Anastasiia Ivanova

Olga Kotelnikova

Alina Luchinina

Tatiana Rubtsova

Team:

Financial results

Customers

Internal Processes

Learning & Growth

Maximize ROE

Revenue

Customer Satisfaction

Operating Efficiency

FinancialHealth

Employee Performance

Workforce Knowledge

IT excellence

16%7%

12%1%

0%

5%

10%

15%

20%

Top 3,average

Tier I,average

Tier II,average

RCB

Return on Equity, 2012, %

0%

20%

40%

60%

80%

2008 2009 2010 2011

RCB revenue growth Bank service revenue growth

…customer survey has shown low customer satisfaction with bank operations

…While because o high staff turnover, employees are unqulified

Current strategy of Ryazan Capital Bank does not support the goal of maximizing return on equity

Market shareAlthough RCB revenue constantly grew at a higher pace comparing to market…

Operating margin is steadily recovering…

RCB’s current strategy of growth led to far lower profitability in comparison with competitors

…while share of provisions for NPL has grown sharply during last 5 years

Absence of trainings and career perspectives has led to high staff turnover…

Sources: Market Line database 2

RUR, mln RUR, mln

Financial results

Customers

Internal Processes

Learning & Growth

Maximize ROE

Revenue

Customer Satisfaction

Operating Efficiency

FinancialHealth

Current strategy of Ryazan Capital Bank does not support the goal of maximizing return on equity

Market share

Costs

Employee Performance

Workforce Knowledge

IT excellence

16%7%

12%1%

0%

5%

10%

15%

20%

Top 3,average

Tier I,average

Tier II,average

RCB

Return on Equity, 2012, % RCB’s current strategy of growth led to far lower profitability in comparison with competitors

…customer survey has shown low customer satisfaction with bank operations

Operating margin is steadily recovering…

…while share of provisions for NPL has grown sharply during last 5 years

…While because o high staff turnover, employees are unqulified

Absence of trainings and career perspectives has led to high staff turnover…

Although RCB revenue constantly grew at a higher pace comparing to market…

Sources: Market Line database 3

0%

20%

40%

60%

80%

2008 2009 2010 2011

RCB revenue growth Bank service revenue growth

RUR, mln RUR, mln

Ruble is going to weaken

Low Risk Quality of borrowers High Risk

Narrow

Market

Broad

“The selected” “Risky special”

“All the trustworthy” “Everyone welcome”

Targeting high risk borrowers is unsustainable, as increase in risk leads to high provisions and NPL growth.

Covering broad market is difficult, as resources are limited.

Government (budget)

income will decrease

Oil prices will fall

RCB needs to focus on specific market segment

and target borrowers with high

creditworthiness.

Taking into consideration macroeconomic conditions, one should target the corporate business – the base for future growth

Strategic options of the bank depend on the range of products it offers and the borrowers it targets

Costs of import will

rise, increasing

costs of production

GDP growth will decreaseReal income of population

will decrease

Inflation will rise

Nominal income will

increase, but with slower

pace

Both corporate and retail crediting will fall. We need to finance business: if it has financial resources, it will be able to grow and pay its

employees more. Then population’s consumption will rise.

USD/barrel

RUR/USD

Political risks make situation worse.Long-term forecast is around 2%.

Optimal solution out of several strategic options is focus on low risk borrowers.Macroeconomic conditions suggest the target market is corporate business

Source: EIU Economic and Commodity Forecast, December 2013, RBC, Agency of Economics Forecasting 4

2014 - 2015 2016 - 2018

Product portfolio

• Corporate business Developing SME segment activelyProviding individual solutions to large companies

Maintaining SME business growthProviding individual solutions to large companies

• Retail business Optimizing existing loan portfolioIncreasing non-interest incomeGoing digital

Growing retail business actively by using strong links with employees of SMEs (cross-selling)

Growth Supporting growth by gradual geographical expansion to key regions

Operational efficiency Investing in staff, modernization of offices & IT system

Improving cost efficiency

Financial health Restoring financial stabilityImproving risk management

Increasing capital to finance active development of retail business

“Growing together

with clients!”

New strategy involves two steps: developing SME business and cross-selling retail products to SME employees

RCB’s strategy is sustainable profitable growth as a regional bank by supporting SMEs and their staff in increasing their wealth

5

RCB needs to focus on SME segment offering both short and long term loans on competitive conditions(see example in Appendix 1). By 2018 SME loans should account for 75% of corporate loan portfolio. These clients will form the customer base for further development in retail.

RCB should continue to work with large corporate clients on individual basis.

SME segment is developing faster than large clients business, but RCB underperforms in both of them SMEs have big potential for development in Russia

In corporate business, RCB should focus on small and medium enterprises,as they will develop and be the growth driver of the market

Entrepreneurship climate in Russiais improving(Doing Business 2014 Rating)

Loans to large companies

Loans to SMEs

92

111

bn RUR

67850,0

0,5

0

25.000

30.000

35.0001,030.248

20.658

28.406

19.089

+21%

2009

+58%

2010 2011 2012

Russia

RCB

2221

7.000

5.000

4.000

1,0

0

6.000

0,0

0,5

2009

3.015

6.056

4.705

+130%

+75%

6.943

201220112010

Russia

RCBbn RUR

Sources: RCB, Central Bank of Russia, Sberbank, SME Bank, Opora Rossiyi 6

Light commercial vehicles market stagnates that diminishes growth of car loans

-69%

50% 50%11%

-100%

-50%

0%

50%

100%

0

2

4

2008 2009 2010 2011 2012

Credit sales Cash sales Credit sale growth

Mortgage market in Russia is unsaturated that gives high potential to develop

Credit card market has the highest potential among consumer loans

205,8 192,9 227,6 367,8671,3 837,4

0

1000

2000

3000

4000

2008 2009 2010 2011 2012 2013Credit cards Other personal loans

RCB possesses unbalanced retail loan portfolio, comparing to peers from Tier I and Tier II, and should rebalance it

RCB’ s portfolio consists mostly on car loans that makes it vulnerable to shrinking of this market;

RCB ignores other possibilities to attract borrowers, such as growing markets of mortgages and credit cards, that may lead to opportunities loss.

In retail portfolio, RCB should focus on perspective mortgage and credit cards market and decrease share of stagnating car loans

USD, bn

RUR, bnCAGR = 32%

93%

2% 5%

5%

50%

28%

44%

63%

2% 3%

0%

20%

40%

60%

80%

100%

120%

RCB Tier I Tier II

Car loans Personal loans Mortgages Credit cards

Mortgage loans, % GDP

Non-mortgage loans, % GDP

Sources: Alfa Bank Annual Report 2012, EY Automotive Survey 2013, Central Bank Reports, Tinkoff Credit System Report 2013 7

RCB needs to look for new financing opportunities to cover the gap between loans and deposits, as deposit market is projected to slow down

Loans at RCB portfolio has been growing faster than deposits, resulting in unavailability to cover issued loans

2,546

1,910

1,2771,084

0,849

0,000

0,500

1,000

1,500

2,000

2,500

3,000

0

5

10

15

20

25

30

35

2008Y 2009Y 2010Y 2011Y 2012Y

Loans Deposits Deposits/Loans

Moreover, RCB deposit portfolio growth is far beyond market growth

Because of current license revocation of several banks, extremely low trust level to commercial banks will decrease even more

“Do you trust Russian financial institutions?”

To attract new deposits RCB should:Adjust deposit rates to those of the competitors;Sell bank warranties on the security of the deposits;Introduce new products:

Investment deposits / “income cards”

RCB deposit rates are lower than average in the market, meaning attracting less customers

5.52418

2010 2011

6.999

13.434

16

11.061

24

+39%

2008 2012

9.250

2009

+143%

19 25

Market deposits

RCB deposits

Sources: Central Bank Reports, National Agency of Financial Research survey 8

4,0% 5,0% 6,0% 7,0% 8,0% 9,0% 10,0%

Tier I

Tier II

RCB

RUR, mln

Interest rate, %

Nevertheless, few Tier 2 banks offer investment products like mutual funds to their clients

Moreover, among various investment products mutual funds are crucial to retain customers in the long run

Pension insurance > 10

Mutual funds 2 - 10

Deposits 0,5-2

Current accounts 0-1

Effective time period of investing, years

Sources: eXceeding eXpectations analysis, investfunds.ru, Absolut bank annual report

47

75

9583 87

113

-30

-20

-10

0

10

20

0

20

40

60

80

100

120

2008 20132012201120102009

Net inflow

NAV

Growing trend in open-end mutual funds’ net assets value and net inflow shows their future potential

Acting as a mutual funds agent, RCB can create new profit sources and extend its customer base

Introduction of open-end mutual funds in bank’s product portfolio will lead to the following advantages:•Additional income from asset management company’s commission•Customer attraction and retention•Opportunities for cross-selling:

- investment deposits- loans secured by mutual funds shares

RCB should partner with asset management company to introduce open-end mutual funds in its product portfolio to create new income channel

None

38%

Depositary

63%

Brokerage25%

Mutual funds

13%

% of Tier 2 banks offering investment services

*Sum may not equal 100%, as some banks offer several services

9

Geographical expansion should continue to support growth, but market potential for both corporate and retail segments should be taken into account

RCB should:•Increase its operations in high potential regions –Moscow and St. Petersburg•Expand to high potential regions – Kazan, Samara, Ufa, Perm•Keep operations in low potential regions significant for RCB - Vologda•Leave low potential regions that do not contribute much to the portfolio – Tver and Yaroslavl

The key regions for RCB in terms of assets and income are Ryazan, Moscow and Vologda

However, there are other regions with big potential for both corporate and retail segments

25%

5%4%

4%

13%

8%

31%

Weighted assets

2%6%

2%

26%

5%4%

4%

14%

10%

27%

Operating Income

2%6%

3%Yaroslavl

Nizhny Novgorod

Krasnodar

Ryazan

Rostov

Tver

Arkhangelsk

Vologda

St. Petersburg

Moscow

24.000

23.000

22.000

21.000

20.000

19.000

6,02,0

18.000

17.000

16.000

15.000

49.000

29.000

28.000

27.000

0,5 1,5 2,5 5,5 15,51,00,0

26.000

25.000

Average income, th. RUR

Arkhangelsk

Murmansk

Yaroslavl

Kaluga

Investment attractiveness(Expert Rating)

Kazan

Nizhny Novgorod

Samara

Ufa

RostovTver

Moscow

Moscow region

St. Peterburg

Krasnodar

Vologda

Syktyvkar

Petrozavodsk

Perm

BelgorodMakhachkala

Ryazan

Sources: Expert Rating Agency, Rosstat 10

Sales channels structure should be reconsidered in order to support new product portfolio…

ProductsProduct

Sales share

Product Sales Channels

Corporate products

66,09%

Retail products 33,70% 30% 30% 5% 25% 10%

Investment products

0,21% 5% 80% 5% 10% 0%

10% 35% 5% 25% 25%

5% 80% 5% 10%

Branches Cross-sell Call-center Internet DSA

55% 20% 10% 15%

29%8,43%

7%

18%

6%8%

8% 25%

50%40%

0%

20%

40%

60%

80%

100%

120%

Costs 2012 Costs 2018

DSA Internet Call-center Cross-sell Branches

…that will lead to new budget structure split by channels

0

1

2

3

4

5

6

User-friendliness Product portfolioavailable

Product portfolioavailable

Design Common Image Waiting time Staff attentiveness Staff expertise

RCB Tier II

Value gap analysis of bank operations by clients has shown that the most critical area is staff performance, while other areas also require attention

Internet banking Mobile banking Branches Staff performance

RCB should reconsider sales channels budgeting, as well as clients perception of day-to-day operations to implement offered strategy successfully

*points for Tier II banks were assigned according to banki.ru survey, while points for RCB were assigned according to information given 11

points*

RCB should invest and create opportunities for operations excellence

Because sellers are main drivers of revenue, it is necessary to analyze ratios for sellers in different offices

Motivation system of sellers should be based both on base salary in accordance to the region and on KPI

KPI for sellers and tellers

New accounts per seller

New accounts per tellers

Existing current accounts per operations employee

Customers per employee

Customer attrition rate

Base salary (KPI achieved- KPI

planned) * $

Employee compensation

31287

34158

18506

31252

28887

21022

33757

15846

28512

45770

0 20000 40000 60000

Moscow

St.Petersburg

Vologda

Arkhangelsk

Tver

Rostov

Ryazan

Krasnodar

N.Novgorod

YaroslavlSalary in banks, rosstat 2012

0,0010,0020,0030,0040,0050,0060,00

Income/seller Opex/seller

Total system of remuneration should be reconsidered and be balanced in all the branches

Branches with high ratios should share their experience

20172016201520142013 2018

IT share in OPEX

IT

OPEX

IT system as an important part of operations excellence should be analyzed

RCB should introduce new IT system and plan its expense according to the benchmark with other banks

Internet and mobile banking

Poor system structure

Investment into technology superiority

Database Absence of

centralized database

Investment into advanced database

Automated banking system

Only manual process

Investment into ABS

12

From 2014 Central Bank introduces new capital requirements according to Basel III

To meet capital requirements, RCB should establish proper risk management system

Capital

Risk-weighted assets

Common Equity Tier 1Limit – 5% Tier 1 CapitalLimit – 5,5%, from 2015Y – 6%

Total CapitalLimit –10%

In RCB high borrowers’ risk is compensated by high interest rates in comparison with Tier 1 & 2 banks

Tier 1&2

Tier 1&2

RCB

RCB

Car loans

Personal loans

Interest rate, %

At the same time high risk leads to an increase in NPL and high provisions

Capital

Risk-weighted assets

RCB should install proper risk-management based on scoring system and reduce risk premium to lower interest rates in order to attract high-end customers and create sound loan portfolio

High interest rates lead to higher credit risk capital requirements and raise risk-weighted assets, while high provisions reduce residual earnings being part of capital

2008 2009 2010

Pro

visi

on

s, b

n R

UR

2011 2012

+71%

13

2013 2014 2015 2016 2017 2018

Q1Q2 Q3 Q4 Q1Q2 Q3 Q4Q1Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1Q2 Q3 Q4 Q1Q2 Q3 Q4

Centralized database

ABS introduction

Current situation analysis

New design creation and implementation

Trainings & learning

New policy based on new requirements

Revision of current credit risk policy

Actions

New regions expansion

Product portfolio optimization

Risk management system

Staff motivation program

New motivation system

Branch rebranding

Internet banking for retail and corporate clients

Front- and back office programs

Mobile banking applications (IOS, Android)

Most actions will be implemented within next 2 years

Proposed measures will be implemented during the next two years andwill increase operating profit by 9 times by 2018

14

Implementation of proposed initiatives will improve key financial indicators significantly and generate 3,74 bn RUR NPV

At the same time net interest margin will rise by 26%

Proposed initiatives will lead to positive NPV generation of 3,74 bn RUR till 2018

Operating profit is gradually increasing as well, while the efficiency ratio is declining

Financial ratios ROE and ROA will increase by 2018

2018

1,4%

7,4%

201720162015201420132012

0,7%1,0%

ROA

ROE

+26,2%

2018

7,2%

2017

6,4%

2016

6,2%

2015

5,9%

2014

5,3%

2013

5,7%

Net interest margin

2,9

0,3

0

1

2

3

0%

100%

50%

2012 2013 2014

9X

80%72% 67%

81% 86% 87%

55%

20182015 2016 2017

Operating profit, bn RUR

Efficiency ratio

NPV

3,74 billion RUR

till 2018

Assumptions:1. Initial investments

will consist of automated banking system embedding and branch rebranding and will account for 0,078 bnRUR

2. WACC = 12%

15

High QualityEducation

DiverseExperience

Multiple Victories

tatiana.rubtsova@mail.ru8 906 279 4249

luchinina.alina@gmail.com8 904 633 6445

ivanova.anastasia@aol.com8 965 059 8749

olga.vlad.kotelnikova@gmail.com8 911 818 7829

Graduate School of Management, SPbSUMaster in Corporate Finance

Exchange semester in EmLyon Business School (France)

Exchange semester in Turku University of Applied Sciences (Finland)

Graduate School of Management, SPbSUMaster in Corporate Finance/ CEMS MIM

Exchange semester in Erasmus University, Rotterdam School of Management

(Netherlands)

Graduate School of Management, SPbSUMaster in Corporate Finance/ CEMS MIM

Exchange semester in Louvain School of Management (Belgium)

Graduate School of Management, SPbSUMaster in Corporate Finance/ CEMS MIM

Exchange semester in Copenhagen Business School (Denmark)

Handle Group – financial analystInternships:Colgate-Palmolive – Finance DepartmentOodji Company – Finance DepartmentRosno Allianz – corporate clientsConsulting project for Ahlers

Internships:Deloitte – consulting Strategy&Operations,Maersk Line - Finance DepartmentUniCreditBankConsulting project for Sberbank of Russia

EVLI Corporate Finance – analyst (M&A) Internships:TransCreditBank– crediting large corporate clientsConsulting project for Indesit

Internships:Colgate-Palmolive - Finance DepartmentConsulting company “Alt”Consulting project for Indesit

Winner:Changellenge Cup SPb 2013Scientific Conference “State Order” and “Social Advertising”2nd place:Changellenge Cup Russia 2013

Winner:Changellenge Cup SPb 2013KPMG International Case Competition 2013 Saint-Petersburg Stage2nd place:Changellenge Cup Russia 2013

Winner:Changellenge Cup SPb 2013KPMG International Case Competition 2013 Saint-Petersburg Stage2nd place:•Changellenge Cup Russia 2013

Winner:Changellenge Cup SPb 2013,Changellenge Cup Technical 2013,KPMG International Case Competition 2013 Saint-Petersburg Stage2nd place:Changellenge Cup Russia 2013

Alina Luchinina Olga KotelnikovaTatiana Rubtsova Anastasia Ivanova

The project was prepared by team

16

Product

Retail SME

Mortgage Car loanConsumer

loanCredit card Short-term Long-term

Loan amount 750,000 –30,000,000

100,000 –4,000,000

RUR

50,000 –1,000,000

RUR(10,000,000

RUR with collateral)

10,000 –100,000 RUR

150,000 –15,000,000

RUR

300,000 –150,000,000

RUR

Loan duration

2 years – 25 years

6 month – 5 years

From 3 month to five

years

Up to 6 month

Up to 1 year 1 year – 5 years

Commission None None None None None None

Application review time

Three days Two days One day One hour Two days One week

Initial payment

10% 15% n/a n/a n/a n/a

Interest rate 10,5%- 14% 11,5%-15% 17%-22,5% 20%-30% From 12,75% From 13,25%

Appendix 1. Key products’ description

17

Appendix 2. Forecast of the loan portfolio structure 2013-2018

Retail loans

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Car loans 0 3,71 12,13 18,93 19,24 18,75 17,22 14,41 10,18 4,59

% of Total 0% 85% 90% 93% 79% 65% 51% 38% 24% 10%

Personal loans 1,71 0,67 1,3 1,49 2,50 3,80 5,41 7,32 9,44 11,47

% of Total 100% 15% 10% 7% 10% 13% 16% 19% 22% 25%

Mortgage - - - - 2,44 5,76 10,06 15,34 21,41 27,52

% of Total - - - - 10% 20% 30% 40% 50% 60%

Credit cards - - - - 0,24 0,48 0,78 1,15 1,57 2,29

% of Total - - - - 1% 2% 2% 3% 4% 5%

Total retail 1,71 4,38 13,43 20,42 24,38 28,79 33,53 38,35 42,81 45,86

Growth 156% 207% 52% 19% 18% 16% 14% 12% 7%

% Total loans 21% 30% 61% 70% 63% 57% 50% 43% 37% 30%

Corporate loans

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

SME loans 1,3 1,81 1,61 2,27 3,81 7,13 14,88 26,95 45,75 80,26

% of Total 0,20 0,18 0,19 0,26 0,32 0,40 0,48 0,56 0,65 0,75

Large loans 5,32 8,45 7,03 6,43 8,1 10,6 15,9 20,8 25,1 26,8

% of Total 0,80 0,82 0,81 0,74 0,68 0,60 0,52 0,44 0,35 0,25

Total corporate 6,63 10,26 8,64 8,7 11,92 17,76 30,81 47,74 70,82 107,01

Growth 55% -16% 1% 37% 49% 73% 55% 48% 51%

% Total loans 79% 70% 39% 30% 31% 35% 46% 54% 61% 70%

Total loans 8,34 14,64 22,07 29,12 38,44 50,74 66,98 88,41 116,70 152,87

Growth 76% 51% 32% 32% 32% 32% 32% 32% 31%

18

Appendix 3. Forecast of the funding sources 2013-2018

Funding

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Deposits 15,83 18,7 23,94 24,72 33,4 45,1 60,7 81,6 109,5 146,8

% of Total 0,94 0,88 0,87 0,70 0,73 0,77 0,80 0,83 0,87 0,9

Other funding 1 2,56 3,44 10,67 12,2 13,8 15,3 16,4 16,9 16,3

% of Total 0,06 0,12 0,13 0,30 0,27 0,23 0,20 0,17 0,13 0,1

Total funding 16,83 21,26 27,38 35,39 45,7 58,9 76,0 98,0 126,4 163,1

Growth 26% 29% 29% 29% 29% 29% 29% 29% 29%

19

Appendix 4. Interest rates conditions for loans and deposits. Forecast for non-interest income from mutual funds

Interest rates loans

Car loans 13,25%

Personal loans 19,75%

Mortgage 12,25%

Credit cards 25%

SME loans 14%

Large 8,3%

Interest rate deposits 2013 2014 2015 2016 2017 2018

Deposits 7,25% 7,50% 8% 8,25% 8,50% 9%

Mutual funds 2013 2014 2015 2016 2017 2018

№ of branches 21 21 21 21 21 21

№ of people attracted per month per branch 6 8 10 13 16 20

№ of people attracted per year 1512 2016 2520 3276 4032 5040

№ of people left 302,4 403,2 504 655,2 806,4 1008

Net amount of people 1210 1613 2016 2621 3226 4032

Net asset value 6048000 9676800 14112000 20966400 29030400 40320000

Premium (1,5%) 90720 145152 211680 314496 435456 604800

Discount (2%) 120960 193536 282240 419328 580608 806400

Basic Remuneration (3%) 181440 290304 423360 628992 870912 1209600

Total remuneration, bn RUB 0,0004 0,0006 0,0009 0,0014 0,0019 0,0026

20

Appendix 5. Forecast of interest and non-interest income and expenses 2013-2018

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Total retail 0,323 0,62 1,792 3,063 3,40 4,06 4,78 5,52 6,23 6,82

Car loans 0,00 0,53 1,62 2,84 2,55 2,49 2,28 1,91 1,35 0,61

% growth - 207% 75% -10% -3% -8% -16% -29% -55%

Personal loans 0,32 0,10 0,17 0,22 0,49 0,75 1,07 1,45 1,86 2,26

% growth -70% 82% 29% 121% 52% 42% 35% 29% 21%

Mortgage 0,30 0,71 1,23 1,88 2,62 3,37

% growth - 136% 75% 52% 40% 29%

Credit cards 0,06 0,12 0,20 0,29 0,39 0,57

% growth - 97% 63% 47% 36% 46%

Total corporate 0,764 0,99 1,054 1,103 1,20 1,88 3,40 5,49 8,47 13,44

SME loans 0,15 0,18 0,20 0,29 0,53 1,00 2,08 3,77 6,41 11,24

% growth 17% 12% 47% 85% 87% 109% 81% 70% 75%

Large companies 0,61 0,82 0,86 0,82 0,67 0,88 1,31 1,72 2,07 2,21

% growth 34% 5% -5% -18% 31% 50% 31% 21% 7%

Total loan income 1,09 1,62 2,85 4,17 4,61 5,94 8,18 11,01 14,70 20,26

Interest expense (bn RUR) 0,82 0,91 1,29 1,86 3,06 3,95 5,10 6,58 8,48 10,94

Deposits 0,77 0,80 1,13 1,30 2,42 3,38 4,86 6,73 9,31 12,84

% growth 4% 41% 15% 87% 40% 44% 39% 38% 38%

Other funding 0,05 0,11 0,16 0,56 0,64 0,73 0,81 0,87 0,90 0,87

% growth 125% 48% 246% 14% 14% 11% 7% 3% -3%

NII before provisioning 0,71 1,14 1,94 2,69 1,93 2,37 3,46 4,82 6,60 9,70

Provision expense 0,14 0,22 0,43 1,17 0,35 0,40 0,55 0,70 0,85 1,10

% growth 57% 95% 172% 43% 35% 32% 30% 28% 25%

% operating income 0,52 0,31 0,33 0,68 0,19 0,18 0,20 0,19 0,19 0,17

NII 0,57 0,92 1,51 1,52 1,58 1,97 2,91 4,12 5,75 8,60

Net fee and commision income 0,095 0,117 0,019 0,034 0,036 0,039 0,043 0,046 0,051 0,057

Other non-interest income 0,087 0,181 -0,053 -0,118 -0,086 -0,039 -0,033 0,004 -0,011 0,043

Total non-interest income 0,182 0,3 -0,034 -0,08 -0,05 0 0,01 0,05 0,04 0,1

21

Appendix 6. Forecast of operating income, operating expense and net income 2013-2018

Operating income (bn RUR) 0,27 0,71 1,31 1,73 1,87 2,19 2,81 3,62 4,59 6,37

164% 83% 32% 8% 17% 28% 29% 27% 39%

OPEX (bn RUR) 0,544 0,848 1,219 1,408 1,61 1,90 2,24 2,61 3,10 3,49

56% 44% 16% 15% 18% 18% 17% 19% 13%

Employee remuneration 0,312 0,525 0,696 0,741 0,82 0,96 1,14 1,36 1,62 1,80

% growth 68% 33% 6% 10% 18% 19% 19% 19% 19%

% of OPEX 57% 62% 57% 53% 50% 51% 51% 52% 52% 52%

Advertising 0,018 0,014 0,025 0,049 0,05 0,10 0,12 0,15 0,20 0,25

% growth -22% 79% 96%

% of OPEX 3% 2% 2% 3% 3% 5% 5% 6% 6% 7%

IT 0,07 0,09 0,15 0,19 0,28 0,35

% of OPEX (based on benchmark) 4% 4,7% 6,7% 7,3% 9% 10%

Other 0,214 0,309 0,498 0,618 0,68 0,75 0,82 0,90 1,00 1,09

% growth 44% 61% 24% 10% 10% 10% 10% 10% 10%

% of OPEX 39% 36% 41% 44% 42% 39% 37% 35% 32% 31%

Operating profit (bn RUR) -0,27 -0,13 0,09 0,32 0,25 0,29 0,57 1,02 1,50 2,88

Income tax 0,20 0,20 0,20 0,20 0,20 0,20 0,20

Net income 0,26 0,20 0,24 0,46 0,81 1,20 2,30

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