ZAO Raiffeisenbank results for first 6 months of 2013 are provided in accordance with International Financial Reporting Standards (IFRS) and may differ from the “Russia” segment data in Raiffeisen Bank International financial report as a result of the difference arising from consolidation.
Profit after tax in the first half of 2013 increased by 13.5% to RUB 11 075.6 million compared to RUB 9 757.4 million received in the same period of 2012. Thus, in the first six months of 2013 the share of Retail banking segment in the total segment result before tax increased to 32.9 % compared to 30.1% in the same period of 2012.
Operating income before provisioning increased by 10.8 % to RUB 24 717.0 million in the first six months of 2013 compared to RUB 22 305.3 million in the first half of 2012.
The key factor of profit after tax growth was a positive trend in net interest income before provisioning for impairment losses5 and net fee and commission income.
Net interest income before provisioning for impairment losses6 in the first half of 2013 increased by 17.2% or RUB 2 531.8 million to RUB 17 268.5 million, mainly due to the increase in interest income on loans and advances to retail customers (by 29.7% or RUB 2 251.5 million) due to the growth in retail loan portfolio.
Net fee and commission income increased by 19.6% (or RUB 825.7 million) to RUB 5 038.5 million in the first half of 2013 compared to RUB 4 212.8 million obtained in the same period of 2012. The main drivers of growth were net commissions on operations with plastic cards (+16.7%) as a result of the increase in number of plastic cards served, as well as agent insurance fee within partnership programmes.
The trading result7 in the first six month of 2013 decreased by 27.9% (or RUB 799.4 million) to RUB 2 065.8 million compared to RUB 2 865.2 million, received in first six months of 2012, thereby exerting a restraining influence on the growth rate of the operating income of the Bank. The negative dynamics of the trading result is associated with reduced sum of two items - unrealised losses net of gains from derivative financial instruments and foreign exchange translation gains less losses.
Administrative and other operating expenses increased by 13.3% to RUB 10 949.3 million compared to the figure in the same period of 2012, mainly due to the increase in staff costs (+15.4% or RUB 784.5 million to RUB 5 865.6 million), as well as advertising and marketing expenses (+106.3% or RUB 215.6 million to RUB 418.4 million) as a result of the advertising campaign for the retail segment products. Thus, the cost-to-income ratio slightly increased: the growth by 1.0 percentage point to 44.3% at first six months of 2013 compared to the figure for the same period of 2012.
In the first half of 2013 the bank's profitability ratios showed a slight increase in comparison with the figures as of 30.06.2012. Thus, the return on equity after tax (ROE after tax) increased by 0.7 percentage points to 20.7% as of 30.06.2013. Return on equity before tax (ROE before tax) increased by 0.2 percentage points to 26.2% as of 30.06.2013.
The bank's assets rose by 9.8% compared to the end of 2012 and amounted to RUB 699 791.0 million. Positive dynamics is mainly explained by an increase in loans and advances to customers (net of provisions) by 9.4% to RUB 403 004.4 million compared to the figure as of 31.12.2012, as well as an increase in liquid assets8 (+11.8% to RUB 247 657.0 million).
Liquid assets of the bank showed a positive dynamics mainly due to the increase in cash and cash equivalents by 8.9% to RUB 168 122.3 million resulting from the increase of correspondent accounts and overnight placements with other banks outside Russia by 157.4% and the growth of liquid securities9 (+27.2% to RUB 63 753.1 million). At the first half-year end of 2013 the share of liquid assets in total Bank’s assets was 35.4%, demonstrating an increase by 0.6 percentage points compared to 34.8% as of 31.12.2012.
The securities portfolio as of 30.06.2013 amounted to RUB 64 767.1 million, an increase by 27.9% or RUB 14 141.7 million as compared to the end of 2012 due to the increased amounts of corporate bonds and Eurobonds in the Bank's securities portfolio.
Loan portfolio (before deduction of provisions for loan impairment) increased by 8.7% compared to the end of 2012 and amounted to RUB 423 071.0 million as of 30.06.2013, mainly due to the growth of retail loan portfolio (+24.8% to RUB 158 362.6 million) and loan portfolio of small and micro business (+19.0% to RUB 14 813.0 million).
Over a period of six months of 2013 there was a positive dynamics of all products in the retail loan portfolio. The greatest growth of the portfolio (in terms of volumes) as compared to the end of 2012 was observed on unsecured consumer loans (+42.6% or RUB 24 261.3 million up to RUB 81 148.9 million) and mortgage loans (+9.9% or RUB 3 385.5 million to RUB 37 418.8 million). In comparison with the figures for the end of 2012, car loans demonstrated the increase by 6.1% or RUB 1 745.7 million, while credit cards and overdrafts added 26.7% or RUB 2 034.2 million.
The corporate loan portfolio demonstratedalmostno change and totalled to RUB 249 833.5 million (an increase by 0.1% compared to the end of 2012) as a result of decrease in market demand of borrowers.
The quality of the loan portfolio improved in the first half of 2013. The share of loans individually determined to be impaired decreased to 4.8% at the end of the second quarter of 2013 (reduction by 0.5 percentage points compared to the end of first quarter of 2013 and by 0.7 percentage points compared to the end of 2012). The volume of loans individually determined to be impaired decreased by 4.0% compared to the end of 2012 from RUB 21 231.9 million to RUB 20 387.5 million.
In the first half of 2013 there was the charge of provision for loan impairment on retail loans in the amount of RUB 534.8 million due to the growth in the retail loan portfolio with its high quality maintained. Thus, this charge was compensated by improved quality of the corporate loan portfolio, including the repayment of problem loans. As a result, during six-month period of 2013, there was a total release of provision for loan impairment, which amounted to RUB 168.1 million in comparison with the charge in amount of RUB 269.9 million in the same period of 2012.
Balance sheet provisions for loan impairment decreased by 3.9% to RUB 20 066.6 million in comparison with RUB 20 882.0 million as of 31.12.2012, mainly due to the release of provision for loan impairment and amounts written off during the period as uncollectible.
Customer accounts increased by 15.6% or RUB 62 382.7 million compared to the end of 2012 and amounted to RUB 462 146.7 million due to the growth of term deposits of state and public organizations (+RUB 34 546.2 million) and individuals (+13.3% or RUB 17 918.4 million).
Current accounts showed an increase compared to the end of 2012 in all segments (current/settlement accounts of legal entities: +20.9%, current/demand accounts of individuals: +8.3%, current/settlement accounts of state and public organizations: +18.5%). In the segment of legal entities the process of replacement of expensive term deposits with cheaper current/settlement accounts continued. Thus, term deposits of legal entities decreased by 25.3% to RUB 54 033.9 million compared to the end of 2012, while current/settlement accounts of legal entities increased by 20.9% to RUB 115 584.2 million.
Customer accounts still remain the foundation of the bank’s resource base. Their share in total Bank’s liabilities in the first half-year end of 2013 increased to 77.9% compared to 75.5% at the end of 2012. Due to the growth in customer accounts, as well as a result of contractual repayments, the share of term borrowings from the Parent bank declined from 7.7% (as of 31.12.2012) to 6.6% (as of 30.06.2013).
Loan-to-deposit ratio as of the first half-year end of 2013 was 91.5%, which is 5.8 percentage points down compared to 97.3% as of the end of 2012 due to the growth rates of customer accounts, exceeding the growth rates of loan portfolio.
The bank continues to diversify its funding base. In June 2013 Raiffeisenbank closed the debut securitization of mortgage portfolio in amount of RUB 5 billion. Moody's Investor Services assigned the rating A3 to the bonds of class A. This is the highest rating among all mortgage-backed securities previously issued on the Russian market with institutions without state participation as originators. The key factors that made it possible to achieve such rating level are the high quality of mortgage loan portfolio and a stable structure of the deal.
The bank's equity amounted to RUB 106 468.9 million as of 30.06.2013, a decrease by 0.9% compared to the end of 2012. Such dynamics occurred as a result of dividend payment in second quarter of 2013 in amount of EUR 263 166 985.98 (at the exchange rate of 43.0409 roubles per 1 euro) for 2012 year.
The capital adequacy ratio (calculated in accordance with the Central Bank of the Russian Federation, H-1) as of 01.07.2013 amounted to 11.8%, a decrease by 1.5 percentage points compared to 13.3% as of 01.01.2013.
Also due to the payment of dividends, total capital adequacy ratio according to Basel II decreased by 1.7 percentage points to 17.6% as of 30.06.2013. As of 30.06.2013 the share of Tier-1 capital is 98.2% of Bank’s total capital (according to Basel II).
ZAO Raiffeisenbank is a subsidiary of Raiffeisen Bank International AG. Raiffeisenbank ranks 11th among the Russian banks in terms of assets, based on H1 2013 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, more than 59,000 employees serve some 14.2 million customers through more than 3,000 business outlets, the great majority of which are located in CEE. 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”.
4 In accordance with the methodology of the Central Bank of the Russian Federation.
5 Including net interest income from derivative financial instruments.
6 Including net interest income from derivative financial instruments.
7 Trading result includes: losses net of gains from trading securities, gains less losses from other securities at fair value through consolidated profit or loss, gains less losses/(losses, net of gains) from redemption of investment securities available for sale, gains less losses from trading in foreign currencies, unrealized gains less losses/(losses, net of gains) from derivative financial instruments, realized gains less losses from derivative financial instruments (excluding net interest income from derivative financial instruments), foreign exchange translation (losses, net of gains)/gains, net of losses, ineffectiveness from the hedge accounting.
8 Liquid assets are calculated as the sum of the following items: cash and cash equivalents; due from other banks, repurchase receivables, trading securities, other securities at fair value through consolidated profit or loss, investment securities available for sale.
9 Liquid securities include repurchase receivables, trading securities, other securities at fair value through consolidated profit or loss, investment securities available for sale.