AMERIABANK CJSC 2008 ANNUAL REPORT Investor Presentation March 2009
TABLE OF CONTENTS HIGHLIGHTS BANK BUSINESS OVERVIEW ENVIRONMENT TARGET MARKETS ANALYSIS OF THE MARKET QUANTITATIVE RESULTS 2
Highlights of 2008 3
HIGHLIGHTS (1 of 9) Development Goals Number 1 in Investment Banking Leadership in Corporate Banking Among Top 5 by assets Full range of investment and corporate bank services Becoming the most desirable Employer Toughening the liquidity and credit risk management practices to battle the global economic crisis Continuing attempts to increase the capital /attracting IFIs/ Increasing cost management efficiency 4
HIGHLIGHTS (2 of 9) GOALS OF THE YEAR 2008 Development of new product range & business processes Professional staff recruitment Bank structure optimization Establishment of two branches, exploitation of 20 ATMs Relocation to a new building 5
HIGHLIGHTS (3 of 9) GOALS FOR THE YEAR 2008(ctd. ) Switching to AS-bank 4. 0 Introduction of Terrasoft - CRM Promotion of a new brand of the Bank Determination & attraction of target clients Working on obtaining of ISO certificate Participation in Visa systems & Master. Card 6
HIGHLIGHTS (4 of 9) MAJOR ACHIEVEMENTS OF THE YEAR 2008 1 st by Share Capital (AMD 18, 2 bln, or USD 59, 3 mln) 4 th by Total Capital (AMD 20, 3 bln, or USD 66, 1 mln) 8 th by Total Assets (AMD 49. 1 bln, or USD 160, 3 mln) Am. Ex agent, VISA & Master. Card principal member 1 st branch launching in Stepanakert 7
HIGHLIGHTS (5 of 9) MAJOR ACHIEVEMENTS OF THE YEAR 2008 (ctd) 1 st Bank-backed M&A transaction in Armenia 1 st Bank to launch financial lease & 1 st by volume and number of leasing operations 1 st Bank to pursue CRM in the Banking Industry of RA 3 rd by public awareness indicator 70 internal business processes endorsed 92 procedures, policies, regulations & instructions adopted 8
HIGHLIGHTS (6 of 9) , P&L and Profitability Ratios Growth, Y-O-Y, (times) 2008* 2007* thous. USD Net Interest Income 6, 637 1, 276 5 Net Non-Interest Income 2, 210 866 3 Total Operating Income (Revenue) 8, 846 2, 142 4 Recurring Operating Costs 4, 376 1, 374 3 Net Income 2, 511 529 5 1. 50% ROAA, Annualized 2. 6% ROAE, Annualized 6. 9% 4. 70% *USD/AMD currency rate is calculated as of the last day of each period ** Growth numbers are rounded 9
HIGHLIGHTS (7 of 9) , Balance Sheet 2008 (as of 31. 12. 2008) 2007 (as of 31. 12. 2007) Growth, Y-O-Y, (times)** thous. USD Net Loans 101, 541 8, 941 11 Total Assets 160, 386 44, 233 4 Total Deposits 75, 964 28, 977 2. 6 93, 999 33, 015 3 66, 387 11, 218 6 Total Liabilities Total Capital *USD/AMD currency rate is calculated as of the last day of each period ** Growth numbers are rounded 10
HIGHLIGHTS (8 of 9) Ameriabank-Efficiency Ratios 2008 2007 Operating Cost To Average Total Assets 15. 8% 13. 7% Operating Cost To Total Cost 4. 6% 4% Cost/Income 88% 94% 7. 6% Total Employee Compensation Expense To Cost 8. 6% 9. 1% Total Employee Compensation Expense To Average Total Assets 2. 5% 2. 4% Total Assets Per One Employee (thous. USD) 917 766 Revenue per one employee (thous. USD) 180 185 ROAA 2. 6% 1. 50% ROAE 6. 9% 4. 70% Total Employee Compensation Expense To Revenue 11 * USD/AMD currency rate is calculated as of the last day of each period
HIGHLIGHTS (9 of 9) Ameriabank - Liquidity Ratios 2008 (as of 31. 12. 2008) 2007 (as of 31. 12. 2007) Net Loans To Total Assets 63% 20% Average Interest Earning Assets To Average Total Assets 95% 89% 20% 51% Total Equity To Net Loans 65% 125% Total Deposits to Total Liabilities 81% 90% 1. 41 2. 93 Liquid Assets To Total Assets Leverage (times) 12 * USD/AMD currency rate is calculated as of the last day of each period
Ameriabank Business Overview 13
STRUCTURE OF THE FUNCTIONAL UNITS (1 of 3) Corporate Banking Investment Banking Trading Asset Management Retail Banking Private Equity & Merchant Banking 14
STRUCTURE OF CORPORATE GOVERNANCE (2 of 3) Shareholders Annual General Meeting Board Of Directors • Ruben Vardanian - Chairman of the Board • Gor Nahapetyan - Board Member • Aram Grigorian - Board Member • Anushavan Arzumanian – Board Member • Andrew Mkrtchyan – Board Member • Artak Hanesyan – Chairman of the Management Board (MB) Management Board • Vazrik Sekoyan- MB Member (Retail Banking) • Tigran Jrbashyan- MB Member (Development) • Andrei Shinkevich- MB Member (IB) • Sergey Shevchenko- MB Member (Trading) • Gohar Khachatryan - Chief Accountant 15
OWNERSHIP STRUCTURE (3 of 3) TDA HOLDINGS LIMITED 99. 7% of the Bank’s share capital + = 100% of Ameriabank CJSC Share Capital Ministry of Finance and other Minority Shareholders 0. 3% 16
Economic & Financial Environment in Armenia 17
ENVIRONMENT (1 of 4) , 1. Macroeconomic environment 2004 2005 2006 2007 2008* GDP (bn USD )1, 2 Real GDP Growth (%) 3. 6 10. 5 4. 9 14. 0 6. 4 13. 3 9. 2 13. 8 11. 9 6. 8* Unemployment rate (cumulative, %) Average monthly salary (USD)1, 2 n/a n/a 7, 6 177 7, 1 255 6, 3 300 Consumer Price Inflation (avg %) 7. 0 0. 6 2. 9 4. 4 9. 0** CPI index (cumulative) n/a 102, 9 104, 4 109, 0 738. 3 1, 004. 9 1, 025. 5 1, 196. 6 1, 123. 8 1, 196. 3 1, 592. 8 1, 921. 3 2, 796. 9 3, 782. 2 Current Account Balance (mln) 1 -19. 6 -51. 7 -117. 1 -589. 6 -1, 564. 6 Exchange rate AMD/USD (avg. ) 533. 5 457. 7 416. 0 342. 1 306. 0** Export (FOB, mln) 1, 2 Import (CIF, mln) 1, 2 2006 (%) 2007 (%) 2008 (%) Net Foreign Assets *** 70, 7 35, 1 (24, 4) Net Internal Assets *** (33, 8) 58, 1 3, 9 Money Base (M 2 X) *** 41, 1 50, 9 2, 9 Interest rate on CB loans (for the end of the period) 17, 2 16, 5 5 5, 7 8, 5 6, 5 7, 5 9, 6 Interbank loans’ interest rate (for the end of the period) Profitability of Governmental bonds 1 Cumulative growth 2 Exchange rate calculated as an average AMD/USD rate for the period *actual ** The Economist Intelligence Unit (EIU) estimates *** Percentage change against the previous period (end of the period) Source: Central Bank of Armenia: www. cba. am, Economist Intelligence Unit: www. eiu. com 18
ENVIRONMENT (2 of 4) 2. 2008 Global Indexes (Armenia) Doing Business 2009 & 2008 reports for the Economy of Armenia by the World Bank Ease of Doing Business Rank Starting a Business Employing Workers Registering Property Getting Credit Protecting Investors to June 2008) 44 66 54 5 28 88 150 2008 41 49 52 2 25 84 147 Year Paying Taxes Trading Across Borders Enforcing Contracts Closing a Business 143 61 47 131 63 47 2009 (April 2007 2009 Index of Economic Freedom World Rankings by The Heritage Foundation World Rank Country Economic Freedom Score Change from Previous #31 Armenia 69. 9 0 World Economic Forum 2008 Global Competitiveness Index (GCI) rankings and 2007 -2008 comparisons Country/Economy Armenia GCI 2008 -2009 rank GCI 2008 -2009 score 97 3. 73 Moody’s Country Rating 19 The fundamental credit outlook for 2008 for Armenian financial institutions by Moody’s is negative. Moody’ s rates the government of Armenia Ba 2 for local and foreign currency debt obligations.
ENVIRONMENT (3 of 4) 3. Monetary policy and estimates for 2009 2008 indicators (actual) Slowing of inflation (av. 9, 0%) and weakening of economic growth (6, 8%) Cutting refinancing rate by a cumulative 75 basis points in December 2008 and January 2009, to 7% National currency to USD rate fluctuated within 300 -309 drams 2009 estimates Protracted economic crisis: volatile market environment & corporate defaults Refinancing rate in 2009 within 6. 5% - 8% Inflation rate within 8 -10% according to RA government AMD/USD rate within 360 -380 drams as per announcements of CBA GDP is expected to grow by 9. 2% according to RA Government by 7 -8% according to CBA by 1. 1 -1. 5% according to EIU, IMF and World Bank predictions 20
ENVIRONMENT (4 of 4) 4. Macroeconomic trends and forecasts by EIU 2007* 2008** 2009*** 2010*** USD USD 13. 8 6. 8* 1. 1 3. 0 10. 2** 1. 3 2. 0 3. 0 Consumer Price inflation (avg %) 4. 4 9. 0* 3. 6 4. 6 Short-term interbank rate 17. 5 17. 1* 16. 5 16. 7 Export (FOB, mln) Import (CIF, mln) 1, 196. 6 2, 796. 9 1, 123. 8 3, 782. 2 976. 6 3, 172. 7 1, 045. 1 3, 345. 1 Current Account Balance (mln) (589. 6) (1, 564. 6) (1, 672. 2) (1, 653. 7) Exchange rate Dram: USD (avg. ) 342. 1 306. 0* 322. 9 347. 8 Exchange rate Dram: Rb (avg. ) 13. 4 12. 3* 9. 4 9. 9 Real GDP Growth (%) **** Gross agricultural production growth * Actual **Economist Intelligence Unite (EIU) estimates *** The Economist Intelligence Unit forecasts **** RA Government forecasts 9, 2% GDP growth. CBA forecasts 7 -8% growth for 2009 Source: Economist Intelligence Unit: www. eiu. com 21
Target Markets 22
TARGET MARKETS (1 of 4) 1. Priority sectors 1. 1 Industry* GDP by Industry Real % change** 2007 Real % change** 2008 Contribution to growth*** 2007 Contribution to growth*** 2008 3. 1 2. 4 0. 5 0. 4 § Quick growth branches in 2008: energy, mining, food industry, construction materials Loan portfolio concentration during 2008 in this sector was almost 32% (avg. ) * Source: National Statistical Service of RA ** Year on year *** Percentage points 23
TARGET MARKETS(2 of 4) 1. Priority sectors 1. 2 Construction* GDP by Construction § § § Real % change** 2007 Real % change** 2008 Contribution to growth*** 2007 Contribution to growth*** 2008 18. 6 7. 2 4. 4 1. 8 Quick growth branches: constructions in hospitality/catering and in the processing industry Slowdown trend in the real estate price growth Extremely tightened mortgage terms or absence of mortgage issuance Loan portfolio concentration during 2008 in this sector was almost 18. 4% (avg. ****) * Source: National Statistical Service of RA ** Year on year *** Percentage points **** The concentration percentage includes mortgage loans as well. 24
TARGET MARKETS (3 of 4) 1. Priority sectors 1. 3 Services* Real % change** 2007 § § Contribution to growth*** 2007 Contribution to growth*** 2008 26. 9 GDP by Services Real % change** 2008 16. 7 1. 6 1. 0 Quick growth branches: transport, tourism & hospitality, telecommunications, finance Alignment towards domestic demand Dependency оn solvency of general population (remittances) Banks have tightened consumer lending terms Loan portfolio concentration during 2008 in this sector was 12% (avg. ) * Source: National Statistical Service of RA ** Year on year *** Percentage points 25
TARGET MARKETS (4 of 4) 3. Sector concentration of the annual total loans issued by the Bank Concentration of loans by RA economic sectors 08 ec D N ov - 08 8 -0 ct O 08 p. Se 08 g. Au l-0 8 Ju n 08 Ju 8 -0 M ay r-0 8 Ap M ar -0 8 08 b. Fe Ja n 08 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Public nutrition and other services Trade Transport Construction Agriculture Industry 26
Analysis of the Banking Market 27
ANALYSIS OF THE MARKET (1 of 6) Bank’s positioning / ranking against benchmarks Top 10 Banks by CAPITAL in 2008* Thous. USD 2008 (as of 31. 12. 2008) 2007 (as of 31. 12. 2007) Growth Y-O-Y ACBA 84, 980 69, 307 22. 6% Ardshininvestbank 84, 447 60, 463 39. 7% VTB Bank Armenia 77, 757 67, 506 15. 2% Ameriabank (4 th by total capital) 66, 387 27, 644 1. 08 times HSBC 50, 564 34, 641 46. 0% Converse bank 42, 820 35, 721 19. 9% Areximbank 32, 363 11, 513 2. 8 times Unibank 30, 844 22, 853 35. 0% Prometey Bank 29, 351 26, 609 10. 3% Armeconombank 28, 451 27, 644 2. 9% * Table contains data published by Banks per CBA requirement 28
ANALYSIS OF THE MARKET (2 of 6) Bank’s positioning / ranking Top 10 Banks By ASSETS in 2008* Thous. USD 2008 (as of 31. 12. 2008) 2007 (as of 31. 12. 2007) Growth Y-O-Y ACBA 403, 612 261, 815 54. 2% HSBC 397, 153 340, 564 16. 6% Ardshininvestbank 371, 120 305, 891 21. 3% VTB Bank Armenia 323, 544 228, 527 41. 6% Converse Bank 234, 286 191, 532 22. 3% Unibank 224, 169 148, 671 50. 8% Armeconombank 164, 020 164, 408 -0. 2% (8 th by assets) 160, 386 44, 233 3. 6 times Inecobank 143, 680 116, 677 23. 1% ABB 140, 695 108, 119 30. 1% Ameriabank * Table contains data published by Banks per CBA requirement 29
ANALYSIS OF THE MARKET (3 of 6) Bank’s positioning / ranking Top 10 Banks By LIABILITIES in 2008* Thous. AMD 2008 (as of 31. 12. 2008) 2007 (as of 31. 12. 2007) Growth Y-O-Y HSBC 346, 590 305, 923 13. 3% ACBA 318, 632 192, 508 65. 5% Ardshininvestbank 286, 672 245, 428 16. 8% VTB Bank Armenia 245, 787 161, 021 52. 6% Unibank 193, 325 125, 818 53. 7% Converse Bank 191, 466 155, 810 22. 9% Armeconombank 135, 569 136, 764 -0. 9% ABB 118, 081 88, 256 33. 8% Inecobank 117, 174 94, 549 23. 9% Anelik Bank 99, 613 87, 057 14. 4% Ameriabank (11 th by liabilities) 93, 999 33, 015 2. 8 times * Table contains data published by Banks per CBA requirement 30
ANALYSIS OF THE MARKET (4 of 6) Bank’s positioning / ranking Top 10 Banks By DEPOSITS* Thous. USD Q 4 2008 Q 4 2007 Growth Y-O-Y HSBC 270, 131 252, 536 7. 0% Ardshininvestbank 228, 187 191, 329 19. 3% Unibank 155, 541 116, 066 34. 0% Converse Bank 142, 119 127, 614 11. 4% VTB Bank Armenia 88, 949 88, 182 0. 9% ACBA 88, 086 70, 338 25. 2% Artsakhbank 76, 304 32, 388 2. 3 times ABB 74, 608 56, 011 33. 2% Armeconombank 65, 198 67, 823 -3. 9% 75, 964 28, 977 2. 6 times Ameriabank (10 th by deposits) * Table contains data published by Banks per CBA requirement 31
ANALYSIS OF THE MARKET (5 of 6) Bank’s positioning / ranking against benchmarks* Thous. USD 2008 Market Share of Top 5 banks by capital Market Share of Ameriabank Net loans 2, 045, 938 52. 3% 5. 0% Total assets 3, 381, 349 49. 0% 4. 7% Total deposits 1, 587, 545 47. 3% 4. 8% Total liabilities 2, 601, 172 49. 7% 3. 6% Share capital 469, 363 40. 4% 12. 6% Total capital 777, 207 46. 9% 8. 5% Net income 90, 714 64. 3% 2. 8% 32 * Table contains data published by Banks per CBA requirement
ANALYSIS OF THE MARKET (6 of 6) Bank’s positioning / ranking against benchmarks Corporate & Retail Banking* Thous. USD Ameriabank ASHIB HSBC Converse Armeconom (position in the market) ACBA 236, 958 234, 043 139, 726 88, 472 thous. USD 101, 54 270, 2 1 (7) 1 Investments 15, 754 31, 100 22, 200 14, 903 9, 52 7 6 (9) 6 Total assets 371, 120 397, 153 234, 286 164, 020 160, 38 403, 6 6 (8) 2 Total deposits 228, 187 270, 131 142, 119 65, 198 Total liabilities 286, 672 346, 590 191, 466 135, 569 93, 99 318, 6 9 (11) 2 Share capital 44, 999 7, 947 4, 020 7, 607 59, 33 32, 6 (1) 2 Total capital 84, 447 50, 564 42, 820 28, 451 66, 38 84, 7 (4) 0 Net income 19, 113 12, 760 6, 697 1, 670 2, 51 14, 1 (10) 2 Net loans 75, 964 (10) 88, 6 ROA 5. 15% 3. 21% 2. 86% 1. 02% 1. 57% 3. 59% ROE 22. 63% 25. 24% 15. 64% 5. 87% 3. 78% 17. 06% Leverage 3 times 7 times 4 times 5 times 1 times 4 times 765 1654 833 659 1096 (6) 331307 Average salary (USD) * Table contains data published by Banks per CBA requirement
Quantitative Results (2008) 34
QUANTITATIVE RESULTS (1 of 8) Revenue Analysis of the Bank (2008) Tous. USD 35
QUANTITATIVE RESULTS (2 of 8) Analysis of the Bank’s Revenue 312% 310% 8, 846 Net Foreign Currency Related Income * USD/AMD currency rate is calculated as of the last day of each period 36
QUANTITATIVE RESULTS(3 of 8) Operational costs of the Bank (2008) Tous. USD 37
QUANTITATIVE RESULTS (4 of 8) Analysis of operational expenses of the Bank 202% 38
6. QUANTITATIVE RESULTS (5 of 19) Profitability* Tous. USD 39 * USD/AMD currency rate is calculated as of the last day of the period
QUANTITATIVE RESULTS (6 of 8) Profitability of the Bank 40
QUANTITATIVE RESULTS (8 of 8) Ameriabank – Main Economic Normatives Minimum total capital of the bank N 1 Total capital/ Risk weighted assets 18, 200, 000 50, 000 20, 296, 982 2, 400, 000 65. 33% 12% 15% 107. 83% Minimum statutory fund of the bank Actual (Thous. AMD) 20. 08% Item CBA requirement (Thous. AMD) 60% 15. 69% 20% 85. 04% 500% 0. 26% 5% No violation N 2. 1 High liquid assets/ Total assets Maximum risk on large-scale borrowers Maximum risk on bank- related person Maximum risk on all bank- related persons No violation N 2. 2 High liquid assets/ Demand liabilities Maximum risk on a single borrower Number of violations during quarter No violation No violation 2. 32% 20% 41
For further information, please contact: Head of Investor Relations Department Ms. Lusine Vardanyan E-mail: L. vardanyan@ameriabank. am Tel: + 37410 561111 42
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