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President of Russia Vladimir Putin: Mr Kostin, your group is now working on the Post Bank project. In fact, this effort has started quite a while ago. You probably have some interesting plans in this respect, so please, tell me about them, and also please report on the bank’s performance.

VTB Bank President and Chairman of the Board Andrei Kostin: Mr President, VTB Group performed well in 2017. The first thing I wanted to highlight is that our net profit more than doubled, exceeding 100 billion rubles.

Another important development was the restructuring within the group. We merged our retail branch, VTB 24, into the core bank, which is expected to produce a cost-cutting effect of 15 billion rubles over a three-year period, as well as synergies in selling bank products and technologies.

There were areas that saw the most rapid growth in 2017. I would like to highlight a 14 percent increase in mortgage lending to over a trillion rubles. Another achievement in this segment is that the average interest rate on mortgage loans slightly declined and is now below 10 percent.

Vladimir Putin: Your assets are currently worth 13 trillion, aren’t they?

Andrei Kostin: Yes, something along these lines.

Auto lending also saw an increase of 16 percent to about 100 billion rubles, of which 40 percent were granted under special programmes supported by the Government.

As for Post Bank, it was established in 2016, so 2017 was the first year when it operated for a complete twelve months. The bank became profitable, and has a customer base of 6.5 million people.

I would like to mention another important detail. Before New Year, the bank opened 13,000 outlets in post offices, and we intend to open another 5,000 branches before the end of 2018, for a total of 18,000. As many as three quarters of these branches are located in small towns and rural areas, while other banks are leaving these places. We have noticed that despite the latest advances in technology and the availability of various channels, including telephone and online banking, people, especially seniors, still prefer to visit their bank branches in person. For them, the accessibility of a bank branch in rural areas and small towns is essential. In this respect, I believe that we are serving an essential social purpose.

In addition, last year Post Bank transferred 3 billion rubles to Russian Post as a so-called structured payment, which of course was a big help for the company. Russian Post invested these funds in developing the postal infrastructure and so on.

Our cooperation with Russian Post is not limited to Post Bank. I would like to present our new initiative that is currently getting off the ground. We want to create a national state-of-the-art high-technology logistics platform for online trade. We all know that online trade is a very vibrant sector. We are ready to invest 30 billion rubles into building 40 cutting-edge logistics distribution centres that will serve both the Russian Post and as online trade hubs.

We are also in negotiations with possible foreign participants, including from China. This project is already beginning to materialise. I hope that it will be fully implemented within the next two or three years.

Vladimir Putin: Good.

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