VTB - Wealth and Investment Management Strategy Session

VTB yesterday hosted a strategy session looking at its wealth and investment management business. > How big is VTB's investments business? VTB Investments' assets under management (AUM) totaled R4 trln ($55 bln) as of end-July 2021. These funds are split more or less evenly between retail and institutional investors. Within the retail segment (R2.1 trln AUM at 1Q21), roughly 80% of AUM is brokerage-related and 20% asset management, and VTB had a 22.4% market share in retail AUM as of 1Q21. VTB Investments has 1.7 mln retail clients, with 0.7 mln MAU and 0.35 mln DAU on its "My Investments" platform. > Building out a partnership model. Without going into too much detail, the presentation stressed the important role of open API partnerships to further deepen VTB Investments' client base. These partnerships include Yandex, RBC, Magnit and Russian Post. > How big is the total retail investment market? According to VTB, retail AUM in Russia totaled R9.3 trln ($125 bln) in 1Q21, of which R7.4 trln related to brokerage and R1.9 trln to asset management. VTB sees excellent growth potential for retail investment services in Russia: retail investment products account for just 14% of retail financial assets, compared to 55% of banking products, and VTB projects this share increasing to 22% by 2023, with R17.7 trln in total retail market AUM among 20-30 mln retail clients (up from 14.8 mln at 1H21). VTB did not give any forecasts for its own business, but commented that a couple of important mid-term retail investment growth drivers are expected to be fractional investments and alternative investments. > What revenue does the business generate? The investments business (retail and institutional combined) generated R20.5 bln of gross revenues in 2020 and R17.1 bln in 7m21, highlighting strong growth this year. The latter equates to around 3.6% of the VTB group's 7m21 pre-provision operating income. > What are the main features of the retail investment app? VTB's "My Investments' app has three core elements: the core brokerage offering, including over 10k instruments on 33 exchanges, with R3.2 trln monthly turnover; investment advisory, including robo-advisory services with 21 different investment profiles and full digital personal advisory; and asset management, including AI robo-advisory and chatbots, investor education and stories. > How does VTB compare to the competition? It's very hard to get a like-for-like picture with banks reporting data in different ways. for example, Sber's wealth management and brokerage segment includes its pension funds, whereas VTB's disclosed investments data does not. Meanwhile, TCS, which reported R500 bln AUC for 1H21 and R9.1 bln in gross InvestTech revenues in 1H21, does not have any material asset management business or institutional business, but instead is primarily a mass-market and higher-turnover retail brokerage operation.