Vozrozhdenie Bank earned RUB 640 million of net profit under IFRS in 3M 2018

4 June 2018

Moscow, May 30, 2018: Vozrozhdenie Bank reported on its financial results for 3M 2018 under IFRS.

  • Operating profit before provisions in Q1 2018 was Rub 4.3 billion;
  • Net profit in Q1 2018 amounted to Rub 640 million adding 19% YoY;
  • Assets were at Rub 231 billion;
  • ROE for Q1 was 9.9% increasing by 1.3 pps QoQ and 1 pp YoY;
  • Gross loan portfolio reached Rub 178 billion

“The growth of operating profit in Q1 was achieved against adverse publicity. In this period we fully recovered the independence of operating, technological and business processes. We have recovered our traditional business model and our customer segment and now see a growth of settlement transactions, we maintain high capital adequacy and liquidity ratios, strengthen our customer base and loan portfolios, and continue optimizing expenditures,” commented Mark Nakhmanovich, Chairman of the Management Board at V.Bank. “Our short-term goal is to add new services and high-tech products to our existing strong customer relations. In April we launched electronic banking guarantees and lending factory. In May we began testing a new version of remote banking system for retail customers and plan to launch testing a new remote banking system for corporate customers. We have all required financial and intellectual resources for this.”

The bank’s operating profit before provisions and income tax in Q1 amounted to Rub 4.3 billion adding 14.4% YoY.

Net profit for the first three months of 2018 was Rub 640 million compared to Rub 537 million YoY and Rub 572 million QoQ.

In the reporting period the bank earned Rub 3 billion of net interest income (NII), which is 11% more than Rub 2.7 billion YoY and more by 2.3% QoQ through considerable savings on interest expenses.

As of the end of the reporting period net interest margin stood at 4.9% growing by 0.3 pps YoY and 0.2 pps QoQ.

Net fees & commissions declined by 5.1% YoY to Rub 952 million. Net Fee & commission income accounted for 22.4% of the bank’s operating income losing 4.6 pps YoY.

The bank continues enhancing its costs management quality. As a result, operating expenses decreased by 28.6% to Rub 1,967 million QoQ. Cost-to-income ratio for Q1 was 46.3, which is less than that of the previous year.

In the reporting period ROE added 1.3 pps QoQ and was at 9.9% and ROA grew by 0.2 pps to 1.1%.

Assets of the bank decreased by 8.5% to Rub 231 billion as at March 31, 2018. This was caused by the reduction of cash and cash equivalents by 41.3% to Rub 20 billion. Due from other banks shrank by 33% to Rub 4 billion (Rub 1.9 billion less YtD). Securities portfolio declined by 8.2% to Rub 32 billion. The share of liquid assets traditionally decreased in the first three months by 5 pps to 22% releasing additional funds for the loan portfolio expansion.

Gross loan portfolio was Rub 178 billion. The growth of loan portfolio against seasonal drop of customers funds by 8.3% to Rub 189 billion as of March 31, 2018 influenced positively on gross loans-to-deposits ratio, which stood at 94%.

The bank kept perfecting its loan portfolio quality. The share of non-performing loans (NPLs 90+) in Q1 2018 declined to 5.8% compared to 5.9% QoQ and 6.3% YoY. As a whole, NPLs 90+ amounted to Rub 10.3 billion versus Rub 12.3 billion YoY.

At quarter-end the bank strengthened NPL 90+ coverage ratio to 180% adding 30 pps QoQ.

Customer funds in Q1 2018 decreased by 8.3% to Rub 189 billion mainly due to a reduction of corporate funds by 18.3% to Rub 36 billion. Retail funds declined by 5.6% to Rub 153 billion.

In the reporting period IFRS equity was at Rub 24.4 billion. The Rub 3.2 billion-worth change in equity reflects the influence of transition to a new provisioning model in accordance with IFRS 9 requirements obligatory from January 1, 2018.

Total capital calculated in accordance with the requirements of Basel III amounted to Rub 30 billion. Total capital adequacy ratio and Tier I capital adequacy ratio increased to 16.3% and 12.3% YoY correspondingly.

N1.0 and N1.2 ratios, calculated in accordance with the requirements of the Bank of Russia, grew YoY and accounted to 13.6% and 9.6% correspondingly (minimum acceptable levels set by the Bank of Russia increased for CAR support buffer are 9.25% and 7.25%, correspondingly).

Moody’s Investors Service changed Vozrozhdenie Bank’s ratings
IFRS Financial Results of Vozrozhdenie Bank for 6M 2018