Profit after tax amounted to RUB 9.8 billion in the end of the first half of 2012, an increase of 44.5% (or RUB 3.0 billion) compared with the result in the first half of 2011 (RUB 6.8 billion).
Operating income before provisioning for impairment losses amounted to RUB 22.3 billion in the first half of 2012, an increase of 22.6% (or RUB 4.1 billion) compared to the RUB 18.2 billion received in the first half of 2011, mainly due to the growth of net interest income2 and net fee and commission income.
Net interest income before deduction of provisions for loan impairment3 equaled to RUB 14.7 billion in the first half of 2012, the increase of 19.7% (or RUB 2.4 billion) comparing to the figure in the first half of 2011. Main drivers of growth were the following factors: the increase of net interest income on loans and advances to customers (+24.7% or RUB 3.4 billion) due to increase of loan portfolio in comparison with the portfolio in 1H2011; growth of net interest income on derivatives as a result of widening of the spread between ruble and USD market rates; as well as due to the decrease of interest expense on term borrowings from Parent funding, which resulted from contractual repayments of long-term loans from the Parent Bank, and the decrease of expense on debt securities in issue because of partial redemption of bonds in the course of put option execution in December 2011.
Net fee and commission income increased by 15.7% (or RUB 0.6 billion) to RUB 4.2 billion in the first half of 2012 compared to RUB 3.6 billion in the first half of 2011. The dynamics of the net fee and commission income determined mainly by the following factors: an increase in the net commissions on operations with plastic cards by 31.1% (or RUB 0.3 billion) resulting from the increased number of issued cards, an increase in insurance commission income by 22.0% (or RUB 0.1 billion), an increase in net credit facility fee by 33.2% (or RUB 0.1 billion).
Income from trading operations rose by 38.2% (RUB +0.8 billion) up to RUB 2.9 billion comparing to the 1H2011, mainly due to foreign exchange translation gains less losses (an increase of 45.8% or RUB 0.8 billion up to RUB 2.4 billion).
Administrative and other operating expenses at end of the first half of 2012 amounted to RUB 9.7 billion, an increase of 5.1% (+ RUB 0.5 billion) compared to the first half of 2011. According to the 1H2012 results, cost-to-income ratio decreased to 43.3% from 55.3% as of 31.12.2011 and 51.3% as of 30.06.2011.
The return on equity (ROE) before tax increased by 6.1 percentage points to 26.0% compared to the first half of 2011. The return on equity (ROE) after tax increased by 4.5 percentage points up to 20.0% in the first half of 2012 compared to 15.5% in the first half of 2011 as a result of the increased profit for the period.
The Bank continues to maintain a significant liquidity buffer. The share of liquid assets5 was 41.3% of the total assets of the bank as of June 30, 2012 compared to 34.4% as of December 31, 2011 due to an increase in cash and cash equivalents (RUB 222.8 billion as of June 30, 2012 compared to RUB 139.5 billion at the end of 2011).
The Bank’s securities portfolio amounted to RUB 45.9 billion as of June 30, 2012, a decrease of 29.6% from the figure as of the end of 2011. The securities portfolio fell by RUB 19.3 billion as a result of the sale of corporate bonds. The share of less risky instruments in the portfolio increased: the OFZ as of 30.06.2012 totaled 18.9% of the total value of the securities portfolio, compared to 7.1% at the end of 2011.
Loans and advances to customers before deduction of provision for loan impairment totaled RUB 389.8 billion at the end of 1H2012, showing a moderate growth of 3.3% (or RUB 12.4 billion) from the end of 2011. SME loans segment was the most dynamic, showing the increase by 15.4% (or RUB 1.2 billion) during the six months of 2012. Retail loans portfolio grew by 8.9% (+ RUB 9.3 billion) up to RUB 113.1 billion mainly due to unsecured credit products (consumer loans and credit cards).
Quality of loan portfolio continued to improve. The share of non-performing loans6 amounted to 5.7% as of 30.06.2012, a decrease of 0.1 percent points comparing to the share as of 31.12.2011.
Charge of provision for loan impairment in the first half of 2012 amounted to RUB 0.3 billion, the same as the charge during 1H2011. The increase in provisions for loan impairment resulted from the overall growth of the loan portfolio, as well as from the charge of additional provisions for loan impairment in the first quarter of 2012 in amount of RUB 521.2 million. At the same time, there was an improvement in the quality of both the existing loan portfolio and newly issued loans, which, in turn, led to the release of provisions in amount of RUB 251.3 million, partially offsetting the provisioning charge.
Provisions for loan impairment remained mostly unchanged during first two quarters of 2012, slightly decreasing by 1.4% in comparison with the figure as of the end of 2011. Coverage ratio of impaired loans is still conservative (98.7% as of 30 June 2012).
Customer accounts as of June 30, 2012 amounted to RUB 443.7 billion, an increase of 11.1% (or RUB 44.2 billion) during the first half of 2012 (comparing to RUB 399.6 billion as of 31 December 2011), mainly due to the growth of current/settlement accounts of legal entities (by 46.6% up to RUB 116.1 billion). The above mentioned dynamics of current/settlement accounts of legal entities took place together with the decrease in the size of the term deposits of legal entities (7% less than the figure at the end of 2011), the situation, which is explained by the process of replacing more expensive term deposits with the less expensive for the Bank current accounts.
Term borrowings from other financial institutions increased by 143.4% (+RUB 5.5 billion) to RUB 9.4 billion, from RUR 3.9 billion as of the end of 2011. In June 2012, the Bank raised USD 175 million in three tranches with a maturity of 5 to 7 years under program of the diversified payment rights securitization. This program provides the further diversification of funding base and allows raising funds for longer terms and at lower interest rates compared to unsecured borrowings.
Bank’s equity in the first half of 2012 increased by 3.6% (or RUB 3.4 billion) to RUB 99.2 billion, primarily due to the net profit received by the Bank. In Q2 2012, the Bank paid dividends to shareholders in amount of RUB 6.6 billion, which explains the slight reduction in equity by 1.1% from the end of Q1 2012.
The capital adequacy ratio (H-1) according to CBR requirements equaled to 13.3% as of 01.07.2012, a decrease of 0.3 percentage points from 13.6% as of 01.01.2012. The decrease was due to the reduction of the Bank’s equity in accordance with the changed methodology of the Central Bank of the Russian Federation, which is related to the inclusion of the revaluation of derivative financial instruments in the calculation of equity (from 1 July 2012). The revaluation of hedging instruments will balance the foreign currency revaluation result, which until July 1, 2012 could significantly affect the bank’s equity both in a positive and a negative way, depending on the movement of the ruble exchange rate.
The Financial Market Authority (FMA) decided to approve the right to use the Foundation IRB-approach under Basel II7 in ZAO Raiffeisenbank’s non-retail portfolio on a consolidated basis. The IRB approach has been applied since 1 June 2012. In order to use the IRB principles, the Bank must demonstrate to the regulator, which is authorized to check compliance with Basel II, a high level of efficiency and reliability of the credit risk management processes, collateral accounting, asset segmentation, applied rating models, high quality data and IT-systems. The IRB-approach has a positive effect on the capital adequacy according to Basel II at the local level and at the level of the RZB Group. The approval of the Austrian regulator applies solely to reporting on a consolidated basis (as part of Raiffeisen Bank International AG), and does not apply to the requirements for ZAO Raiffeisenbank determined by the Central Bank and the laws of the Russian Federation.
In June 2012, Moody’s affirmed the long-term credit rating of ZAO Raiffeisenbank at Baa3 with a stable outlook. The baseline credit assessment (BSA, without the support of the Parent bank) was raised to investment grade (from ba1 to baa3) for the first time in the history of the Bank.
In July 2012, Fitch Ratings also affirmed the long-term credit rating (issuer default rating, IDR) of ZAO Raiffeisenbank at BBB+ with a stable outlook. The viability rating (VR) of ZAO Raiffeisenbank was upgraded from bb+ to the investment grade bbb-.
The bank remains one of the leading investment banks in the debt capital market. In the first half of 2012, the Bank was on the 4th place among the arrangers of bond placements in the corporate sector, having arranged 17 issues for 11 issuers in total amount of RUB 42 947.0 million, and get the third place in the ranking of underwriters with 17 issues for 11 issuers in total amount of RUB 41 451.0 million8. Some of these issues were significant for the Russian market. For example, for the first time in the history of Russian market Raiffeisenbank organized the placement of a
The results of ZAO Raiffeisenbank in the 1st half of 2012 are provided under International Financial Reporting Standards (IFRS) and may differ from the results of the «Russia» segment in the financial statements of Raiffeisen Bank International as a result of the difference arising from consolidation.
ZAO Raiffeisenbank is a subsidiary of Raiffeisen Bank International AG. Raiffeisenbank ranks 9th among the Russian banks in terms of assets, based on H1 2012 results (Interfax-CEA). According to the same Interfax-CEA data, ZAO Raiffeisenbank ranked 5th in terms of liabilities of individuals and 10th with regard to consumer lending.
Raiffeisen Bank International AG (RBI) regards both Austria, where it is a leading corporate and investment bank, and Central and Eastern Europe (CEE) as its home market. In CEE, RBI operates an extensive network of subsidiary banks, leasing companies and a range of other specialised financial service providers in 17 markets. RBI is the only Austrian bank with a presence in both the world’s financial centres and in Asia, the group’s further geographical area of focus. In total, around 61,300 employees service about 14.6 million customers through around 3,100 business outlets, the great majority of which are located in CEE (these figures include Polbank). Raiffeisen Bank International is a fully-consolidated subsidiary of Raiffeisen Zentralbank Oesterreich AG (RZB). RZB indirectly owns around 78.5 per cent of the common stock, the remainder is in free float. RBI’s shares are listed on the Vienna Stock Exchange. RZB is the central institution of the Austrian Raiffeisen Banking Group, the country’s largest banking group, and serves as the group head office of the entire RZB Group, including RBI.
1 Calculated by subtracting from «Operating income» the following items: «Provisions for loan impairment,» «Provisions for credit related commitments,» «Provisions for investment securities held to maturity».
2 Includes net interest income on derivatives
3 Includes net interest income on derivatives
4 Income from trading operations includes: losses net of gains from trading securities, losses net of gains from other securities at fair value through profit or loss, gains less losses from redemption of investment securities available for sale, gains less losses from trading in foreign currencies, realized gains less losses from derivative financial instruments (excluding net interest income on derivatives), unrealized losses net of gains from derivative financial instruments, foreign exchange translation gains less losses, ineffectiveness from the hedge accounting.
5 Liquid assets are calculated as the sum of the following items: cash and cash equivalents, due from other banks, accounts receivable repurchase — trading securities, other securities at fair value through profit or loss, investment securities available for sale.
6 Share of non-performing loans for «Russia» segment according to Raiffeisen Bank International 2Q2012 IFRS report
7 The Internal Ratings Based Approach is a method for estimating capital requirements, according to which the credit institution uses ratings and risk indicators which it calculates by itself.
8 According to Cbonds.ru