Retail Banking
Mortgage Lending
In 2010, the Bank renewed the implementation of mortgage lending programs. Today, it is possible to obtain a loan at the Bank for the purchase of housing in the primary or secondary real estate market, as well as for any consumer purposes on the security of an apartment owned by borrowers.
To date, the mortgage lending is one of strategic lines of retail business. The Bank has actively been working on the accreditation of developers in order to extend as much as possible the list of projects under construction to be credited and to give borrowers an opportunity to make a self-selection. We attract realtor/broker, insurance and appraisal companies in order to give borrowers a wide choice of tariffs and terms and conditions of services related to the granting of mortgage loans.
Mortgage lending programs offered by the Bank are undoubtedly competitive, convenient, profitable and affordable from the clients’ point of view: the interest rate on the secondary market starts from 11,5% in rubles, the initial contribution starts from 10% of the residential premises being acquired.
Last year, the preparation of the transaction began, which is planned for 2011 together with the National Reserve Bank, in respect of securitization of mortgage portfolios under the guarantee of the Federal Agency for Housing Mortgage Lending.
Restructuring of the retail loan portfolio
In 2010, the Bank continued the implementation of programs for restructuring of retail loans of borrowers who have difficulties to repay loans during the financial crisis period.
According to the results of 2010, 674 retail loans were restructured to the total amount of 1,595 million rubles.
In June 2010, the Bank sold the mortgage portfolio having a volume of 425 million rubles within the framework of the Federal housing mortgage loans restructuring program of the Agency for Restructuring of Housing Mortgage Loans, what allowed the borrowers who found themselves in a difficult financial situation to expect the repeated restructuring of loan obligations.
Bank Cards
In 2010, it was introduced a new wide line of credit cards of different categories: for payroll clients, corporate (non-payroll) clients, clients having a positive credit record and other individuals (pilot project in Moscow and the Urals branch). These programs stipulate the issue of credit cards on special conditions for relevant categories of clients.
Consumer lending
In 2010, it was launched in the Bank a pilot project to grant purpose express loans for the purchase of subscriber equipment and other goods in sales offices of MTS retail network.
Sales of retail products and services
The system of retail sales continued to develop last year: there were introduced modernized standards of sales of retail products and services of the Bank and customer service standards. There were prepared and implemented scenarios of promotion of retail products and their general and special presentations, the results are monitored on a weekly and monthly basis.
In 2010, training programs for the Bank’s retail bloc were developed and implemented. Over 500 employees of the branch network were trained on the courses: "Skills of Sales of Credit Card to Payroll Clients","Skills of Sales of Mortgage Products" and distance learning courses. The business training “Skill of Mortgage Products Sales by Telephone” was prepared and conducted for employees of the Bank’s Information Center.
The training on the Bank’s mortgage programs is arranged in Moscow and a number of branches for employees of partner organizations (realtor/broker, developers).
The training on the terms and conditions of the Bank’s products was conducted in sales offices of MTS retail network for 8 trainers of MTS retail network within the framework of the launched project of consumer lending.
In November 2010, mortgage lending advertising campaign was launched: clients who received advertising coupons from the Bank’s partners were provided with additional privileges when obtaining a loan. At the end of the year there was conducted the event “Happy New Photo”, in which all MTS Bank credit card holders participated. By sending photos of interesting and unusual gifts purchased with MTS Bank credit card, clients received prizes from the Bank.
In August 2010, MTS Bank Model of Retail Sales was developed and approved.
Telemarketing
In October 2010, the Bank launched a new channel of retail products sales by telephone — telemarketing.
The first task for telemarketing was a project of activation of payroll clients’ credit cards for the purpose of increasing their credit limits.
In November and December 2010, the promotion of credit cards issued on special terms for MTS Bank bona fide borrowers started through telemarketing.
Deposits of the population
In 2010, the Bank continued the work to attract monetary funds on deposits. The multi-currency deposit was included in the line of fixed-term deposits, which makes it possible to manage monetary funds in three currencies within the framework of a single contract.
The Bank currently offers deposits taking into account the needs of all client groups: classical deposits not to be replenished, deposits to be replenished, deposits with the possibility of replenishing and withdrawing monetary funds, special deposits for corporate clients’ employees and people of retirement age.
Internet banking
During 2010, the Bank actively enlarged the list of companies to which it is possible to make payments through the system of Internet banking. In addition to new Internet providers and telecommunications services, it became possible for the Bank’s clients to pay for the purchase of railway and air tickets and traffic police fines in various regions, as well as replenish the electronic purses (Yandex.Money, WebMoney, QIWI, Wallet One). The opportunity to make money transfers under free details through the non-banking credit institution “Rapida” was implemented.
From June 2010, it is possible to obtain full details of the account of your bank cards for non-cash replenishment.
From November 2010, it is possible to connect remotely Internet banking and also to change the login and password using MTS Bank self-service network equipment (ATMs and terminals).
Acquiring
The obtaining of acquiring license from Visa International and the implementation of direct acquiring in respect of Visa cards in 2009 facilitated the dynamic development of acquiring network. Turnover in attended trade and service outlets (TSO) exceeded 2 billion rubles in 2010 with a network positive financial result over 9 million rubles and increased against the previous year notwithstanding the growth of fee commissions of international payment systems Visa and MasterCard.
ATMs and terminals
The network of ATMs and terminals in MTS Bank developed dynamically in 2010, at the end of 2010 there were 572 ATMs and 63 terminals. The efficiency of the network has been increasing. The average financial result per one ATM was more than 255 thousands of rubles last year.
The opportunities for servicing the Bank’s clients have systematically developed, so in 2010 the development of the network of united settlement systems (USS), which member is MTS Bank, made it possible for the Bank’s clients to use additionally more than 9,600 machines for the receipt of cash funds.
In addition, it was brisked up the work on the connection of regional payment providers and the development of additional services in ATMs of MTS Bank in 2010. This gave the Bank an opportunity to offer clients, along with traditional functions, a variety of self-services from the provision of information on the nearest scheduled loan repayment up to the payment to various local providers of utility services, the payment of cellular communications, television, Internet.
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Corporate Banking
Corporate business development
Despite the difficult situation in the banking sector, the Bank has strengthened its positions in such industries as metallurgy, the fuel and energy complex, telecommunications, defense, construction, food, leasing, and insurance.
The first three quarters of 2009 were marked by slow business activity in corporate lending, but during the fourth quarter the Bank approved loans that increased the total amount of lending to corporate clients by about 4.2 billion rubles. Despite reviving lending at the end of the year, the Bank’s corporate loan portfolio decreased by 27% to 28.951 billion rubles as of January 1, 2010, while the export and trade financing portfolio fell from 5.494 billion rubles in 2008 to 3.418 billion rubles.
In 2009, the Bank continued to attract tied loans from foreign banks under the guarantees of such export credit agencies as Euler Hermes (Germany) and Eximbanka (Slovakia). As a result, MTS Bank’s corporate clients had the opportunity to use financing services on beneficial terms (maturities of 5 to 10 years, low interest rates).
The work carried out by the Bank allowed its clients to receive
The volume of bank guarantees provided to legal entities in 2009 rose 58% to 8.341 billion rubles.
During 2009, the Bank offered corporate clients new deposit products: the “Accumulative” deposit with possible funding during the term of the deposit; the “Operational” deposit with funding and partial withdrawal; and the “Universal” deposit with funding, partial withdrawal and an option to cancel the deposit agreement early. These changes allowed the Bank to increase liabilities by attracting deposits from insurance, metallurgy and other companies.
For regional clients, the Bank developed and launched the “Business Summer” deposit, which featured a high interest rate and no fees for installation and servicing of the"Client-Bank" system.
Corporate lending
In 2009, MTS Bank kept its traditional priorities in lending. Due to changes in the financial situation on the market, the Bank’s combined corporate loan portfolio amounted to 26,967.96 million rubles as of January 1, 2010:
- the Bank’s head office provided loans worth over 15,506.86 million rubles (57.50% of the total corporate loan portfolio);
- regional branches — over 11,461.10 million rubles (42.50%).
As of January 1, 2010 the Bank’s loan portfolio included over 1,000 outstanding loan agreements and 40 bank guarantee agreements. The head office of the Bank concluded 88 loan agreements and 57 bank guarantee agreements in 2009.
The Bank’s head office and branches provided financing to 554 companies as of January 1, 2010, including 54 companies by the head office.
One of the main features of MTS Bank’s lending in 2009 was the high quality of borrowers and the strict criteria they had to meet: loans were provided to borrowers in a sound financial position against safe pledge in the form of guarantees of financially stable companies or a pledge of liquid property.
In 2009, MTS Bank continued to lend to companies within industries that had emerged as priorities for the Bank. As of January 1, 2010, loans to companies from three main industries accounted for a total of 65.19% of the total loan portfolio:
- Financial leasing — 7,250.78 million rubles (26.89% of loan portfolio);
- Retail — 5,309.09 million rubles (19.69%);
- Construction — 5,021.81 million rubles (18.62%.)
Companies from the oil and gas and telecommunications sectors also accounted for significant shares (8.45% and 5.78%, respectively) of the loan portfolio.
Thus, having kept its key priorities in allocating loans in 2009, MTS Bank had a loan portfolio with a diversified structure of investment in terms of industries.
In 2009, the loan portfolio changed in terms of the maturities of loan agreements, in particular:
- Short-term loans (up to one year) accounted for the largest share in the loan portfolio in 2008 — 79% of the total. As of January 1, 2010 the share of loans maturing earlier than in one year had decreased to 74.53% of the total.
- Mid-term loans (maturing in one to three years) fell marginally, from 15.61% in 2008 to 15.26% in 2009.
- The share of long-term loans, provided for over three years, doubled to 10.21% in 2009 from 5.37% in 2008.
The data provided suggest that the Bank mostly finances its clients’ current operations.
In 2009, MTS Bank also recorded a decrease in the share of U.S. dollar-denominated loans in its loan portfolio. The share of loans provided in dollars fell by 3.59 percentage points in 2009 to 23.44% from 27.03% of the Bank’s total loan portfolio.
Euro-denominated loans were trending in the opposite direction, their share increased by 4.41 percentage points to 11.31% from 6.90%. The share of ruble loans in the loan portfolio remained almost unchanged at 65.25%, down from 66.07% as of late 2008. The decrease in dollar loans can be attributed to the rise in the dollar exchange rate in early 2009 and borrowers’ intentions to redeem their dollar-denominated obligations.
The share of loans provided by the Bank’s branch network increased in 2009, as it did in 2008. The branches provided 42.50% (11,461.10 mln rbl) of the total amount of loans, an increase of 1.88 percentage points compared to 2008.
The Urals, Moscow Region, and Nizhny Novgorod branches were the largest branches of the Bank in terms of loans provided as of January 1, 2010. The three branches had a combined share of about 49.44% of the total amount of loans provided by MTS Bank’s regional branches.
Summarizing the results for 2009, it is worth saying that the Bank had been implementing a successful credit policy, paying special attention to collecting previously provided loans and minimizing risks for newly-provided loans amid tough conditions on the financial market and negative trends in micro and macro economy. This allowed the Bank to keep its loan portfolio sufficiently robust.
As of January 1, 2010 the share of overdue loans in the consolidated loan portfolio amounted to 2,267.15 million rubles, or 8.41% of the total. In the Head Office, the overdue loans amount to 444.39 million rubles, or 2.89% of the Head Office loan portfolio.
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Private Banking
Private banking has traditionally been one of MTS Bank’s priorities.
In 2009, special attention was paid to the development of private banking, both in the regions of Bank’s operations and abroad. The Bank implemented projects aimed at increasing the quality of service provided, developing the range of products for select clients, and attracting partners that offer luxury services in the non-financial sphere.
Despite tough competition in the private banking segment, the volume of the deposit portfolio and the commission income from private banking clients’ operations in 2009 considerably exceeded the results for 2008.
In particular, the deposit portfolio of clients looked after by the specialized private banking department grew by over 2 billion rubles, or by 18.5%, in 2009 to 13.2 billion rubles as of 31.12.2009.
Commission income from these clients’ operations exceeded the planned target by 41% and reached over 17.6 million rubles.
The Bank’s branch network also continued to actively develop and increase the private banking client base, it refined procedures to service wealthy clients, and some branches created specialized departments to look after private banking clients.
MTS Bank group currently offers its private banking clients a wide range of banking and investment services, from settlement and cash services, asset management and support of deals with real estate, to alternative types of investment.
Opportunities offered by MTS Bank banking group, including servicing in one of the most respectable European jurisdictions — Luxembourg, considerably increase interest from potential clients. This is illustrated by the growth in business activity of private banking clients in 2009, who decided to use the Bank’s services both in Russia and abroad.
