First Quarter 2008 IFRS results
1Q 2008 net income of Bank Saint Petersburg increased 172% to RUR 640 million (USD 27.2 million) compared to the 1Q
- Net income increased by 172% to RUR 640 million (USD 27.2 million) compared to 1Q 2007
- Assets increased by 9.3% to RUR 138.5 billion (USD 5.9 billion) from January 1, 2008
- Return on equity (ROE) is to 16.7% compared to 20.6% in 2007
- Cost to income ratio reduced by 2.3 percentage points to 37.9% from 40.2% for 2007
*Assets and liabilities of Bank Saint Petersburg are translated into USD at the official exchange rate quoted by
the CBR on 31 March 2008 (USD 1.00 = RUR 23.52).
Alexander Savelyev, the Chairman of the Management Board of the Bank Saint Petersburg commented on the first quarter results: “The first quarter of 2008 was successful for the Bank. In spite of unstable market environment the Bank is performing on strongly as customer accounts remain the principal source of funding.
An IPO held in November 2007 indicates that the Bank is competitive at the capital
markets. We continue to grow above the market and we expect to increase our assets by more than 60% this year. By the
end of 2008 we expect to leverage our equity with a maximum efficiency and in order to support our further development
we plan a secondary public offering (SPO) in amount of around $400m in the 4Q 2008”.
Bank Saint Petersburg continues to grow above the market using its competitive advantages in the region: expertise in corporate segment, extensive branch network and high operational efficiency. As at 1Q 2008 Bank’s assets grew by 9.3%, compared to the average asset growth rate in the Russian banking sector of 6%. The growth comes primarily from the increase in the volume of the loan portfolio and trading securities operations including repo transactions.
As a result of the client base growth, decline in loan portfolio concentration and good quality of assets and profit figures Fitch Ratings has upgraded the Bank's Long-term Issuer Default rating (IDR) from ‘B’ to ‘B+’, Outlook Stable.
Cost to income ratio remains one of the lowest in the sector and amounts to 37.9% (compared to 40.2 % for 2007). The cost growth still lags behind the income one. In 1Q 2008 operational expenses increased by 62% to RUR 742 million up from RUR 459 million for the similar period of 2007 due to the growth in the volume of the Bank’s business: 4 new outlets were opened, the number of employees grew 12% to 2,110.
The branch network presently consists of 32 offices in St. Petersburg and four offices in Moscow, Kaliningrad, Nizhny Novgorod and Priozersk. During 1Q 2008 the branch structure of the Bank was rearranged. Management system has only two levels to enhance costs efficiency and speed up the decision making process.
Return on equity (ROE) amounted 16.7% and decreased by 3.9 percentage points compared
to 2007 due to the significant increase of an average capital in the reported period compared to Y2007 which is a
result of an IPO held in November 2007.
Net income in 1Q 2008 increased 172% to RUR 640 million (USD 27.2 million) compared to the similar period of the previous year primarily due to the solid business expansion.
Net interest income increased by 74% to RUR 1,622 million (USD 69 million) compared to 1Q 2007. Net interest margin decreased to 5.24% from 5.50% for 2007 primarily due to uneven loan portfolio growth within the 1Q 2008 and expansion of the low risky repo transactions.
Net fee and commission income increased by 114% to RUR 364.1 million (USD 15.5 million) up from RUR 170.4 million in 1Q 2007 due to the growth in the number of both individual and corporate customers. The number of retail customers reached 630,000, while the number of corporate clients reached 30,000. In 1Q 2008 the number of cards issued by the Bank exceeded 500,000. As at April 1, 2008 the Bank’s card network comprised of 329 ATMs (including at every station of St. Petersburg underground) and 1,395 point-of-sale terminals.
Equity increased by 4% to RUR 15.6 billion (USD 665 million) for the first three months corresponding to 1Q 2008 net income. As at April 1, 2008 the Bank’s Tier 1 and total capital adequacy ratios are 11.4% and 14.7% respectively.
Liabilities. Customer accounts still represent the principal source of funding for the Bank, increased by 6% to RUR 94 billion for 1Q 2008 and amounted to 77% of the Bank’s liabilities. The Bank has absorbed around 16% of the retail deposits market growth in St. Petersburg in 1Q 2008. As at April 1, 2008 bonds issued and other debt securities contribute 12% to the Bank’s liabilities, while other borrowed funds and interbank loans - 6% and 5% respectively.
Loan portfolio increased by 14.6% to RUR 105.1 billion for the 1Q 2008. The corporate loan portfolio increased by 13% to RUR 94.7 billion which is 90% of the loan book. The volume of retail lending increased by 22% to RUR 10.4 billion representing 10% of the portfolio. The growth ratio of mortgage lending is 41.7%. This makes the Bank the 2nd largest mortgage lender in St. Petersburg in terms of mortgages issued in 1Q 2008 (3rd as at January 1, 2008) according to St. Petersburg Mortgage Agency.
The loan portfolio quality. As at April 1, 2008 the share of overdue loans in the Bank’s portfolio (before provisions) declined to 0.13% of total volume of loans (0.25% as of the end of 2007). The rate of provisions for loan impairment decreased to 2.66% as at April 1, 2008 as compared to 2.75% as at January 1, 2008.
1Q 2008 IFRS Financial Statements are available on the Bank’s website.