FP-Internationalization of Russian Companies

INTERNATIONALIZING OF A COMPANY

OF EMERGING MARKETS: RUSSIA

Hafiz Poladzade MA IB 2013

26th February 2014

AGENDA

Sberbank Rossii at a glance

Retrospect – History of Sberbank

Development

International Success Factors

Market Situation

Strategy for Future

Discussion

Sberbank Rossii at a Glance

AT A GLANCE

3rd biggest bank of Europe (2011)

Shares

50% RF Government

50% Public Shareholders

70% of RF population use services of Sberbank

18212 department in 89 regions of Russia

17 federal branches

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

SBERBANK GROUP OF COMPANIES

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

History of Sberbank

HISTORY OF SBERBANK

1841 1895

1895 1917

1917 1941

1941 1953

1953 1991

1991 2008

2009 2013

First customer of the first bank in the country

Growth up to 500 customers a day

3875 saving banks

2,000,000 issued savings book

The first revolution and global changes in the policy of

Sberbank.

Established a new Charter for state savings banks.

Development and transformation of Sberbank during

the "thaw", "stagnation" and "perestroika“ periods.

Global changes of Sberbank of Russia: Life on the new

economic laws.

Sberbank entered the top 20 banks by market capitalization.

Sberbank has canceled all fees for reviewing and issuing loans.

Twice been reduced lending interest rates.

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

DEVELOPMENT

DEVELOPMENT

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

DEVELOPMENT

DEVELOPMENT

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

Price history:

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

DEVELOPMENT

DEVELOPMENT

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

INTERNATIONAL SUCCESS FACTORS

SBERBANK IN THE WORLD

≈ 250.000 employees

in 22 countries

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

INTERNATIONAL SUCCESS

Joint Ventures

Acquisitions

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

MARKET SITUATION

MARKET SITUATION

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

MARKET SITUATION

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

Source: The Banker, July 2013

Rank Bank CountryAssets ($

million)

Pre-tax

profit ($

million)

Return on

assets

(%)

49 Industrial Bank China 519.484 7.381 1.42%

50 China Minsheng China 513.256 8.094 1.58%

51 China Merchants Bank China 505.301 4.027 0.80%

52Shanghai Pudong Development

BankChina 502.663 7.151 1.42%

53 Resona Holdings Japan 500.641 3.302 0.66%

55 Itau Unibanco Holding Brasil 498.093 9.867 1.98%

56 Dexia Belgium 473.656 -3.990 -0.84%

Ranking by Asset size

MARKET SITUATION

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

MARKET SITUATION

Cost efficiency at Sberbank and other leading global banks

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

MARKET SITUATION

Performance comparisons:

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

MARKET SITUATION

Mean-variance optimal portfolio:Performance comparisons:

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

Source: wolframalpha.com

“Sberbank’s strategy is very ambitious and aggressive”

Mark Rubinstein

STRATEGY FOR FUTURE

: “Improve efficiency by cutting cost and workers”

Sberbank plans to cut 30.000 workers and close 3600 branches in next 5 years

After announcement: - gains raised 2.4% to 104.20 rubles at 6 p.m. Moscow

- the lender’s stock has surged about 12 % this year

- outpaced the Micex Index’s 1.7 % advance

STRATEGY FOR FUTURE

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

STRATEGY FOR FUTURE

Key financial indicators for Sberbank’s activities

The Goal - doubling the size of our net income and maintaining its annual

rate of growth at a level of 14–16%

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

BANKING MARKET INDICATORS IN COUNTRIES

WHERE SBERBANK OPERATES: HISTORICAL DATA AND

FORECASTS

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

STRATEGY FOR FUTURE

Russian corporate business: segment structure

Structure of the loan portfolio for Russian Business

STRATEGY FOR FUTURE

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

STRATEGY FOR FUTURE

International regional business: regional structure

Structure of the loan portfolio for International Business

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

STRATEGY FOR FUTURE

Key themes of Strategy

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

OPPORTUNITIES AND CHALLENGES

OPPORTUNITIES AND CHALLENGES

New technology is a competitive factor in the financial markets

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

OPPORTUNITIES AND CHALLENGES - PROFITABILITY

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

DISCUSSION

Is improvement of efficiency by cutting workers and branches acceptable solution?

How it can affect the reputation of Sberbankfrom local and international point of view?

Hafiz Poladzade MA IB 2013. Emerging Markets and International Trade. 26th February, 2014.

Thank you for your Attention!

Questions and Comments

are welcome!

REFERENCES

The Banker. Top 150 Banks Worldwide Ranked By Asset Size: http://www.cba.ca/contents/files/statistics/stat_bankranking_en.pdf

Bloomberg. Sberbank to Cut 30,000 Employees in Effort to Double Profit: http://www.bloomberg.com/news/2013-11-12/sberbank-to-cut-30-000-workers-in-bid-to-double-profit-by-2018.html

Sberbank: 2009-2014 strategy highlights: http://sberbank.ru/common/img/uploaded/files/pdf/normative_docs/sberbank_strategy_presentation.pdf.

Sberbank Development Strategy: 2014-2018: http://sberbank.ru/common/_en/img/uploaded/files/SberbankDevelopmentStrategyFor2014-2018_en.pdf.

Comparison of Sberbank, HSBC, Volksbank: retrieved on 13.02.2014 from http://www.wolframalpha.com/

History and Achievements: http://www.sberbank.ru/en/about/about_sberbank/history_achievements/

Sberbank in Numbers (IFRS): http://www.sberbank.ru/en/shareandinv/financialresultsandreports/innumbers/