Development Strategy

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					                                                 Bank Profile

VTB24’s Supervisory Board

Chairman of the Supervisory Board:
President – Chairman of the Board of VTB Bank OJSC

Member of the Board of JSC VTB Bank

President – Chairman of the Board of VTB Bank (OJSC)

Vice President - Chairman of the Board of VTB Bank (OJSC)

Senior Vice-President, Head of Department of OJSC VTB24

Deputy President – Chairman of the Board of JSC VTB Bank

VTB24’s Board2

President – Chairman of the Board

First Deputy President – Chairman of the Board

Deputy President – Chairman of the Board, Network Department Director

Deputy President – Chairman of the Board, Marketing & PR Department Director

Member of the Board, Mortgage Lending Department Director

 VTB24's Supervisory Board Members were elected by the annual General Shareholders Meeting held June 28,
2010 (Minutes No. 03/10 dd. June 29, 2010). Members of the VTB24’s Supervisory Board have
made no contributions to its share capital and do not possess any ordinary registered shares of VTB24.
 VTB24’s Board membership as of December 31, 2010.
Member of the Board, Retail Business Department Director .

Member of the Board, Financial Department Director

Member of the Board, Risk Analysis Department Director

Member of the Board, Operations Department Director


       General License issued by the Bank of Russia for performance of bank operations No.
        1623 dd. November 17, 2006.
       License of the professional securities market participant issued by the Federal Financial
        Markets Service for performance of brokerage activities No. 077-03219-100000 dd.
        November 29, 2000.
       License of the professional securities market participant issued by the Federal Financial
        Markets Service for performance of dealership activities No. 077-03311-010000 dd.
        November 29, 2000.
       License of the professional securities market participant issued by the Federal Financial
        Markets Service for performance of custody activities No. 077-03752-000100 dd.
        December 7, 2000.
       License of the professional securities market participant issued by the Federal Financial
        Markets Service for performance of securities management No. 077-03391-001000 dd.
        November 29, 2000.
       License issued by the Federal Financial Markets Service for rendering special custody
        services to investment funds, mutual investment funds and non state funds No. 22-000-1-
        00041 dd. October 30, 2001.
       License of exchange broker for commodity futures transactions and option transactions in
        exchange trade issued by the Federal Financial Market Service No. 1409 dd. July 21,


       Certificate No. 680 on entering the bank into the Register of Member Banks of the
       Association of Russian Banks (ARB)
       The Russian Managers Association
       National Securities Market Association (NSMA) Self-Regulatory Non-Commercial
       Russian Trading System Stock Exchange OJSC
       RTS Non-Commercial Partnership
       Saint-Petersburg Stock Exchange CJSC
       Saint-Petersburg Currency Exchange CJSC
      Moscow Stock Exchange OJSC
      Moscow Central Stock Exchange CJSC
      MICEX (Moscow Interbank Currency Exchange) CJSC
      MasterCard International Incorporated
      VISA International Service Association
      Association of Bill Market Participants Non-Commercial Organisation
      S.W.I.F.T (Society for Worldwide Interbank Financial Telecommunications and
       electronic financial workflow)

2010 Chronicles


Jan 13
In early 2009, the number of payments performed by the VTB24 customers in favour of
organization has increased 1.5 times.

Jan 18
VTB24 has been paying insurance premium to Mega Bank CJSC depositors since January 14,

Jan 21
VTB24 renews the refinancing program of mortgage loans extended by other banks.

Jan 22
Following the results of 2009, VTB24 auto loans portfolio amounted to 44.9 billion rubles.

Jan 26
VTB24 has started extending mortgage loans with combined interest rates

Jan 28
In early 2010, the number of Telebank system users has exceeded 500,000.

Jan 29
Following the results of 2009, the ATM network of VTB24 has increased 1.5 times, to 4100


Feb 3
VTB24 and Jaguar Land Rover Russia introduce their dedicated Jaguar Land Rover on Credit

Feb 9
VTB24 launches its Privilege services package in the Ukraine,
Feb 11
VTB24 and the Urals Airlines launch a new co-brand card.

Feb 12
Alexander Melenkin heads the financial department of VTB24.

Feb 19
VTB24 improves the Avtostandart program conditions.


March 5
VTB24 is one of the most secure banks according to the Finance magazine.

March 11
VTB24 improves the conditions of special auto lending programs.

March 22
VTB24 is one of the leaders due to the results of the poll held with the entrepreneurs.

March 25
Mikhail Zadornov meets VTB24 Private Banking customers

March 26
VTB24 confirms proper leadership in the call-centre industry


April 1
Leonid Parfenov and Valery Todorovsky have become new spokesmodels of VTB24’s I’m
Confident program.

April 8
VTB24 and the Ulan-Ude administration have signed a cooperation agreement

April 12
Mikhail Zadornov, the head of VTB24, takes the annual prize of Finance magazine as The Best
Retail Bank Manager.

April 14
VTB24 cuts mortgage rates

     April 23
VTB24 was awarded an annual national prize IT-LEADER.

May 4
ANATOLY PECHATNIKOV is appointed Deputy President – Chairman of the Board of the

May 17
VTB24 offers its clients a possibility to open unallocated metal accounts.

May 20
VTB24 launches a the program for the state support of mortgage debtors program

May 24
VTB24 card My Conditions makes it possible to cut expenses

May 27
VTB24 cuts the term for revision of client claims to 15 days.

May 31
The Supervisory Board of the VTB24 extended the term of office for Mikhail Zadornov and all
bank directors to 5 years.


June 1
VTB24 starts to accept applications for mortgage loans under the state support program.

June 3
VTB24 won the Financial Olympus prize nominated as the Best Mortgage Bank.

June 9
Following the results of May 2010 the net profit of VTB24 exceeded 8 billion rubles.

June 11
VTB24 has won the Grand Prix of the Russian Financial Elite award and was nominated as the
Bank of the Quinquennium 2005 – 2010.

June 16
The number of current credits at VTB24 retail credit portfolio has exceeded 2 million.


July 1
The Vice-President of VTB24 board has met the governor of Rostov region, Vasily Golubev

July 6
In June 2010 VTB23 has drawn time accounts to the amount exceeding 17 billion rubles.

July 8
VTB24 improves the conditions of loan extension to small business

July 14
VTB24’s net profit in the first semester increased up to 8.62 billion rubles

July 29
ALEXANDER MELENKIN was appointed member of VTB24 board


August 2
VTB24 launches new ATM network for OTP bank credit card holders

August 4
ANDREY NEKRASOV headed VTB24’s customer service department for small business.

August 6
VTB24’s clients all over Russia have got a possibility to open unallocated metal accounts.

August 25
VTB24 Private Banking office was open in Kazan

August 25
VTB24 starts to accept money transfers in favour of forest fire victims.

August 30
VTB24 ATM network with the cash-in function is as large as 1000 machines.


September 1
VTB24 has made a charitable donation to the Russian school in Armenia.

September 3
VTB24 launches an advertising campaign for loan products

September 8
VTB24 celebrates the fifth anniversary of the first extended consumer loan

September 17
VTB24 launches a joint project together with the NTM online store

September 20
VTB24 starts extending mortgage loans for purchase of garages,
September 23
Mikhail Zadornov tops the rating list of banking CEOs: TOP 1,000 Russian Managers

October 5
VTB24 in Moscow reached 50 branches

October 8
VTB24 has signed a strategic partnership agreement with the Government of Orenburg region

October 14
VTB24 cuts mortgage rates and reviews loan applications free of charge

October 18
VTB24 launches a new model for servicing small business customers.

October 10
VTB24 has issued over 10 million cards

October 21
VTB24 and Court Bailiffs Service of Russia launch electronic information exchange system

October 29
Mikhail Zadornov became the award winner of ARISTOS-2010 prize.


November 3
VTB24 was called the best bank of Russia according to the Business New Europe version.

November 12
VTB24 and Rostelekom launch instant payment for telecommunication services with the credit

November 18
Not less than 500 million rubles to be credited for small business development in the framework
of cooperation between the government of Samara region and VTB24

November 22
VTB24 cancels auto loan interest rates.

November 25
VTB24 receives Forex Expo Awards, nominated Best Forex Bank-Broker

November 26
VTB24 Private banking is the best Russian bank according to SPEAR'S Russia

December 2
VTB24 launches a speedy loan extension program for its salary clients.

December 2
VTB24 acts as primary sponsor of the national award THE CAR OF THE YEAR IN RUSSIA

December 3
VTB24 is the best retail bank according to The Retail Finance

December 7
VTB24 gets 5 billion rubles from the Russian bank for Development

December 10
VTB24 started performing mortgage transactions on Saturdays

December 14
VTB24 has drawn time accounts to the amount exceeding 500 billion rubles

December 20
Capital Group and VTB24 announce the start of cooperation.


Fitch Ratings according to the international scale

BBB long-term rating, Outlook Positive
F3 short-term rating
ААА (rus) national long-term rating, Stable Outlook

Date rated: July 27, 2006

Moody’s Investors Service

      Baa1 for long-term foreign currency deposits, stable outlook.
      Prime-2 for short-term foreign currency deposits, stable outlook.
      Baa1 for long-term foreign currency deposits, stable outlook.
      P-2 for short-term foreign currency deposits, stable outlook.
      D rating for financial strength; stable outlook.
      The national scale rating—, stable outlook.
      Date rated: July 27, 2006

                      Overview of the Russian Banking System
       In 2010, the Russian banking system started to restore after the financial crisis. It should
be noted that retail loans demonstrated faster growth than the corporate ones. Consequently, the
sustained growth of the Russian banks and highly professional actions taken by the government
to maintain stability reinforced customers’ confidence to the bank crisis that was reflected in
sustained fast growth of retail deposits as bank assets.
        The growth rates of the banking system in 2010 have substantially increased as compared
to 2009. The average monthly growth rate of Russian banks’ assets was 1.2% as compared to
0.4% in 2009, while the capital of Russian banks was growing more slowly 0 by 0.2% versus
1.6%, respectively. Nevertheless, the assets of the Russian banking system increased to RUR
33.8 trillion and its capital reached the amount of RUR 4.7 trillion to the beginning of 2011.

                    Активы и капитал российской банковской
                              системы, трлн. руб.

           35                                                                               5

           28                                                                               4


           21                                                                               3

           14                                                                               2

            7                                                                               1

            0                                                                               0
                     01.01.2008             01.01.2009          01.01.2010     01.01.2011

                                        Активы           Капитал (правая шкала)

             Assets and Capital of the Russian Banking System, RUR trillions
                  Доля кредитов предприятиям и населению
             Assets/Capital (right scale)
                         в активах банков, % активов
             Source: Bank of Russia
        In terms of the growth rates, the Russian banking system has continued to be16 line with
                                                                                            Кредиты населению

the core Russian industries. This resulted in the banks’ assets to GDP ratio increased remaining

          45                                                                         15
at the level 76% and in insignificant decline in credits to the economy (51% to 50%). A high

saving activity of the population is worth mentioning: bank deposits of physical persons per
          44                                                                         14
annum increased 19% GDP to 22% GDP.
      As a result, the banks’ assets to GDP ratio increased from 67 to 75%, and13 capital-
         43                                                                     the
GDP ratio grew from 9.2 to 11.8%. The funds raised from customers were the key source of
         42                                                                    12
                                                    19% to 22%
growth: retail deposits to GDP ratio increased from 01.01.2009 GDP.
                 01.01.2007       01.01.2008                      01.01.2010

                                       Кредиты предприятиям (левая шкала)
                                       Кредиты населению (правая шкала)
                    Отношение основных показателей
                   банковской системы России к ВВП, %








                   2008                         2009                          2010

          Активы    Капитал     Кредитный портфель       Привлечённые средства населения

       Main indicators of the Russian banking system to GDP ratio, %
       Assets – Capital – Credit Portfolio – Retail Deposits
       Source: Bank of Russia
        Lending remains the major type of banking system transactions: by the end of 2010, the
volume of loans granted by the banks to the non-financial sector and individuals was 19.2 trillion
rubles, which is 2 trillion rubles less as compared to beginning of the year. Retail lending in
banks’ assets remained at the level of 12% while corporate lending showed a certain decline in
the course of the year: from 46% to 45%.
                               Доля кредитов предпритиям и населению в
                                       активах банков, % активов

                         50                                                                             15

                         49                                                                             14
  Кредиты предприятиям

                                                                                                             Кредиты населению
                         48                                                                             13

                         47                                                                             12

                         46                                                                             11

                         45                                                                             10

                         44                                                                             9
                               01.01.2007     01.01.2008    01.01.2009    01.01.2010     01.01.2011

                                                Кредиты предприятиям (левая шкала)
                                                Кредиты населению (правая шкала)

                          Share of Consumer and Corporate Loans in Banking System Assets, % of assets
                          Corporate Loans (left scale)
                          Consumer Loans (right scale)
                          Source: Bank of Russia
       The second semester 2010, however, brought in a tendency for the growth of overdue
debt of bank portfolios. The said index reached its summit by the mid-year and started to
decrease and amounted to 6.9% by the beginning of the 2011 with reference to consumer loans
and 5% with reference to corporate loans.
                                    Просроченная задолженность
              900                                                                                            8.0

              720                                                                                            6.4

                                                                                                                   Доля портфеля, %
 Млрд. руб.

              540                                                                                            4.8

              360                                                                                            3.2

              180                                                                                            1.6

               0                                                                                             0.0
                     01.01.2008 01.07.2008 01.01.2009 01.07.2009 01.01.2010 01.07.2010 01.01.2011
                       Просроченная задолженность по кредитам физическим лицам, млрд. руб.
                       Просроченная задолженность по кредитам юридическим лицам, млрд. руб.
                       Доля просроченной задолженности в портфеле кредитов физическим лицам , % (прав ая шкала)
                       Доля просроченной задолженности в портфеле кредитов юридическим лицам , % (прав ая шкала)

                    Delinquencies on Loans
                    Billion rubles – Portfolio share, %
                    Delinquencies on consumer loans, billion rubles
                    Delinquencies on corporate loans, billion rubles
                    Share of loan delinquencies in consumer loan portfolio, % (right scale)
                    Share of loan delinquencies in corporate loan portfolio, % (left scale)
                    Source: Bank of Russia, settlements of VTB24

         The confidence level of the population to Russian banks being high and the alternative
investment forms being underdeveloped resulted in an increase of more than 31% versus 27% in
2009. Alongside with that the main part of growth (over 40%) fell for the IV quarter, as usual.
This resulted in an increase of the share of population in bank assets grew from 25% to 29% of
        An aggressive growth of bank deposits accompanied by a moderate growth in lending led
to an increase of bank system transactions balance. Following the results of the year, an increase
in borrowed funds of the population exceeded the amount of previously extended credits more
than 1.8 trillion rubles. Under the limited outside financing the population is the main source not
only for the retail but for corporate lending as well.
                         Прирост кредитов и депозитов населения в 2010 г.
                       (млрд. руб. в квартал) и доля депозитов населения в
                                   пассивах (на конец квартала)

                1000                                                                  30

                800                                                                   29
   млрд. руб.

                600                                                                   28

                400                                                                   27
                200                                                                   26

                   0                                                                  25
                -200         I кв           II кв               III кв   IV кв        24

                  Кредиты населению
                  Привлеченные средства населения
                  Доля средств населения в пассивах, на конец квартала (правая шкала)

        Retail Loans in 2010 (billion rubles per quarter) and Retail Deposits Growth in liabilities
(to the end of quarter)
                 Retail Loans
                 Retail Deposits
                 Source: Bank of Russia, settlements of VTB24
       No dramatic changes were observed in the institutional framework of the Russian
banking system. The structure of Russian bank assets remains balanced: about 40% of assets
belong to state banks and banks in possession of Russian private capital while 20% of the assets
belong to the bank in non-residents’ possession.
                      Институциональная структура российской
                        банковской системы, на начало года
   % активов

                             2008              2009                 2010                2011
     Госбанки            Российские частные банки           Банки, контролируемые нерезидентами

               Institutional Structure of the Russian Banking System, at the start of the year
               State banks
               Russian private banks
               Banks controlled by non-residents
               Source: Bank of Russia, settlements of VTB24
       Under the conditions of retail markets recovery and increased competition VTB24
continued to enhance its market positions. Its assets in 2010 grew 1.3 times while proper funds
grew 1.1 times. Following results of the year, the bank was ranked 5th in the Russian bank
system with reference to assets and 6th with reference to the capital.
        The population credits portfolio growth outrunning the market (20% versus 14% on an
average at the market) enabled the bank to increase its market share (taking into consideration
the cession) to 0.5 p.p., to 10.6%. The market share amounts to 11.2%. Taking into consideration
the securitized mortgage portfolio, the market share amounts to 11.2%.
        An increase of volumes of population funds placed with VTB24 also outran the market
(45% versus 31%), the bank share at the market increased by 0.6 p.p. and amounted to 6.4%.
VTB24 stabilized its positions as the second retail bank of the country with reference to the
amount of loans to the population as well as with reference to the drawn deposits, outrunning its
closest pursuers.
                             ВТБ24 на рынке кредитования физических

                       450                                                                13.5%
                       400                                                                12.0%
Портфель, млрд. руб.

                                                                                                  Рыночная доля, %
                       350                                                                10.5%
                       300                                                                9.0%
                       250                                                                7.5%
                       200                                                                6.0%
                       150                                                                4.5%
                       100                                                                3.0%
                        50                                                                1.5%
                         0                                                                0.0%
                              01.01.2008           01.01.2009   01.01.2010   01.01.2011

                                    Кредиты физическим лицам, млрд. руб.
                                    Рыночная доля (правая шкала)

                       Portfolio, billion rubles
                       Market share, %
                       Lending to individuals, billion rubles
                       State funds (right scale)
                       Source: Bank of Russia, settlements of VTB24
                                  ВТБ24 на рынке привлеченных средств
                          700                                                                 7%
                          600                                                                 6%
   Портфель, млрд. руб.

                                                                                                   Рыночная доля, %
                          500                                                                 5%
                          400                                                                 4%
                          300                                                                 3%
                          200                                                                 2%
                          100                                                                 1%
                            0                                                                 0%
                                 01.01.2008            01.01.2009   01.01.2010   01.01.2011

                                  Привлеченные средства населения, млрд. руб.
                                  Рыночная доля (правая шкала)

                          VTB24 in Retail Deposits Market
                          Retail Deposits, billion rubles
                          Market share (right scale)
                          Source: Bank of Russia
        According to our estimates, the Russian banking system together with the Russian
economy will continue to recover from the crisis in 2011. Bank lending is going to become more
active, alongside with that retail loan will prevail over the corporate loan growth. The population
is going to head to the consumer behaviour model instead of the saving behaviour model. At the
year end, we expect retail loans and retail deposits to grow both nominally and in relation to
GDP. The loan and deposit growth are going to be comparable in 2011.

                                 Core Performance Results of VTB24 at the end of 2010

       Bank’s financial data for the current and preceding reporting periods have been generated
under the Russian Accounting Standards.
         In 2010, VTB24 achieved a dramatic growth with reference to assets as well as the net
profit, its net profit being a record for the whole period of bank’s operation. The results secured
maximum approach to the strategic aims of 2012-2013 as far as capital and asset return as
        In 2010 the bank’s balance sheet profit before tax is 22 billion rubles and its net profit is
16.8 billion rubles. VTB24’s profit under IFRS in 2010 equal to 17.2 billion rubles has exceeded
the similar index in 2009 showing the 3.5-fold growth.
                 The bank’s own funds (capital) calculated under the Bank of Russia Regulation on the
          Methods for Calculation of Own Funds (Capital) of the Lending Institutions No. 215-P of
          February 10, 2003 grew 1.08 times in 2009 and amounted to 104.1 billion rubles (as of January
          1, 2010). VYB24’s capital adequacy ratio (H1) reached 12.9% as of January 1, 2010, and the
          qualifying rate (established by the statutory documents of the Bank of Russia) is 10%.
                   In 2010, VTB24’s assets grew 1.3 times, from RUR 708.5 billion to RUR 900.6 billion.
                  In the post-crisis period main VTB24’s competitive advantages are not only the number
          of retail products and their attractive conditions but also the client service quality, the range of
          service channels and differentiated approach to various client categories.
                 Development of new credit products, effective targeting of various client categories
          allowed for a dramatic retail portfolio increase in 2010.
                 Net loans increased 1.31 times in 2010, and amounted to 738.8 billion rubles as of
          January 1, 2010 (564.8 billion rubles as of the same date of the previous year.)
                  The retail product portfolio grew 15% percent, from 433.9 billion rubles to 497.9 billion
          rubles. Consumer loans increased from 154.5 billion rubles to 203.1 billion rubles, and auto
          loans rose from 45.0 billion rubles to 51.7 billion. The mortgage portfolio (without taking into
          consideration the secured portfolio) rose from 142.6 billion rubles to 152.2 billion rubles to
          (without securitized portfolio – 176.6 billion rubles)
                  The saving behaviour model of the population prevailed throughout the 2010. This was
          expressed as a record pace of population assets growth throughout the year. Alongside with that
          the cost of retail deposits was decreasing that allowed to retain and even to increase business
          profitability for the period of credit interest decrease a little.
                 In 2010, the overall liabilities of the bank grew 1.29 times, and amounted to 812.2 billion
          rubles as of January 1, 2010. The funds on the customers’ accounts increased 1.42 times and
          amounted to 710.9 billion rubles as of January 1, 2011 (501.9 billion rubles as of January 1,
          2009). Time retail deposits increased 1.44 times following the results of 2010 and exceeded
          523.5 billion rubles as of January 1, 2011.

          Basic Balance Sheet Items

RUR, billion                                             2010     2009 2008        2007     2006 2005        2004
Assets, including                                       900.6    708.5 601.6      323.5    166.2 43.4           32
Loan portfolio                                          738.8    564.8 455.8        261      141 33.1         22.8
Liabilities, including                                  811.4    630.9 547.4      279.6    148.8 37.6         27.8
Funds on customer accounts, including                  710.9    501.9 365.2        219    103.9    17.5      8.1
Individual funds                                       630.1    433.6 304.8      174.2     62.5     7.7      3.4

         Retail Loan Portfolio

       RUR, billion                                             2010     2009     2008     2007    2006      2005
       Retail products portfolio volume, including             497.9    433.9    423.3    208.7     67.4       7.6
       Consumer loans                                          203.1    154.5    129.7      60.3    19.7       3.1
       Car loans                                                 51.7       45     38.8     17.4     6.1       1.1
       Mortgage loans                                          152.2    142.6    167.9      82.2    20.1       0.7
       Small business loans                                      63.7     71.2     74.3     45.1    20.5       2.7
       Credit cards                                              27.1     20.6     12.6      3.7       1       0.1

                  In 2010, the bank has issued more payment cards because new clients were attracted. To
         attract new clients, the main card tariffs dropped significantly in the mid-year. The bank an the
         payment system held various activation campaigns for cardholders to intensify card use by the
                The total number of cards in circulation (credit and debit cards) exceeded 7.2 million as
         of January 1, 2010, 2.7 million of them being credit cards (including payroll cards).
                  Being a participant to VTB international financial group, in 2010 VTB24 continued to
         offer products of other companies- member of VTB group that present interest to their clients.
         Thus, VTB24 offices offer the following possibilities: purchase insurance products
         corresponding to insurance products or independent of them, investment products and services
         and execute partial transfer of pension contributions to the National Pension Fund VTB Pension
         Fund. The VTB Pension Fund offers a full range of financial services and to become bank No. 1
         to its clients in its quality of retail business representative.

         Efficiency and Cost Management

                In 2010 cost management and tough control over cost cutting were one of the key
         VTB24’s objectives. In the course of the year an automated cost management and cost cutting
         system was implemented in the bank and the control procedures and approaches to cost
         management were improved. In 2010, one of the key VTB24’s objectives was also to retain the
         high efficiency level in the sphere of cost management reached in 2009. VTB24 succeeded in
         solving the tasks almost as high as 10% in comparison with the previous year.

                                           2010–2012 Development Strategy

                 VTB’s strategic aim with reference to further growth in its scope of business and
         profitability is based on promoting a customer-centered approach to provide services to
         individuals and small businesses.
        The strategic aims fall into 3 sections – quantitave aims, qualitative aims and
infrastructure aims. Major aims may be defined as follows:
            To secure return on equity (ROE) over 20%;
            A dramatic growth in the number of clients;
            Develop the network of branches and the self-service network;
            To become leaders in client services and in its function of major retail bank for the
            New technological platform implementation and secure operation of key bank
              systems at the level of the best world practices.

       VTB24 strategic development plans involve a number of key initiatives for work with
individuals and small businesses.
       In 2011 VTB24 is guided by the following key objectives:
            To sustain and enhance the efficiency values reached in 2010;
            Growth in the scope of business to increase the market share and regional
              presence support;
            Further implementation of measures aimed at the shift of the client-orientated and
              segment-orientated model of product offers and client services;
            develop and promote remote sales and service channels to accommodate
            Open about 70 new point of sales;
            Further upgrade the bank’s IT infrastructure.

                              Bank products and services

                                     Mortgage Lending

       In 2010 the mortgage lending market of the country rallied to a notable extent. The most
evident aspect of transition from the stagnation state to the mortgage lending market recovery
was to be mentioned in the second semester of 2010.
        Starting from the end of 2009 – the start of 2010 the bank increased its activity at the
mortgage lending market and swiftly transformed its business strategy implemented during the
crisis period (concentration of efforts for the quality and profitability of a ready mortgage
portfolio) into the business strategy of intensive growth of mortgage business.
       The key drivers of the mortgage business growth were considered as follows:
      Efficiency of mortgage infrastructure operation and implementation of a new mortgage
       sales model;
      Enhancing the mortgage product appeal retaining the balance of product availability and
       optimization of systemic credit and interest risks.
        At the end of 2009 – the start of 2010 the bank not only renewed all the mortgage lending
programs stopped in the crisis period but increased its activities in the mortgage lending for
purchase of residential property under construction sphere and cooperation with
partners/contractors but also proposed completely different mortgage programs for the market.
The offers oriented for new market segments (garage mortgage) as well as for the interest risk
optimization (combined rate) and an increase in mortgage lending (mortgage lending with initial
installment 10%).
       In I semester of 2010 the initial installment requirement was reduced to 20% practically in
all regions of bank’s presence. This measure enhanced availability of mortgage lending as far as
the mortgage lending demand is quite sensible properly to the initial installment amount.
        In III quarter client were offered the State Supported Mortgage program in the framework
of active bank participation in state mortgage market support.
       In 2010 VTB24 reduced the mortgage lending interest rate here-fold, according to the
market tendencies.
       To sustain the high level of control over the mortgage portfolio the bank continued
balanced development of proper mortgage loans instruments restructuring (Mortgage card,
Collateralized emergency loan, Pledged Property Showcase).
       Presently the range of VTB24 mortgage products is one of most widespread at the
market, comprises all its segments and is capable of any customer needs.
       The bank offers loans for purchase of residential property at the primary and secondary
markets, general-purpose loans collateralized with the available property, mortgage lending
savings programs, garage mortgage, concessional loans for purchase of pledged facilities,
mortgage refinancing of loans obtained with other banks, special partner lending programs.

Mortgage Portfolio and Number of Issued Mortgage Loans

       In 2010 the bank managed to overcome the negative tendency for the mortgage portfolio
reduction that existed in 2009.
        Mortgage loan portfolio of VTB24 as of January 1, 2011 inclusive of securitized loans
amounts of RUR 176.6 billion showing the total growth of +2.2% in 2010. The share of
mortgage loans in the retail portfolio of the bank as of January 1, 2010 grew by 13.6% and
amounts to about 103 thousand of effective loans. The mortgage portfolio share in the retail loan
portfolio of the bank amounted to 33.8% as of January 1, 2011.
      In total, during 2010, the mortgage portfolio was formed exclusively due to proper sales.
Geographic structure of mortgage portfolio as of 2010 faced no material changes.
                                VTB24 Mortgage Lending Portfolio structure

                                                                                                   Table 1
                                                                         Mortgage Lending Portfolio
                          Region                                     as of January 1, 2011, RUR billions
 Moscow                                                    62.2
 Saint-Petersburg                                          14.3
 Sverdlovsk region                                         7.2
 Tyumen region                                             5.9
 Kemerovo region                                           5.3
 Novosibirsk region                                        5.3
 Chelyabinsk Region                                        4.6
 The Krasnoyarsk Territory                                 4.2
 Other                                                     67.7
 Total                                                     176.6

        As of January 1, 2011 about 61% of the mortgage portfolio was concentrated in eight
leader regions.

                      Regional Structure of the Mortgage Lending Portfolio by products

                                                                                                   Table 2
                                              Mortgage Lending Portfolio
                Product Type                    as of January 1, 2010, RUR           Share in Total Portfolio, %

 Finished housing                                            106.4                              60%
 For real estate owners (non-purpose)                          8.3                              5%
 Off-plan                                                     29.8                              17%
 Refinancing                                                   4.5                              2%
 Cession                                                      27.6                              16%
 Total                                                       176.6                            100.0%

       Lending to individuals for buying apartments and houses in the secondary housing
market accounts for 71.4% of the total portfolio. Loans issued for buying apartments off-plan
account for 20%, while 5.6% are non-purpose loans secured by the borrower’s real estate. The
share of refinanced loans issued by other banks is 2% of VTB24’s portfolio.

Sales results

       Following the results of 2010, mortgage loan sales amounted to 31.7 billion rubles that
exceeds the sales results in 2009 2.7-fold. About 75% of total mortgage loans were issued by
regional subdivisions in 2010.

                            Regional Structure of the Residential Property Mortgage Sales

                                                                                                   Table 2
                                                         Number of extended mortgage credits in
                                                                  2010, billion rubles
 Moscow                                               7.9
 Saint-Petersburg                                     1.7
 Tyumen region                                        1.2
 Sverdlovsk region                                    1.2
 Kemerovo region                                      1.1
 The Altai Territory                                  1.0
 Novosibirsk region                                   1.0
 Chelyabinsk Region                                   0.9
 Other                                                15.8
 Total                                                31.7
         Eight leader regions concentrate about 50% of mortgage credit sales in 2010.
         In 2010 borrowers showed great interest in a new lending program initiated in June 2010,
i.e. State Support of Mortgage Debtors Program. In June 2010 VTB24 was the first to implement
Vnesheconombank’s investments into the projects of affordable housing construction and
mortgage lending in 2010-2012. Following the results of 2010, the share of loans with under the
State Support of Mortgage Debtors Program exceeded 2.8 thousand of mortgage loans issued to
the amount of more than 4.1 billion rubles.

VTB24 Position in the Mortgage Lending Market

       As of January 1, 2011, VTB24’s share on Russia’s mortgage lending market was 13.5%.
Moscow and the Moscow region, Primorsk Territory, Vologda Region and Kemerovo region
show the best results – over 20% of the mortgage lending market. VTB24’s share has exceeded
10% of the market in 30 regions.


      VTB24 continued active cooperation with insurance and appraisal companies and
renewed its close cooperation with real estate agencies and construction firms last year.
        In the framework of cooperation with construction companies, bank liberalized its
approach to the accreditation of off-plan real estate property. The above provisions allowed not
only to enhance relations with the acting partners but to attract over 1000 new developers.
       As of January 1, 2010, the bank accredited over 1600 projects all over Russia. Besides,
special mortgage lending programs were established with over 40 construction companies, for
example with GK PIK, GK DSK 1, YIT corporate group, GK Don-Story, Gals System GK.
       In 2010 the bank also expanded the list of its business partners which includes insurance
and appraisal companies providing mortgage insurance services and appraisal of real estate.

The number of loan sales points
        As of the beginning of 2011 VTB24 mortgage loans were available in 133 sales points in
112 Russian cities and towns. The bank has scheduled to expand the mortgage business
geography prior to the end of the current year to improve the quality of services. The branches
are to be open at the territory of Moscow and the regions. 6 specialized mortgage lending centres
are to start their operation in Moscow prior to December 2011.

2011 Targets

The bank contemplates to pursue the following key trends in developing of its mortgage lending
transactions in 2010:

    Target financing application of the AHML;
    Products parameterization operative control, including price formation in the “recovery
     from the crisis” and improvement of competition;
    Liberalization of requirements to the list and forms of documents for the mortgage sale;
    The continuation of Pledged Property Showcase project;
    Promote marketing support of mortgage products sales within the territory of the bank’s
    Implement further measures aimed at the proactive model of selling mortgage loan
     products. The new sales model expansion over the whole of the mortgage lending
    Further enhancing of work with bank’s contractors in the process of mortgage product
     sales (corporate clients, real estate agencies, developers, mortgage brokers);
    Control the growth of outstanding debts;
    Credit procedure optimization;
    Completion of collateral assessment system reform (Bank – assessment sponsor), project
     replication to the whole of IED network;
    Development/ adjustment of the price formation system that takes into consideration
     individual borrower risks. Its extension to all mortgage products;
    Implementation of programs Mortgage Lending for Soldiers, Mortgage Lending +
     Maternity Capital.

Cash Lending
       Presently cash lending is in high demand with the customers. In 2010, the bank issued
574.1 thousand cash loans for the total amount of 124.5 billion rubles. As compared to 2009, the
cash loan portfolio has grown by 31% in value terms and by 29% in quantitative terms. In late
2010, the portfolio amounted to 203.1 billion rubles or 1.198 loans. At the end of 2010, the
average loan amount has grown and amounted to 216.6 thousand rubles.
       Such results owe much to streamlining of the product range. VTB24 currently offers cash
loans both with and without guarantee for the period up to five years and loans for small business
owners and private entrepreneurs – Kommersant.

Cash loans portfolio
                                Portfolio,       Portfolio, RUR
                           thousand pcs.             billions
01.01.2011              1,199                 203.1
01.01.2010              927                   154.5
 01.01.2009                   738                      129.7
 01.01.2008                   353                      60.3
 01.01.2007                   115                      19.67

       Cash loans issued under corporate joint programs with partner organizations account for
the major share (48%) of the overall VTB24 cash loan portfolio. Cash loans to retail customers
rank the second with a share of 37%. Kommersant loans represent 8% of the loan portfolio.

Cash loans portfolio geographical breakdown as of January 1, 2011 .
                                   Moscow and the
                                   Moscow Region
Portfolio, thousand rubles              35.9                   167.2
Shares      according    to             18%                    82%

Portfolio structure by regions as of January 1, 2011

                     Region                                     Portfolio, RUR billions

 Moscow                                        35.9
 Saint-Petersburg                              11.1
 Kemerovo Region                               7.7
 Sverdlovsk region                             7.3
 Irkutsk region                                6.3
 Krasnodar territory                           6.2
 Tyumen region                                 5.5
 Chelyabinsk Region                            5.5
 Other                                         117.7
 Total                                         203.1

        In 2010, the major objectives of the bank in cash lending sector included maintaining
growth in sales volumes (including the growth of customer base and market share), maintaining
portfolio profitability and preventing an upsurge in loan deficiencies levels.
        In order to sustain growth in sales volumes and to enhance customer loyalty in the fourth
quarter of 2010 the bank reduced interest for all the range of customer loans and a commission
fee for loan extension was cancelled. Other measures implemented included an increase of the
maximum loan limit under the program Gold – online* 300 thousand rubles to 500 thousand
rubles and a new credit program Silver* – online with an established limit to 500 thousand rubles
was implemented.
      The procedures for loan extension to clients were simplified and instant loan extension
for VTB24 payroll card holders.
        For the purpose of reducing risks and the level of loan delinquencies, in 2010 the bank
offered its customers the option to restructure and convert their debts. Under restructuring
program, the customer was offered to reduce his/her equal monthly installment by extending
loan period and obtain extra three months of favorable payments. In 2010, the bank has
restructured over 29 thousand for the total amount of 7.6 billion rubles.
        In the fourth quarter of 2010, the bank initiated the process to improve cash loans
conditions. In particular, it has reduced interest rates for the whole product line, the interest for
credit extension;
        The positive tendencies in the cash lending sphere continued in 2011. The main objective
in 2011 is to sustain growth in sales volumes and to enhance the market share by streamlining
internal business procedures accompanying the loan extension process and by offering new
attractive products orientated versus individual customer needs. In 2011 customers shall be
offered new complex products Kommersant combining credits and various additional bank
services and services for business development at low prices in one solution. A new Credit Line
product is going to become unique on the Russian market. This product has a client-friendly
mechanism for using credit funds and an individual credit repayment plan.
      The bank is going to continue liberalization of credit extension and servicing conditions:
minimum age decrease, requirements to the package of documents.
       Products of the consumer loan line are characterized by such advantages as clear financial
conditions, fast application processing, large limits and a long lending term, a broad sales
network and service channels network and also the high quality of service.

                                          Car Lending

        Car lending was one of the VTB24’s first products offered to its customers. VTB24 car
lending programs are widely regarded among the best in the market. Strong demand for
VTB24’s car loans is easy to explain: the lending conditions and technology are best customized
to meet demands and possibilities of potential borrowers. Long lending periods and short terms
of applications review make VTB24’s car loans even more attractive to customers.

Car Lending in Figures

       In 2010 VTB23 continued to strengthen its position at the car lending market.
        Following the results of the last year, VTB24’s car loan portfolio grew by 15% and
amounted to 51.7 billion rubles. By the end of 2010, VTB24 has issued 66 thousand car loans for
the amount of 29.9 billion rubles. Car loans issued under AutoStandard Program account for the
largest share of the portfolio. Car lending share in VTB24’s retail portfolio is 10.5%.

Change Dynamics in VTB24’s Car Lending Portfolio
                        31.12.200 31.12.200 31.12.200 31.12.200 31.12.200 31.12.201
                        5         6         7         8         9         0
Car lending portfolio
volume across the
                      1.1            6.1         17.4        38.8         45.0    51.7
whole product range
(RUR thousand)

       Car loans issued by VTB24 in the auto lending market rose from 8.7% to 10.4%

       The market share dynamics

      Car loans were best sold in Moscow and at the regional branches - Saint-Petersburg,
Yekaterinburg, Tyumen.
               The car lending market of the Russian Federation, billion rubles
               The car lending portfolio of VTB24
              The share of VTB24

                       Region                   The share of portfolio
                       Moscow                                      28%
                       Saint-Petersburg                              7%
                       Yekaterinburg                                 5%
                       Tyumen                                        4%
                       Chelyabinsk                                   3%
                       Nizhny Novgorod                               3%
                       Kazan                                         3%
                       Other branches                              47%

2010 Milestones:
       VTB24 continuously upgrades its car lending product line by offering customers new
lending opportunities and extra services which make buying cars on credit an easy and
comfortable procedure. In 2010, the following changes were introduced into the car lending
product line:
           Efforts taken to enhance the transparency of loan servicing costs to customers: a
            monthly commission fee for the AutoExpress product was canceled in May.
            While the commission fees for loan extension and for early repayment of loan
            were canceled for all the products.
           A new distribution channel named the Corporate Car Lending Program is a
            special loan offer for VTB Group employees that stipulated a service contract
            with VTB24.
           In July a new product named PAAL – Previously Approved Auto Loan was
            launched. A client shall receive a letter on the approved loan limit and may use it
            without submitting additional documents to the bank under the product. The
            distribution channel operates under the Autostandard product and under the state
            program for car loan sponsorship.
           In 2010 the rates for basic auto lending programs and federal projects are being
            reduced and the commission fees thereto are being cancelled. Besides alterations
            of product’s price parameters a number of measures were implemented in order to
            retain bank’s position at the market.
           A special offer was launched for those who voted under the Auto of the Year in
            Russia project. The project has become the largest-scale premium in the Russian
            auto industry.
       A special role in bank’s car lending is given to the state funding program, where VTB24
was the first to issue a car loan. Under this program the bank received more than 52 thousand
applications and issued 18 thousand loans. The bank’s share in the state program was 11% in
        One of the core trends in car lending business is the development of joint programs with
auto manufacturers. In 2010, the bank implemented nine federal projects issuing loans for the
total amount of 11.5 billion rubles which is 16% of total lending.
      In 2011, VTB24’s share in direct sales of brands involved in federal programs was 11.4%
which may be explained by the fact of enhancing the programs with participation of car
producers, improvement of the existing product range and launch of sales of car loans in new
                              Debit and Credit Payment Cards

         Continuous improvement of the quality of services and products offered by the bank
contributed to the positive growth dynamics of VTB24’s card business in 2010. Bank’s success
in the line may be attributed to a wide range of modern and convenient card products catering for
various client categories combined with an outstanding sales and customer post-sales support
         In 2010, VTB24 continued actively developing its card business.
      Following the results of 2010, VTB24 cards issue volume increased by 45% and
amounted 11.3 million as of January 1, 2011.
        Totally, the bank issued over 3.5 million cards within 2010. The total number of
circulating cards reached 7.2 million. The total number of retail cards increased by 39% and
amounted 3.6 million as of January 1, 2011.
        The amount of card accounts balances increased by 48% and exceeded 86.9 billion rubles
as of January 1, 2011.
       Following the results of 2010, the bank’s credit card portfolio increased by 31.4% and
exceeded 27.1 billion rubles as of January 1, 2011. The volume of issued credit cards amounted
to 1.3 mln in 2010. The card turnover amounted to 95 billion rubles in 2010 demonstrating
growth by 57% as compared with the last year.
         The VTB24’s share in the credit cards market increased in 2010 by 13.2% and reached
       According to 2010 results, the bank issued over 1.5 million of payroll cards. As part of
payroll projects, VTB24 issued 44% of the total cards issue volume. As of January 1, 2011, the
number of circulating payroll amounted to 3.6 million as of January 1, 2010.
       In 2010, VTB24 has implemented 8300 payroll projects. The total number of enterprises
which are payroll customers of VTB24 is over 35,000. The largest partners of VTB24 under
payroll projects include Slavyanka OJSC, Yurginsky mashzavod LLC, Belon OJSC, LOMO
OJSC, Vorota Severnoy Stolitsy OJSC, GOZ Obykhovsky zavod OJSC and many others.
        In March 2010 a new product – My conditions card - was launched. The product is
characterized by a dramatic bonus program, its unique feature being holder’s reimbursement of
5% of any payment in one of the three bonus categories to choose from at proper discretion
(restaurants/bars/cafes, refilling stations, mobile communications) and also 1% of any other
purchase paid with the card.
        Last year the bank held various events associated with annual card servicing discounts.
More than 300 partners dwelling in 100 cities of Russia were attracted under the loyalty
program. The bank partners are apartment stores and restaurants, jewelry shops and beauty
salons, wine and furniture shops as well as bonus hotel chains. The program enables customers
to get discounts to 50% and also various additional privileges, bonuses and gifts.
       Important Changes to the Plastic Cards Range in 2010
       •   The credit card interest is cut by 2-3 p.p.
       •   Two new products: MY CONDITIONS and VTB24– the Urals airlines AK.
       •    Increase in sales volumes according to the cross-sales technology (under the Companion
Cards program).

        • Operation was standardized with the municipal and budget sphere enterprises (a
special Budzhetny pricing plan was approved).
        • New technologies for payroll project implementation and servicing were
implemented (automation of some processes that enables to minimize manual labour: package
transfer to different pricing plans in cases of employee dismissal, alteration of the issuing
procedure and the loan limit activation under the credit cards subject to payroll projects, enabling
an enterprise to perform remote card refilling using the enterprise computer network.
       • A new model of payroll project sales was approved (a transfer from appraisal of
revenues from hr high level of cross-sales of other credit products of the bank).
       • Additional card product protection means – 3-D secure technology (Verified by
Visa/MasterCard SecureCode). The technology helps to minimize risks of credit cards
transactions in Internet.
        In 2011 VTB24 plans to hold further campaigns among the cardholders in order to
increase the active card share in the portfolio (contest and marketing events), streamline the
existing product range due to package offers complemented by special services, develop loyalty
programs with bank partners (new co-branding card products).

                                         Retail Deposits
       In 2010, VTB24 has strengthened its position among top leaders of retail time deposits
         The amount of VTB24 retail deposits as of January 1, 2011 is RUR 631.1 billion rubles.
The share of time deposits accounts for 83% of personal funds. From the beginning of the year,
retail time deposits have grown by 44% to amount 523.5 billion rubles as of January 1, 2011.
The growth of time deposits balance is over 159.6 billion rubles.
        During the same period, time deposits number grew by 13%. As of January 1, 2011, the
number of time deposits exceeded 595 thousand. During 2010, the bank attracted time deposits
for the total amount of 290 billion rubles.
       The key event in 2010 was deposit product range alteration. In April 2010 the time
deposit range was complemented by VTB24-Svoboda Vybora deposit operating as a construction
kit. The deposit makes it possible to combine the conditions that are most required and most
convenient from customer’s point of view in one deposit. VTB24-Dokhodny and VTB24-Tselevoy
can be formalized only via remote access, using the Telebank system.
       During the same period, the bank completed VTB24-Podderzka deposit acceptance.
Pensioners were offered an increase in the interest rate at making VTB24-Svoboda Vybora and
VTB24-Rastuchi Dokhod.
        The new range was simplified, yet it accounts for all the requests of our customers – an
independent choice of interest payment periodicity and the time of deposit, a wide range of fund
management options within the deposit, mobility and remote access. Debit operations to the
capitalized interest amount were introduced by two deposits. Early deposit closing is no longer
needed if a client needs funds equal to interest amount during the term of deposit.
       Placement conditions were improved under the current deposits:
     - An option to reduce the minimum balance during the time of deposit under VTB24-
Komfortny deposit was implemented and the early deposit conditions were improved;
       - the additional fee limitations were canceled under the replenished deposit account to be
open via the Telebank system (established in the amount of 1 unit in each currency);
       - VTB24-Index is limited to 7 years – it’s the maximum term of placement within the
deposit range for individuals.
       The deposit conditions making part of the Privilege package were improved and the term
for early requisition of VTB24-Privilege (Multicurrency) was extended. VTB24-Privilege
(Dokhodny) is accepted as floating interest rate deposit.
     In April – June 2010 the bank offered VTB24 – For the Victory Day deposit to
commemorate the 65th anniversary of the Great Victory.
        In 2010 on the basis of contests announced by the Deposit Insurance Agency GC VTB24
became ASB agent bank for payment of insurance claims of depositors of the three bankrupt
banks subject to insurance event: Mega bank CJSC, S-Bank JSCB (CJSC), already paid, and
starting from December 28, 2010 VTB24 started to make payments to the depositors of Monetny
Dom OJSC bank depositors. For the payments period of December 28 to December 31, 2010 the
bank paid the insurance to more than 3000 depositors to the amount of 0.85 billion rubles.
Customers chose to deposit about 50% of funds with our bank.
       In 2010 payments under three more banks were performed – MABES Sakhalin-West, CB
Sibcontact OJSC and Econatsbank CJSC. Besides, VTB24 continues to perform insurance
payments to Tyumenenergobank up to the present moment.
VTB24 deposits
 Index                                     01.01.09     01.01.10    01.01.11
Retail deposits balance (RUR, billion),
including:                                   304.8        433.6     631.1
 Time deposits, RUR billion, including:      260.3        363.9     523.5
 Currency breakdown, (%)
 rubles                                     46.3%        50.9%        64.3%
 US dollars                                 25.8%        20.9%        17.6%
euro                                        26.9%        26.6%        16.8%
other currency                               1.1%         1.6%         1.2%
 Regional breakdown (%)
Moscow and the Moscow Region              58.5%        57.0%        59.9%
Far-East Federal District                   4.0%         4.0%         3.8%
Volga Federal District                      6.0%         6.5%         6.5%
North-Western Federal District              13.6%        13.7%        11.7%
Siberian Federal District                   3.8%         3.9%         4.0%
Urals Federal District                      1.9%         2.3%         2.4%
Central Federal District                    7.1%         7.4%         7.3%
Southern Federal District                   5.1%         5.2%         4.5%

                             Privilege (premium sector products)
        In 2010 VTB24 continued active attraction of affluent customers for long-term complex
servicing granted by the Privilege package. Privilege package includes premium bank services,
high quality service and special offers from bank’s partners.
       By the end of 2010 the number of Privilege package customers amounted to more than
9.5 thousand people. The main development line became improvement of service package filling
and extension of the list of additional bank products granted on preferential terms.
        In 2010 customers were granted a possibility to obtain a consumer loan with base rate
discount and increased maximum loan amount. They could also formalize a gift certificate for
the Privilege package in favour of a third person. For safer Internet settlements Ozon Virtual was
included into the package. This card is granted without commission. Special rates comprising
discounts for the rent of safe deposit boxes and for the term of over 365 days (the discount from
one to four months of rent) are valid for Privilege clients, risks of extreme sports were added into
the insurance program and Concierge-service operation was improved.
       In 2011 the product range is going to be expanded by the products for upper and average
segment customers. The Priority package – a new offer comprising a premium card and a set of
banking services for convenient client-bank interaction was scheduled, as well as service
proposals of bank partners.
        In 2011 the package is scheduled to be filled with new options. As early as in the first
quarter of 2011 customers of the privilege package shall be transferred to platinum cards
equipped with an electromagnetic microchip that enhances the protection level, functionality and
useful life of cards.

                                       Private Banking
        In 2010 VTB24 Private Banking was nominated Spear’s Wealth Management Russia
Awards (the first Russian award for best representatives of private bank servicing industry, large
capital management and the adjoining industries) and was recognized best Russian bank that
provides private bank servicing and large capital management.

       Offices and representation offices

        In 2010 the bank’s premium network was actively expanding: VIP-offices were open in
Yekaterinburg, Kazan and Samara. The number of cities and regions of VTB24 Private Banking
presence reached thirteen. The regional program demonstrated its efficiency by an example of
Krasnodar VIP that commemorated the first anniversary as of the day of opening with a deposit
portfolio of over 2.3 billion rubles in October 2010.
       In 2011 regional VIP-offices are scheduled to be open in the largest cities of Russia.
      In 2010 VTB24 Private Banking acted as expert for transfer of experience of servicing
VIP-customers to the VTB group banks in the CIS territory. In particular, VIP-office in the
Ukraine was created with immediate VTB24 Private Banking consulting support.

       Products and services

       The Private Banking sector offers Prime products and services package which is a unique
offer that makes it possible to perform individual umbrella approach for servicing of a small
client range that are going to place more than 500 thousand of US dollars with the bank. During
the period under consideration specialized product sales grew by 60 %.
       In 2010 the prime package was complemented with new offers to satisfy client needs:

   –   VTB24-Prime (Family) was implemented into Prime deposits line for clients who wish to
       allocate funds for family members and third persons out of proper funds not losing in
   –   Special conditions for purchase of precious metals for clients that prefer unallocated
       metal accounts for saving.;
   –   An option for Prime supplementary card issue in currency different from the main card
       currency and/or currency of the main card but not taking into consideration the main card
   –   An option of credit extension to VIP-customers on individual conditions was
   –   Customer real estate property transfer to closed annuity share fund together with VTB
       asset management;
   –   Customer option to solve a range of issues in the euro-region via VTB Group Bank–
       Russian Commercial Bank (Cyprus);
   –    The number of partner companies that offer exclusive programs and services in various
        regions and directions (Prime package holders may use services of more than 100
        partners on privileged conditions).

Customer database extension

        Individual program for capital servicing that combines best solutions of private bank
servicing practice and the high professional level of the management team made it possible to
dramatically increase the number of customers that were first to be serviced by VTB24 Private
        Balances of the bank’s VIP-offices increased by 47%. The number of customers grew by
45%. Balance with reference of one customer serviced at VTB24 Private Banking offices as of
January 1, 2011 average to 57.6 million rubles.

               Количество VIP-клиентов-владельцев пакета Прайм

  900                                                                   857
  800                                         735
  700                        651






           01.01.2010     01.04.2010    01.07.2010    01.10.2010     01.01.2011

Number of VIP clients – Prime package holders.

Development plans in 2011

       Development of cooperation between VTB group banks and companies for servicing of
        large capital.
       Expansion of regional presence of VTB24 Private Banking, opening of new VIP-offices
        under the approved plan.
       Development of deposit products, including deposits in currency with restricted
       Organization of purchase of foreign coins, containing precious metals, by VIP-clients.
      Implementation and development of the financial planning system that enables customers
       to streamline their income, expenses, assets, liabilities, insurance and pension coverage,
      Expansion of the partner companies list that offer services to the clients-Prima package
       holders in various spheres and business lines on special terms and conditions.

                                    Precious Metal Coins
       In 2010, VTB24 actively promoted its product Precious Metal Coins. In spring 2010, the
bank offered an option of opening unallocated metal accounts in gold. In summer customers
were offered an option of opening unallocated metal accounts in precious metals (gold, silver,
platinum, palladium). At the end of the year 5 thousand accounts were open in more than 400
bank offices.
        Precious metal coins of foreign origin were actively sold. These coins are notable for
their unique design, special structure, form and colour, which make them not only an investment
instrument, but also an original present. The bank initiated sales of custom-made coins of two
series. These coins are to be purchased only with bank subsidiaries.
        VTB24 operates with Russian commemorative and investment coins. The Bank sustains
the differentiated prices approach. When buying large batches of investment coins individual
prices are set for them.
       In 2010 the number of offices that sell coins grew 4.5-fold. About 250 regional offices
and about 6o regional units of Moscow and Moscow region sustain a wide range of coins on
sale. Almost every other bank office sustains a range of precious metal coins on sale and an
unallocated metal account may be open with any bank office.
       The number of coins sold in 2010 exceeded 32 thousand pcs. that is 2.5-fold more than
the index of 2009.
       The number of coins sold exceeded 32 thousand pcs. in 2010. That is 2.5 times more that
the similar index of 2009. Coins were best sold in 2010 in Novosibirsk, Voronezh and the north-
western region.
       In 2011, VTB24 contemplates to develop proper programs aimed at issue of coins of
individual design and launch an electronic catalogue of coins with a possibility of coin search
according to the parameters set by the customer at the bank’s corporate web-site.


        In 2010, the amount of payments accepted from individuals due to organizations of
different industries and operation fields has exceeded the results of 2009 by 50% and amounted
to more than 49 billion rubles.
      The number of clients ready to pay for most services not only at bank offices but also via
remote access is in the constant increase. The number of payments accepted by VTB24 from
individuals via ATMs, checkpoints and Telebank exceeded 25 which is 60% more than the
number of transfers accepted in 2009.
        In 2009 there was an increase in average amount of payments. ATM payments have
grown 1.4 times, checkpoint payments – 1.2 times, and Telebank payments – 1.5 times. The
growth of average payment amount was facilitated by elaborate and harmonized pricing policy
of the bank and extensive cooperation with companies supplying goods and services which are
interested in developing the system to accept payments in their favor.
       In 2010, VTB24 executed new agreements for payment acceptance with partner
companies. It established the system of accepting commission-free payments from individuals in
favor of 50 organizations.
        Therefore, the number of organizations for which the bank is entitled to accept
commission-free payments has exceeded 530. The main VTB24’s partners in accepting
payments are the largest trading companies operating in the cosmetics market, the leading
educational institutions and universities of the country, all federal mobile phones operators, the
largest cable TV networks and Internet providers of Russia, and other suppliers of goods and
         In 2011 the bank contemplates to focus its attention on stipulation of contracts with
regional telecommunications operators, higher educational establishments, communal
organizations that render services in various Russian towns. One more payment system
integrator is going to be connected– Kiberplat CJSC that would enable material extension of the
list of providers the services of which may be paid with bank’s distribution channels.

                                  Small Business Lending

       In October 2010 VTB24 launched a new model of small business servicing. The model
was implemented in accordance with a new bank development strategy that presupposes sector-
oriented approach to client servicing.
       The characteristic features of the new servicing model are targeted communications,
making managers in charge of customer portfolios and single point of customer servicing with
reference to the whole range of issues.
        To implement its objectives, VTB24 formed a team of managers for customer services
that are trained salesmen performing valid support of small business clients. The function of
support and assistance were automated and centralized as much as possible. Individual product
and service offers for small business clients were developed by the bank in the framework of the
       The bank has streamlined its business processes and developed special borrower appraisal
technologies to facilitate and to speed up the credit procedure.
       As a result of implementation of a new service model, a growth in the amount of attracted
loan applications was demonstrated (the growth amounted to 59% in 2 months).
                                      Loan applications dynamics, number

          2 500
                                                                       2 222

                                                 1 922                             1 волна
          2 000
                                                                       654         (25 ТП)

                          1 395                 679
          1 500
                                                                                   2 волна
                          338                                          794         (38 ТП)
          1 000

                                                1 243
            500          1 057                                                     2 волна
                                                                        774        (55 ТП)

                       октябрь 2010           ноябрь 2010           декабрь 2010

        October 2010
        November 2010
        December 2010
        1st wave (25 TP)
        2nd wave (38 TP)
        3rd wave (55 TP)

Small Business Lending

          In order to provide loans to small business, VTB24 has issued about 8 thousand loans amounting to 29.3
billion rubles. In comparison with similar values of 2009 the growth amounted to 29% of the loans issued before.

        Small business loan portfolio as of January 1, 2010 was 63.7 billion rubles as of January 1, 2011 or
of the total bank loan portfolio. The number of loans at the portfolio amounts to 19 thousand
        During 2010 there was a tendency for the overdraft and opened loan lines share increase
in the bank lending, their total amount and their total share having undergone an increase from
12% in January to 26% in December.
       The leading small business lending departments by the size of their portfolios are located
in the Central, Privolzhsky and Sibirsky Federal Districts. As of January 1, 2011, VTB24 had
105 units engaged in small business lending operations in Russia.
       Loans issued to trade and consumer services enterprises represent the largest share in the
loan portfolio structure. The number of loans extended to enterprises that perform real estate
transactions is also large.
       In 2010, the bank made an extensive use state support mechanisms for small business for
loan issue to small business enterprises. As of January 1, 2011 VTB24 has concluded 40
agreements with regional units providing support to small business. Following the results of
2010, the portfolio of loans issued with collateral security, amounts to 961.8 billion rubles.
        In 2010, an important event took place - an agreement for the issue of loan for financing
of small enterprises in the amount of 5 billion rubles was signed with OJSC Russian
Development Bank. The total lending amount for small business under the project shall amount
to 10 billion rubles.

       Meaningful changes in small business lending in 2010:
              New ISB client servicing model implementation aimed at enhancing of sales
               volume and efficiency, the growth of client database, comprehensive approach to
               clients servicing and development.
              The lending procedures were simplified due to credit cycle reduction,
               centralization of risk control for municipal organizations, introduction of
               deadlines for application processing.
              Financial conditions for clients were improved by reducing loan interest and
               introduction of individual lending conditions.
              Promotion events for lending were a success. More than 1 400 loans to the
               amount of 3.8 billion rubles were issued in the course of Triple Nine Loan-999
               promotion event. Business loans 12-24 event enabled entrepreneurs to receive
               over 800 loans to the total amount of 2.2 billion rubles in 2.5 months in 2010.
           To 50% of loans are issued in the course of promotion events.
            The level of outstanding debt was made stable due to the following stabilizing
             products: restructuring of outstanding debt, Pledged Property Showcase project,
             business recovery loans.
       In 2011 the bank shall proceed with short-term loan issue due to purposeful attraction of
trade enterprises for lending with an aim of working capital replenishment. The number of long-
term investment loans is going to be reduced, too.
       One of VTB24’s targets is to increase small business loan portfolio in 2011
        Loan portfolio growth is a VTB24’s target in 2011. The bank is going to increase the loan
portfolio by 19%, up to 75.9 billion rubles.
       Agreements with 10 regions of the Russian Federation are scheduled to be signed in the
framework of cooperation with the state support authorities for state support of small business
and financial organizations.
       Settlement and cash services and attraction of small business funds in 2010:
          In the second quarter of 2010 the project for launching legal entities and individual
           entrepreneurs was launched.
          Client service was launched due to the two-level client support for exchange control
           in the fourth quarter of 2010 as well as currency sale/purchase that allows to request
           current bank rate on-line and perform operations at the profitable rate, including those
           via remote servicing channels.
          The product range was improved.
          The work for streamlining of package services to small business customers
           (settlement and cash services package) with significant discounts is being held. In the
           3rd quarter of 2010 the bank issued a new product – the Trade-Light package – on the
           market. The package is to satisfy the needs of customers who perform greatest
           number of operations with the bank taking into account the particularities of their
           business. In 4 months of 2010 1896 packages were sold which amounted to 3.8 % of
           sales of all settlement and cash services packages in 2010.

         In 2011 a growth in number of attracted funds reached 80 billion rubles. The scheduled
liabilities volume is to be attracted due to implementation of the following measures:
          Active attraction of customer funds in the framework of a new customer servicing
           model – for small business customers;
          New product range implementation for attraction of time liabilities;
          Organization of liability product remote sales.
        In 2011 the bank is going to increase the number of settlement accounts of legal entities
to 202 thousand.

       Investment Services

       VTB24 is one of the leading players in the investment service market for private
investors, ranking the 5th in the list of Russia’s top brokers (according to RBC), and occupies the
leading positions in the customer service market within the foreign exchange market (Forex).
         In 2010 a new model for sale of retail investment products aimed at client orientation
approach was approved. The model is aimed at satisfaction of needs in investment products of
various spheres of retail clients as well as at creation of the most convenient (for tariffs as well as
for additional services) conditions of loyal customers servicing. Implementation of the model
shall lead to an increase of trade activity of existing clients as well as to customer database
growth. The new investment servicing model shall demonstrate its efficiency in 2011, after the
start of its large-scale implementation.
      As for investment business, VTB24 shall focus its efforts on increasing the quality of
customer servicing, expansion of the proposed services in 2011.

       Stock Market Transactions

       By the end of 2009, 159 thousand broker accounts of VTB24 clients were registered at
the Moscow Central Stock Exchange. Following the results of 2010, the VTB24 share at the
broker services market amounted to 12.3% (i.e., VTB24’s customers were involved in
transactions of the exchange market turnover.)

       Notwithstanding a decrease in the trade participants’ activity on the Russian securities
market in 2010, the number of client operations of VTB24 with shares at the Moscow Central
Stock Exchange amounted to over 1.5 trillion rubles. An average daily volume of marginal
lending in 2010 amounted to over 7.9 billion rubles.
       In 2010 active development and use of customer remote servicing in the bank sales
network made it possible to increase the number of customers that use broker services of VTB24
for over 6 thousand people.
        Customer friendly service and the growth in number of retail investment services offered
by the bank became the most important factors of an investment activity increase of retail clients
for the accounting period.
        In 2010 the number of active clients amounted to 24 thousand clients. The average
monthly number of active customers that use broker services amounted to over 9.6 thousand
active customers in 2010. The average number of transactions made by VTB24 customer during
a day at the Russian stock exchanges amounted to over 70 thousand, alongside with that the
maximum number of transactions reached 115 thousand a day.

                                   Среднемесячное число активных
                                       клиентов, использующих
                                     брокерское обслуживание на
                                           фондовом рынке









                                         2009           2010
The average monthly number of active customers that use broker services at the exchange
       According to PTC FORTS rating of the futures and options market leaders, the bank
ranks 10th by the volume of customer trading. The volume of bank’s customer trading at the
term market segment (in PTC FORTS) exceeded 1.5 trillion rubles, which is more than 2 times
more as compared to 2009.

                                       Биржевой оборот клиентских
                                   операций (акции в режиме основных
                                   торгов ММВБ и срочные инструменты
                                         в РТС FORTS), трлн. руб.








                                            2009             2010

       Exchange turnover of customer transactions (shares as main bidding at Moscow Central
Stock Exchange and term instruments in PTC FORTS), trillion rubles
      Transactions list offered by VTB24:

             Purchase and sale of stocks and bonds within MICEX stock section;

             Purchase and sale of state securities within the state securities section of MICEX;

             Purchase and sale of Gazprom shares at Saint Petersburg Exchange;

             Time derivatives (futures and options) trading at FORTS;

             Marginal lending (option of performing transactions in access of own funds);

             OTC purchase and sale of securities; and

             Purchase and sale of eurobonds.

      Trading floors covered by VTB24 transactions:

             Moscow Interbank Currency Exchange;

             Russian Trading System Stock Exchange; and

             Saint-Petersburg Exchange.
FOREX Transactions
The number of customers using services in FOREX market has grown to reach 6 thousand
customers. The volume of customer FOREX trading amounted to USD 153 billion (including
SWAP transactions).

                                    Оборот на рынке FOREX, включая
                                             сделки Swap,
                                            млрд. долл. США

                                          2009           2010

The volume of customer FOREX trading (including SWAP transactions) USD 153 .
       Provided services:
             Conversion arbitrage (transactions on purchase/sale of one foreign currency for
              another, and trading operations with USD/RUR and EU/RUR) for amounts
              exceeding initial security deposit.
             Minimum deposit:
             for individuals – USD 2000 (10,000 for ruble couples); and
                  -   for legal entities – USD 10,000.

Agent services for mutual fund shares distribution
        The number of transactions with mutual fund shares distribution following the results of
2010 more than doubled as compared with 2009 and exceeded 1 billion rubles. The bank offers
its customers shares in largest management companies, such as: VTB Capital Asset Management
CJSC, Renaissance Investment Management LLC, TKB BNP Paribas Investment Partners (TKB
BNPP IP) and others.

       In 2010 over 85% of transactions with mutual fund shares via bank agent points were
mutual investment funds under VTB Capital Asset Management CJSC management.
                                         Объем сделок с паями ПИФов
                                         через агентские пункты Банка,
                                                   млн. руб.






                                                 2009          2010

Transactions with mutual fund shares via bank agent points, million rubles

The number of points for the sale of shares in 2010 increased by 81 offices and reached 495.

                                         Количество агентских пунктов по
                                          распространению паев ПИФов

                                               2009              2010

The number of points for the sale of mutual fund shares.

In 2010, the volume of funds transferred to hold on individual trust of the bank has increased 1.7

VTB24 trust advantages

                The amount of initial investment is the most agreeable as compared to similar
                 products put on the market (4.5 million rubles in 2010).
              Individual approach to meet investor’s goals; and a possibility to develop investment strategy
               together with trustee:
               -     properly assess risks;
               -     select the best investment period;
               -     chose parameters for securities included in the portfolio;
               -     upgrade the selected trading strategy in the process of investment subject to the current
       market situation;
               -     restructure and streamline the set investment portfolio of customer; and
                -    work transparency: provide regular information on the current portfolio status and performed

In the framework of the product range development in 2010 the bank implemented a number of
new investment solutions. One of such solutions is inclusion into the investment strategies list
proposed to customers within the framework of trust, under the stock-index based strategies
(strategies based on index combinations).

                              Distribution Channels Development

VTB24 Regional Network

Network Development and Streamlining

         In early 2010, the bank was building a retail branch network. 55 sales offices were open
in a year. The greatest number of offices – 13 sales points - were open in Moscow, 5 - in Saint-
Petersburg. Yekaterinburg, Samara, Chelyabinsk housed 4 new offices each. The sales network
at the largest market which is the market of Moscow reached 90 offices.
       In late 2010, VTB24’s office network included 531 branches in 203 cities. The network
covers 71% of city population of the Russian Federation.
        VTB24 offices network is one of the most powerful and efficient retail bank services.
Judging by its business volumes per one VTB24 branch, VTB24 is an absolute industry leader.
The average deposit amount per one branch is 1.2 billion rubles, the average loan amount is 1
billion rubles which exceeds its competitor achievements a few times. In 2010 the deposit
amount per one branch has increased by one third.
       The newly opened offices are getting ever more convenient and comfortable. As for the
branches open in 2010m their customer areas are being enlarged, financial advisor areas for
affluent customer servicing are being allocated and the number of self-service devices installed
in 7х24 areas has grown.
        One more trend is creation of a multipurpose front-line in order to speed up customer
servicing, enhance the productivity and sales outlet capacity. The bank aims at “front” business
processes simplification, enhances the productivity of sales points. A multipurpose front-line
enables to spread the load between office employees, enhance analyst operations. About one
fourth of the network has been already transferred to the model. They are going to amount to a
half by the end of 2011.
         As for further network development, the distribution channels shall be expanded in the
first place and further servicing quality shall be improved in the cities where the bank is making
large business and has a large number of clients. 90% of offices to be open in 2011 shall be
located in large towns with a population of over 500 thousand people.
       A total of 69 sales offices is going to be opened in 2011.

                                    Рост кол-ва отделений ВТБ24




                            2007        2008       2009       2010        2011

       Growth in the number of VTB24 branches

       Bank’s positions
       In late 2010 VTB24 ranks second in 44 regions at the individuals lending market and in
15 regions at population funds attraction market.
       The portfolio of loans issued to the population exceeds 10 billion rubles in 11 regions
while the number of such regions has increased 1.5 times in the course of the year. The first three
leaders with reference to the lending portfolio amount are Saint-Petersburg, Sverdlovsk region,
Kemerovo region.
        The VTB24 share at the lending market of 24 regions (a third of network) exceeded 15%,
in 11 regions - over 20%. As for the Tula and Belgorod regions, their share has exceeded 30%.
        In 2010 the number of branches has doubled (from 12 to 23) forming the attracted funds
portfolio of over 5 billion rubles. Saint-Petersburg, Khabarovsk Territory, the Vologda Region
are leading in the attracted population funds.
      As of January 1, 2011 VTB24’s share at the individuals attracted funds amounted to
6.42% exceeding 9.8% in 6 regions. As for the Vologda Region, the market share was more than

   Regional business
      In 2010 VTB24 has transferred to the sphere-oriented approach and organized unique
work with various customer categories.
       Business with affluent customers has been developing actively. The market share in the
sphere exceeded 15%. The number of Privilege package holders exceeded 10 thousand clients.
      A new model for work with the upper sphere that enables a significant increase in the
number of bank products used by a customer.
       The Bank at work format which implies that bank employees visit an enterprise or an
organization to execute bank products was implemented. The share of such sales in the corporate
channel reached 10%.
        The sales model was altered for the upper sphere of small business. The institution of
active salesmen – customer managers – has become effective.
       A new business model has been formed for work with clients of the standard small
business sphere, with a profit to 20 million rubles per annum. The bank issues more than 3000
Kommersant loans on a monthly basis. Besides lending, the bank holds cross-sales of deposits
and lending cards to individual entrepreneurs. VTB24 attracts more than 500 million rubles and
sells more than 1.5 thousand of credit cards on a monthly basis.
        Active sales of real estate loans and car loans are going on. The inflow is organized via
the partners (real estate brokers, developers, etc.). The share of active sales reached 38% by real
estate loans.
       It’s a second successive year that the bank sells over 1.2 million cards, including 1
million of payroll cards.
        The cross-sales of credit cards have increased by one and a half, the cross-sales of
insurance policies doubled while VTB research and production company product cross-sales
have tripled.

Bank’s Capacity. The quality of client servicing
        The bank dramatically increased the quality of its services notwithstanding the fact that
the network customer flow has been in a constant increase (it grew more than by a third in a year
to reach over 150 thousand customers daily. In 2010, the international researchers EPSI Reserch
Services assigned VTB24 top ratings in the banking sector with reference to customer
satisfaction and loyalty levels. The high quality of service is confirmed by appraisal of The
Retail Finance and such companies as Profi Online Research and Nextep.
        There is less queuing in bank’s department and branch capacity has increased. The share
of customers who wait in lines more than 10 minutes has dropped by 1.6 times in 2010. The time
for cashiers and item processing operators to perform transactions was reduced.
       The process of execution of main products with bank branches has become simpler and
faster while the time for loan extension and deposit transactions was reduced twice. Now
VTB24’ services and products may be purchased on a day-off. VTB24 has actively enhanced
service availability via remote channels in an active manner.
                               Bank’s Services Access Channels


      VTB24’s remote service channels render additional convenience to bank products
management and are becoming increasingly popular.
        In 2010, the number of Telebank remote service users exceeded 970 thousand people
which is 90% more as compared to the previous year. The number of orders (transactions
completed by Telebank customers) doubled to exceed 4.6 million. Total balance amount of
Telebank time deposits has grown by 87% and, following the results of the year, the amount in
current account increased by 75%.
       In 2010, the bank has broadened the range of popular service providers that could receive
payments without a commission fee. Customers have had an option to perform payments in
favour of more than 200 bank partners in a year.
        Moreover, the bank has upgraded and expanded the existing functions, a significant
upgrade being system information functions enhancement. Besides, in 2010 a few special events
were held simultaneously for the Telebank system customers, including the event dedicated to
the 5th anniversary of the bank and a joint event held together with the NTM mobile electronic
devices producer.
       VTB24 is constantly increasing system availability with the regional network. In 2010 40
more offices were employed to service the Telebank system. Thus the total of involved offices as
of January 1, 2011 exceeded 500.

System Development Prospects

        In 2011, the bank has scheduled further active development of remote retail banking as
far as modern mobile platform developed enabled the bank offer simple and fast offline
instruments for fast and simple bank products management. VTB24 contemplates to make the
full use of such opportunities. The bank is also contemplating integration with the third-party
services for airline reservation tickets that would enable Telebank customer service to pay for
their order in a fast, convenient way and without commission.
        VTB24 shall also continue its activities to make work with client applications more usef-
friendly and simple. The bank contemplates to attract designers and usability specialists to
streamline the internet version of the Telebank system. In 2011 the principles to alter product
depiction in the internet bank that makes part of the Telebank system shall be altered.
       The coming function for instant issue of a virtual card expected by the customers shall be
launched at the internet-bank in 2011 and the function of transfer to another VTB24 customer
card shall be streamlined.
Customer Support Centre

      VTB24 provides round-the-clock services to customers and operates as an interface
between different bank units and multiple customers.
       By the end of 2010, the Customer Support Centre employed 561 people (besides
rendering round-the clock consultations on bank products and services) and performs the
following operations:
    preliminary customer’s credit scoring relative to VTB24 credit products;
    completing applications for cash loans or credit cards;
    providing account statements, information on cash flows, payment schedules and loan
    locking/unlocking of payment cards, addressing other matters related to card operations;
    customer registration with Telebank, Teleinfo and Bank Client Online;
    making transactions via Telebank, Teleinfo and Bank Client Online;
    consultations on all the issues associated with using Telebank, Teleinfo and Bank Client
     Online systems;
    reviewing claims and feedback, informing customers on the results of their applications
    supporting marketing campaigns by providing information support of marketing research
     and submitting reports on advertising campaigns’ efficiency;
    customer information support under current agreements;
    taking steps to provide comprehensive customer support, and pre-claim settlement of
     conflicts with bank’s customers;
    developing bank’s positive image by drafting and posting official feedback on bank
     forums and web-based hotlines;
    promoting the sales of existing products, as well as new retail products and services of
     the bank via remote customer service channels;
    facilitating service quality improvement (telephone surveys).
        Competent and efficient performance of the above functions directly impacts the
servicing quality and facilitates bank’s positive image with potential VTB24 customers.

2010 Performance Analysis

        In a WFM-soltion was implemented. WorkForce Management is a system for the call
centre load forecasting, for making schedules and planning of operator work. The system
comprises monitoring instruments for key indices of the contact centre in the real time mode,
provides strategic planning instruments, instruments for planning shifts and graphic modes and
also provides operators with an instrument for demand assignment for weekends and days off.
       IVR Authentication centre was also put into operation. The authentication service is for
the customers to access data on accounts/contracts with a Unique Customer Number and
password directly via remote channels of banking services. The creation of an authentication
centre made it possible for clients to receive personal financial information under bank products
via IVR talk exchange system that facilitated servicing and reduced the load on Document
Support Department operators.
        In 2010 the functions of the subdivision were expanded and the approach to acceptance,
distribution, revision and analysis of customer claims/complaints habitual for the bank was
altered. The whole cycle of claims processing was focused on Document Support Department.
Now the time for claims processing is 15 days, complaints – 3 days. Additionally, now certain
applications may be considered online or with the help of customer support department
employees and to satisfy customer claims to the amount of 1500 rubles in a speedy manner. As a
rule, the clients are being informed on the approval of such applications not later than the day
following the day of application registration.
       In 2010 a project for effective pre-claim activities on site was launched by the Document
Support, under the auspices of the marketing and public relations department as well as the
network department. The corresponding instruments, including a most simple loyalty program is
implemented in order to enhance customer loyalty and, as a result of it, to decrease the number
of complaints and ungrounded claims incoming to sales points.
       The analysis of feedback received from the pilot project members made it possible to
conclude that a most simple loyalty program (handing a customer promotion merchandise) to
resolve a conflict works out well. Clients that received memorable coin sets at the final stage of
the interaction with the customer manager were satisfied with the communication and such
courtesy as promotion merchandise and did not file their application in writing.
       In 2010 the Document Support Department of VTB24 won a successive prize of the Crystal
Set -2010 contest. The bank was nominated for Best Use of Technologies, Prize for Corporate
Responsibility, Advisor/ Employee of the Year.

CSC Quantitative Indicators in 2010:

        % In the course of the year the number of incoming calls demonstrated a stable increase.
In the fourth quarter of 2010 the number of incoming calls exceeded the same value for the first
quarter by 22% (668 thousand).
       Customer e-mails processed for the accounting period were 52 % more than in the
previous period. The trend to reduce the number of processed applications arrived by fax has
remained, just as it was last year.

       In 2010 the number of sent SMS messages increased by 63%. Major growth took place
due to the following lines: Customer notification on the following payment for a loan products,
CRM mailing list and Overdue debt notification.

2011 Agenda

      Enhancing customer support employees presence in social networks and thematic
       websites, reducing the time before response to the references placed in them.
      Creation of CSC head’s blog at a popular banking website.
      Customer loyalty program development and implementation.
      Replicating of the general scheme for effective pre-claim work on site and the
       corresponding methods for its implementation to most bank offices.
      Customer support department’s transfer to the round-the-clock operation mode.
      Operator contact center adaptation (e-mail channel processing).
      Complete IVR switchover to VoicePortal technological platform.
      Transfer to a new ITU platform (testing, customer support).
      Participation in the Mobile Bank project (employee training, testing, customer support,
      Transfer to the new Nice Perform version that would make it possible to search by words,
       appraise the emotional charge of the dialogue, sampling option.
      Implementation of Strategic Planner WFM module.
      Previously Approved Auto Loan sales (PAAL).

Corporate Website
        In 2010 the popularity of VTB24 corporate sources was increasing. As of January 1, 2011
the total audience on the bank Internet portals has surpassed 2 million visitors. The corporate
website continued to strengthen its position in all leading website traffic analysis
       In 2010 a number of technological upgrades of VTB24 corporate site were performed. It
allowed the site to become a fully automated resource providing financial services. Almost all
products of the bank can be drafted by filling the application online on the website.
       New significant services appearing on the website in the 2010:
              Investment trust calculator;
              Online application for credit card;
              Online application for auto loan;
              Service of partner car dealer search.
        Total amount of applications handed in via website in 2010 has increased by more than a
third in comparison with the previous year.
        In the end of 2010 the VTB24 team together with developers launched a new design of
corporative online website in the Internet. The main ideas of the new concept of the design of
online source was the simplicity of navigation for different group of users, tuning
of the site for the target audience segments, as well as use of changing product showcases. Also,
a number of technologic alterations were implemented – the website was moved to a new
hardware platform, which allowed significant increase in the productivity and fault-tolerance.
       In 2010 the ground was laid for creation of new software and hardware platform of the
corporate website.
       In 2011 the priority area of activities will be the launch of a new corporate website. New
Internet portal shall improve the understanding of information by the visitors, simplify
navigation and increase functional capabilities.

Self-Service Network

       By the results of 2010 VTB24 has expanded its ATM network by 954 units, out of which
198 units perform the cash-in.
       As of January 1, 2011 the ATM network of the bank has surpassed 5,000 units, out of
which 1,110 units have the money acceptance functions.
       The functions of VTB24 service include withdrawals and acceptance of cash, transfers
and opening of the deposits, as well as payments to more than 100 payees.
        Following the results of 2010, the VTB24 self-service network has processed more than
130 millions of transactions, more than 700 billion rubles given as cash, more than 88 billion
rubles accepted and transferred to the card accounts of clients.

       Main events of 2010:
       VTB24 is constantly developing the self-service network, improving the quality of ATM
operations and increasing the size of the network:
            Technical availability of the self-service network (percentage ratio of the time
             during which ATMs were serviceable to the total time in the period) has increased
             from 91.5% to 96.5%.
            More than 1,100 ATMs were outfitted with special software for target marketing
            The agreement was concluded with the OTP Bank within the terms of which since
             August 1, 2010 the cash disbursement under the OTP Bank credit cards in VTB24
             ATMs has been performed at reduced rates.
            By the end of 2010 more than 69% of all cash account replenishment operation
             had been performed through the ATMs with the cash-in function.

        In 2011 VTB24 is planning to increase its own self-service network to 5,600 units, as
well as perform the merging of ATM networks with other self-service banks. As a result, the
self-service network of the bank will include more than 19,000 ATMs by the end of 2011.
                 Management of credit, market and operational risks

        The key task of VTB24 in the credit risk management field in 2010 was keeping of the
credit portfolio quality on pre-crisis level.
        The transfer of scoring system of credit decision making to behavioral and integral
scoring has been completed as part of credit strategy modification. This model of scoring takes
into account both social and demographical characteristics of the borrower and data on his
payment discipline. Apart from the data on credit history of the borrowers of the bank itself, the
behavioral models were also based on the data of credit history bureaus. Integral scoring models
display better predicative capabilities and allow for the bank to increase the approval rate
significantly while keeping the credit risk level unchanged. Aside from the extension of integral
scoring model to credit cards and autoloans in 2010, the system of scoring cards, as part of
mortgage loans for the purchase of constructed housing, was also developed. It allowed for
keeping the risks on a close-to-zero level and significant shortening of the time of making credit
decision, the amount of mortgage crediting being significantly increased.
        The fraud detection cards were introduced in mass retail credit products in order to detect
outside frauds in total amount of clients which allowed for keeping outside fraudulence on a
relatively low level.
        With regard to operations with small enterprises, the credit decision making function was
centralized with significant increase of the risk management service role in the credit process.
That included the verification of the borrowers’ account statements and control of the credit
procedure quality as part of small business crediting. The process of pledged assets assessment
was reorganized with engagement of appraisal companies in order to form adequate market-
value appraisal of the pledge portfolio.
       In 2010 the credit portfolio quality management was carried out using the monitoring
system introduced in the bank which was created on the basis of “early identification of risk
        In 2010 the bank moved to countercycle system of credit risk management. The
requirements for borrowers, pledged assets and complexness of credit procedure were lowered
for short duration credits. The approaches to risk estimation for long credits were modified in
favor of decreasing the probability of the borrower’s default. The approach to maximal allowed
credit load depending on the term of credit was reviewed, as well.
        As part of effective management of overdue indebtedness under credit portfolio, the final
integration of CRM-module Siebel collection with client information storage in the bank was
performed in regard to product groups for individuals. The integration allowed for receiving
analytic reports for efficient making of management decisions. Additionally, an expanded
functional was introduced with regard to litigation and enforcement processing on distressed
assets of individuals and legal entities. The result of technology optimization was the increase of
overdue indebtedness collection effectiveness and lowered costs of its collection at all stages by
approximately 30%. Apart from that, in 2010 the sale of distressed indebtedness has become one
of the elements of overdue indebtedness management.
        In 2010 the bank continued improvement of the risk management system. That included
the introduction of new software products, review of the used models of market risks assessment
based on back-testing of the risk assessment models, as well as development of new methods of
market risks assessment in accordance with the recommendations of the Basel committee.
        As part of operation risks management in 2010, a large scope analysis – RSA (risk self
assessment) was performed. Based on its results, the list of most significant operational risks was
drawn up and plans on their management were developed and introduced. The system of
collecting and accounting of data on realized and potential operational risk events was
considerably revised.

       Plans for 2011

       The main areas of credit risk management in 2011 will be:
          Turn from product-oriented to client-oriented approach in the credit decision making.
It will allow for offering not one but multiple credit products to clients upon their application to
the bank.
         Introduction of the system of borrower’s credit limit management for revolving credit
products (credit cards, credit facilities) depending on its payment and transactional behavior. On
the one hand, this will allow for decreasing of the credit loan on the client at the early stages of
its default risk and, thus, decreasing the possible losses, and, on the other hand, this will allow
for increasing the amounts that can be given to low-risk clients that need additional financing.
      While crediting small enterprises the bank plans to revise the approaches to credit
underwriting as well as apply fully automated system of credit decision making.
        As part of operation risk management system in 2011, it is planned to introduce the
system of capital calculation and allocation based on AMA (advanced measurement approach),
the preparation for the launch of automated system of operation risk management, start of
introduction of DRP (disaster recovery process). In the field of key risk indicators, it is planned
to introduce the monitoring system on the general bank level and in the section of territorial
subdivisions, involving the quick reaction system on the signals of KRI (key risk indicators) and
business and operational process correction. Complete movement of the credit conveyance from
existing ABS to separate module is being planned. That migration will allow for quick
modification and tuning of credit conveyance operation depending on quickly changing product
concepts and credit risk management procedures.

                             Operations with distressed assets

       In 2010 the bank continued its activities in settlement and collection of distressed assets.
       The VTB24 system of operations with distressed assets involving full list of the debt
settlement procedures on different stages, as well as the network of specialized regional
collection divisions have shown high working capability. The main efforts in 2010 were directed
towards increasing of the effectiveness of said system and lowering of costs.
       The following key actions were taken in 2010:
        One of the biggest market transactions on the sale of distressed debts with long term
due-payment was performed. The result of project implementation was the bank getting
additional income under IFRS.
         The bank has completed the introduction of new fully automated information system
for operations with distressed assets. It allowed for full automation of all the processes of
collecting of distressed debts and, therefore, significant decrease of the costs of collecting
         The large-scale project on introduction of unified collecting standards was implemented
in the regional departments of VTB24. This allowed for spreading the use of the best practices
and making the collecting procedure more transparent and controlled.
         The bank continued to take active part in the Federal program of support for mortgage
borrowers of Agency for Mortgage Restructuring OJSC. In order to carry out further
restructuring of the assets, the transactions were performed involving selling to the Agency a part
of mortgage loans, the debtors under which had previously received the stabilizing help under
the program of the Agency.
         The bank continued operations with pledged property of debtors that had difficulties
with regular payments. The debtors were offered the possibility to sell the pledged property in
order to pay the indebtedness or to decrease the debt load. The “Pledged Property Showcase”
program was developed involving the possibility of featuring a debtor’s property for sale on the
official website of the bank and receiving the credit at reduced rate. Also, the list of displayed
property was extended and the sales revenue has increased.
              The bank continued active acquiring of collecting agencies for the collection of
distressed debts under agent agreements. The collaboration principles were altered to a large
extent and directed towards accounting of agency operations efficiency.
        Those actions had allowed for increase of the amount of collecting of post-due
indebtedness by 80% per month compared to 2009 by the end of 2010. The quality effectiveness
of collecting was improved significantly and amounted to 98% under retail credits. This is one of
the best results on the market.

       Plans for 2011
        Improve the effectiveness of collecting distressed debts as a part of litigation and
        Decrease the bank expenses on collecting of the distressed debts
             Continue proven effective practice of market sale of distressed debt, collecting of
which using bank’s own resources was deemed impractical.
                                  Information technologies

        In 2010 in accordance with the plans of introduction of new technological platform the
most mass product Cash Credit was distributed in all bank network based on new IT-platform.
All the operations on this product were performed on the base of new ABS. Large-scale
modification of operations and automation of respective processes for transition to daily closing
of operational day will allow for further development of bank products and services on the base
of this new platform.
        The possibilities for target offers to clients were expanded – the “Campaign
Management” industrial solution, which allows the bank implementation of the client-oriented
strategy. That strategy is based on multi-channel and multi-step communications in condition of
operation with difficult data using the platform of leader in the field of software and hardware
platforms for business analytics - Teradata. The system has already shown itself as valuable by
speeding up complex marketing campaigns.
         The “Campaign Management” solution is a part of realizing project on creating the online
data archive (Active Data Warehouse). The realization of active archive in addition to the project
of creation of analytic archive of client information (ACAI) completed in 2010 will allow for the
bank to provide online access for operational CRM, client notification subsystem and operational
decisions making subsystem. This will provide for the possibility of transfer from segment-
oriented approach to client services to target offers for every client depending on his lifecycle of
buying activity and will improve effectiveness of interaction with each client. The ACAI system,
in its turn, is successfully used for consolidation of processes of drawing of management reports
and information analysis, as well as for information and analytic support of different directions
of bank activity. Eventually bank will implement the online archive for those tasks as well.
       Moving of processing center of the bank to the new platform (IBM) allowed for
processing of constantly increasing amount of credit cards and increased number of transactions.
The scalability of RISC of IBM platform will allow the IT-infrastructure stay relevant to the
business needs in the future.
        In 2010 the three-year IT program on transformation of branch network was completed,
which included the change of the bank branches on the territory of RF to unified centralized
banking system. IТ-landscape of ABS of the branch network was moved to the target
architecture and the results of operation of centralized complex allow for drawing conclusions on
appropriateness of the chosen direction: the operation stability was increased, the productivity
was boosted and the mechanisms of redistribution of process powers “on the fly” allowed for
getting the maximal effect from the bank investments.
       To satisfy the ever-increasing need of the clients in remote management of their own
financial assets, payment for services, operations with plastic cards the productivity of the
Telebank system have been significantly increased. Also, modernization and optimization of
infrastructure of the platform for remote bank services for legal entities took place – the
productivity and fault-tolerance of the Bank-client was increased.
       For the fastest possible implementation of state programs, the following products were
automated: mortgage with state support, mortgage with maternity capital, military mortgage.
        In 2010 the bank completed the creation of the client service center based on the phone
solutions of Avaya Company. The cutting edge technologies increasing the effectiveness of the
call-center operations, such as Voice over IP, subsystem of interactive voice menus (IVR),
integrated with banking systems, conversation recording subsystem (Nice), subsystem of
preliminary dialed calls (PDS) and module of control of operators working shifts (WFM), were
used here.
       In order to increase the operation efficiency and improvement of the ratio of sales volume
to the service volume, the electronic system of process and documents management was
introduced based on the DocsVision platform.
       In order to optimize the expenses, the outsourcing of printing services of the bank was
performed in Moscow region which allowed for increase of availability of copying and printing
equipment and great reduction of maintenance expenses. The partner of the bank in the project
was the XEROX Company.
       A new online application for credit card processing was developed and introduced for
convenience of the clients. The application can be filled in on the bank website which greatly
reduces the time of waiting for cards issuing.

       Plans for 2011:
              Approval of new IT-strategy of the bank for 2011-2013
              Introduction of unified frontal solution in the bank offices.
              Introduction of information and payment terminals.
              Introduction of mobile banking for physical bodies.
              Introduction of system of automated expenses distribution (Activity-Based
              Introduction of information and analytical system for automated cash flow in the
              Development and introduction of specialized frontal application for the sales of
               banking products in the offices of partners, including credits at the car dealers.
              Introduction of specialized centralized system of data control of MDM class.
              Increased server space volume due to construction of DPC-3.
              Implementation of videoconference system based on the equipment of Cisco
               Tandberg in the territorial branches of the bank.
              Realization of the project on creation of DRP DPC.
              Continued operation on virtualization of server powers on the base of HP and
               VMWare products, as well as finishing of the change of the network core to the
               technology 10G based on the equipment Cisco Systems.
              Implementation of SAP ERP system to optimize administrative and housekeeping
               activity of the bank.
              Transfer of the Bank-Client online system to the new platform.
              Creation of new corporative website VTB24.
              Provision of transfer to MS ActiveDirectory 2008 and Exchange 2010.
              Transfer to the SwiftAlliance system.

                                         Recruitment Policy

       In 2010 the emphasis in the sphere of human resources management was put on
implementation of new and improvement of current practices aimed at meeting business
demands to the maximum and accomplishment of bank growth strategy. Major breakthroughs
were performed in the wage, social security, staff recruitment, assessment and training systems
and in other strategic directions.
      As of December 31, 2010, VTB24 employed 18,691 people. On the whole, the number of
employees showed an increase of 13%. This was attributable to active network development and
opening of new outlets within a year.
        For the purpose of improvement of customer support quality the approach to front line
specialist recruitment was revised. Now when selecting applicants most of the focus is on
evaluation of their personal qualities that moulds client-oriented behavior. Alongside with active
recruitment of employees a significant step was taken towards strengthening of bank position as
an employer, increase of loyalty and current staff retention.
        Bonus plan was updated: additional facilities of business unit managers’ influence on
staff motivation, extra bonus payment option for implementation of significant projects have
been developed, bonus pay performance targets for employees of head office business units and
sales personnel of regional network branches have been offset.
       In order to increase social security of bank employees the following changes have been
introduced into the social protection and corporate benefit system:
              Fringe benefit under sick leaves has been introduced and is paid in the amount up
               to a certain percent of an official salary with due consideration of total
               pensionable service and record of service of an employee in VTB Group;
              Maternity fringe benefits under sick leaves have been introduced;
              Extra days of paid special leave with a view to different life circumstances.
        A range of significant projects was implemented in the area of training and development.
Throughout 2010 VTB24 Higher School introduced new academic programs that are focused on
different personnel levels. Thus, the program “Leadership Horizons”, which involves all
managers of branch offices and regional operational offices of the bank, caters for development
of management potential. The new program of all-purpose front line employee training is aimed
at customer service quality improvement.
       In order to meet the increasing network requirements for high-quality training of new
employees a mentoring system was developed providing for a newcomer’s training on probation
in current bank branches under supervision of a skilled colleague. In 2010 the system was
introduced in Moscow region, in 2011 it is expected to be distributed throughout all VTB24 local
       Some projects aimed at corporate competence development were initiated. Evaluation of
staff performance that accumulates the results of available assessment tools (KPI, MBO,
competence evaluation) was performed for the first time. Work on creation of corporate
competence model was launched with active contribution of top managers. Implementation of
the program “Personnel Front Line” was initiated allowing for highlighting of highly prospective
employees, creating strategies for their development and retention in the bank.
        Apart from achievement of high business performance, 2010 was marked for VTB24
group by the first anniversary: the bank accomplished five years. Festive events were held in
each operations area of the bank under the rallying slogan “VTB24. 5 Years of Cooperative
History Development”, and on September 18 the anniversary celebration took place in Moscow.
1425 employees that have been working for VTB24 since the moment of its set-up were awarded
with commemorative silver medals. Another 478 employees received silver trade marks for their
loyalty to VTB Group in the form of the Group logo.
        In 2010 positive changes took place in the field of provision of information to the staff. In
April 2010 the initial release of the newsletter “Your Bank’s News” was issued. This electronic
edition summarizes the key information on the work undertaken, current plans and crucial
events. In May 2010 the corporate movie “VTB24. New Strategy” was released. Therein Mikhail
Zadornov, President – Chairman of the Board, and his deputies review the results of the bank
performance, tell about the strategy for the years 2010-2012 determining the future of VTB24.
The movie was seen by more than 7,000 users of 24 Hours Intranet Web Portal. It is currently
being broadcasted within the framework of the bridging program for new employees.

                                 Information Transparency

        VTB24 can be called, without hesitation, one of the most open banks of Russia with
respect to information provision. The Bank not only sells many of its services on a 24-hour basis,
but also provides information to federal and local mass media during more than 18 hours a day.
       Being aware of great interest in the bank evincing on the part of not only federal, but also
local mass media, the bank set up the institute for media relations officers in 2010.
       In 2010 the media relations officers for Northwestern, Southern, Volga, Ural, Siberian
and Far Eastern Federal Districts commenced their work.
       Cooperation with mass media was switched to the continuing basis in 30 bank operations
areas. Within a year more than 50 events for local and federal mass media were arranged by the
media relations office.
        At year-end Ivan Makarov, the media relations officer for Northwestern Federal District
of VTB24, was declared the best bank PR manager of Saint-Petersburg by FinNews Bank Web
Portal in association with TT Finance publishing house.
        In 2010 VTB24 launched its active cooperation with social media. The media relations
office opened its representative offices in Facebook social network and Twitter microblogging
service. The project “VTB24 Community Liaison Office” was implemented on LiveJournal
platform. In November 2010 the social marketing lab “Sarafannoe Radio” ranked VTB 24 the
first among Russian banks according to a degree of integration with social media.

                          Sponsoring and Charitable Activities
        In 2010 VTB24 continued its sponsoring and charitable activities in the priority areas that
have already become traditional: support of creative, cultural and educational organizations, as
well as socially disadvantaged groups. Major criteria of our social activities are transparency and
efficiency of assistance rendered, partnership cooperation and active involvement of the bank
employees in socially important activities.

Support of cultural institutions
        Last year VTB24 carried on its tradition for support of cultural institutions as one of top-
priority areas of its charitable and sponsoring activities. The bank regards development of culture
as one of the key directions in preservation of the nation’s spiritual and moral health.
       For more than three years VTB24 has been cooperating with the Moscow South-West
Theatre making its contribution to technical re-equipment of the theatre. Thanks to the bank
sponsorship, road tour of the theatre took place in Saint Petersburg within the framework of
which the audience of the capital of the North attended the following performances: “Master and
Margarita”, “Carnival Joke”, “Run for Your Wife”, “The Taming of the Shrew”, etc.
       Since 2008 VTB24 has been cooperating with Y.P. Lubimov’s Charity Fund for Theatre
Art Development and has been contributing to support and development of the Taganka Theatre.
In 2010 the theatre prepared a present for the spectators – the staging of “Honey” which is
dedicated to the author of the namesake poem, a friend of Y.P. Lubimov’s, T.Guerra. This and
other performances became possible due to the patrons and friends of the theatre among which is
        In 2010 cooperation of VTB24 with Moscow Theatre College under the Moscow Theatre
Directed by O.Tabakov continued. Due to support of the bank and other patrons, screenings of
talented children took place in Barnaul, Smolensk, Perm, Omsk, Samara, Rostov-on-Don,
Moscow, Saint Petersburg, Lipetsk, Novosibirsk, Saratov, Yekaterinburg, Irkutsk. 1,117
teenagers took part in the screenings, 131 of them passed the preselection stage successfully and
are preparing for college admission examinations.
Support of educational institutions
       One more area of charitable activities of the bank – support of talented students and
educational institutions.
        For the fifth year running VTB24 has been actively cooperating with Government
Institution Higher School of Economics in the context of master’s degree program in Financial
Economics of International Institute of Economics and Finance of Government Institution
Higher School of Economics. During the study under this program in 2009-2010, 19 graduates
received full and partial scholarships for studying in International Institute of Economics and
Finance, as well as scholarships for accommodation arrangement for non-resident A-grade
students. The graduates also receive an opportunity of passing the practical training in the
branches of VTB24 and receiving necessary practical skills required for future professional

Support of socially unprotected groups of people
        The bank supports orphans and the children without parental support, critically ill
children and disabled persons, veterans of the Great Patriotic War and people in difficult life
situations. Such assistance is traditionally initiated by VTB24 branch employees, and the bank
allocates charitable funds in addition to the ones already collected by the employees.

Philanthropic assistance of clients and friends of the bank
       VTB24 offers its clients convenient and effective system for charity support through the
Telebank Internet banking system This system allows for the clients to study
the Charity section and select the organization and area of support they like. The donations are
not subject to fees.

Openings of 2010

     In 2010 VTB24 provided financial help for reconstruction of St. Nikolai Church in
Khamovniki. The major part of the Church interior was restored. The church is the monument of
Moscow architecture of XVII century.
     In 2010 VTB24 acted as the general sponsor of international festival «ARCHANGELSK-
BLUES-2010», held in May 2010 at Severodvinsk and Archangelsk.
       In April 2010 VTB24 for the first time took part in the mini football tournament held by
the Downside Up Charity Fund. The event was not only directed towards the support of the
Fund’s activities in pedagogic and psychological aid to the children with Down syndrome in the
Russian Federation, but also helped to develop team spirit in the bank employees.
    Financial Statements

    Balance Sheet
    (published form) as of January 1, 2011
    Lending institution:
    Bank VTB 24 (closed joint-stock company)
    VTB 24 (JSC)
    (corporate (full official) and abbreviated names)
    Postal address: 35 Myasnitskaya St, 101000, Moscow

    Form code 04009806
    RUR thousands

Item                                         Item                                     Reporting     Relevant
No.                                                                                   Period Data   Previous
I.          ASSETS                                                                                  Reporting
                                                                                                    Period Data
1           Cash                                                                      44,752,891    39,570,860

2           Placements by lending institutions with the Russian Central Bank          21,491,068    14,155,599

2.1         Statutory reserves                                                        5,524,998     4,286,194

3           Placements with lending institutions                                      5,984,299     3,335,220

4           Net investments in securities evaluated at fair value through profit or   52,881,883    53,451,210
5           Net loan delinquencies                                                    738,788,583   564,821,327

6           Net investments in securities and other financial assets held for sale    897,115       369,772

6.1         Investments in subsidiary and dependent organizations                     740,010       32,510

7           Net investments in securities held to redemption                          3,690,690     6,862,398

8           Property, plant and equipment, intangible assets and inventories          10,001,656    8,945,785

9           Other assets                                                              22,087,925    16,953,502

10          Total assets                                                              900,576,110   708,465,673


11          Borrowings from, deposits of and other funds obtained from the            0             12,270,076
            Russian Central Bank
12          Placements by lending institutions                                        47,721,829    61,618,826
13      Placements by clients that are non-lending institutions                    710,928,102      501,854,967

13.1    Personal deposits                                                          630,051,741      433,597,375

14      Financial liabilities evaluated at fair value through profit or loss       0                0

15      Debt instruments issued                                                    40,415,284       46,292,767

16      Other liabilities                                                          11,710,699       8,388,142

17      Provisions for potential loss under loan-related contingent liabilities,   1,442,760        481,693
        other losses and transactions with off-shore residents

18      Total liabilities                                                          812,218,674      630,906,471


19      Shareholders’ (members’) capital                                           50,730,197       50,636,514

20      Own shares (participatory interest) bought-out from shareholders           0                476,498
21      Share premium reserve                                                      22,693,020       22,625,380

22      Reserve fund                                                               999,657          888,535

23      Revaluation at fair value of the securities held for sale                  4,113            0

24      Revaluation of fixed assets                                                7,724            7,724

25      Non-distributed profit (non-covered loss) of the previous years            1,660,959        1,660,959

26      Non-used profit (non-covered loss) of the reporting period                 12,261,766       2,216,588

27      Total sources of equity                                                    88,357,436       77,559,202


28      Irrevocable liabilities of the lending institution                         90,894,055       97,153,611

29      Guarantees and surety-ships granted by lending institution                 459,387          4,470,857

 President – Chairman of the Board                              Mikhail Mikhailovich Zadornov
 Chief Accountant                                                         Svetlana Petrovna Emelyanova

 Profit and Loss Statement
 (published form) for 2010
      Lending institution name:
      Bank VTB 24 (closed joint-stock company)
      VTB 24 (JSC)
      (corporate (full official) and abbreviated names)
      Postal address: 35 Myasnitskaya St, 101000, Moscow

               Form code 0409807
               RUR thousands

Item                                          Item                                            Relevant      Previous
                                                                                              Reporting       Period
No.                                                                             Period Data

1             Total interest income                                             97,412,199    85,160,049


1.1           From placements with lending institutions                         11,968,235    7,120,298

1.2           From loans granted to clients that are non-lending institutions   79,787,791    72,570,318

1.3           From financial lease services                                     0             0

1.4           From securities investments                                       5,656,173     5,469,433

2             Total interest expense                                            43,080,639    41,609,190


2.1           Under borrowings from lending institutions                        2,420,107     9,353,623

2.2           Under finances borrowed from clients that are non-lending         36,428,657    29,030,256
2.3           Under debentures issued                                           4,231,875     3,225,311

3             Net interest income (negative interest margin)                    54,331,560    43,550,859

4             Total changes to loss provisions for loans, lending and similar   -12,358,380   -23,830,085
              debts, funds held with the correspondent accounts and accrued
              interest income

4.1           Changes to loss provisions for accrued interest income            -651,987      -848,281

5             Net interest income (negative interest margin) upon making        41,973,180    19,720,774
              loss provisions
6             Net income from operations with securities evaluated at fair      -222,907      852,590
              value through profit or loss
7           Net income from operations with securities withheld for sale      87, 717         -5,202

8           Net income from securities transactions withheld prior to         0               -6,551
9           Net income from foreign currency transactions                     -60,464         -2,860,682

10          Net income from foreign currency revaluations                     1,326,232       2,078,071

11          Income from participation in other legal entities’ capital        0               0

12          Commission income                                                 10,325,587      8,634,217

13          Commission expense                                                1,587,955       1,516,300

14          Changes to loss provisions for securities withheld for sale       -50             0

15          Changes to loss provisions for securities withheld prior to       56 300          -22 958
16          Changes to other loss provisions                                  -750,559        -51,832

17          Other operating income                                            3,519,139       1,727,044

18          Pure income (expense)                                             54,666,220      28,549,171

19          Operating expenses                                                32,669,320      24,295,651

20          Pre-tax profit (loss)                                             21,996,900      4,253,520

21          Accrued (paid) tax                                                5,185,650       2,036,932

22          Post-tax profit (loss)                                            16,811,250      2,216,588

23          Total post-tax payments out of profits                            4,549,484       0


23.1        Dividend distribution among shareholders (participants)           4,549,484       0

23.2        Deductions for forming and replenishment of the reserve fund      0               0

24          Non used profit (loss) for the reporting period                   12,261,766      2,216,588

     President – Chairman of the Board                            Mikhail Mikhailovich Zadornov
     Chief Accountant                                                      Svetlana Petrovna Emelyanova

     Statement of Capital Adequacy, Provisions for Problem Loans and Other Assets
     as of January 1, 2011
Item                                   Item                                As of beginning    Increment (+)   As    at   the
No.                                                                        of                 / decrement     respective
                                                                           the    reporting   (−) for the     date of the
                                                                           period             reporting       reporting
                                                                                              period          period
1       Total shareholders’ equity (capital), RUR thousand                 97,381,116.0       6,714,319       104,095,435.0


1.1     Authorized capital of the lending institution                      50,636,514.0       93,683          50,730,197.0


1.1.1   Par value of registered ordinary shares (participatory interest)   50,636,514.0       93,683          50,730,197.0

1.1.2   Par value of registered preference shares                          0.0                0               0.0

1.2     Own shares (participatory interest) purchased from shareholders    476,498.0          -476,498        0.0
1.3     Share premium reserve                                              22,625,380.0       67,640          22,693,020.0

1.4     Reserve fund of the lending institution                            888,535.0          111,122         999,657.0

1.5     Financial results of activities with a view to equity funds        2,693,517.0        9,754,069       12,447,586.0
1.5.1   of the previous years                                              1,829,195.0        -642,001        1,187,194.0

1.5.2   of the reporting year                                              864,322.0          10,396,070      11,260,392.0

1.6     Intangible assets                                                  6,885.0            2,914           9,799.0

1.7     Subordinated loan (facility, deposit, bonded debt)                 21,048,840.0       -3,001,150      18,047,690.0

1.8     Sources (part thereof) of additional capital formed by investors   0.0                77,130          77,130.0
        improper assets
2       Standard value for capital adequacy (interest)                     10.0               х               10.0

3       Actual value for capital adequacy (interest)                       15.2               х               12.9

4       Total actually formed reserve (RUR thousand)                       40,612,370.0       12,947,368      53,559,738.0


4.1     for loans, lending and similar debts                               39,593,231.0       12,271,066      51,864,297.0

4.2     for other assets with loss risk and for other losses               541,198.0          538,183         1,079,381.0

4.3     for loan-related contingent liabilities shown in off balance       477,941.0          138,119         616,060.0
        accounts and futures contracts
4.4     for transactions with off-shore residents                          0.0                0               0.0
           Reference section:

           1.         Formation (additional crediting) of reserve for possible    91,010,440
                      losses on loans, lending and similar debts in reporting
                      period (thousands rubles), total
                      Including owing to:
           1.1.       Granting new loans                                          26,642,513
           1.2.       Alteration of the quality of the loans                      57,358,615
           1.3.       Alteration of official exchange rate of foreign currency    614,949
                      against ruble established by the Bank of Russia
           1.4.       Other reasons                                               6,394,363
           2.         Restoration (decrement) of reserve for possible losses      78,739,373
                      on loans, lending and similar debts in reporting period
                      (thousands rubles), total
           2.1.       Writing off of uncollectible loans                          87,199
           2.2.       Loan repayment                                              28,988,389
           2.3.       Alteration of the quality of the loans                      45,584,432
           2.4.       Alteration of official exchange rate of foreign currency    655,906
                      against ruble established by the Bank of Russia
           2.5.       Other reasons                                               3,423,447

           President – Chairman of the Board                    Mikhail Mikhailovich Zadornov
           Chief Accountant                                               Svetlana Petrovna Emelyanova

           Statutory Ratios
           as of January 1, 2011,%

Item   Item                                        Standard                 Actual value
No.                                                value

                                                                   as of reporting date         as of the previous
                                                                                                reporting date
1      Equity (capital) adequacy ratio (H1)        10.0            12.9                         15.2

2      Instant liquidity ratio (Н2)                15.0            40.8                         47.8
3    Current liquidity ratio (Н3)                      50.0       69.3                         100,5

4    Long-term liquidity ratio (Н4)                    120.0      94.9                         87.9

5    Ratio of the maximum risk per single borrower                                    15.4               18.5
      or a group of related borrowers (Н6)                       Maximum                       Maximum

                                                                                      0.1                0.0
                                                                  Minimum                      Minimum

6    Maximum large-scale credit risks ratio (Н7)       800.0      51.8                         59.7

7    Ratio of the maximum loan amounts, bank           50.0       0.0                          0.0
      guarantees and surety-ships granted by the
      bank to its members (shareholders) (Н9.1)

8     Aggregate bank insider risk ratio (Н10.1)        3.0        0.9                          1.2

9     Ratio of using the bank’s own assets (capital)   25.0       0.0                          0.0
      to purchase other legal entities’ shares
      (participatory interest) (H12)

10    Ratio of proportion of liquid assets due for
      payment in the nearest 30 calendar days to
      the amount of NSCA obligations (Н15)

11    Ratio of maximum aggregate amount of
      loans to the clients participating in
      settlements for closing of settlements (Н16)

12    Ratio of NSCA providing at its own behalf
      and at its own expense loans to the borrowers
      other than the clients participating in
      settlements (Н16.1)
13    Ratio of minimal proportion of provided          10.0       128.2                        133.5
      mortgage credits and own assets (capital)

14    Ratio of minimal ratio of mortgage amount        100.0      108.3                        102.2
      and emission of mortgage obligations (Н18)

15    Ratio of maximal proportion of total sum of      50.0       0.0                          0.0
      obligations of issuer credit organization
      before the borrowers that, in accordance with
      federal legislation, have the priority for
      satisfaction of their requirements before the
      owners of mortgage obligations, and own
      assets (capital) (Н19)

         President – Chairman of the Board                     Mikhail Mikhailovich Zadornov
         Chief Accountant                                                 Svetlana Petrovna Emelyanova
          2010 Cash Flow Statement
          (RUR thousands)

Item                                            Item
                                                                                            Cash flow within   Cash flow within
                                                                                            the                the previous
                                                                                            reporting period   reporting period

         Net funds received from / used in operating activities
1,1      Total funds received from / used in operating activities prior                     117,493,996        117,456,767
         to changes in operating assets and liabilities

1.1.1    Interest received                                                                  92,134,514         87,726,686
1.1.2    Interest paid                                                                      -43,991,925        -44,640,760
1.1.3    Commissions received                                                               10,174,040         8,574,253
1.1.4    Commissions paid                                                                   -1,587,955         -1,516,300
1.1.5    Income less expense for operations with financial assets                           -46,063            209,819
         evaluated at fair value through profit or loss and held for

1.1.6    Income less expense for operations with securities held to                         0                  0

1.1.7    Income less expense for operations with foreign currency                           -60,464            -19,987
1.1.8    Other operating expenses                                                           3,480,260          1,675,125
1.1.9    Operating expenses                                                                 -26,807,651        -23,515,939
1.1.10   Profit tax expense / reimbursement                                                 -5,264,573         -697,626
1.2      Total increment / decrement of the net funds from                                  -15,716,257        -37,257,184
         operating assets and liabilities
1.2.1    Net increment / decrement in relation to statutory reserves                        -1,238,804         -3,701,058
         with the accounts held with the Bank of Russia
1.2.2    Net increment / decrement in relation to investments into
                                                                                            577,604            -23,256,760
         securities evaluated at fair value through profit or loss

1.2.3    Net increment / decrement in relation to loan debt                                 -193,877,992       -132,033,940
1.2.4    Net increment / decrement in relation to other assets                              -5,286,750         35,233,999
1.2.5    Net increment / decrement in relation to borrowings from, deposits of and other    -12,270,076        -75,833,169
         funds obtained from the Bank of Russia
1.2.6    Net increment / decrement in relation to other lending institutions’ funds         -13,835,330        -1,134,434
1.2.7    Net increment / decrement in relation to customers’ (non lending institutions’)    215,461,341        136,613,275
1.2.8    Net increment / decrement in relation to financial obligations evaluated at fair   0                  0
         value through profit or loss
1.2.9                                                                                       -5,889,130         23,273,236
         Net increment / decrement in relation to issued debt instruments

1.2.10   Net increment / decrement in relation to other obligations                         642,880            3,581,677
1.3      Total section 1 (item 1.1 + item 1.2)                                              101,777,739        80,199,583
2        Net funds received from / used in investment activities
2.1      Purchase of securities and other financial assets related to those available for   -829,304           -3,035
2.2      Proceeds from sale and redemption of securities and other financial assets         3,524,701          880,259
         related to those available for sale
2.3                                                                                        0                   -2,492,443
      Purchase of securities related to those held to redemption

2.4   Proceeds from redemption of securities pertaining to those held to redemption        0                   997,402
2.5   Purchase of property, plant and equipment, intangible assets                         -2,455,528          -2,518,161
      and inventories
2.6   Proceeds from sale of property, plant and equipment, intangible assets and           33,789              71,345
2.7   Dividends received                                                                   0                   0
2.8   Total section 2 (sum of items 2.1 to 2.7)                                            273,658             -3,064,633
3     Net funds received from / used in financial transactions
3.1   Contributions by shareholders (participants) in authorized capital                   0                   23,999,999
3.2   Purchase of own shares (participatory interest) redeemed from shareholders           0                   -476,498
3.3   Sale of own shares (participatory interest) redeemed from shareholders               476,498             476,498
3.4   Dividends paid                                                                       -2,105,466          -4,088,706
3.5   Total section 3 (sum of items 3.1 to 3.4)                                            -1,628,968          19,911,293
4     Effect of changes in official foreign currency against the ruble rates established   320,080             -762,624
      by the Bank of Russia for funds and their equivalents
5                                                                                          11,278,696          6,622,123
      Increment / use of funds and their equivalents

5.1   Funds and their equivalents as of the start of the reporting year                    49,440,265          42,818,142
5.2   Funds and their equivalents as of the end of the reporting year                      60,718,961          49,440,265

       President – Chairman of the Board                              Mikhail Mikhailovich Zadornov
       Chief Accountant                                                        Svetlana Petrovna Emelyanova

       Auditor’s Report
       On the Annual Report drafted by the results of 2010 operation

       Attn: shareholders of Bank VTB 24 (closed joint-stock company)

       Audited legal entity:

       Full name: Bank VTB 24 (closed joint-stock company) hereinafter referred to as “Bank”.

       Certificate of State Registration of a lending institution No. 1623 issued by the Central Bank of the Russian
       Federation on July 13, 2000.

       Certificate of registration in the Unified State Register 77 No. 008018454 issued by the Ministry of Taxation of the
       Russian Federation on September 17, 2002.

       Address: 35 Myasnitskaya St, 101000, Moscow, Russian Federation

       Name: OOO Ernst and Young
       Main state registration No. 1027739707203.

       Location: Bldg 1, 77 Sadovnicheskaya Quay, Moscow, Russian Federation, 115035
OOO Ernst and Young is a member of Non-Commercial Partnership Auditor Chamber of Russia (NP APR)
registered in the register of auditors and audit organizations of NP APR under No. 3028, and included in the
approved copy of the register of auditors and audit organizations under main registration entry number

We have conducted audit of the enclosed annual report of VTB24 (closed joint-stock company). The report includes
Balance Sheet as of January 1, 2011; 2010 Profit and Loss Statement; 2010 Cash Flow Statement; Statement of
Capital Adequacy, Provisions for Problem Loans and Other Assets as of January 1, 2011; Statutory Ratios report as
of January 1, 2011; and Explanatory Notes (items 1.4-7, 9-17).

Responsibility of audited legal entity for annual report

The management of VTB24 (closed joint-stock company) is responsible for drafting and validity of the annual
report in accordance with the rules of annual report drafting established in the Russian Federation and for inner
control system necessary for drafting of annual report not containing material misrepresentations due to frauds or

Responsibility of auditor

Our responsibility is to share our opinion on validity of the above annual report based on the audit carried out by us.

We have conducted audit in accordance with the Federal Auditing Standards and with due regard to the International
Standards of Auditing. Those standards require compliance with the applicable ethical norms, as well planning and
conducting the audit so as to obtain reasonable confirmation that the Annual Report is free from any material

 Audit includes the auditing procedures for receiving the evidence confirming the figures mentioned in the Annual
Report and disclosure therein of information. The choice of auditing procedures is the part of our opinion based on
the risk of material misrepresentation of the Annual Report due to frauds or errors. As a part of estimation of the
risk, auditor reviews the internal control system ensuring drafting and validity of the Annual Report in order to
choose the relevant auditing procedures but not to express opinion on effectiveness of internal control system. The
report also includes the assessment of relevant character of applied accounting policy, examination of substantial
estimated figures obtained by the audited legal entities’ management as well as evaluation of the general
representation of the Annual Report.

We suppose that the audit provides us with sufficient grounds for expressing our opinion.


In our opinion, the above Annual Report validly reflects all material aspects of the Bank VTB 24 (closed joint-stock
company) financial status as of January 1, 2011 and the results of its financial and economic activities for the period
from January 1 through December 31, 2010 inclusively in accordance with the legislation and the statutory
regulations governing execution of the annual reports in the Russian Federation.

Other information

The Bank management decided not to include this Explanatory Note into the Annual Report for publication in mass
media subject to the order of the Central Bank of the Russian Federation of January 20, 2009 No. 2172-U on
Publication and Providing Information on Operations of Lending Institutions and Banking (Consolidated) Groups.
Please, note that this audit report on the enclosed annual report should be considered in combination with all
reporting forms and the explanatory note which are an integral part thereof. The full text of the annual report
including all reporting forms and the explanatory note will be posted on the website used by the bank for disclosing
information at upon the approval of the annual statement by the general meeting of shareholders
(participants) of VTB24.

The enclosed Annual Report does not aim at reflecting the financial situation and the activity results in accordance
with accountancy or reporting principles and methods generally accepted in the countries and other political
subdivision entities besides the Russian Federation. Thus, the above Annual Report is not intended for persons
unaware of the accounting and reporting principles, procedures and methods accepted in the Russian Federation.

I.V. Odinaeva
Senior Manager
OOO Ernst and Young

April 19, 2011

Our Contacts

Central Office:
35 Myasnitskaya St, Moscow, 101000
Customer Support Centre:
+7 (495) 777-24-24 (for calls from Moscow)
8 800 100-24-24 (for toll free calls from Russian regions)

Bank on the Internet:
The bank’s official website:
Telebank website:
Private Banking website:
Online Broker investment portal:
VTB Group website:

Our banking details

Correspondent account: 30101810100000000716 with Operations Department of the Moscow
General Territorial Department of the Bank of Russia
INN (Taxpayer’s Identification Number): 7710353606
BIC: 044525716
OKPO (All-Russian Classifier of Enterprises and Organizations) code: 20606880
OKONKh (All-Russian Classifier of National Economy Branches) code: 96120
Bank’s OGRN (Principal State Registration No.): 1027739207462 of September 17, 2002
KPP (Code of Registration Reason): 775001001