Strategy

MKB’s strategic objective is to strengthen its market positions among the leading universal commercial banks to consolidate its status as the bank of choice for its customers and become the bank of choice for international business. It aims to develop and improve further its corporate and retail banking products and services, based on best international and Russian practices and thus maintain sustainable performance. The bank intends to exemplify sustainable development principles for its customers and partners, guided by social and environmental responsibility principles, and based on best national and international corporate governance practices.

Key elements of MKB’s strategy:

Maintain high asset quality

Tasks:

  • Optimise and enhance risk management
  • Limit high-risk business lines
  • Shift focus in lending towards less risky segments
  • Build a sophisticated debt recovery system

Results:

  • One of the lowest shares of Stage 3 and POCI loans in the gross loan portfolio among competitors: 4.7% as at end- 2019
  • Cost of risk (COR) remained at 1.0% as at end-2019
  • Almost no investments in high-risk instruments such as shares or securities of limited liquidity

Deliver further sustainable development

Tasks:

  • Consolidate positions as the largest publicly-traded privately-owned bank
  • Become the bank of choice for international business
  • Concentrate on balanced and diversified growth with a focus on the corporate segment
  • Concentrate retail business on high-margin consumer and mortgage loans to prime customers
  • Create a synergistic effect within MKB by developing its investment business, and expand business volumes
  • Minimise cost of funding
  • Upgrade the bank’s ratings
  • Develop ESG-oriented products and support ESG initiatives
  • Lead the way in adapting best corporate governance practices

Results:

  • The largest Russian publicly-traded privately-owned bank by assets
  • Top 5 Russian bank by corporate loan portfolio
  • Top 5 domestic bond arranger in 2019
  • Competitive international infrastructure at the level of banking market leaders
  • Top 5 in terms of cross-border factoring according to the Russian Association of Factoring Companies
  • Upgraded by two rating agencies: to BB by Fitch and to ruA by Expert RA
  • First Russian bank to receive an ESG rating
  • Rated AA+ by Lianhe Ratings on the Chinese national scale
  • Mudrost (Wisdom) card ranked among the best bank cards for pensioners
  • Sustainable Development Workgroup created
  • The “Best Corporate Governance in Russia 2019” award by World Finance

Maintain high efficiency

Tasks:

  • Maintain operational efficiency at a high level
  • Actively implement its cross-selling strategy
  • Focus on transaction business to increase the bank’s profitability and minimise risks and expenses

Results:

  • CTI remains traditionally low at 33.2% in 2016-2019
  • Further development of remote service channels
  • Fee income from transaction business rose by 26%

Develop IT tools to attract and service customers and improve the cost/return ratio

Tasks:

  • Develop its IT systems and solutions actively and continuously
  • Deliver most in-demand and up-to-date services through its remote banking solutions
  • Update the bank’s technologies for market needs

Results:

  • A pilot Digital Helper project developed for customers to access real-time information on credit card issue and maintenance, and to improve their financial literacy
  • MKB joined FinTeсh Association in 2019 to introduce cutting-edge digital solutions to optimise its business processes
  • MKB connected to NSD’s Swift Service Bureau in 2019, reducing its IT expenses, while preserving a high level of transaction security
  • A current account text alert service available to corporate customers since February 2019

Build a professional team

Tasks:

  • Improve the staff’s professional skillset
  • Promote effectiveness and automate processes
  • Create a bank-wide goal setting system, translating strategic goals to each employee

Results:

  • A series of area-specific training programmes put in place, completed by 2,475 employees
  • Active use of remote training channels and Webtutor software: more than 4,200 distance learning course completions in 2019, 20% more than in 2018.
  • Performance Management (PM) system launched
  • 3 managers of the bank appeared in the 2019 Top 1000 Russian Managers ranking of Russian Managers Association and Kommersant Publishing House

Enhance the bank’s positioning and perception

Tasks:

  • Improve brand awareness and attractiveness
  • Establish closer ties with customers to achieve maximum efficiency across the entire relationship life-cycle

Results:

  • A Euromoney survey placed the bank 1st in the Best Service category
  • The customer base expanded by 18% in 2019