Beginning of Meeting with President and Chairman of the Board of VTB Andrei Kostin 2007-12-04 19:50:10 Novo-Ogaryovo Andrei Kostin: I would like to say a few words about the general situation today on the banking market. It must be said that we are seeing a crisis situation on the banking market in the United States and Western Europe. Many leading Western banks have made losses and capitalisation of the U.S. banking sector has dropped dramatically. It is enough to say that Citibank, the world’s biggest bank, has seen its share price fall by almost half this year. Many experts now suggest that the banking crisis in the U.S. will lead to a slowdown in the U.S. economy. Seen against this background, the Russian banking sector is showing enviable stability and steady and successful development. The measures taken by the Government and the Central Bank have had results. There is sufficient liquidity in the Russian banking sector today. Overall, the clients of Russian banks have no need to worry. Vladimir Putin: In short, everything is going badly over there but everything is fine here. Andrei Kostin: The situation is normal here, though I wanted to say that Russian banks do have need of additional long-term liquidity because it has become more expensive and difficult to borrow abroad, and this was an important source of long-term resources for investment. The banking sector expects that the measures the Government has outlined now to make more active use of the funds we have within the country will have a positive impact on maintaining the growth rate in the banking sector and lending to the economy, and ultimately this will be reflected in higher economic growth overall. Vladimir Putin: You know the Government’s position. The Government and the Central Bank are ready to support the country’s banks, but they must do this carefully so as to avoid upsetting our macroeconomic indicators. I am sure that there will be progress in this direction. What are the results of your work? Andrei Kostin: The results are good and steady. We expect a record profit this year. Our assets have increased by 60 percent already this year and our credit portfolio by around 80 percent. We marked a record this week – three billion dollars in total mortgage loans made to the population. Overall, every day, 150 Russian families in 90 different towns throughout the country improve their housing situation with the help of housing loans made by VTB Group. The housing loan crisis that America currently faces is not a problem in Russia. We are continuing to develop our housing loan programme and consumer loans for the population and all different types of services, including lending to Russian corporations, of course. There is growth in every segment today. Overall, our results are better this year than last year.