Address of the Chairman of the Management Board

Vladimir A. Chubar

Vladimir A. Chubar
Chairman of the Management Board

Dear shareholders, investors, partners and customers,

2019 was quite a successful year for the Russian banking sector. After 3-4 years of high volatility, the financial market situation has stabilised. This was partly due to a series of actions taken by the Bank of Russia, such as consistent key rate cuts and the limitation of borrowers’ debt load, which also encouraged responsible consumer lending. In addition, a positive trend continued in retail and corporate deposit-taking – despite declining rates, the deposit portfolios did nothing but grow. All these factors ensured strong performance of the Russian banking system, with annual earnings reaching a record-high RUB 2 tln.

Last year was also successful for Credit Bank of Moscow, which consolidated its market positions as a top-ten Russian bank. We closed the year as the largest privately-owned public bank by assets. The bank’s assets grew by 13% in 2019 to reach RUB 2.4 tln. Total gross loan portfolio increased by 12% y-o-y to RUB 829.2 bln, and core capital rose by 17% y-o-y, reaching RUB 170.2 bln. The bank demonstrates high operational efficiency and good corporate governance, as recognised by a World Finance Corporate Governance Award.

The bank now services more than 25,000 corporates and almost 1.8 mln individuals. Customer deposits, representing 60.5% of total liabilities, demonstrated stable growth in 2019, having increased by 5.3% to RUB 1.34 tln mainly due to a strong 29.6% inflow of retail deposits that reached RUB 486.2 bln or 36.3% of total deposits. These figures are a testament to the efficient way we have built long-term trust-based relationships with customers and consistent improvement of the product range, financial technologies, remote banking facilities, and overall customer service.

Our investment and private banking team achieved a significant breakthrough in 2019. In just one year, MKB rose from a debt capital market debutant to a top-5 arranger of public bond placements. We closed 80 deals totalling RUB 900 bln in 2019. The bank made a significant step in developing its investment business in international markets, too: Belarus, Kazakhstan, Uzbekistan and Kyrgyzstan. Continuous development is shown by mkb private banking – a new business line of the Bank targeting high net worth individuals: the volume of structured finance with family offices rose to USD 600 mln. These achievements did not go unnoticed by the market: MKB received 3 awards from Cbonds last year, including the “Best Arranger for the Non-Financial Sector“, and the “Start of the Year” for mkb private banking from Spear’s Magazine.

In 2019, MKB continued developing its business in Asia. We see Asia as a key strategic region for business expansion, and China as a strategic partner for the entire Russian economy. Being a systemically important bank, MKB seeks to strengthen business relationships and ties between Russian and Chinese financial institutions, share information and develop joint business initiatives. In late 2019, MKB was the first privately-owned Russian bank to raise a syndicated loan, a facility of up to CNY 2 bln, from Chinese financial institutions. The proceeds are earmarked for financing trade between Russia and China. It is a priority for MKB to participate in programmes promoting Sino-Russian relations and cooperation and, in particular, support projects related to the Belt and Road Initiative.

MKB is rated quite high by Russian and international agencies: in 2019, Fitch Ratings upgraded its rating to BB reflecting an improved evaluation of its risk profile, while Expert RA highlighted the improved quality of its assets and upgraded its rating to ruА. Other agencies also affirmed MKB’s ratings: А by ACRA, BB- by S&P, and Ba3 by Moody’s. In 2019 MKB was the first Russian bank to receive a BBB[esg] rating from Rating-Agentur Expert RA GmbH, which reflects a high expert evaluation of the bank’s efforts to integrate ESG principles into its business strategy. MKB was also rated АА+ on the Chinese national scale by China Lianhe Credit Rating Co.

We are not complacent about our achievements. Since very early 2020, the bank’s geography of presence has been expanding: 134 branches cover as many as 21 regions of Russia, operational centres have opened in Smolensk and Saint Petersburg. We are developing as a modern financial institution of a national scale. We continue integrating cutting-edge financial technologies and best product solutions into our operations. We are making a bank that is friendly not only to its customers and partners, but also to its employees, by fostering the features expected of a responsible and attractive employer and by promoting comfortable environment for effective work and personal development.

Nevertheless, it is clear that 2020 will be a challenging year for all sectors of the economy of many countries, including Russia. The outbreak of the new coronavirus infection that started in late 2019 continues to provoke a high volatility in the financial markets and puts pressure on the entire global economy. In that environment, acknowledging its social responsibility and possible risks, the bank’s key priority is to further maintain its own stability and make arrangements to support the stability of our customers and the safety of our staff. To this end, the bank has already announced the launch of loan restructuring programmes for affected parties and sectors in line with the new initiatives of Russian state authorities. We continue serving all our customers and investors. We are monitoring the situation and are taking all necessary precautions.

For many years, MKB has been able to show strong performance not only in periods of economic growth, but also amid financial turbulence thanks to its sustainable, ever profitable business model, high capital adequacy and shareholders’ support. As a systemically important bank, we understand our impact on a significant part of the economy and society, and will therefore continue to introduce best global practices of corporate social responsibility. I believe that all these steps will help us strengthen our positions as a leading privately-owned commercial bank, enhance our efficiency, and remain a beneficial partner for customers, a transparent and understandable business for investors, and a profitable asset for shareholders.