RU

Letter from CEO of the REC Group

Russia is rich in natural resources for which there is a steadily demand for. While this pretty much explains the current structure of Russian exports, it is important to understand that we are witnessing the formation of new operating procedures that are likely to fundamentally change not only the positions of suppliers in separate markets, but to transform the entire structure of demand due to the emergence of new products or even industries.

Petr Fradkov,
CEO of the REC
Group

Dear colleagues and partners,

I am pleased to present you the 2016 Annual Report of Eximbank of Russia.

Summing up the results of the reporting year, I would firstly like to highlight the importance of the fact that a new system of export support has finally been shaped in Russia. The REC Group, in particular, Eximbank of Russia, played a significant part in the process.

Russia is rich in natural resources for which there is a steady demand. While this pretty much explains the current structure of Russian exports, it is important to understand that we are witnessing the formation of new operating procedures that are likely to fundamentally change not only the positions of suppliers in separate markets, but to transform the entire structure of demand due to the emergence of new products or even industries. Thus, developing and supporting non-commodity exports, in particular, the exports of high value-added products became one of the 2016 highlights. This trend can be observed not only in Russia, but also in the global economy at large. Supporting non-commodity exports is a challenge that requires a comprehensive, system-wide approach where both financial and nonfinancial instruments should be used.

Having started in 2015, the integration of the three companies — the Russian Export Center, EXIAR export insurance agency and Eximbank of Russia — successfully completed in 2016. We aligned all the business processes, adjusted the product line and significantly improved the service quality to make the cooperation of exporters with the REC maximally effective and comfortable. Our priority was to meet the expectations of various kinds of export-oriented companies, from industrial heavyweights to smaller manufacturers of consumer goods, to preserve the positive experience of cooperating with the existing customers and win the trust of new partners.

As before, both in Russia and abroad, lack of financing is regarded as the main obstacle for foreign trade. Therefore, the matter of ensuring the access of exporters to credit and insurance instruments should be dealt with at the state level. To enhance the level of export support, RUB 8.1 billion was allocated from the state budget to increase the capital of Eximbank of Russia. As the result, the Bank was able to increase the credit limits for export contracts, as well as to offer financing at competitive rates, compared to the foreign market players. In the past year the demand has increased for loans provided under the high tech exports support program that is implemented in collaboration with the Russian Ministry of Industry and Trade. Notably, in 2016 the focus was on financing of foreign buyers to reduce the debt burden on the Russian companies and enable them to enter external markets with package offers. These efforts were reflected in the Bank’s results: total loans issued exceeded RUB 36 billion; over 60% of this amount was provided under the high tech exports support program. The support of Eximbank of Russia enabled companies from very different industries to implement around 250 export contracts.

Eximbank of Russia further strengthened the cooperation with foreign financial institutions. In 2016 the average annual volume of the Bank’s financial market transactions increased 15 times, while the number of transactions increased 5 times. In 2016 the Bank listed two programs of bonds worth USD 350 million on MOEX, and the first ruble bond issue was included in the Lombard List by the Central Bank of Russia. In July 2016 MOEX included the issue in the list of securities eligible as collateral for repo transactions with CCP. Moody’s, the international rating agency, reconfirmed the rating of Eximbank of Russia as Ва2, while Expert RA (RAEX), Russia’s largest rating agency rated it as А++ (the highest credit rating possible).

The team of Eximbank of Russia did a tremendous job and achieved truly impressive results by the end of the year. However, the plans for 2017 are even more ambitious; to achieve them will require maximum engagement from all of the Bank’s units and personal responsibility of every employee for the common result.