23 May 2006
Moscow, 23 May 2006. Vozrozhdenie Bank (VZRZ) today reported first quarter 2006 IFRS financial results:
- Net income in the first quarter RUR 166 million ($6 million), up 191%
- Q1 2006 Return On Equity (ROE) at 19.8%, above 2005 average of 18.5%
- Quarterly earnings per share increased to RUR 9 up from RUR 3 in Q1 2005
- Equity grew by 32%, assets by 53%, compared to the same quarter of 2005
“We are pleased to see last year’s good financial results continue to strengthen through the first quarter of 2006. We achieved not only higher profits, but also improved quality of earnings, increasing the share of net commission income in operating income from 36% to 44%. At the same time we managed to contain operating costs while keeping our revenue growth rate high. This reduced our cost to income ratio by 5 percentage points to 71% for the first quarter 2006 coming closer to our 60% efficiency target.
We are seeing continued success from building relationships with both business and individual customers. Deposits and other funds entrusted to the bank continue to grow rapidly and support increased lending to our commercial and individual clients. We are particularly pleased with the growth of our mortgage portfolio as we think that this is a very important step for our clients who have decided to purchase new homes.”, commented the bank’s Chairman Dmitry Orlov.
Pre-tax income in the first quarter 2006 increased by 282% to 218 million rubles from the same period last year. Tax is accrued at the full statutory rate of 24%. After tax net profit of 166 million rubles compares to 57 million rubles in the same period of 2005.
Net Interest Income grew 74% in line with the overall growth in assets. Provision expense for potential loan losses was 102 million rubles to maintain a reserve although the level of problem loans in both the retail and commercial portfolios has remained very low.
Operating income grew 49% to RUR 1,013 million ($36 million). Non-interest income rose to 50% of operating revenue from 45% in the first quarter of 2005. Net commissions comprised 89% of non-interest revenue up from 79%.
Operating expenses grew 28% as volumes increased and the branch network expanded. The ratio of cost to operating income before loan loss provision has dropped from 76% for the full year 2005 to 71% in the first quarter.
Assets increased by 68% to RUR 51,665 million ($1,861 million). Loans to individuals continue to grow rapidly, particularly mortgages. Over 800 million rubles of new mortgages were issued in the quarter compared to 100 million rubles in the first quarter of 2005.
Equity was up 32% to RUR 3,439 million ($124 million).
In the first three months of 2006 Vozrozhdenie added 3 new branches and had 139 sales outlets and 409 ATMs at the end of the first quarter. The bank is the 10th largest Russian bank by the volume of deposits from individuals and the 9th largest issuer of new mortgages for purchasing residences.
Vozrozhdenie Bank provides personal banking and business services to clients throughout the Russian Federation. Vozrozhdenie Bank serves more than 40,000 corporate clients, and over 900,000 individuals. We are successful for one reason; complete focus on the needs of our clients.
The bank’s full IFSR reports are available at: www.vbank.ru
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