27 October 2011
Bank Vozrozhdenie published 9M 2011 results under Russian Accounting Standards.
Net profit for 9M 2011 increased by 3 times to Rub 1.2 bln compared to Rub 404.4 mln in the same period last year.
Net interest income surged by 30.5% YoY and reached Rub 5.5bln for 9M 2011 mainly driven by substantial reduction of interest expenses and lower funding costs. Net commission income for 9M 2011 grew by 18.4% YoY and comprised 38% from total operating income. Thus, operating income before provisions was up 24.7% to Rub 9.4bln compared with the similar period of 2010.
“Amid financial markets volatility and heightened global uncertainty the Bank demonstrates positive dynamics on key indicators, maintaining liquid balance sheet. We keep improving profitability of core business: focus on high-yielding client segments and control over interest expenses resulted into net interest margin growth from 3.5% in Q1 to 4.9% in Q3 2011. In the current fragile environment we put particular emphasis on monitoring of credit quality and adequate provisioning as well as improvement of operating efficiency — in the third quarter we managed to reduce cost-to-income ratio to the level below 60%”, — commented Dmitry Orlov, Chairman of the Management Board.
The Bank’s assets increased by 13.7% YoY and reached Rub 177bln. Despite evaporation of excessive liquidity in the banking system, Bank Vozrozhdenie managed to maintain share of liquid assets in its balance at the comfortable level of 23.9%. Assets growth was mainly driven by loan portfolio expansion that increased by 25% YoY and comprised 71.7% of total assets. Corporate loans before provisions were up 26.8% YoY and reached Rub 112.2bln (or 15.6% for 9M 2011) mostly due to SME loans build-up. Retail loans grew respectively by 47.6% to Rub 22.5bln (or 34.7% for 9M 2011) primarily due to mortgage lending revival.
Client funds remain the main source of total assets growth and totaled Rub 140.4bln as of October 1, 2011 (up 10.8% YoY) or 88% of the Bank’s total liabilities. Retail deposits, the main funding tool for the bank, grew by 9% for the year and reached Rub 85.2bln.
The Bank continues to charge adequate provisions on possible impairment of assets in order to comply with the Bank of Russia requirements. Allocations to provisions on possible losses in Q3 2011 amounted to Rub 892.9 mln. Total provisions on possible losses on assets grew by Rub 2.1bln since the beginning of the year and amounted to Rub 13.5 bln (or 9.9% of loan portfolio).
The Bank’s capital grew by 9% to Rub 17.7bln for the year on the back of earned profit. Capital adequacy ratio equaled to 11.9%.