14.12.2010

Bank 9M and 3Q 2010 IFRS Results

Financial highlights for 9M 2010 and 3Q 2010*:

•    Net income for 9M 2010 increased by 740.9% compared with 9M 2009 to RUB 2.3 billion (USD 75.4 million); Net Income for 3Q 2010 increased by 50.9% compared with 2Q 2010 to RUB 1.2 billion (USD 38.4 million);

•    Net interest income for 9M 2010 increased by 22.8% compared with 9M 2009 to RUB 9.0 billion (USD 296.5 million);

•    Loan portfolio increased by 12.9% compared with January 1, 2010 to RUB 196.5 billion (USD 6.4 billion);

•    The share of overdue loans decreased to 5.8% of the loan portfolio (7.1% as at July 1, 2010);

•    3Q 2010 Return on equity amounted to 17.8%

*The RUB-nominated figures are translated into USD at the official exchange rate quoted by the CBR for October 1, 2010 (USD 1.00 = RUB 30.51).

Alexander Savelyev, Chairman of the Management Board, commented on the Bank’s 9M 2010 and 3Q 2010 results: “We are satisfied with the third quarter results. We restarted the growth with all key efficiency ratios moving closer to the target range. Moreover the third quarter was marked with the record quarterly result in the Bank’s history: RUB 1.2 billion. We believe that the worst is behind us and look positively into the future”.

As at October 1, 2010, Bank Saint Petersburg was ranked 14th in terms of retail deposits and 17th in terms of assets among the Russian banks (Interfax ranking). As at December 1, 2010, the number of cards issued by the Bank exceeded 700 thousand; the Bank’s ATM network comprised of 468 items. Today, the Bank provides services to over 1 million individuals and 35 thousand corporates. As at December 1, 2010, Internet-Bank was actively used by 76 thousand clients.

In September 2010, Bank Saint Petersburg placed a RUB 5 billion bond issue with the coupon rate of 7.5%. In November, the Bank entered into a loan agreement with the EBRD under which it attracted USD 65 million to fund the small and medium businesses of the North-West region of Russia. In October, Moody’s Investors Service changed the outlook on the Bank’s Ba3 ratings to stable from negative.

Net interest income for 9M 2010 increased by 22.8% compared with 9M 2009 amounting to RUB 9.0 billion. Quarterly net interest income remains flat for several quarters in a row: net interest income for 3Q 2010 amounted to RUB 3.0 billion. Net interest margin (NIM) amounted to 5.2% (5.2% for FY 2009). NIM for 3Q 2010 decreased to 5.1% (5.4% for 2Q 2010).

Net fee and commission income increased by 11.5% compared with 9M 2009 and amounted to RUB 1.2 billion.

Net trading income. In 9M 2010 an aggregate result from financial markets operations amounted to RUB 848.4 million (-62.2% compared with 9M 2009). The result is attributed to the gains from operations with foreign currencies in the amount of RUB 462.2 million, and gains from operations with securities in the amount of RUB 386.2 million.

Income before provisions and taxes increased by 4.0% compared with 9M 2009 and amounted to RUB 11.2 billion for 9M 2010. The Bank’s Cost-to-Income Ratio for 9M 2010 came closer to the target level of 30-35% and amounted to 28.2% (25.1% for FY 2009). Bank’s operational expenses increased to RUB 3.1 billion (+22.0% compared with 9M 2009).

Net income for 9M 2010 amounted to RUB 2.3 billion (+740.9% compared with 9M 2009). Net income for 3Q 2010 reached RUB 1.2 billion (+50.9% compared with 2Q 2010; +264.0% compared with 3Q 2009), which is a record quarterly income for the Bank. The Bank’s return on equity (ROAE) for 9M 2010 improved to 11.8% from 2.9% for FY 2009. ROAE for 3Q 2010 reached 17.8% which is close to the target level of over 20%.

During 9M 2010 the Bank’s assets increased to RUB 247.4 billion (+5.0% compared with January 1, 2010; +3.3% compared with July 1, 2010).

Liabilities. Customer accounts amounted to RUB 179.0 billion (-1.2% compared to January 1, 2010; +2.2% compared with July 1, 2010). As at October 1, 2010, 62.9% of customer accounts belonged to corporate customers and 37.1% - to individuals. During 9M 2010, the volume of retail customer accounts increased by 9.4% while the volume of corporate customer accounts decreased by 6.5%. The share of wholesale funding in liabilities remains insignificant (9.8%).

Equity and capital. As at October 1, 2010, the shareholders equity increased to RUB 26.8 billion by 5.8% compared with January 1, 2010. The Bank’s total capital increased to RUB 34.5 billion (+3.9% compared with January 1, 2010; +3.0% compared with July 1, 2010). As at October 1, 2010, the Bank’s Tier 1 and total capital adequacy ratios were 9.9% and 13.7% respectively.

As at October 1, 2010, Loan portfolio before provisions amounted to RUB 196.5 billion (+12.9% compared to January 1, 2010; +10.9% compared with July 1, 2010). Corporate loans constituted 92.8% of the loan book and amounted to RUB 182.3 billion, during 9M 2010 their volume increased by 14.3%, during 3Q 2010 - by 12.0%. Loans to retail customers amounted to RUB 14.2 billion (-3.1% compared with January 1, 2010; -1.7% compared with July 1, 2010).

Loan portfolio quality. As at October 1, 2010, the share of overdue loans in the Bank’s portfolio amounted to 5.8% of the total volume of loans (7.1% as at July 1, 2010). The share of the corporate overdue loans amounted to 5.5% of the total corporate loans (6.8% as at July 1, 2010); the share of the retail overdue loans amounted to 10.4% of the total retail loans (10.7% as at July 1, 2010).

Impaired not past due loans as at October 1, 2010 constituted 5.9% of the total volume of loans (6.9% as at July 1, 2010). The rate of provisions for loan impairment decreased to 10.3% compared with 11.1% as at July 1, 2010. Provision charge steadily declines: in 3Q 2010 it decreased to RUB 997.9 million (RUB 1.2 billion in 2Q 2010) reflecting improvements in the loan portfolio quality.

9M 2010 IFRS Financial Statements are available on the Bank’s website.