Our strategy

Strategy, enabling development

The basic principle of our strategy is the highest level of integration of corporate and retail business. After securing the market recognition as a bank that provides a full range of services, we continue to develop dynamically.

Dmitry Orlov
Chairman of the Board of Directors

The strategy of Bank Vozrozhdenie is based on continued development in key segments, associated with the corporate and retail sectors of the Russian economy, and on ensuring long-term growth of business value in the interests of its shareholders.

The main priority of the Bank is the provision of comprehensive services to individuals and legal entities, the improvement of service quality to enhance competitiveness and aid brand development. The Bank combines investment in business expansion with a policy of optimisation of expenses for increasing efficiency and ensuring high profitability of its operations.

Focus on corporate business is key for the development of Bank Vozrozhdenie. In the corporate segment, the Bank focuses on establishing long-term cooperation with clients, while maintaining an optimum balance of risks. The expansion of the customer base is achieved through attracting SME clients, as well as personal service and tailored work with large corporates, focusing attention on the existing clients, the geographical presence of whose office networks coincide with the regional presence of the Bank’s branches.

The formula of success lies in a comprehensive approach to serving each corporate client and its employees, improving service quality, and a special approach to work in different client segments. The Bank builds relations with the client based on his needs, offering not just a single service but the set of products developed individually for each client.

The retail segment is the second prioritised business line in the development of the Bank in the near future, as well as in the long term.

The main products of the retail segment include:

  • Deposits
  • Mortgage and consumer lending
  • Card products, including credit cards
  • Payment and cash services for individuals, including through remote banking channels

It should be noted that the Bank considers retail funds as the most important source of financing credit operations and as a stabilising factor for the Bank’s activities, in particular in times of significant market volatility.

The major technological tasks to be completed for implementation the Bank’s strategy include:

  • The optimisation of internal business processes to ensure financial stability of the Bank by increasing the efficiency of its business model, high quality standards of transactions and a conservative risk policy
  • Development an up-to-date infrastructure to provide quality banking services and ensure a high level of information security for clients
  • Increasing the quality of customer service through the use of advanced information and telecommunication technologies
  • Improvement of quality and efficiency of interaction with state authorities and other organisations
  • Continued professional development of personnel in the sphere of information and telecommunication technologies
  • Combating the use of information and telecommunication technologies that pose a threat to the smooth operations of the Bank

Given the geographical diversification of its business, the Bank adheres to a strategy of regional development, based on the expansion in the regions where its branches are already present. An increase in sales infrastructure on the basis of offices and self-service devices, in combination with Internet and mobile banking, is planned for supporting long-term and balanced growth of all business lines taking into account the market capacity of each particular region.

The marketing strategy of Bank Vozrozhdenie is inextricably linked with the business objectives of the Bank, and aims to increase competitiveness of its products, while increasing customer loyalty and satisfaction by:

  • Development of the sales channels (including the branch network)
  • Development and support of a product offering that more accurately and completely meets customer needs, compared to competitor products
  • Ensuring high standards of customer service
  • Development of the brand

The Bank’s strategy provides for the continuous development of the corporate governance system in accordance with global best practices and the interests of the shareholders. The Bank seeks to increase effectiveness of the Board of Directors’ work, including through the use of self-assessment procedures and optimisation of the processes of interaction with the executive management bodies. Participation of the Board of Directors in the Bank’s current operations is expanding, due to the control improvement of compliance of the Bank’s operational management with the Board’s decisions.

How we plan to achieve strategic goals

Balanced credit and resource policy Robust risk management Corporate clients
Service at every stage of business development
Retail clients
Service at every point in the lifecycle
Increased operating efficiency
2013 progress
  • The increase in the share of interest-earning assets by 1.5 p.p. to 79.9%
  • Improvement of the Loan-to-Deposit ratio by 8.4 p.p.to 104.7%
  • Efficient response to the market conditions, while managing interest rates
  • Toughening requirements for concentration of credit risk in the corporate loan portfolio
  • Formation of the Operational Risk Management Division within the Risk Control Department
  • Formation of the Collateral Division
  • A growing number of clients in comparison with the previous year in all key segments
  • Completion of the advanced remote banking system (Internet-Client) implementation.
  • Successful cooperation with SME Bank
  • Implementation of the microbusiness programme in 19 branches
  • Growth of the retail loan portfolio above the market growth
  • Retail business and bank card business synergy, development of RBS
  • The second and the third securitisation of mortgage portfolio
  • A number of significant innovations within the project of the operating model optimisation: fraud analysis, automated payments processing, centralization of the accounts opening, etc.
  • Establishment of the Operations Centre
  • Tight control over operating expenses
Goals for 2014
  • The Roubles/Foreign Currency proportion in the balance not more than 80/20
  • The share of liquid assets at 17-18%
  • The Loan-to-Deposit ratio at 100%±10 p.p.
  • Further reduction of concentration in the loan portfolio
  • Development of the risk assessment system, in accordance with the requirements of Basel II and III
  • Credit quality control
  • The increase in the share of lending to SME
  • Inceasing diversification of a client base. Growth of cross-sales and the volume of fee and commission income
  • Development of factoring. Optimisation and development of cash collection service
  • The implementation of the microbusiness programme in all branches planned in the project (28)
  • Active development of the remote sales channels
  • Implementation of the single targeted product offering for clients through all sales channels
  • Cross-sales growth
  • Commence of the implementation of the main centralisation changes
  • Defining new offices format
  • Changes in the planning system
Risks
  • Rouble devaluation
  • Liquidity deficit in the market
  • Deterioration in the macroeconomic conditions
  • Credit quality deterioration in the SME segment
  • Closure of capital markets
  • Economic slowdown
  • Economic slowdown
  • Credit quality deterioration in the SME segment
  • The growth of market competition on the non-interest income products
  • Deterioration in the macroeconomic conditions
  • Delay in implementation of projects due to slow introduction of new technologies
  • Reduction of the population income and consumer demand
  • Risks of the implementation slowdown, the possible worsening of the client service quality
  • Rouble devaluation and increased spending on IT
  • Competitive environment and low business activity
KPIs
  • Net interest margin
  • Asset growth
  • Loan-to-Deposit ratio
  • Provisions/NPLs 90+
  • Cost of risk
  • Total Capital Adequacy ratio according to Basel III (N 1.0)
  • Corporate loan portfolio growth rates
  • The share of SME portfolio in the corporate loan portfolio
  • The share of the micro-business portfolio
  • The growth of the retail loan portfolio
  • The growth of mortgages portfolio
  • The cross-sales ratio – the number of products per client
  • Cost-to-Income ratio
  • Operating expenses growth rate
  • Share of non-interest income
KPIs for 2013 4.50%
Net interest margin
108%
Provisions/NPLs 90+
2%
The corporate loan portfolio growth
30%
The growth of the retail loan portfolio
59.9%
Cost-to-Income before provisions ratio

Practical steps for realisation of the strategy

The practical steps for realisation of the strategy of Bank Vozrozhdenie are elaborated for the main business segments (corporate and retail), and are aimed at the implementation of a balanced credit and resource policy, increasing efficiency of operations and robust risk management.

Regarding the development of corporate business, the Bank intends to:

  • Increase efficiency of work with the client base
  • Diversify the client base to mitigate risks associated with migration of large clients, primarily through work with SMEs
  • Intensify work on client retention
  • Develop cross-sales
  • Develop new product offerings, based on the increasing demands and evolving needs of clients
  • Attract new clients
  • Increase sales of payroll services, to expand the base of bank card holders
  • Develop POS-terminals network

In the retail segment, the strategic objective of the Bank is to maintain position in the TOP-15 Russian banks by volume of retail funds. The share of retail funds in the balance sheet of Bank Vozrozhdenie will be maintained at the level not less than 40%.

It is planned to increase the Bank’s share in the individual savings market to 1%. The level of deposit rates will depend on the market developments and offers of major competitors, as well as the internal funding needs of the Bank.

Bank Vozrozhdenie plans to continuously improve attractiveness of the deposits and associated services, focusing on the changing demand from customers and other market conditions.

Retail loan portfolio is planned to be formed by loans given to our existing customers with a proven credit or payment history, as well as individuals working in companies using payroll services of the Bank.

The Bank will continue to develop the infrastructure of servicing bank cards as a basis for attracting clients for the payroll services, with active subsequent cross-selling to them of the entire line of products and services for private customers.

Another strategic goal of Bank Vozrozhdenie is the development of information and telecommunication technologies to improve competitiveness, reduce costs and complexities of the technological banking processes, and increase the effectiveness of the management system of the Bank.

To achieve these goals, the Bank plans to:

  • Develop the multichannel remote banking service providing clients with ability to manage accounts
  • Continuously optimise and increase the mobility of the IT infrastructure by centralizing and virtualising hardware, integrating information systems and unifying the technological banking processes
  • Develop a system of monitoring technological banking processes
  • Develop a system of decision making by centralising reporting and a system of risks evaluation and management

As part of the regional development strategy, the Bank plans to strengthen its positions in the following regions:

  • Moscow region. This region includes branches, located in Moscow, the Moscow region and adjacent Tula, Yaroslavl, Kaluga and Ryazan regions
  • Southern region. This region includes branches, located in Rostov, Volgograd, Krasnodar and Stavropol regions
  • North-western region. This region includes branches, located in St. Petersburg, Murmansk, Petrozavodsk and Kaliningrad

Strategic priorities

The strategic priorities of Bank Vozrozhdenie are related to the development of the core business lines:

  • Development of the corporate business
  • Development of the retail business
  • Growth of non-interest income
  • Development of business technologies
  • Development of the Bank’s branch network
  • Improvement of the internal management system
  • Development of the risk management system