Garanti Bank Moscow

GBM is a member of the Russian Deposit Insurance System. The Bank has 1 branch and 3 satellite branches.

Economic Developments:

The Russian economy has been growing 7-8% over the few years. In 2008, due to the negative impact of the economic turmoil especially in the last quarter, growth realized as 5.6%, while for 2009 a decline of 2.2% is expected. Inflation in 2008 was 13.3% and for 2009 the Russian government targets to contain inflation within the similar range of 13%-14%. However there is a probability that it will be exceeded.

In Russia, the outlook depends heavily on commodity prices, especially oil and gas prices, which have fallen rather sharply due to the global financial crisis.

2009 will be a tough year for the Russian economy as it is deeply integrated into the global financial system. The Government has already implemented significant anti-crises measures to help refinance upcoming external debt obligations and provide liquidity to the banking system. The length and the depth of the expected global recession will determine the path the Russian economy takes in 2009.

Activities in 2008

The unprecedented global financial crisis is changing the operating and competitive landscape for all companies in Russia.

GBM has an ability to quickly adapt to such dramatic changes in the business environment as the ongoing liquidity crunch that all the Russian banks faced in September 2008 and the associated negative impact on the real sector of the national economy. Since August 2008, the Bank has taken actions to withstand the crises.

Since the beginning of 2008, GBM continues to support its customers through maintaining a conservative lending approach, and remains focused on the delivery of sound corporate/commercial banking services in Russia.. As a precaution taken in this crises period and with a slowdown in the lending activity, GBM intentionally decreased assets size in 2008 by 38% from $503 million in 2007-end to $314 million. Most of the decrease took place after August 2008.

As the credit quality of all the Russian companies is under pressure, our focus has been on companies in the real sector of economy that are relatively low leveraged, with good cash generation ability, financially disciplined and have relatively low short-term refinancing requirements and sound management. Our priorities are revised towards accumulating liquidity and strengthening the collaterals over lending expansion.

While decreasing loan portfolio by 52%, the Bank has managed to increase its fee and commission income by 46% in 2008 to USD 5.7 million. FX and currency revaluation gain was also increased by 49% to USD 4.2 million. Thus, despite of living in the crises environment since August 2008, GBM achieved a profit before tax of USD 15.1 million by year-end 2008, a 12% increase compared with USD 13.5 million at the end of 2007.

Responding to tough economic environment, the Bank is placing more emphasis on reducing its operational expenses.

With a staff of 81, GBM has over 600 active corporate and commercial customers. Russian companies comprise 82% of its customers and 18% are non-residents. In 2008, the number of large scale loan customers amounted to 117 and 73% of the loans provided were granted to the Russian companies.

The current economic situation provides opportunities for GBM to start business with new reputable names and encourage existing relations. GBM's constant policy is to be very close to its customers. Today, this is especially important and we follow our customers even more precisely, by increasing the frequency of the visits and paying more attention to visiting production units in the regions. The Bank is focused on providing high quality services while maintaining a compact structure. By adapting itself to a changing environment, GBM aims at keeping the Bank's structure intact during the challenging period that should start after the crisis.