Economic growth and

banking in Russia

VTB24 President – Chairman of the Board

Mikhail Zadornov

Russia in world ranking by GDP based on PPP

bln. USD,

current prices (2012)

1 USA 15 685

2 China 12 406

3 India 4 684

4 Japan 4 628

5 Germany 3 197

6 Russia 2 513

7 Brasil 2 356

8 Great Britain 2 336

9 France 2 254

10 Italy 1 833

Source: IMF

2

Russia in world ranking by GDP per capita based on PPP

USD, current prices (2012)

1 Qatar 102 211

2 Luxembourg 79 785

3 Singapore 60 410

4 Norway 55 009

5 Brunei 54 389 … … …

16 Sweden 41 191 … … …

23 Finland 36 395 … … …

45 Estonia 21 713

46 Lithuania 21 615 … … …

51 Latvia 18 255

52 Argentina 18 112

53 Antigua and Barbuda 18 027

54 Croatia 17 810

55 Russia 17 709

56 Malaysia 16 922

57 Botswana 16 820 … … …

105 Ukraine 7 374 Source: IMF 3

Share of Russia in global indicators

Source: Russian Federal State Statistics Service, IMF, VTB24 calculations

Share of Russian GDP (2012)

Export 26,2%

Foreign trade turnover 42,9%

4

Share of Russia in global indicators

(2012)

GDP 3,0%

Population 2,0%

Area 11,5%

Demographics of Russia

5

143,6

141,6 140

142

144

146

Projections of Russian population, mln.

Total population

85,1

77,3

76

78

80

82

84

86

Working-age population

Source: Russian Federal State Statistics Service

Russia GDP growth rate

Source: Russian Federal State Statistics Service

6

10,0%

5,1%

4,8%

7,3% 7,2%6,4%

8,2% 8,5%

5,2%

-7,8%

4,5% 4,3%3,4%

-12%

-8%

-4%

0%

4%

8%

12%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Russia GDP annual growth rate, %

Historical data and projections of Russia GDP growth rate

Note: dotted line denotes values projected by the Ministry of Economic Development of the Russian Federation

Source: Russian Federal State Statistics Service, Ministry of Economic Development of the Russian Federation

7

4,8

4,3

3

2,1

1,61,4

1,92,2

3,0 3,13,3

0

1

2

3

4

5

6

1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 2014 2015 2016

%, year-

to-y

ear

GDP growth rate

Average annual oil price

Source: finam.ru

8

28,124,1 25,4 28,8

38,5

55,2

66,075,2

98,0

64,0

80,5

112,1

111,5

107,7

0

20

40

60

80

100

120

140

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Annual average Brent price, USD per barrel

International trade growth rate

Source: IMF

9

11,9

0,3

4,0

5,8

10,8

7,7

9,28,0

3,1

-10,6

12,5

6,0

2,5

-15

-10

-5

0

5

10

15

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

International trade growth rate, %, year-to-year

Historical data and projections of capital investment in Russia

Note: dotted line denotes values projected by the Ministry of Economic Development of the Russian Federation

Source: Russian Federal State Statistics Service, Ministry of Economic Development of the Russian Federation

10

16,3

11,610,3

6,6

0,1

-1,7

4,4 3,9

7,2 6,8

-4

0

4

8

12

16

20

1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 2014 2015

%, year-

to-y

ear

Capital investment growth rate

Russian export in 2012

Note: other components include other mineral products, precious gems, metals and their products, wood and paper products, textile and shoes,

leather , furs and their products and other goods.

Source: Russian Federal State Statistics Service

11

Major export components Share of export, %

(2012)

1 Fuel and energy 70,4

2 Metals and their products 8,5

3 Chemical industry

products, rubber 6,1

4 Machinery, equipment,

and vehicles 5,0

5 Food and agricultural raw

materials 3,2

6 Other components 6,8

Structure of capital investment sources

Other sources include extra-budgetary funds, funds of companies and individuals for housing construction partnerships, funds of superior

organizations, funds from issuance of corporate shares and obligations.

Source: Russian Federal State Statistics Service

12

41,9 45,4

8,6 8,4

19,2 17,8

30,3 28,4

0

20

40

60

80

100

2011 2012

Sources of capital investment, %

Other sources Budget funds Bank loans Internal financing

Foreign direct investment in Russia

Source: Bank of Russia, VTB24 calculations

13

74,8 36,6 43,2 55,1 51,4

4,5%

3,0% 2,9%3,0%

2,6%

0,0%

1,5%

3,0%

4,5%

6,0%

0

20

40

60

80

2008 2009 2010 2011 2012

Foreign direct investment (FDI) in Russia, mln. USD

FDI to Russia GDP ratio, % (right axis)

Countries with the largest volume of net aggregate FDI in Russia in 2008-2012

14

mln. USD

1 Cyprus 53 163

2 Netherlands 28 150

3 Luxembourg 25 695

4 British Virgin Islands 19 175

5 Ireland 18 121

6 Germany 13 809

7 Bermuda 12 971

8 Sweden 8 690

9 Bahamas 7 415

10 France 6 193

Source: Bank of Russia

Net capital outflow from Russia

15

Note: net capital outflow includes outflow via transactions of government, regions, Bank of Russia, commercial banks and other sectors.

Source: Bank of Russia, VTB24 calculations

34,5 30,7 84,8 36,8

2,8%

2,1%

4,6%

1,8%

0%

1%

2%

3%

4%

5%

0

20

40

60

80

100

2009 2010 2011 2012

Total capital outflow, mln. USD

Total capital outflow to GDP ratio, % (right axis)

Final consumption structure

Source: Russian Federal State Statistics Service, VTB24 calculations

16

73,0% 72,4%

27,0% 27,6%

0%

20%

40%

60%

80%

100%

2011 2012

Final consumption expenditures, %

Households Government

Russian federal budget

Source: federal laws on budget execution, Long-Run Budget Strategy of Russia till 2030

17

18,4%

20,8% 20,5%19,3%

18,0% 18,8%17,4%

22,4%

20,0% 20,6% 20,1%18,2% 18,8% 18,0%

-4,0%

0,8%-0,1%

-0,8%-0,2% 0,0%

-0,6%

-5,0%

-2,5%

0,0%

2,5%

5,0%

7,5%

10,0%

12,5%

-10%

-5%

0%

5%

10%

15%

20%

25%

2010 2011 2012 2013 2014 2015 2016

Federal budget indicators to GDP

Revenues Spending Surplus (+) / Deficit (-) (right axis)

Russian regional budgets

Source: federal laws on budget execution, Long-Run Budget Strategy of Russia till 2030

18

14,5% 14,0%12,9% 12,9%

12,0% 12,3% 12,7%

14,7%14,1%

13,3% 13,2%12,1% 12,4% 12,7%

0,2%

-0,1%

-0,4% -0,3%

-0,1%-0,1% 0,0%

-0,5%

0,0%

0,5%

1,0%

1,5%

2,0%

-4%

0%

4%

8%

12%

16%

2010 2011 2012 2013 2014 2015 2016

Regional budgets indicators to GDP

Revenues Spending Surplus (+) / Deficit (-) (right axis)

Real income growth and retail sales in 2011-2013

Source: Russian Federal State Statistics Service

19

0,8

1,6

4,4

4,9

5,86,2

3,41,7

7,2

7,97,4

5,6

4,9

4,1

3,6 3,8

0

1

2

3

4

5

6

7

8

9

2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013

%, year-

to-y

ear

Real disposable income, growth rate Retail trade turnover, growth rate

Total assets of Russian banks to GDP ratio

20

Source: Bank of Russia, Russian Federal State Statistics Service, VTB24 calculations

2013*: Russia GDP from July 2012 to June 2013, total assets of Russian banks after June 2013.

45,1%

51,9%

60,5%

67,9%

75,8%73,0%

74,6%

79,1% 80,4%

40%

50%

60%

70%

80%

90%

2005 2006 2007 2008 2009 2010 2011 2012 2013*

Total assets of Russian banks to GDP ratio, %

Total assets of Russian banks growth rate

Source: Bank of Russia, VTB24 calculations

21

2013*: growth rate for 12 month from October 2012 till September 2013

36,6%

43,2% 44,1%

39,2%

5,0%

14,9%

23,1%

18,9%

18,5%

0%

10%

20%

30%

40%

50%

2005 2006 2007 2008 2009 2010 2011 2012 2013*

Total assets of Russian banks, growth rate, %, year-to-year

Banking system profit and return on equity

Source: Bank of Russia

22

2013*: profit for 12 months from September 2012 till August 2013, total equity after August 2013

93 128 178 262 372 508 409 205 573 848 1012 988

16,0% 15,8%

18,8%

21,1%21,9%

19,0%

10,7%

4,4%

12,1%

16,2% 16,6%

14,7%

0%

5%

10%

15%

20%

25%

0

250

500

750

1 000

1 250

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*

Current profit, bln. rub. Return on equity, % (right axis)

Loans to individuals and companies: different trends

Source: Bank of Russia, VTB24 calculations

Note: Loans to companies are loans to non-financial enterprises according to Bank of Russia methodology

2013*: growth rate for 12 months from October 2012 till September 2013

23

-11,0%

14,3% 35,9% 39,4% 31,0%0,3% 12,1% 26,0% 12,7% 12,8%

-20%

-10%

0%

10%

20%

30%

40%

50%

2009 2010 2011 2012 2013*

Loans to individuals and companies

Loans to individuals, annual growth rate, % Loans to companies, annual growth rate, %

Sales of new cars in Russia are falling

Source: ACEA, AEB, VTB24 calculations

Sales of new cars in Russia in January – September 2013 decreased by 2.5% compared to the same

period of the previous record-breaking year. By the end of 2013 decline in sales may reach 5-6%.

Share of car sales financed with loans in 2013 rose to 38-39% compared to 30% in 2012.

24

0

50 000

100 000

150 000

200 000

250 000

300 000

jan feb mar apr may jun jul aug sep oct nov dec

Sales of new cars in Russia, pcs.

2009 2010 2011 2012 2013

Source: Federal Service for State Registration, Cadastre and Cartography

Mortgage financing becomes more and more important for house acquisitions

25

839

1032

953

1160

897

985

1067

1169

918

1070

1323

93142 152

198

147

205 211 228

169

224247

11,1%

13,8%

16,0%

17,1%

16,4%

20,8%19,8%

19,5%

18,4%

20,9%

18,6%

0%

4%

8%

12%

16%

20%

24%

28%

0

200

400

600

800

1000

1200

1400

1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013

tho

usan

sd

tra

nsacti

on

s

Registration of ownership rights for housing property in Russia

Total (without joint ownership and construction partnerships) Mortgage loans Share of mortgage financing (right axis)