8 May 2014
Bank Vozrozhdenie has published RAS results for Q1 2014.
“In the environment of financial markets volatility and significant rouble depreciation versus hard currencies, we optimized balance sheet structure to maintain comfortable level of liquid assets, stabilize funding and protect interest margin level. Economic stagnation restricted loan portfolio expansion in both corporate and retail segments. Meanwhile, mortgages remained the most attractive business for growth”, commented Andrey Shalimov, Deputy Chairman of Bank Vozrozhdenie Management Board.
Net profit for the reporting period totaled RUB 307.8 mln, escalating by 57.9% versus the prior-year period. Operating income before provisions grew by 6.4% to RUB 3.7 bln during the same period, mainly fueled by an increase in net interest income by 18.3% to RUB 2.5 bln.
The bank’s assets stood at the level of the start of the year and equaled RUB 206.9 bln, while the share of liquid assets slightly declined to 17.6%. Loan portfolio before provisions including securitized mortgages* reached RUB 176.3 bln, up by 1.7% QoQ and by 6.4% YoY.
Retail loan book expanded the most within the loan portfolio: loans to individuals including securitized mortgages climbed by 2.5% over the quarter to RUB 44.1 bln, up by 28.9% compared to the similar period of the previous year that is 2.6 pps higher than the sector growth. Mortgages progressed by 3.5% over the reporting quarter to RUB 30.8 bln (70% of the retail portfolio). Corporate lending saw positive dynamics of 1.4% in the course of the quarter having increased to RUB 132.2 bln.
During Q1 2014 the bank charged RUB 1.3 bln to provisions for assets impairment, including charges to provisions for possible losses on loans and other similar indebtedness in the amount of RUB 1.0 bln. As of April 1, 2014, total provisions for possible losses were RUB 20.7 bln, including RUB 19.0 on loans and other similar indebtedness.
Starting from October 2013, negative economic trends and instability in the banking sector reasoned client funds outflow. Moreover, there was traditional season decrease of debit card accounts’ balances on the background of long holidays at the beginning of the year. As a result, client funds dropped by 5.1% from the start of the year to RUB 157.0 bln. Meanwhile, concerns on rouble depreciation caused increase of FX deposits by 13% during the quarter, and their share in the individual funds reached 31.3% taking into account revaluation of FX part. In total, retail funds shrank by 1.4% over Q1 2014 to RUB 103.1 bln that is less than average figure for the sector.
Some outflow of client funds was offset by raising market financing. Share of funds borrowed at the interbank market in the bank’s liabilities grew by 0.8 pps since the beginning of the year to 5.6% and as of April 1, 2014 such borrowings were RUB 10.4 bln, out of which RUB 9.2 bln represent long-term instruments — funding from SME Bank and trade finance facilities. Beyond that, as of the end of Q1 2014, RUB 5.5 bln were received from the Bank of Russia against securities pledging in the framework of one-week repurchase agreement.
The Bank’s capital calculated in accordance with Basel III requirements widened by 6.3% to RUB 24.7 bln over Q1 2014 mainly due to retained earnings. Total regulatory capital adequacy ratio (N 1.0. norm) advanced to 11.6% as of April 1, 2014 (+40 bps compared to the start of the year) versus the minimum required level of 10%, while common equity Tier 1 capital adequacy ratio (N 1.1. norm) improved to 9.7% (+90 bps compared to the start of the year) versus the minimum required level of 5%.
Kindly note that the bank’s IFRS Consolidated Financial Statement for Q1 2014 will be published on May 28, 2014.
* Hereinafter loan portfolio figures are provided in accordance with internal reporting forms of Bank Vozrozhdenie.