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28.05.14

Raiffeisenbank has announced its results for 1Q2014 in accordance with International Financial Reporting Standards on a consolidated basis

ZAO Raiffeisenbank results for 1Q2014 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.

INCOME STATEMENT

Profit after tax for 1Q2014 declined by 13.8% to RUB 5 438.1 million compared to RUB 6 305.2 million obtained in the same period of 2013. The main factors, which determined the decrease in profit, were the decline in trading result (among all due to positive one-off effect from the sale of securities in 1Q2013), as well as charge of provision for loan impairment.

Nevertheless, operating income before provisioning[1] continued to increase and reached RUB 13 086.5 million in the first three months of 2014 (up 4.6% compared to RUB 12 507.5 million in the same period of 2013), primarily due to a positive dynamics of net interest income before provisioning for impairment losses[2].

Net interest income before provisioning for impairment losses[3] in 1Q2014 increased by 23.1% or RUB 1 894.5 million compared to the same period of 2013 and reached RUB 10 080.8 million, mainly due to the increase in interest income from loans and advances to retail customers by 49.6% or RUB 2 225.4 million as a result of retail loan portfolio growth (+40.2% vs 1Q2013).

Net fee and commission income in 1Q2014 was RUB 2 324.4 million (up 2.9% compared to the same period of 2013). The main drivers of growth were the following components - net commissions on operations with plastic cards (+16.7% or RUB 138.4 million to RUB 965.2 million) as a result of the increase in the number of plastic cards served and insurance commission income (+27.6% or RUB 72.8 million to RUB 336.9 million). The main factors constraining the growth of the Banks net fee and commission income in 1Q2014 were the decline in commissions on documentary business and guarantees (down 34.4% or RUB 101.3 million) as well as net commissions on settlement transactions (-52.6% or RUB 78.0 million) due to the growth of  expense side -  agency fees paid because of the retail business expansion.

The trading result[4] fell by 75.9% to RUB 441.5 million in 1Q2014 compared to RUB 1 830.4 million obtained in the same period last year. Lower level of trading result in 1Q2014 was primarily attributable to a positive one-off effect in the amount of RUB 1 032.5 million from the sale of securities from the available for sale portfolio in 1Q2013. The other constraining factor was the loss from trading securities and other securities at fair value through consolidated profit or loss (RUB 560.0 million and 632.9 million, respectively) due to negative revaluation as a result of the increase in market interest rates.

Administrative and other operating expenses by the end of the first three months of 2014 reached RUB 5 503.1 million, an increase of 6.9% or RUB 357.4 million compared to 1Q2013, mainly due to the rise of staff costs (+11.8% or RUB 339.0 million to RUB 3 203.4 million) following the increase in the number of staff and higher costs on personnel trainings. Cost-to-income ratio in 1Q2014 was 42.1% compared to 46.1% as of 31.12.2013 and 41.1% as of 31.03.2013.

In the first quarter of 2014 there was a charge of provision for loan impairment in the amount of RUB 986.1 million versus the release of provision in 1Q2013 in the amount of RUB 553.9 million. This was primarily due to provision charge for the retail loan portfolio because of higher overdue amounts and the growth of retail loan portfolio.

BALANCE SHEET

The Banks assets rose 4.5% compared to the end of 2013 to RUB 743 072.6 million primarily due to the 3.1% growth in loans and advances to customers (before provisions) to RUB 445 801.6 million, as well as due from other banks, increased 2.6 times to RUB 25 703.6 million.

The Bank continues to maintain considerable liquidity cushion. Liquid assets[5] at the end of 1Q2014 were RUB 230 757.4 million remaining practically unchanged compared to RUB 231 562.0 million at the end of 2013 (down 0.3%). The share of liquid assets in total banks assets was 31.1% as of 31.03.2014, down 1.5 percentage points compared to the figure as of 31.12.2013. 

Loans and advances to customers (before provisions for impairment losses) were RUB 464 097.7 million as of 31.03.2014, up 3.2% (or RUB 14 604.8 million) compared to RUB 449 492.9 million as of 31.12.2013 resulting from loan portfolio growth in retail, small and micro, as well as middle business segments.

Retail loan portfolio increased by 4.7% in 1Q2014 to RUB 190 168.4 million resulting from a positive performance of all products in the portfolio: unsecured consumer loans (+3.9% or RUB 3 516.4 million), credit cards and overdrafts (+7.8% or RUB 938.8 million), car loans (+7.6% or RUB 2 900.3 million), and mortgage loans (+2.7% or RUB 1 121.5 million).

Loan portfolio of small and micro business rose by 6.8% compared to the end of 2013 to RUB 19 001.6 million due to the expansion of client base. Loan portfolio of middle business increased by 10.1% or RUB 1 666.2 million to RUB 18 196.2 million at the end of the first quarter 2014. Total corporate loan portfolio increased by 2.0% to RUB 254 895.5 million.

The share of loans individually determined to be impaired in the gross loan portfolio of the bank by the end of the first quarter of 2014 was 5.2% (+0.5 percentage points compared to 31.12.2013) as a result of the 14.4% increase in the loans individually determined to be impaired to RUB 24 260.1 million.

Balance sheet provisions (for loan impairment) rose by 5.9% compared to the end of 2013 to RUB 18 296.1 million as of 31.03.2014.

Customer accounts reached RUB 479 617.8 million as of 31.03.2014, up 6.0% (or RUB 27 145.0 million) compared to RUB 452 472.8 million as of 31.12.2013 due to higher current account balances of retail and corporate customers (+5.4% to RUB 113 032.0 million and +16.6% to RUB 129 887.5 million, respectively), and growing term deposits of state and public organisations (from RUB 215.7 million to RUB 21 798.4 million by the end of the first three months of 2014).

The loan-to-deposit ratio was still on a comfortable level amounting to 96.8% by the end of the first quarter of 2014, down 2.5 percentage points compared to 99.3% at the end of 2013.

Term borrowings from the parent bank increased by 7.0% or RUB 2 322.3 million compared to the end of 2013 due to currency effect and reached RUB 35 494.6 million. The share of term funding from the parent bank in the bank's total liabilities remained practically unchanged (a slight increase by 0.1 percentage point to 5.7% by the end of 1Q2014).

The Banks equity reached RUB 121 222.4 million by the end of the first quarter of 2014, up 4.7% (or RUB 5 438.1 million) compared to RUB 115 784.3 million at the end of 2013 as a result of the net profit obtained in 1Q2014.

RETURN ON EQUITY AND CAPITAL ADEQUACY

Return on equity (ROE) before tax was 22.7% as of 31.03.2014, a decrease of 0.4 percentage points compared to the figure as of 31.12.2013. Return on equity (ROE) after tax remained practically unchanged compared to the end of 2013 (a slight increase of 0.1 percentage points) and reached 18.4%.

Capital adequacy ratio according to Basel II amounted to 19.2% by the end of the first quarter of 2014 demonstrating a decrease of 0.3 percentage points compared to 19.5% as of 31.12.2013.

Capital adequacy ratio (N-1.0)[6] according to Russian standards was 13.5% as of 01.04.2014, up 0.5 percentage points compared to 13.0% as of 01.01.2014.


ZAO Raiffeisenbank
is a subsidiary of Raiffeisen Bank International AG. Raiffeisenbank ranks 11th among the Russian banks in terms of assets, based on Q1 2014 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 15 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 57,000 employees service about 14.5 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 holds around 60.7 per cent of the shares, the rest account for the 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] Including net realized result on derivatives (cross-currency interest rate swaps, interest rate swaps and foreign exchange swaps)

[3] Including net realized result on derivatives (cross-currency interest rate swaps, interest rate swaps and foreign exchange swaps)

[4] 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 realized result on derivatives (cross-currency interest rate swaps, interest rate swaps and foreign exchange swaps)), foreign exchange translation (losses, net of gains)/gains, net of 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, repurchase receivables, trading securities, other securities at fair value through consolidated profit or loss, investment securities available for sale.

[6] According to the methodology of Central Bank of Russian Federation.

 

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