Vozrozhdenie Bank earned RUB 1.4 bln of net income in Q1 2017 under RAS

18 May 2017

Vozrozhdenie Bank published its financial results for Q1 2017 under RAS.

Net profit for the reporting quarter amounted to Rub 1.4 bln, compared to a net loss of Rub 0.7 bln for the same period of the last year due to a recovery of provisions on loans assigned under cession agreements and a reduction in operating costs.

Operating costs for the reporting period fell to Rub 3 bln (Rub 6.9 bln in Q1 2016), which offset a slight decrease in operating income before provisions to Rub 4.1 bln (-4%). Both high operating expenses and high other operating income in Q1 2016 were caused by a revaluation of real estate temporarily not used in core business activities according to the changes in the Russian Accounting Standards. Excluding the effect of revaluation, pre-provisioning operating income would have been higher by 8% YoY.

Operating income before provisions less other operating income in Q1 2017 added 10% YoY to Rub 4 bln.

The bank’s assets amounted to Rub 232 bln as of April 1, 2017, 0.5% down compared to the year-start. Meanwhile, the share of net loans in the structure of assets grew by 1.1 pp to 77.9%. Cash and cash equivalents decreased by 34.0% YtD to Rub 6 bln as of the reporting date. In addition, the securities portfolio volume increased by 5% in Q1 to Rub 20 bln, which together with the growth of net loans by 1% to Rub 181 bln allowed to improve the share of net earning assets; it added another 1.9 pp. and reached 87.9%.

The gross loan portfolio* of the bank increased by 3% during Q1 2017 and was Rub 197 bln at the reporting date due to the growth of both corporate and retail book. The volume of loans to legal entities went up by 3% YtD to Rub 136 bln, while retail loans including a portfolio of securitised mortgages increased by 2% to Rub 65 bln.

In the first quarter of 2017, the bank recovered Rub 1.1 bln of provisions for loan impairment. At the same time, Rub 0.7 bln was charged to provisions in order to cover other losses risks.

By the end of the reporting period the main source of funding, customer funds on term deposits and accounts, amounted to Rub 201 bln (-1% YtD). Such dynamics were caused by a decrease in both funds of legal entities that reached Rub 60 bln (-1%) and funds of individuals and individual entrepreneurs that amounted to Rub 138 bln as of the reporting date (-1%, including card balances). Savings of individuals increased by 2% to Rub 122 bln. Thus, the L/D ratio was balanced and reached a comfortable level of 101%.

As of April 1, 2017, the common equity Tier I capital adequacy ratio (N1.1 norm) calculated in accordance with the requirements of the Bank of Russia was 7.7% (January 1, 2017: 8.1%) and the total regulatory capital adequacy ratio (N1.0 norm) was 12.2% (January 1, 2017: 12.4%), well ahead of the minimum acceptable levels set at 4.5% and 8.0% respectively. Some decrease in the indicator was due to RWA expansion (+5.5% per quarter to Rub 248.1 bln) and an increase in the total capital calculated in accordance with Basel III recommendations by 3.7% to Rub 30.3 bln.

Vozrozhdenie Bank earned net profit of Rub 2.1 billion for 2016
Vozrozhdenie Bank earned RUB 0.5 billion of net income in Q1 2017 under IFRS