Annual report 2011 - VTB

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VTB Annual Report 20114. Management report40broker accounts were registered with MICEX for VTB24customers.In 2011, the volume of VTB24 customer transactionsin shares on MICEX exceeded RUB 1.4 trillion roubles,representing a brokerage service market shareof 9.5% 1 for VTB24. The volume of transactionscompleted by the bank’s customers in the FORTStotalled more than RUB 2.6 trillion, 1.6 times morethan the 2010 figure.During the reporting period, an additional onlineForex trading platform was introduced, whichincreased the number of customers using the serviceby more than 1,000. At the end of 2011, more than6,561 customers were registered to trade on the Forexmarket. The volume of customer Forex transactionsduring the reporting period was over USD 135 billion,including SWAP transactions.VTB24’s customer-oriented approach and theimproved quality of its retail investment services werethe key drivers behind the growth in retail customerinvestment activity during the 12 month period.In 2011, the number of active customers reachedmore than 25,000.In 2011, VTB24 reduced the down payments requiredto set up individual trust management agreements.At the end of 2011, the number 2 of active individualtrust management agreements was 1.7 times biggercompared to the same period of 2010. During thereporting period, as part of the development of itsproduct line, the bank introduced trust managementservices for property, constituting special-purposecapital of non-commercial organisations.In 2011, funds attracted through VTB24 agencies intomutual funds grew by 2.5 times compared to 2010and exceeded RUB 1.1 billion. The number of officesresponsible for selling mutual fund equity units grewby 72 in 2011, making a total of 567.In 2012, VTB24’s investment business will focus itsefforts on improving the quality of customer serviceand expanding the range of its services and retailinvestment products.Services for small businessesSmall business customers make up a key part of VTBGroup’s retail business. Prior to the Bank of Moscow’sconsolidation in the third quarter of 2011, the Groupprovided services to individual entrepreneurs andsmall enterprises mainly through VTB24. As at theend of 2011, the volume of lending by the bankto small businesses increased by 70% comparedto 2010, and the bank provided RUB 50 billion offinancing in 2011. The bank’s loan portfolio for thissegment rose to RUB 68.7 billion during the year.The number of companies and individual entrepreneursusing the bank’s settlement and cash services reached218,000. The total volume of funds deposited by smallbusiness customers amounted to RUB 97 billion.In 2011, the bank continued to implement its strategyof growing its market share and customer base. A keydevelopment towards the fulfilment of this strategywas the bank’s transition from a single product salesmodel to providing integrated banking services tosmall business customers.In the reporting period the bank:Increased the limit for the “small business”classification category from RUB 90 million toRUB 300 million of annual revenues;Moved to a new customer service model for smallbusiness customers and established an effectivesales unit;Introduced a new product range for lendingtransactions and guarantees;1 Proportion of overall MICEX trading volume in which VTB24 customers took part (in the main trading mode).2 Customers who concluded Forex and stock market transactions during the reporting period.Made changes to its lending procedure to rationalisethe decision-making process and increase theaffordability of loan products to small businesscustomers;Approved a Business Express product concept (forloans of up to RUB 4 million) designed for standardsegment small business customers for whom lendingis subject to a scoring system as part of the bank’scredit decision-making process. In the fourth quarterof 2011, the bank successfully completed a pilottesting of this product and expects that the productwill be rolled out during the second quarter of 2012;Completed a project to develop a new remotebanking system – Bank-to-Customer Online – a Betaversion of which was launched in 2011.Today, the bank offers one of the most extensiveproduct ranges in the market for small businesses,covering most of its segments and meeting almostany customer need.In 2011, as part of the state support programmefor small businesses, VTB24 used OJSC MSE Bank’slending resources of RUB 5 billion to providefinancing to small businesses and individualentrepreneurs. The total volume of lending to smallbusinesses granted through this project amountedto RUB 10 billion, as VTB24‘s Co-financing productcontributed an additional RUB 5 billion of the bank’sown funds to the financing of small businesses.During 2011, the bank continued to develop itsrelationship with regional institutions responsible forsupporting small businesses. The number of currentagreements between VTB24 and such institutionsreached 51.VTB Group’s main aim for its small business lendingand servicing segment in 2012 is to grow salesvolumes and increase its market share. This will beachieved by optimising internal procedures relatedto processing lending applications and by offeringattractive new products. The Bank of Moscow willplay a particular role in the development of thisbusiness area. Just as VTB24 has done, it will provideservices to small and medium-sized businessesindependently. The Bank of Moscow intends to focusits efforts primarily on Moscow and the Moscowregion, as well as other ten key regions where it ispresent, thus covering more than 65% of mediumsizedbusiness in Russia.ATMsIn 2011, VTB Group had one of the largest ATMnetworks in Russia, and taking into accountTransCreditBank’s and the Bank of Moscow’sinfrastructure, the total number of ATMs reached10,161 units as at the year-end.As at the end of the reporting period, VTB24’s ATMnetwork totalled more than 5,700 units, 28% of whichare equipped with a cash pay-in function. Customerscan withdraw and pay in money, transfer funds andopen deposit accounts at the bank’s ATMs. They canalso make payments to more than 100 payees.As at the year-end, the bank’s ATM network hadprocessed more than 420 million transactions.More than RUB 214 billion was received and creditedto customers’ card accounts and payments of morethan RUB 31.5 billion were made.The bank is continuously improving its ATM networkby expanding its size and enhancing service quality.In 2011, the bank installed 749 ATMs, including thereplacement of existing ATMs, 495 of which have acash pay-in function.In 2011, the technical availability of ATMs, definedas the ratio of time when the devices wereoperational to the total time for the period, increasedfrom 91.0% to 92.4%.In 2012, the bank plans to expand its own network ofATMs to 6,370 units and put new devices into service,such as information and payment terminals for noncashpayments.41
VTB Annual Report 20114. Management report42NetworkVTB Group has one of the most developed networks ofsales and service offices in Russia. This includes VTB andVTB24 offices, as well as offices belonging to the Bank ofMoscow and TransCreditBank, which when combined,amount to 1,371 units as at the end of 2011.In 2011, VTB24 achieved impressive growth ratesin the scale, efficiency and quality of its network.During the year, business volumes per branch grewby 17% for retail loans (to RUB 1 billion) and 15% forretail deposits (to RUB 1.4 billion). VTB24’s networkstill remains the most efficient in the industry, withgrowth far outpacing its main competitors.During the reporting period, the bank accomplishedall of its network development plans. VTB24 opened76 new sales points, and the biggest growth in thenetwork was within the Moscow region (17 newoffices), St. Petersburg and Ekaterinburg (five newoffices). As a result, the number of VTB24 officestotalled 606 units as at the end of 2011. Today,the bank operates sales offices in 69 regions and212 cities in Russia, providing coverage for 72%of the country’s urban population.An important stage in the development of the bank’snetwork was the introduction of a new customerservice model for the high net-worth segment in2011. This enabled the bank to reach a new level inthe provision of customer service for this segmentand to significantly increase its customer base.The bank confidently maintains its leading marketpositions for customer service quality. According tothe results of two independent surveys, conducted byVTB24 retail networkEPSI, an international research company, and RetailFinance magazine, VTB24 was the absolute leaderin terms of customer service quality among Russianbanks in 2011.In 2011, a number of systemic measures wereimplemented to improve the quality of service:Half of the bank’s branches switched to the singlewaiting line system. During the year, the numberof offices using this system increased from 133 to309. This allowed VTB24 to significantly increasebranches’ rate of throughput while maintainingsustainable growth in incoming business streams;As part of the development of the segment-orientedapproach to customer service, 238 private servicezones for high net-worth customers were created;Lending application procedures became simpler andfaster due to optimised internal business processesand the time needed to process a cash loanapplication was reduced by 40%;Since July 2011, the bank’s customers have beenable to conduct commission-free transactions throughTransCreditBank and the Bank of Moscow ATMs. Thecombined ATM network comprises 10,000 units, twiceas many as at the beginning of 2011.In 2012, VTB24 will continue to expand its regionalnetwork by consolidating its presence in high-volumemarkets and also by increasing the number ofmobile offices to render sales and services to payrollcustomers. The 2012 network development plan aimsto deliver 80 new sales points.2009 2010 2011Number of sales points, including 476 531 606Branches 9 8 8Regional operational offices 59 61 61Additional offices / operational offices 401 455 530Cash desks 7 7 7VTB Group’s plans provide for additional salesnetwork growth with a higher proportion of servicingoperations and sales conducted through alternativechannels.4.3.3. Other businessesIn addition to retail and corporate and investmentbanking services, VTB Group provides financial servicesin such areas as leasing, factoring, insurance andprivate pensions. Establishing synergies and promotingthe cross-selling of banking and non-banking productsremain a key priority in developing the Group.LeasingVTB Leasing is today one of the leading Russianleasing companies, offering a broad range ofservices, with regional offices across Russia andsubsidiaries in the CIS and Europe.At the end of 2010, VTB Group acquired a controllingstake in TransCreditBank, and as a result theactivities of VTB Leasing and TransCreditLeasing wereintegrated. Both leasing companies are currentlyworking on furthering cooperation with each other,and on developing common approaches to dealingwith customers.As at the end of 2011, the combined leasingportfolio of VTB and TransCreditLeasing amountedto RUB 326.8 billion, and the volume of new leasingcontracts totalled RUB 212.9 billion. Key segments ofthe company’s leasing portfolio include rail transport,aviation technology, oil extraction and processingequipment, power and mechanical engineeringequipment.VTB Leasing is, according to the Russian Expert RARating Agency, one of the top-three companies in theRussian leasing market and, based on Leaseuropedata, it is among the top-50 leasing companies inEurope. In December 2011, the Expert RA RatingAgency rated VTB Leasing as the “Leader in RailwayEquipment Leasing – 2011”, repeating the ranking ithad given VTB Leasing in 2010.InsuranceVTB Insurance provides individuals and institutionswith a full range of services: property insurance, civiland professional liability insurance, and personalinsurance (excluding life insurance).The authorised capital of VTB Insurance was increasedto RUB 1.54 billion in 2011. During the reportingperiod, the amount of premiums accrued for all directinsurance businesses increased to RUB 9.3 billion, upby 69% when compared to 2010. This was primarilythe result of the dynamic growth of the company’sretail business, with the amount of premiums accrueddoubling year-on-year to RUB 6.1 billion.In 2011, VTB Insurance continued to focus onthe development of its bancassurance segment,increasing its market share for accident insuranceto 8.6% from a figure of 5% in 2010. During thereporting year, accident insurance and financialrisk insurance demonstrated the greatest growth inpremiums, at 166% and 122% respectively.VTB Insurance continued to expand its retail network.At the end of 2011, 209 insurance sales outlets wereoperating in the branches of VTB Group’s banks.Furthermore, the first sales outlets were opened inbranches of TransCreditBank and the Bank of Moscowduring the reporting year.The company strengthened its market position asa result of its performance in 2011, rising to 15thposition amongst the largest Russian insurers byvolume of premiums, and accounting for 1.4% of theRussian insurance market.VTB Insurance remains one of the most reliableinsurance companies in Russia. In 2011, Fitch Ratingsupgraded the company’s financial strength rating from“BB” to “BBB-“ (Outlook: “Stable”), while the Expert43
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