english

2007 : 

MOSCOW MORTGAGE AGENCY 2007 Address: 1, bldg.9, Tikhvinskaya Str., Moscow 127055, Russia Tel.: [+7 495] 721-19-27 Fax: [+7 495] 972-64-64 E-mail: mia@mia.ru

ABOUT THE BANK : 

ABOUT THE BANK Commercial Bank «Moscow Mortgage Agency» (JSC) was established in 1999 in accordance with the Law of the City of Moscow dated March 31, 1999 No. 11 ‘On organizational and financial support of the implementation of home mortgage system in Moscow’. The Moscow Mortgage Agency (MMA) is a specialized mortgage-financing institution, set up to facilitate and promote the development of real estate mortgage in Moscow thus increasing affordability of mortgage lending to population. The only shareholder of the Moscow Mortgage Agency is the Government of the City of Moscow represented by the Property Department of the City of Moscow. The authorized share capital amounts to RUB 790 224 000 (appox.US$ 29.82 mln). It consists of 16 463 common ordinary shares. The nominal value of each share is RUB 48,000.00. Moody’s Investors Services has assigned MMA deposit rating at the Ba2/NP level. According to the national scale MMA is rated Aa2.ru.

CITY OF MOSCOW: 

CITY OF MOSCOW Population 10,4 million Ratings Baa2/Stable (Moody’s) BBB+/Stable (Fitch) BBB/Stable (S&P) GDP (2005)     RUB 3.6 trln (US$ 129 bln)     During 1999-2005 average real GDP growth stood at 9.2% p.a. and in 2006-2009 is expected to be 7- 9% p.a..     Since 2002 the GDP growth of the City of Moscow has outpaced even the robust growth of the Russia’s GDP.     The City of Moscow has a larger population and a higher GDP per capita than Hungary, Poland, Slovakia, the Czech Republic and Cyprus.     The City’s economic output amounts to around 21% of the total Russia’s GDP. Foreign investments     As the capital of Russia, Moscow is a focal point for foreign investments.     In 2005 foreign investments in Moscow amounted to US$25.2 bln (61% growth compared to 2004).     Foreign investments in Moscow account for 47% of the total volume of foreign investments in Russia.

 MORTGAGE MARKET  IN RUSSIA: 

MORTGAGE MARKET IN RUSSIA Main residential mortgage lending institutions in Russia: commercial banks Federal Agency for Home Mortgage Lending regional mortgage agencies The number of banks implementing mortgage programs in Russia is constantly growing. In 2002 only 200 banks offered mortgage lending opportunities, in 2005 their number reached 241, in 2006 – 395 and at the beginning of 2007 exceeded 500. These banks offer around 1000 different mortgage programs. Agency for Home Mortgage Lending is established and owned by the State Government. The Federal budget contains a special allocation to guarantee securities issued by the Agency. To develop mortgage lending in the regions specialized mortgage operators such as mortgage funds, agencies and corporations have been set up almost in 70 regions of Russia. Presently 72 regional, 21 municipal and 5 branch operators conduct mortgage activities in the country’s regions

 MORTGAGE MARKET  IN RUSSIA: 

MORTGAGE MARKET IN RUSSIA All the factors necessary for considerable growth in mortgage lending exist: The macroeconomic situation has improved and therefore population income has increased. The necessary legislation has been passed and now is in force. The banks have got an access to long-term credit resources. Within 2 year period the total amount of mortgage loans granted in Russia has grown almost 11 times.

 MORTGAGE MARKET  IN RUSSIA: 

MORTGAGE MARKET IN RUSSIA Positive developments on the Russian mortgage market: The maximum average duration of mortgage loans continues to increase. It has already reached 25-30 years. The size of downpayment is decreasing. In 2005 a borrower was expected to contribute between 20 and 30% of real estate price, in 2006 the amount of downpayment dropped to 5% and sometimes even to zero. Though the bulk of the loans are based on a fixed rate, available options may also include a floating interest rate. Loans refinancing is gaining popularity. In future, as the Russian market grows, refinancing can become a routine offer as it is in developed countries’ market. New opportunities for bank assets securitization within the Russian internal market have been opened since the Act ‘On Mortgage Backed Securities’ came into force in July 2006. As a result mortgage unit investment funds have started emerging. The share of non-performing loans in the total amount of mortgages in Russia is extremely low, about 0.1%. This is a result of effective credit technologies applied by the banks and the responsible attitude of borrowers .

 COMPETITIVE POSITIONS OF  THE BANK IN THE MORTGAGE  MARKET : 

COMPETITIVE POSITIONS OF THE BANK IN THE MORTGAGE MARKET MMA enjoys a unique position on the Moscow mortgage market. It is the only bank in Moscow authorized to provide mortgage lending to those Muscovites, who are on ‘the waiting list’ for municipal housing. MMA also provides refinancing facilities to the originators of mortgages. In this area MMA is competing with the Agency for Home Mortgage Lending (AHML), which dominates in this segment of the mortgage market. In 2006 AHML purchased more than 2 000 loans worth RUB 1.9 bln. Due to the Federal Government guarantees the cost of funding for AHML is very low. Other competitors include such banks as Sovfintrade Bank, BTA Ipoteka, KIT Finance and others, which appeared on the market in 2005. These banks are also acquiring mortgage portfolios of other banks to collect pools for future securitization. MMA is one of the market leaders in providing commercial mortgages in the Moscow region. MMA occupies the 5th place among the Russian banks in terms of mortgage contracts signed. In 2006 about 800 new mortgage contracts were concluded by MMA. The total number of the mortgage contracts raised on the market were 13.6 thousand.

MORTGAGE PORTFOLIO: 

MORTGAGE PORTFOLIO Since 2002 MMA mortgage portfolio has demonstrated a record growth of more than RUB 4 bln. Breakdown of the mortgage loan portfolio (in RUB, thsd)

BOND ISSUES: 

BOND ISSUES 2002 1st bond issue 2005 2nd bond issue RUB 1.0 billion Nominal value per bond – RUB 1 000 Number of bonds issued – 1 000 000 Issue date – 09.08.2005 Maturity date – 09.08.2008 Date and code of registration – 14.06/2005, 40203344B Coupon – 9.5% pa (for 1 – 6 coupons) Coupon – 8.6% pa (for 7 – 12 coupons) Quarterly coupon payments RUB 2.2 billion Nominal value per bond – RUB 1 000 Number of bonds issued – 2 200 000 Issue date – 12.11.2002 Maturity date – 20.09.2012 Date and code of registration – 04.11.2002, 240103344B Coupon – 10% pa., varies depending on the RUB/USD exchange rate established by the Bank of Russia Quarterly coupon payments

BOND ISSUES: 

BOND ISSUES 2006 3rd bond issue RUB 1.5 billion Nominal value per bonds – RUB 1 000 Number of bonds issued – 1 500 000 Issue date – 02.03.2006 Maturity date – 23.02.2012 Date and code of registration – 18.01.2006, 40303344B Coupon – 9.4% pa (for 1 – 6 coupons) Quarterly coupon payments

FUNDING BASE: 

FUNDING BASE The sources of MMA funding base include: placement of mortgage backed bonds; attraction of funds of non-state pension funds and insurance companies; placement of mortgage backed eurobonds and credit notes; increase of the authorized capital of the Bank through additional issue of common ordinary shares; attraction of mid-term funds from Russian and foreign investors.

DEVELOPMENT STRATEGY FOR 2007-2010 YEARS: 

DEVELOPMENT STRATEGY FOR 2007-2010 YEARS Within the next years MMA plans to come to financial markets with a number of transactions targeting to raise more than RUB 46 bln by the end of 2010.

DEVELOPMENT STRATEGY FOR 2007-2010 YEARS: 

DEVELOPMENT STRATEGY FOR 2007-2010 YEARS The Bank plans to expand mortgage lending operations to achieve the total mortgage book of RUB 49.6 bln by the end of 2010. (RUB, mln)

DEVELOPMENT STRATEGY FOR 2007-2010 YEARS: 

DEVELOPMENT STRATEGY FOR 2007-2010 YEARS Currently ‘The Mid-term Programme for housing construction in Moscow for the period 2006 - 2008 and tasks up to the year 2010’ is being implemented. It provides for the enhancement of mortgage lending in Moscow and the consequent increase of affordability of comfortable housing for Muscovites. Plans for 2010 include the construction of 878 thousand square meters and the growth of mortgage loans to RUB 12.2 bln.

DEVELOPMENT STRATEGY FOR 2007-2010 YEARS: 

DEVELOPMENT STRATEGY FOR 2007-2010 YEARS Driven by strong growth, MMA is targeting to increase its authorised capital to more than RUB 2.01 bln by the end of 2010. * including SPV assets.

DEVELOPMENT STRATEGY FOR 2007-2010 YEARS: 

DEVELOPMENT STRATEGY FOR 2007-2010 YEARS In 2010 MMA expects to receive the net profit of RUB 382 bln and to enlarge its home mortgages portfolio to RUB 46.6 bln.

INTEREST POLICY : 

INTEREST POLICY MMA interest policy is based on the market principles. Taking into account the structure of its assets and liabilities MMA is currently maintaining the following interest margins, which are applicable to the loans issued: 1.5-2.5% pa - for home and repurchased mortgages; 2.5-3.5% pa - for commercial mortgages. The interest rates are reconsidered on a regular basis following changes in the financial market conditions, current trends on the mortgage market and pricing terms offered by other mortgage institutions.

INTERNAL CONTROL POLICY: 

INTERNAL CONTROL POLICY The Bank perform its activities in strict conformity with the legislation, regulative and other requirements of the Government of Moscow, the Bank of Russia, and other authorized bodies. To ensue this the Bank has developed Internal Control Policy. Special attention is paid to: adequacy and due preparation of financial, accounting, statistic and other statements; information security and banking confidentiality; non-involvement of the Bank’s employees in illegal activities including legalization (money-laundering) of incomes received through criminal way; prevention of conflicts of interests within the Bank; observance of regulatory acts, standards, bylaws, constituting and internal documents; prevention of wilful misuse of internal information; establishment of effective risk management procedures and risk assessment techniques.

KEY FIGURES (IFRS) : 

KEY FIGURES (IFRS) Year ended RUB/USD exchange rate 31 December 2005 28.7825 31 December 2004 27.7487

CONTACT INFORMATION: 

CONTACT INFORMATION Address: 1, bldg.9, Tikhvinskaya Str., Moscow 127055, Russia Tel.: [+7 495] 721-19-27 Fax: [+7 495] 972-64-64 E-mail: mia@mia.ru Contact person: Mr. Sergey Tchernyakov, Head of Treasury Tel.:[+7 495] 729-5245 E-mail: treasury@mia.ru