors, officers, employees, agents and

advisers makes any expressed or implied representation or warranty as to the accuracy, completeness, fairness or reasonableness of the information contained

herein and none of them shall accept any responsibility or liability (including any third party liability) for any loss or damage, whether or not arising from any error or

omission in compiling such information or as a result of any party's reliance or use of such information. The information and opinions in this presentation are subject

to change without notice. Neither TDB nor any third party has any obligation to, or intends to update or otherwise revise any statements reflecting circumstances

arising after the date of this presentation or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition.

This presentation is not an offer for sale of securities in the United States or any other jurisdiction. Any securities which are the subject of such offer will not

registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and may not be offered or sold in the United States absent registration under the

Securities Act or pursuant to an exemption from registration. Any offer of such securities will be made by means of an offering document that will contain detailed

information about TDB and its management, including financial statements.

This presentation does not constitute a prospectus or other offering document in whole or in part. This presentation does not constitute an offer to sell or the

solicitation of an offer to buy or an advertisement with respect to the purchase or sale of any security and nothing contained herein shall form the basis of any

contract or commitment whatsoever. There shall be no sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to

qualification under the securities laws of such state or jurisdiction.

This presentation may not be reproduced, copied, distributed, shared or disseminated in whole or in part in any manner whatsoever. Any such action is

unauthorized. In particular, this presentation may not be taken into the United States, Canada or Japan or distributed, directly or indirectly, in the United States,

Canada or Japan. The distribution of this presentation in certain jurisdictions may be restricted by law and persons into whose possession this presentation comes

should inform themselves about, and observe, any such restrictions.

AgendaAgenda

Mongolian Economy Recovery Fast

Overview of TDB

TDB’s Competitive Market Position

Robust Financial Performance


Overview of TDB



Overview of TDB

Robust Financial Performance



Overview of TDB

1. Mongolian Economy Recovering Fast

Mongolian Economy on Fast Track to Strong RecoveryMongolian Economy on Fast Track to Strong Recovery

■ The Mongolian economy witnessed a dramatic turnaround with annualized GDP growth rate reaching 5% for 1H 2010

■ Recovery supported by strong policy response to the crisis, increasing copper and coal imports by China and upward momentum in metal prices

■ International reserves are at an all time high of U S$1.6 billion, public finances are on a sound footing and GDP growth is expected to hit 8% for 2010

■ Signing of the Oyu Tolgoi investment agreement in lat e 2009 serves as a cornerstone for the development of Mongolia’s substantial mineral resources – new investment and local spending from mining projects should boost GDP growth

Mongolia’s Economy Recovered in Tandem with China’s Growth

Source: Asian Development Outlook 2010 Update, Asian DevelopmentBank

5.0(1.6)

8.910.28.6

7.310.6

6.1

11.19.19.6

14.212.7

11.310.110.0

(2)

2

6

10

14

18

2003 2004 2005 2006 2007 2008 2009 1H 2010

Real GDP YoY Growth (%)

Mongolia China

Foreign Direct Investments Recovering to Pre-Crisis Levels

Source: Mongolia Quarterly Economic Update July 2010, World Bank

0

200

400

600

800

1,000

2003 2004 2005 2006 2007 2008 2009 1Q 2010

US$ Million

Trade Deficit Almost Vanished with Rebound in Metal Prices

Source: Monthly Statistical Bulletin June 2010, Bank of Mongolia

(800)

(600)

(400)

(200)

0

200

2003 2004 2005 2006 2007 2008 2009 1H 2010

YoY (%)

(60)

(40)

(20)

0

20

40

60

80US$ Million

Trade Balance (LHS)

Export Growth (RHS)

Import Growth (RHS)

■ 2009 was a challenging year with many banks sufferi ng liquidity shortages and poor governance

■ Anod Bank, the fourth largest bank, was taken into conservatorship in December 2008 and a State Bank wa s established when Zoos Bank failed in November 2009

■ To restore public confidence, a blanket deposit guarantee was issued, prudential ratio requirements were tightened and enhanced banking supervision was implemented

■ Deposits are now on a rising trend, hitting a new p eak of US$2.3 billion in June 2010, up 47% from a year ago

■ A strengthened financial system will be able to sup port the upswing in activities anticipated in the corpor ate sectors, particularly in mining and related industr ies

NPLs Rose As Key Sectors in the Economy Slowed Down

Key Statistics in the Banking System

0

100

200

300

400

500

600

700

1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10

MNT Billion

0

4

8

12

16

20(%)Principal in Arrears (LHS)

Non-Performing Loans (LHS)

NPL Ratio (RHS)Line 4

Source: Monthly Statistical Bulletin June 2010, Bank of Mongolia

Mongolia Ready For Upcoming Boom in Mining SectorMongolia Ready For Upcoming Boom in Mining Sector

Restored Confidence in the Banking System

11.6%

31.1%

9.4%

1,592.5

1,890.6

2,662.5

Jun 2009

17.4%

37.1%

13.3%

1,917.3

1,961.6

3,021.8

Dec 2009

45.9%23.6%Liquidity

7.2%

11.1%

1,434.3

1,947.2

2,480.1

Dec 2008

14.3%Capital Adequacy Ratio

14.0%NPL Ratio

Jun 2010(US$ Million)

2,129.8Total Loans

2,345.5Total Deposits

3,417.6Total Assets

Note: MNT/USD rate used = 1353.5

Source: Monthly Statistical Bulletin June 2010, Bank of MongoliaSource: Monthly Statistical Bulletin June 2010, Bank of Mongolia

0

1,000

2,000

3,000

4,000

2003 2004 2005 2006 2007 2008 2009 1H 2010

MNT Billion

40

60

80

100

120(%)Total Loans (LHS)

Total Deposits (LHS)

Loan to Deposit Ratio (RHS)

NPL ratio of the banking sector excluding Anod

Bank

NPL ratio of the banking sector excluding Zoos

Bank

2. Overview of TDB

(US$ Million) 2007 2008 2009 Jul 2010

Total Asset 416.3 487.1 598.7 608.8

Total Loans 282.5 325.3 300.1 330.6

Total Deposits 358.0* 376.4* 451.4** 492.6

Total Equity 49.6 50.6 49.6 57.3

Net Profit 12.1 12.1 11.1 7.7

Capital Adequacy 13.8% 14.7% 12.7% 13.8%

ROAA 3.3% 2.6% 2.1% 2.3%

ROAE 31.3% 24.0% 19.4% 24.5%

Bank HighlightsBank Highlights

Business Profile Strong Credit Fundamentals

TDB Rated One Notch Above the Mongolian Sovereign

Source: Company information, 31 July 2010

Note: MNT/USD rate used = 1353.5

D-Bank Financial Strength

B1Subordinated EMTN (foreign currency)

Ba3Senior unsecured EMTN (foreign currency)

Ba3 / NPLong- and short-term issuer ratings (domestic currency)

Ba3 / NP

Ba3 / NP

B2 / NP

Long- and short-term deposit ratings (domestic currency)

Long- and short-term issuer ratings (foreign currency)

Long- and short-term deposit ratings (foreign currency)

Source: Moody’s Investors Service

Second Most Profitable Bank in Mongolia

TDB’s Share in Banking Sector Net Profits

Largest Corporate Lender in Mongolia

TDB’s Share in Banking Sector Total Corporate Loans

NPL Ratio Substantially Below Industry Average

NPL Ratios

TDB52%

Others48%

Dominant Position in FX, Money, and Bullion markets

TDB’s Share in Banking Sector Total Gold Market

1 2

3 4




5.0%5.3%

1.6%2.0%

3.3%

17.4%

13.4%

7.2%

0%

5%

10%

15%

20%

25%

2007 2008 2009 Jul-10

NPL Ratio (TDB)

NPL Ratio (Industry Ave.)

TDB27%

Others73%

TDB25%

Others75%

*Including the US$75 million Senior Notes**Including the US$41 million Senior Notes

TDBTDB’’s Strategy as a Leading Bank in Mongolias Strategy as a Leading Bank in Mongolia

Strengthen Leadership Position

in Corporate Banking

Strengthen Loan Portfolio

Quality

Expand Deposit Base

Target Niche Segments of Retail

Market

Expand Product Offerings to SMEs

3. TDB’s Competitive Market Position

TDB is One of MongoliaTDB is One of Mongolia’’s Leading Banks in All Discipliness Leading Banks in All Disciplines

Source: Monthly Statistical Bulletin July 2010, Bank of Mongolia and Company

information

Note: All data as of 31 July 2010

By Asset Size

TDB16%

Others84%

TDB27%

Others73%

By Net Profit

By Loan Size By Deposit Size

TDB15%

Others85%

TDB17%

Others83%

■ The Mongolian financial sector currently comprises 14 commercial banks

■ Significant share of banking sector profit from relatively smaller loan and asset size

■ Cost efficient corporate client-focused distribution strategy without unnecessary expansion into rural regions

By Equity Base

TDB20%

Others80%

US$608.8MM

US$57.3MM

US$7.7MM

US$330.6MM US$492.6MM

Strong ROE visStrong ROE vis--àà--vis peers in Mongoliavis peers in Mongolia

Note: Size of bubbles is proportionate to book value of average assets at 31 July 2010

Calculations based on average shareholders’ equity & assets and pre-tax earnings

2 of the 14 commercial banks (Credit Bank and Transport Development Bank) are excluded from this chart as they had negative ROAA of (51.2)% and (18.7)%

respectively

4. Robust Financial Performance

Asset Composition

Putting Our Assets to Work


72.7% 75.5%

109.6%101.7%

71.8%66.1%62.8%

30.3%

0

200

400

600

800

1,000

2003 2004 2005 2006 2007 2008 2009 Jul-10

MNT Billion

0%

20%

40%

60%

80%

100%

120%Total Assets (LHS) Total Loans (LHS)

Loans / Deposits (RHS)

Loan Composition By Borrower Type



Cash 3%

Others6%

Interbank Deposits

22%

Investment Securities

15%

Loans54%

■ Asset composition is well balanced between interban kdeposits, financial markets and loans

■ Post-financial crisis, lending activities recovered and our loan portfolio grew 10.2% in July 2010 since Decemb er 2009

■ Consistent with our strategy to expand coverage int o the SME and high net-worth segments, we see an increase in loan portfolio contribution from these segments

■ We have achieved 26.0% and 39.7% CAGR growth in our asset and loan portfolios from 2003 to 2009 respect ively

Well Diversified Assets Ensure Adequate Risks and ReturnsWell Diversified Assets Ensure Adequate Risks and Returns

SME4%

Corporate81%

Retail15%

NPL Ratio Substantially Below Industry AverageNPL Ratio Substantially Below Industry Average

Loan Composition By Economic Sector

Loan Portfolio and NPL


Past Due and NPL Structure

Source: Bank of Mongolia, Company information, 31 July 2010


Agriculture5%

Others20%

Petrol import and trade

7%

Manufacturing21%

Mining and quarrying

14%

Construction19%

Corporate Trading

14%

■ Loan portfolio in terms of industry exposure is wel l-diversified across Mongolia’s most important indust ries such as the mining and related sectors

■ Policy to have all loans 100% collateralized at lea st 65% with real estate and remainder with PP&E, mining licenses, gold, working capital etc

■ Our NPL ratio improved dramatically from 27.7% in 2 003 to below 2% at the end of 2008. It rose to above 7% at one point during the 2009 credit crunch before receding to 5.0% in July 2010

■ Current NPL ratio of 5.0% is well below industry av erage of 14.0% as a result of a prudent risk management p olicy

5.0%5.3%

1.6%2.0%4.4%

7.2%9.5%

27.7%

0

100

200

300

400

500

2003 2004 2005 2006 2007 2008 2009 Jul-10

MNT Billion

0%

5%

10%

15%

20%

25%

30%Non-performing loans (LHS)

Loan Portfolio (LHS)

NPL Ratio (RHS)

0

10

20

30

40

50

2003 2004 2005 2006 2007 2008 2009 Jul-10

MNT BillionBad Doubtful Substandard Past due

Absolute amount decreased even as loan portfolio increased by 10.2%

Capital Adequacy Ratio

Prudent Cushion Over Regulatory Requirements


Equity Growth Remains Strong



■ As at July 2010, total shareholders’ capital reached US$57.3 million

■ Book equity grew at 30.6% CAGR from 2003 to 2009, demonstrating resilience from financial crisis

■ BoM raised the minimum required CAR level from 10% t o 12% to promote a more resilient banking system in Mongolia

■ Our policy is to maintain substantially higher thre sholds than the minimum BoM requirements so the implementation of tighter prudential ratio requirem ents has no impact on us

Strong Capital Base to Support Future GrowthStrong Capital Base to Support Future Growth

23.1%22.4%

15.1% 13.8%12.7%

14.7%13.8%

18.6%

0%

5%

10%

15%

20%

25%

2003 2004 2005 2006 2007 2008 2009 Jul-10

BoM raised minimum

required level to 12%

Prudential Ratios BoM Threshold TDB Ratios

Capital Adequacy Ratio >12% 13.8%

Liquidity Ratio >18% 49.1%

Foreign Currency Exposure <10% 4.8%

Single Borrower Exposure/ Capital Funds <20% 18.8%

Related Party Lending / Capital Funds <5% 0.2%

13.5

77.5

67.168.5

60.3

49.7

37.8

22.7

0

20

40

60

80

2003 2004 2005 2006 2007 2008 2009 Jul-10

MNT Billion

Diversified Funding Sources and Strong Funding Base

On-lending Syndicated Loan Facilities


Current Funding Profile



■ A strong funding base supports anticipated increase in lending activities given optimism in economic growt h

■ Main source of funding derived from current and dep osit accounts of our corporate and retail clients

■ Funding alternatives reduce reliance on short-term deposits, thereby reducing volatility in funding co sts, asset / liability gap management and interest margi ns

■ Extensive experience in international banking transactions, including trade finance with over US$ 150 million in credit lines, syndicated lending activit ies

■ Implementation of various on-lending programs in cooperation with many international financial insti tutions for our core corporate clients

Continuous Access to Diversified Funding SourcesContinuous Access to Diversified Funding Sources

0

200

400

600

800

1000

2003 2004 2005 2006 2007 2008 2009 Jul-10

MNT Billion Securities Issued and OthersRetained EarningsEquitySubordinated DebtInterbank LoansDeposits

Securities Issued & Others

3%

Equity3%

Retained Earnings

7%

Interbank Loans7%

Deposits80%

US$25MM Trade Finance Line

US$3.25MM Facility Agreement on the Re-lending Basis employer

EUR4.3MM Financial Sector and SME Development Facility

US$25MM Two-Step Loan Project for SME Development and Environmental Protection on the On-Lending Basis

US$6.2MM Second Private Sector Development Project Facility on the On-Lending Basis

EUR6MM Trade Finance Line

US$2.23MM Payment Assignment Facilities on the On-Lending Basis

US$15MM Syndicated Term Loan Facility

Efficient Cost Management Supports Solid Profitabil ity

Interest Income Grows with Strong Net Interest Marg ins



■ Able to defend our profitability during the global economic crisis – recorded strong earnings in 2009 e ven when the Mongolian economy contracted by 1.6% that year

■ Interest income dominates income composition �� aim to increase contribution from fee based income

■ With greater efficiency, cost efficiency ratio rema ins at stable levels - best in class cost efficiency amongs t peer group

■ Achieved strong returns in terms of ROAE (24.5% in July 2010) and ROAA (2.3% in July 2010)

Stable Profitability Despite Stress in Domestic EconomyStable Profitability Despite Stress in Domestic Economy

8%8% 8%

6%5%

7%

5% 4%

0

10

20

30

40

2003 2004 2005 2006 2007 2008 2009 Jul-10

MNT Billion

0%

2%

4%

6%

8%

10%

12%

14%Net Interest Income (LHS)

Net Non-interest Income (LHS)

Net Interest Margin (RHS)

0

10

20

30

40

50

60

2003 2004 2005 2006 2007 2008 2009 Jul-10

(%) Cost Efficiency Ratio (RHS) ROAA ROAE

5.4

7.4

11.8

16.4 16.315.0

10.4

2.6

0

5

10

15

20

2003 2004 2005 2006 2007 2008 2009 Jul-10

MNT Billion

(5)

0

5

10

15(%)Net Income (LHS) Column 2

Mongolia GDP Growth (RHS)

Profit Stability Even During Global Economic Crisis


On pro-rata basis for full year 2010

Note: 2008 Net non-interest income is diminished due to a write down of trading losses

Thank You!