14 Dec 2016 13:18
JSC VTB Bank / Miscellaneous - Medium PriorityVTB Group announces strategy for 2017-2019 14-Dec-2016 / 15:18 CET/CESTDissemination of a Regulatory Announcement, transmitted by EquityStory.RS,LLC - a company of EQS Group AG.The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- Press release 14 December 2016 VTB Group announces strategy for 2017-2019 On 14 December 2016, the VTB Supervisory Council approved VTB Group'sdevelopment strategy for 2017-2019. The Group's strategy for the next three years is based on the followingpriorities: - To increase profitability and achieve net profit in excess of RUB 200 billion by 2019. - To create an integrated banking business and build a single full- service bank by completing the VTB Bank - VTB24 merger no later than January 2018. - To modernise the Group by developing a more customer-oriented bank through a large-scale technological transformation The strategy is built on a moderately optimistic development forecast forthe Russian economy and the banking industry. This is based on theassumption of economic growth gradually recovering to 2%-2.4%, achievingthe targeted inflation rate of 4.5% and a gradual reduction of the Bank ofRussia's key interest rate to 6% by end-2019. The Group's terminal ROE is expected to be at about 13%-14%, and cost-income ratio at approximately 40%. The Group expects lending in the Russian banking sector to recover,enabling VTB to expand its loan portfolio by at least 10% per annum. Underthe strategy, the Group is expected to outperform the market in terms ofretail lending growth rates, increasing the segment's share in the overallloan portfolio. An important objective is to improve the funding profile by increasing theshare of customer funds, primarily in the retail segment, as well asstreamlining liabilities by attracting more funds into current accounts andincreasing the share of rouble-denominated account balances. Merging VTB Bank and VTB24 into an integrated bank is a key strategicproject in the new three-year strategy. The initiative is expected toimprove the Group's management structure by creating a single, highly-competitive entity, efficiently leveraging its business lines to delivercommon objectives. The merger will also enable the Group to streamlinecosts and improve its overall financial results. A technological transformation entails rapid development of digitalchannels, significantly reducing the time it takes to introduce newproducts and services, developing data analysis tools and an integratedsystem for streamlining and automating processes. Retail business Under the approved strategy, we expect above-market growth in the retailsegment. The Group is committed to improving all key indicators in theretail segment in terms of market share. This will increase the share of retail business in the overall Group's loanportfolio from 20% to 30%, and from 30% to 40% in the Group's totalliabilities. Consequently, the Group will have a greater share ofbusinesses with a high rate of return, and more stable funding. Increasing the size of the mass segment is an important objective in termsof optimising the cost of funding in the retail segment. This can beachieved, inter alia, by actively promoting Post Bank, increasing marketshare in terms of current account balance by at least 1.5-times, andsignificantly increasing the share of rouble-denominated funds on retailaccounts as opposed to those in foreign currency. By delivering on these objectives the Group will reduce the cost offunding, which will positively affect the net interest margin. The integrated VTB Bank and Post Bank are expected to become leadingplayers in terms of quality of service and customer loyalty in theirrespective sectors. With this as a focus, significantly improving thequality, convenience and functionality of digital channels, the mobile andthe online bank, is a key priority. Corporate-investment business In the next three years, increasing business profitability whilststrengthening leadership with major corporate customers will be a priorityfor the Corporate-Investment Banking (CIB) global business line. To theseends, CIB will be tasked with delivering on the following strategicobjectives: - Increase lending by at least market-average growth rates (approximately 8% per year), adjusting the variety of industries in the portfolio depending on established priorities - Increase market share in terms of average current account balances and transaction services to corporate customers by improving quality of service, offering innovative products and upgrading the existing technology platform - Diversify customer base by offering more competitive rates, which can be facilitated by a better funding profile and an approach whereby rates depend on the yields offered to customers across all business lines of the Group - Develop products and expand the geography of trade and export financing operations - Maintain leadership in investment banking services in Russia and make efficient use of the Group's international presence to further develop CIB business line Medium corporate business In working with medium-sized corporate customers the strategic objectivesfor the Group are to grow the customer base by three times and expand thetransactions segment by four times, including current account balances andrisk-free fees, to exceed average market growth rate. To this effect, the Group will overhaul its business model for medium-sizedcorporates. First, it will improve its risk coverage models and cross-sales for high-end medium corporate business customers by introducingdetailed customer-level planning. Second, the Group intends to build atransaction model for attracting more bottom-end customers. --------------------------------------------------------------------------- The EquityStory.RS, LLC Distribution Services include RegulatoryAnnouncements, Financial/Corporate News and Press Releases.Archive at www.dgap.de/ukreg --------------------------------------------------------------------------- Language: English Company: JSC VTB Bank 12, Presnenskaya emb. Moscow Russia Phone: +7 (495) 739-77-99 Fax: +7 (495) 739-77-99 E-mail: info@vtb.ru Internet: www.vtb.com ISIN: US46630Q2021 Listed: Foreign Exchange(s) London Category Code: MSCM TIDM: VTBR Sequence Number: 3687 Time of Receipt: 14-Dec-2016 / 15:18 CET/CEST End of Announcement EquityStory.RS, LLC News Service--------------------------------------------------------------------------- 529749 14-Dec-2016UK-Regulatory-announcement transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.