Transcript of the beginning of the meeting:

Vladimir Putin: Mr Gref, the results of the first quarter. Of course, I'm also interested in issues related to social problems. One of them, the most important, is support for the mortgage system, mortgage lending. Your bank probably issues more mortgage loans than any other bank in the country. And our overall desire and goal are to make mortgage rates as low as possible, so that they will be affordable to the vast majority of citizens. The year before last, how much were they, almost 14% on average? Last year, I know you lowered the rate to 12.5%. I know that clients with a good history and who are considered stable can get 10.5%. How is the work in this year's first quarter progressing? And you also perhaps have something to say about other social programmes, including new products for the public. If you please.

German Gref: Mr Putin, we have taken stock of four months of work. We have good results. We have grown our business loan portfolio by 4% and our consumer loan portfolio 5%. That is just about within the range of our forecast for the year. We expected that in the course of the year, our consumer loan portfolio would grow by about 18% and that our business loan portfolio would grow slightly less – 13-14%. Here, the growth rate is increasing – it is not very big but, nevertheless, positive. We had very good performance on our return on equity –in terms of net profit, we earned 111.2 billion roubles in 11 months, which is an absolute record in the history of the bank. We are working to promote reforms linked with increased efficiency and cost reductions. Accordingly, this has the effect of reducing our rates on loans transactions, among other things.

We have just launched a new product for small business development. The product line is not yet complete – we want to create several new loan products by the end of the year, and by the end of next year, we must radically change the situation in the small business financing market. We've created a new product – small business financing – up to two million roubles will be approved within three days for loans of up to five years. And since the beginning of this year, we have issued about 9,000 such loans in excess of 5.5 billion roubles. I think that this is a positive programme for small business, and here we are moving to support solutions for the financial problems of small businesses.

Vladimir Putin: What type of collateral do you require from them?

German Gref: Mr Putin, we are issuing express loans through our “loan factory” technology. And the clients are, as a rule, small businesses that already have some credit history with our bank or other banks. This is an experiment of sorts. We are going to roll it out later this year... Until we do so, we are doing it only in nine regional banks, and we will expand it to the entire country by the end of the year. This is a very affordable product. It has a low collateral rate. The loan is usually granted under current operational assets. But this is for companies that exist on the market, we know them.

We want to launch a new product by the end of the year to help start-up companies, what we will call a start-up loan.

Vladimir Putin: I know that you also planned a product line for pensioners...

German Gref: Mr Putin, would like to express my gratitude to the Pension Fund, because we were very active in the last year and signed an agreement with the Pension Fund. We do have a major problem – the long queues in our branches on days when pensions are disbursed. All the pensioners come to our branches, and it is very uncomfortable for them to stand in queues and uncomfortable for us to compel them to do so.

Now we have combined our databases, and in agreement with the Pension Fund, we are issuing all pensioners free credit cards. We also teach seniors to use ATMs, and terminals, and we distribute cash with no commission, free of charge, in case people do not want to use the card and want cash. This has very significantly reduced the walk-in traffic at our branches and reduces the time seniors need to receive their pensions. Hopefully, in cooperation with the Pension Fund, we will switch the majority of pensioners to this type of service before the end of this year. It is absolutely free for pensioners, we do it all at our own expense, but to us it is an advantage, because we preserve our image in the eyes of our customers. We serve most seniors, the majority of them, and we eliminate the queue, and most importantly, we create convenience for our clients, the seniors.

Vladimir Putin: Let's come back to mortgages.

German Gref: Regarding mortgages, Mr Putin, we have launched a new product – with a 50% down-payment, the mortgage interest rate is 8% for 8 years. This is a new type of loan. This is the lowest interest rate on mortgage loans in our entire history. During the crisis, we issued about 60% of all mortgages in the country. In 2010, this figure was about 50%. In 2011, it's a little lower, because the business sector is beginning to recover and commercial banks resumed issuing mortgages and, naturally, our share dropped a bit. But we try to maintain a relatively low interest rate in the first place for those of our borrowers who are the most reliable.

I must say that this year, we signed a lot of regional agreements for young professionals, for the rural middle class, and our rates are sometimes  subsidised 50% by the constituent entities of the Federation – and then these rates are 4%-5%, including the subsidies from federal programmes. And we see how the amount of mortgage loans is growing very strongly. This is currently one of the most lively and growing segments, given the fact that we are very much starting to increase construction lending. This year, the bank is financing about 20 million square meters of housing. This is a pretty significant figure. In the previous two years, unfortunately, we saw a very sharp drop in the number of new housing loans, and because of this, prices in general have gone up. Lending is now being restored.

Mr Putin, there is another thing I wanted to tell you. You asked about social programmes. We try to support a number of programmes that help children, orphans and orphanages. Today, I had a meeting with the heads of an international program called SOS. It was established in Austria in 1949 after the war, when there were a huge number of street children. They began to build villages and settlements with an average of 15 houses instead of orphanages. These homes are available for use by families who take from five to eight children in foster care. And now we have six such villages already built in Russia. The latest village was built in Pskov with our help. We financed the construction and now have come to an agreement with the international organisation, which has great experience in helping these children to adapt – they do not abandon them. The children are brought up in families up to the age of 16. The organisation builds youth homes where at 16 years of age, these teens are already adapting to normal life. There is now a very good programme with the regions – they are helping to support these children. We help with the construction, and the regions help with support. And they asked me to give you their organisation's tie. It shows just kids holding hands, and they invite you to come to one of their villages.

Vladimir Putin: Thank you very much.

German Gref: They celebrated 15 years of the first children's village here in the Moscow Region, in Tomilino. These villages will be appearing every year. We agreed with them that we will finance the construction of a village of about 15 houses, no more, and the programme in Russia will grow each year by one village. Today there are 2,200 children in their care. This is a significant number. I think that major corporations should also support this kind of programme.

Vladimir Putin: Thank you, I will come.