1

New opportunities of communications in retail banking promotion

Deputy CEO, VTB24

Mikhail Kozhokin

2

Overview of VTB24

531 branches/outlets Approx. 5000 ATMs Nationwide branch network that is

significantly larger than those of most competitors

Profile

Market Position

Business Lines

Distribution Network

Regions

Clients

Very strong position in all Russia’s regions: 69 regions – 86% coverage

Focus on major cities

Over 7.8M individuals clients with 6.9M active clients

Approx. 200 000 SME clients with 49 500 active

Leading Russian retail bank with full range of banking products and services for individuals and SME

Second largest retail bank in Russia Fifth largest bank in Russia by assets Retail loans market share – 10,6% Retail deposits market share – 6,4%

Loan and deposits for individuals SME lending and services Private Banking Cards Investment products for individuals

Total Asset Growth (in RUB mln)*

712 973

904 011

596 481

319 387

159 045

2006 2007 2008 2009 2010

CAGR = 42%

Net Income Growth (in RUB mln)*

17 514

4 8984 237

937545

2006 2007 2008 2009 2010

CAGR = 100%

*IAS, standalone VTB24. 2010 data preliminary, non-audited

3

SET UP

Acquisition of Guta Bank in Russia

Based on Guta Bank, a specialized retail bank, VTB24, was created, focusing on serving and providing loans for retail customers and small businesses as a part of VTB.

Product lines and sales process were set and launched

2004 – 2006 2007 – 2008 2009 – 2011

ACCELERATED EXPANSION

Significant growth of VTB24’s business volumes and market share evidenced by branch network expansion across the country and creating new office forms and bank products sales modules.

Retail customers’ migration from VTB and VTB North-West

The strategic focus is further leading growth with client-oriented and segment-based approach to ensure profitability and high efficiency

ACNOWLEDGED LEADER

The second largest retail bank in Russia

Wide branch network throughout Russia

Developed retail infrastructure, including front office, processing center and internet banking

Significant retail client base Leader in customer service*

VTB24 actively develops its retail business and product line, leading banking service technologies and cross-selling, and steadily grows its share on the retail market.

Retail Banking – History of VTB24

* Awards granted in 2010 presented on next slides

4

Business Growth Supported and Customer Loyaltyby Efficiency Improvement

Number of clients Branches and ATMs

Average time of operation Structure of client-flow by time in queue

5

- EPSI (Quality assessment to meet European standards) – Annual research «Customer saticfaction’2010» – VTB24 is recognized as absolute leader for customer satisfaction and loyalty

- «The Retail Finance» magazine – 1st place by results of 2010: «The best retail bank», «The best service quality»

- SPEAR’S Russia Wealth Management Awards - in 2010 VTB24 Private Banking is recognized as the best Russian bank, providing private banking services and wealth management

Rising Customer Satisfaction Contribute to Stable Growth

#1 Private Banking

SberbankVTB24 Alfa-Bank Other banks

Industry average

VTB24

Alfa-Bank

Raiffeisen Bank

1st place

3rd

2nd

6

Segment-oriented approach and the Internet

VTB24 implemented a segment-oriented approach in client attraction. Key target segments are High/Ultra High Net-Worth’s, mass affluent and the upper mass segment.

The upper mass segment is characterized by high level of activity in the Internet, especially in social networks: 52% of the respondents access the Internet every day, 81% - no less than once a week. In comparison national average is 40% and 61% respectively.

The marketing policy of VTB24 rests on following features:

Internet Advertising (high share in the advertising budget, emphasis on contextual advertising)

General creative concept (celebrities)

Presence in social networks

Family Income, per person, per month, $ Family Income, per person, per month, $

39%

60%

72%

92%85%

300-500 501-800 801-1600 1601-2500 >2500

The share of the Internet users in different income groups The share of Internet in the sources of information about the bank

32%

19%16%

10%

22%19%

10% 11%

300-500 501-800 801-1600 1601-2500

search for information on the Internet

users' advice on the Internet

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Internet audience in Russia

Dynamics of Internet Usage in Russia

3,1

29,4

38,0 45,3 59,7

42,8%

32,3%

27,0%

20,8%

2,1%

0

10

20

30

40

50

60

70

2000 2007 2008 2009 2010

mln

.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Users (left scale) % of Population (right scale)

The number of the Internet users in the Russian Federation increased by 31,8% in 2010 and amounted to 59,7 million people. It’s about 42,8% of the total population of the country.

Source: Internet World Stats

8

Internet Advertising in Russia

Except for the post-crisis 2009, the growth rate of internet advertising in Russia in 2006-2010 didn’t descend below 40%. In 2010 the internet advertising market capacity in Russia according to MindShare Interaction amounted to 21,9 billion rubles.

The Internet is the only segment of the advertising market that has been continuously increasing even during the crisis in 2008-09 years.

Internet Advertising in Russia

5,1

9,5

14,715,6

21,9

97%

55%

40%

6%

87%

0

5

10

15

20

25

2006 2007 2008 2009 2001

mln

0%

20%

40%

60%

80%

100%

120%

advertising expenses (left scale) growth, % (right scale)

9

Website Attendance Dynamics – www.vtb24.ru

Monthly site reach, mln. visitors

0

1

2

3

4

5

6

7

Moscow St. Peterburg VTB24 Ekaterinburg

The amount of website visitors is continuously rising with a 25% increase in 2010. For 4 years in a row (2007-2010) the VTB24 site attendance has grown by 7.5 times.

About 50% of visitors are interested in cash loans and credit cards.

VTB24 site reach is less than the amount of Internet users in Moscow or St. Petersburg, but exceeds that of Ekaterinburg and the other Russian cities.

0

2 000 000

4 000 000

6 000 000

8 000 000

10 000 000

12 000 000

14 000 000

16 000 000

18 000 000

2006 2007 2008 2009 2010

Website visitors

Mortgages19%

Microcredit1%

Cash loans38%

Credit cards11%

Savings19%

Auto Lending12%

The product structure of site attendance in 2010

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VTB24 Expands Its Communications Via the Internet

Internet Advertising costs increased by 80% in 2010.

The share of Internet Advertising coats in the advertising budget is rising from year to year. In 2010 it reached 26,1%.

Website is a Generator of Sales

The amount of cash loans applications via www.vtb24.ru increased by 28% in 2010, which is three times more than in 2009 (9%).

3,4

2,4

4,3

2008 2009 2010

Internet Advertising Costs, $mln

0%

20%

40%

60%

80%

100%

2008 2009 2010

Internet TV Radio Press Outdoor Metro Collateral m aterials

The Structure of Advertising Costs

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The Effectiveness of Internet Advertising Increases:The Example of Cash Loans

With the increase of Internet advertising costs by 80% in 2010 the conversion ratio of the number of VTB24 site visitors into the number of internet applications for cash loans decreased by 21%. So the effectiveness of Internet advertising has risen.

3,4

2,4

4,3

7,47,9

6,3

2008 2009 2010

Internet advertising costs conversion ratio

-21%

Internet Advertising Costs and Conversion Ratio (Number of Visitors-Number of Applications)

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VTB24 in Social Networks

VTB24 is represented in Facebook, Twitter, on Banki.ru (leading Russian site

on banking), LiveJournal and Blogspot.

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VTB24 Internet Banking

In 2009-2010 the number of internet banking clients of VTB24 has grown by 4,6 times. At present every eighth client of VTB24 uses internet banking.

Number of clients VTB24 internet banking

52.2103

211

505

974

4.5%4.6%

5.2%

7.8%

12.5%

0

200

400

600

800

1000

1200

01.01.2007 01.01.2008 01.01.2009 01.01.2010 01.01.2011

tho

usa

nd

s o

f p

eop

le

0%

2%

4%

6%

8%

10%

12%

14%

number of VTB24 internet banking users share of VTB24 cliens, % (right scale)

14

Specifics of Russian financial internet development

Banking technologies development can’t catch up with the Internet technologies

Russians don’t have enough trust in the Internet for financial transactions.

In general in Russia the Internet is yet a communication environment and information search engine, rather than a tool for business matters and for solving personal financial questions.

The core of financial internet audience are young successful professionals, a new and attractive generation of clients

This is yet narrow but fast growing segment with a high potential for both financial internet and client base of retail banks development

They would open new opportunities for the banking sector