Corporate Banking

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Services for Small and Medium Enterprises The number of loans issued to SME customers increased by 257%. the strong demand from SME customers operating in the Central Region – that share increased to 18% from 12% in 2005. In 2007, ROSBANK plans a comprehensive upgrade of its SME product line, to increase the maximum loan amount to RUR 26 million (USD 1 million) and segregate loan products into several segments: micro-loans, small business loans and medium business loans. The product range will also be expanded to include special offers targeting specific customer groups under partnership programs. With these innovations, ROSBANK will be able to offer competitive SME products and services targeting various customer groups in line with modern business requirements. The current favorable domestic macroeconomic situation combined with the on-going improvement of the product range will support the growth of the SME banking segment in line with the general growth of small and medium businesses in Russia. According to RBC ratings, in 2006, the SME lending market grew 40–50% to RUR 1.6 trillion (USD 60 billion). However, even this unprecedented growth was insufficient to bring the share of SME in the bank loan market to levels typical for developed economies. In 2006, ROSBANK focused on active development of its SME lending business, gradually expanding its market share in this segment. Products offered by the Bank generate considerable customer demand, and thereby the Bank easily outperformed its 2006 targets. The number of loans issued to SME customers increased by 257% (from 1,400 to 5,000 loans). The strong demand for Bank products and services from SME clients is explained by the availability of an extensive branch network, which provides access to banking services within maximum proximity to business locations, while the Bank’s products are broad enough to meet all client requirements. In 2006, the Bank initiated major reforms of its SME business. These initiatives were positively met by customers and included the increase in the minimum loan amount to RUR 15 million (USD 500 thousand). The maximum loan tenor was extended to 60 months. The Bank also cancelled the loan application commission. In addition, the Bank significantly expanded the range of its SME products and introduced two new programs – loans to SME owners and individual entrepreneurs, as well as overdrafts for SME and individual entrepreneurs. Both programs were launched in mid-2006 and are being actively developed by the Bank. As of December 31, 2006, the outstanding loan balance under the first program was close to RUR 171 million, under the second program – RUR 37 million. Both programs are characterized by high asset quality, with a default ratio of less than 0.03%. In addition to loans, the Bank actively promoted deposit and cash management products targeting the SME segment. In 2006, the number of customers using the Bank’s deposit products grew 48% to 3,700 clients, while the aggregate amount of customer deposits increased by 81.6% to RUR 84.7 billion. Current account balances increased by 48% to RUR 4.3 billion, with average account balances rising 81.6%. This trend reflects the growing confidence of SME clients in the Bank. The strong demand for SME loans and the expansion of the product line boosted the Bank’s 2006 revenue from SME operations to RUR 1.2 billion, or up 243% compared to 2005 revenue (RUR 353.5 million). The SME loan portfolio tripled by the end of 2006 to RUR 5.5 billion, while the share of overdue loans remained low at 1.3%, indicating the good credit standing of the Bank’s SME customers. The SME customer base has a nationwide geographic spread: the majority of the SME customers are located in Siberia (27%) and the Far East (20%); however, they have lost a part of their share (7% and 2%) to other regions as a result of active efforts to expand the Bank’s client base in all regions of Russia and a territorial diversification of the loan portfolio. Another important trend is Geographic Composition of SME Client Base 27% Siberia 13% Over 2% Southern District 6% North-Western District 20% Far East 5% Urals 10% Мoscow Region 18% Central District 32 33
Corporate Banking The gross corporate loan portfolio increased by RUR 20.3 billion to RUR 84.6 billion, while the number of the corporate borrowers exceeded 7,000 companies. In 2006, ROSBANK kept on successful expanding its operations with large corporate clients. A diversified customer base and a wide product range enable the Bank to balance its risk profile and to take full advantage of cross-selling opportunities to different customer groups. Currently, ROSBANK offers the following services to domestic and foreign companies: • cash management and settlement services, including remote account management and payroll solutions; • loans; • project finance; • trade and structured finance; • foreign exchange and term deposits; • stock brokerage; • corporate finance and advisory; • depository services; • asset management including cross-selling of third-party products; • insurance, cash carrier, acquiring and processing in co-operation with ROSBANK’s business partners. Currently, the Bank’s corporate clients comprise companies in practically all industries throughout Russia. In 2006, ROSBANK focused on co-operation with utility companies, including such clients as RAO UES, Khabarovskenergo, Yakutskenergo, Dalenergo, Kamchatskenergo, Altaienergo, St. Petersburg Generation Company, Sakhalinenergo, AEC Komienergo, South Generation Company, Belgorodenergo, TGK-5, and Amurenergo. In addition, in 2006, the Bank strengthened its relations with corporations operating in other industries, including Surgutneftegaz, MICEX, Copper Foil Production Association, Urals Steel, Moldavian Metallurgical Works, MIAN Group, Ufa Engine Works, MiG, Mortgage Lending Agency, Gazprom, TAIF, and Transaero. Another priority area for the Bank is the development of business relations with regional administrations and municipalities. In 2006, ROSBANK executed 11 general co-operation agreements with regional authorities and municipalities of the Russian Federation. As of December 31, 2006, it had a total of 34 general agreements with regional authorities. In 2006, ROSBANK fostered business relations with the governments and administrations of such regions as the Khabarovsk Territory, Nizny Novgorod Region, Astrakhan Region, Irkutsk Region, Kostroma Region, Tula Region, Amour Region, Yaroslavl Region, Kabardino-Balkarian Republic, Republic of Kalmykia, and the cities of Kazan, Saratov, Omsk and Yuzno-Sakhalinsk. In 2006, ROSBANK focused on offering banking services to regional companies. Compared to 2005, the share of regional customers, in the total corporate deposits increased from 11% to 18%. The Bank also plans to develop its regional business through network expansion programs. In 2006, following this strategy, the Bank increased the number of offices targeting corporate clients to 29 by the end of 2006. New offices were opened in two regions – Bashkortostan and Tatarstan. The expansion of the regional network for corporate services brought major regional corporations to the Bank and facilitated the implementation of package solutions for “network” customers-major groups and their regional subsidiaries and branches. The Bank’s clients such as Sportmaster, Avtomir, Evrokommertz, Ingosstrakh, and Paterson received a possibility for online control and management of their groups’ cash flows from a single center, as well as other business process optimization tools. To enhance its cooperation with corporate customers, the Bank has developed retail programs for these companies’ employees. In 2006, the Bank arranged the promotion of its retail programs directly at corporate customers to offer a broad range of retail products to employees. Corporate Accounts Corporate accounts have traditionally been a priority focus for the Bank, which maintains strong positions in this market segment. According to RBC ratings, at the end of 2006 the Bank was ranked sixth among the largest Russian banks in terms of corporate accounts. Corporate accounts with ROSBANK contribute 3.2% of the total amount of settlement, current and deposit accounts opened with Russian banks by corporate non-banking clients. As of December 31, 2006, the aggregate amount of corporate accounts (settlement, current and deposit) exceeded RUR 122 billion, which represents growth by more than 60% year to year. Accounts opened by large corporates remain an important component of the Bank’s funding, contributing over 90% of the total nonbanking client accounts in 2006. Corporate Loans Corporate lending preserves its position as one of the most important business lines of ROSBANK. As of December 31, 2006, the Bank’s share of the corporate loan market was 1.2%. The gross corporate loan portfolio increased by RUR 20.3 billion to RUR 84.6 billion, while the number of 34 35
Page 1 and 2: www.rosbank.ru
Page 3 and 4: Contents Annual Report 2006 4 5 8 1
Page 5 and 6: Throughout Russia. For you.
Page 7 and 8: hindered by insufficient capitaliza
Page 9 and 10: Top Banks by Total Assets (as of Ja
Page 11 and 12: 120 80 40 0 ROSBANK’s Customer Lo
Page 13 and 14: V. Community Activity ROSBANK assoc
Page 15 and 16: Retail Business In 2006, according
Page 17: General Purpose Loans The general-p
Page 21 and 22: the corporate borrowers exceeded 7,
Page 23 and 24: Private Banking As of December 31,
Page 25 and 26: Throughout Russia. For you.
Page 27 and 28: Custody Services The customer base
Page 29 and 30: Financial Report 2006
Page 31 and 32: Statement of Management’s Respons
Page 33 and 34: Consolidated Balance Sheet as of 31
Page 35 and 36: Consolidated Statement of Cash Flow
Page 37 and 38: In 2006 ROSBANK acquired additional
Page 39 and 40: quoted in an active market other th
Page 41 and 42: amortization of initial premium rev
Page 43 and 44: Results from discontinued operation
Page 45 and 46: 9. Other Income 11. Income Taxes Ot
Page 47 and 48: 14. Financial assets at fair value
Page 49 and 50: As of 31 December 2006 and 2005 inc
Page 51 and 52: Agriculture 962,568 131,271 Chemica
Page 53 and 54: 23. Customer Accounts Customer acco
Page 55 and 56: Capital commitments As of 31 Decemb
Page 57 and 58: Year ended 31 December 2006 RUR’0
Page 59 and 60: Geographical segments Segment infor
Page 61 and 62: Up to 1 month Interest bearing liab
Page 63 and 64: Deposits from banks Customer accoun
Page 65 and 66: Cash and balances with Central and
Page 67 and 68: Auditors’ report To Shareholders
Page 69 and 70:
Profit and Loss Statement (Publishe
Page 71 and 72:
Consolidated Balance Sheet as of Ja
Page 73 and 74:
Information on Participants of the
Page 75 and 76:
Explanatory Notes to Annual Financi
Page 77 and 78:
cost is changed only upon write-off
Page 79 and 80:
Appendix 1 The Bank’s Corporate G
Page 81 and 82:
38 The company’s articles of asso
Page 83 and 84:
73 74 75 The company’s by-laws sh
Page 85:
Ufimsky 54, Gafury Str. Bashkortost
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