Bank 1H 2010 IFRS Results
Financial highlights for 1H 2010 and 2Q 2010*:
• Net interest income increased by 32.4% to RUB 6.1 billion (USD 194.4 million) compared to 1H 2009
• Net Income amounted to RUB 1.1 billion (USD 36.1 million)
• NIM for 1H 2010 remained stable and amounted to 5.5%
• The share of overdue loans decreased to 7.1% of the loan portfolio (8.6% as at April 1, 2010)
• Provision charge in 2Q 2010 decreased to RUB 1.2 billion (RUB 2.8 billion in 1Q 2010)
*The RUB-nominated figures are translated into USD at the official exchange rate quoted by the CBR for July 1, 2010 (USD 1.00 = RUB 31.26).
Alexander Savelyev, Chairman of the Management Board, commented on the Bank’s 1H 2010 and 2Q 2010 results: “1H 2010 results generally fall in line with our previous guidance. The income is consistently solid, margins and efficiency ratios are stable even in a more competitive environment. The new factor is the positive changes within our loan portfolio as we finally see distinct signs of asset quality becoming less of a problem. Accordingly, we expect it to have much lower influence on our financials going forward as we are heading to normal healthy banking”.
As at July 1, 2010, Bank Saint Petersburg was ranked 14th in terms of retail deposits and 16th in terms of assets among the Russian banks (Interfax ranking). As at September 1, 2010, the number of cards issued by the Bank exceeded 685,000; the Bank’s card network comprised of 472 ATMs. Today, the Bank provides services for over 987,000 individuals and 34,900 corporates. As at September 1, 2010, Internet-Bank was actively used by 66,800 clients.
The most significant events of the first 8 months of the year 2010 were the following:
In April 2010 Bank Saint Petersburg placed a RUB 5 billion bond issue with the coupon rate of 8.1%. Over the course of book building overall demand totaled at RUB 18.6 billion which resulted in a dramatic oversubscription.
On April 29, 2010, the Annual General Shareholders’ Meeting of Bank Saint Petersburg approved the payment of dividends for 2009 on the ordinary and preferred shares in the amount of 11% of such shares’ nominal value and on type A preferred shares in the amount of 13.5% of their placement price in USD. Aggregated sum of dividends paid is RUB 828,954,703.
Net interest income for 1H 2010 increased by 32.4% compared with 1H 2009 amounting to RUB 6.1 billion. Interest income increased by 2% compared with 1H 2009. In 1H 2010 customer lending made up 87% of the total interest income. Interest income from trading securities operations made up 11% of the total interest income (+282% compared with 1H 2009). Interest expenses decreased by 16% compared with 1H 2009. In 1H 2010 corporate and retail term deposits contributes 79% of the total interest expense. The most considerable decrease in interest expenses is attributed to “due to banks” (-81% compared with 1H 2009) and to “bonds issued” (-41% compared with 1H 2009) reflecting the downward trend on funding costs for the Bank. Net interest margin (NIM) amounted to 5.5% (5.2% for FY 2009) remaining stable for four quarters in a row despite the market trends.
Net fee and commission income in 1H 2010 amounted to RUB 763 million and increased by 9.1% compared with 1H 2009. Net fee and commission income in 2Q 2010 amounted to RUB 426.3 million increasing by 26.4% compared with 1Q 2010 (+14.2% compared with 2Q 2009) which is in line with the seasonal trends of general business activity.
Net trading income. In 1H 2010 an aggregate result from financial markets operations amounted to RUB 730.7 million (-54.4% compared with 1H 2009). The result is attributed to the gains from operations with foreign currencies in the amount RUB 355 mln, and gains from operations with securities in the amount of RUB 375 mln.
Income before provisions and taxes increased by 7.7% compared with 1H 2009 and amounted to RUB 7.7 billion for 1H 2010. The Bank’s Cost-to-Income Ratio for the 1H 2010 remained stable at 25.4% (25.1% for FY 2009). Bank’s operational expenses increased to RUB 1.9 billion (+16.5% compared with 1H 2009). Net income for 1H 2010 amounted to RUB 1.1 billion (in 1H 2009 net loss in the amount of RUB 48.7 million).
The Bank’s return on equity for 1H 2010 improved to 8.9% from 2.9% for FY 2009.
During 1H 2010 the Bank’s assets increased to RUB 239.5 billion (+1.6% compared with January 1, 2010; +3.2% compared with 1Q 2010). The structure of the assets has not changed significantly: the share of loans and advances to customers amounted to 66% of the assets (67% as at January 1, 2010), the share of securities amounted to 11% (13% as at January 1, 2010), the share of cash and cash equivalents amounted to 12% (9% as at January 1, 2010).
Liabilities. Customer accounts amounted to RUB 175.2 billion (-3.3% compared to January 1, 2010; +1.3% compared to April 1, 2010). As at July 1, 2010, 62.4% of customer accounts belonged to corporate customers and 37.6% - to individuals. During 1H 2010, the volume of retail customer accounts increased by 8.4% while the volume of corporate customer accounts decreased by 9.2%. The share of wholesale funding in liabilities remains insignificant (7.6%).
Equity and capital. As at July 1, 2010, the shareholders equity increased to RUB 25.6 billion by 1.2% compared to January 1, 2010. The Bank’s total capital increased to RUB 33.5 billion by 0.9% compared with January 1, 2010 as the amount of retained income outweighed the amount of dividends paid. As at July 1, 2010, the Bank’s Tier 1 and total capital adequacy ratios were 10.5% and 14.9% respectively.
As at July 1, 2010, Loan portfolio (before provisions) amounted to RUB 177.2 billion (+1.8% compared to January 1, 2010, -0.5% compared to April 1, 2010). Corporate loans constituted 92% of the loan book and amounted to RUB 162.8 billion, during 1H 2010 their volume increased by 2.1%, during 2Q 2010 their volume decreased by 0.7%. Loans to retail customers amounted to RUB 14.4 billion (-1.4% compared with January 1, 2010, +1.5% compared to April 1, 2010).
Loan portfolio quality. As at July 1, 2010, the share of overdue loans in the Bank’s portfolio amounted to 7.1% of the total volume of loans (8.6% as at April 1, 2010; 7.4% as at January 1, 2010). The share of the corporate overdue loans amounted to 6.8% of the total corporate loans (8.4% as at April 1, 2010; 7.1% as at January 1, 2010); the share of the retail overdue loans amounted to 10.7% of the total retail loans (10.6% as at April 1, 2010; 10.1% as at January 1, 2010). Impaired not past due loans as at July 1, 2010 constituted 6.9% of the total volume of loans (6.3% as at April 1, 2010; 7.1% as at January 1, 2010). The rate of provisions for loan impairment increased to 11.1% compared with 10.4% as at April 1, 2010 and 9.1% as at January 1, 2010. Provision charge in 2Q 2010 decreased to RUB 1.2 billion (RUB 2.8 billion in 1Q 2010). The positive signs within the loan portfolio mark a turnaround point for the general trend of the last couple of years and reflect the Bank’s efforts in bad loans recovery and collateral management process.
1H 2010 IFRS Financial Statements are available on the Bank’s website.