13 November 2014
Bank Vozrozhdenie summarized 9M 2014 results under the Russian accounting standards.
Operating income before provisions for 9M 2014 came in at RUB10.9 bln. An expansion of the retail loan book and increased interest rates on loans resulted in the net interest income growth by 4.3% to RUB7.1 bln. The bank earned RUB3.7 bln of non-interest income for 9M 2014, including RUB3.1 bln of fees and commissions.
The bank’s net income for 9M 2014 delivered almost three-fold growth to RUB2.2 bln versus the same period of the previous year, due to both recording of Q2 deferred tax asset in the amount of RUB1.5 bln and the rise of 8.2% in pre-tax profit to RUB1.2 bln.
Due to the positive dynamics of the net indebtedness (+RUB2.5 bln) and the securities portfolio (+RUB7.9 bln), the bank’s assets grew by 2.9% YtD to RUB212.4 bln as of October 1, 2014.
The bank’s loan portfolio* before provisions totaled RUB167.8 bln as of the reporting date that is 3.3% lower than the level of the year-start. It was reasoned primarily by 6% decline in corporate loans which amounted to RUB122.6 bln amid anemic business activity and a lack of reliable borrowers. Persisted demand for mortgages and consumer loans stimulated the growth of retail lending. Retail loan book including securitized mortgages added 5.2% over 9M 2014 and equaled RUB45.2 bln as of the reporting quarter-end.
The loan portfolio stagnation during Q3 2014 contributed to increasing investments in securities by RUB5.6 bln to RUB22.9 bln at the end of the period. Short-term bonds of sovereign and quasi-sovereign issuers represented over 80% of the securities portfolio. In accordance with the Russian accounting standards, bonds held to maturity which were purchased in the course of the mortgage securitization deals are recorded as a part of the securities portfolio, and their share in the total securities’ investments stood at 11.5%.
In Q3 2014, continuous inflow of customer funds drove them total figure up to RUB171.1 bln as of September 30, 2014. For the first time during the year, both deposits and current accounts of corporate clients were in the green with total amount equaling to RUB54.9 bln (+4.8% QoQ). Retail funds remained the major source of liabilities growth, comprising 61.7% thereof. For the second quarter in a row the bank faced strong clients’ demand for retail deposits and it spurred the growth in retail funds by 9.8% YtD to RUB116.2 bln.
Over Q3 2014 the share of funds borrowed from the Bank of Russia and other credit institutions in the structure of the bank’s liabilities went down by 0.4 pps to 5.1% (or RUB9.6 bln). Funds raised from SME Bank and the European Bank for Reconstruction and Development under SME support programmes constituted 57.9% of interbank financing, another 26.6% fell on trade finance transactions with foreign banks. Above all, RUB650 mln comprising 6.7% of all the financing from credit institutions were raised from the Bank of Russia against non-market assets.
Since the beginning of the year the capital of the bank rose by 12.8% and reached RUB26.2 bln according to Basel III standards, mainly due to retained earnings. The total regulatory capital adequacy ratio (N1.0 norm) grew by 1 pp to 12.2% YtD while the minimum acceptable level is set at 10%. The common equity Tier1 capital adequacy ratio (N1.1 norm) added 0.8 pps over the same period and reached 9.6%, while the minimum requirement is 5%.
Over 9M 2014 the bank charged RUB3.3 bln to provisions for assets impairment (19% down YoY) consistently following a conservative risk management policy. The amount included RUB2.7 bln of charges to provisions for impairment of loans and other similar indebtedness. The total amount of charges to provisions for possible losses totaled RUB20.2 bln as of September 30, 2014, including RUB18.2 bln for impairment of loans and other similar indebtedness.
Please note that IFRS consolidated financial statements of Bank Vozrozhdenie for 9M 2014 will be published on November 25, 2014.
* Hereinafter loan portfolio figures are provided in accordance with internal reporting forms of Bank Vozrozhdenie.