Vozrozhdenie Bank announced RAS results for H1 2015

11 August 2015

Vozrozhdenie Bank published its RAS results for H1 2015.

As of July 1, 2015, the bank’s assets totaled RUB 212.4 billion, 6.1% down compared to the year-start when the bank has accumulated significant liquidity cushion for the New Year holidays. The assets went back to the optimal level predominantly due to the dissolution of the excessive liquidity including cash and equivalents (-49.3% YtD) and securities portfolio (-27.7% YtD). In addition, the Ruble strengthening during the reporting period resulted in the decline of the ruble equivalent of FX-denominated assets. Net loan indebtedness represented the largest share in the assets structure of 72.8%, up by 3.9 pps from the start of 2015. Loan-to-Deposit ratio was preserved within the targeted range totaling 99.4%.

Loan portfolio before provisions* declined by 2.3% YtD to RUB 171.3 billion triggered by the same factors that affected borrowers’ activity at the beginning of the year — high interest rates, contraction of real disposable income and tighter credit policies. Corporate loan book contracted by 3.1% YtD amounting to RUB 124.8 billion, while retail loans, including securitized mortgages, went up by 2.1% QoQ to RUB 46.5 billion returning to the level of the year-start (sector contraction was 5.3% for H1 2015, according to the Bank of Russia data).

Adhering to its conservative risk management policy and in order to comply with the Bank of Russia requirements, the bank charged RUB 3.6 billion to provisions for 6M 2015, 52.3% above the level of the same prior-year period.

Customer funds, the key funding source, were stable across the first half of 2015 and totalled RUB 172.3 billion as of July 1, 2015, up by 6.8% YoY. The growth was mostly ensured by the expansion of retail funds that widened by 15.0%YoY to RUB 125.3 billion on the back of the inflow of new deposits. It afforded the bank to avoid aggressive competition for corporate deposits and cut the corporate funds to RUB 46.7 billion as of July 1, 2015 (-6.8%YoY and −10.9%QoQ).

As of July 1, 2015, the funds borrowed from the Bank of Russia dropped to RUB 1.78 billion with the share in the total liabilities diminishing to 0.9% versus RUB 9.5 billion and 4.7% at the start of the year respectively. The funds due to other credit institutions were equal to RUB 8.4 billion, comprised by the long-term funds due to SME Bank and trade finance and representing 4.4% of the total liabilities.

Capital of the bank decreased by 4% to RUB 25.4 billion according to Basel III standards. The total regulatory capital adequacy ratio (N1.0 norm) remained flat comparing to the beginning of the year at 12.0% as of July 1, 2015 while the minimum acceptable level is set at 10%. The common equity Tier1 capital adequacy ratio (N1.1 norm) added 1.0 pps over the same period and reached 10.3%, while the minimum requirement is 5%.

The bank’s operating income before provisions for H1 2015 grew by 10.2% to RUB 8.0 billion versus the same prior-year period, contributed by all its components — net interest income enhancing by 4.3% to RUB 5.0 billion, fee and commission income remaining intact at RUB 2.0 billion and trading income growing by 3.4 times to RUB 0.7 billion.

Pre-tax losses amounted to RUB 515 million comparing to profit of RUB 832 million for H1 2014 influenced by the charges to provisions, which grew to RUB 3.6 billion amid toughening credit risks, and operating costs, which expanded to RUB 4.9 billion under the pressure of accelerating inflation and the Ruble strengthening. Net loss for H1 2015 equaled to RUB 639.6 million versus net profit of RUB 1.9 billion for the similar period of 2014.

Please note that IFRS consolidated financial statements of Vozrozhdenie Bank for 6M 2015 will be published on August 25, 2015.

* Hereinafter loan and deposit portfolio figures are provided in accordance with internal reporting forms of Vozrozhdenie Bank.

Official comment on possible changes in the shareholder structure of Vozrozhdenie Bank
Vozrozhdenie Bank will publish its H1 2015 IFRS results and hold a conference call for investors on August 25