Vnesheconombank published consolidated financial statements of the VEB Group for Q1 2016 as prepared in compliance with IFRS

The VEB Group’s key performance indicators:

• In Q1 2016, the VEB Group’s equity increased by RUB 30.7 billion (6%) to reach RUB 511.5 billion as at 31.03.2016. The upward trend is primarily attributable to a capital contribution by the state in the amount of RUB 73.8 billion to partially compensate for the losses incurred in 2016 in discharging obligations under foreign loans raised in capital markets. This came as the first tranche of the RUB 150 billion designated for VEB’s support in 2016. The subsidy received by VEB from the federal budget in the amount mentioned above caused the equity to increase to RUB 519.4 billion, with the capital adequacy ratio reaching 12.1%.
• Net interest income increased by 35% to RUB 25.7 billion as compared to the same period of the previous yearbillion. The increase is accounted for by higher growth rates of net interest income and a reduction in funding costs.
• In Q1 2016, the VEB Group recognized a RUB 58.3 billion loss caused by provisioning. The negative impact was mitigated by the net gain recognition of the governmentgrant in the amount of RUB 135.9 billion, as part of the state support measures. As Nikolay Tsekhomsky, First Deputy Chairman of Vnesheconombank – Member of the Board put it “the funding extended by the State was another measure designed to promote transformation efforts made by the Bank’s management to boost the operational efficiency”.
• When auditing the VEB Group’s assets, the Bank took a conservative approach to the provisioning policy. Thus, provisions for impairment of assets increased to RUB 176.3 billion. The provisions growth affected both the net loan portfolio of the Group, which decreased by 13.4% against the beginning of the year, and the financial results of the Group for Q1 2016.
• The VEB Group’s assets decreased by RUB 433.4 billion (-9.9%) to RUB 3.949 trillion. It was mainly caused by a RUB 344.1 billion (-13.3%) decrease in the customer loan portfolio to RUB 2.236 trillion. The total loan portfolio share in the Group’s assets decreased from 59% to 57% as compared to early 2016. The trend is attributed to a significant decline in the currency rates against ruble, as well as provisioning for impairment of loans.
• Total liabilities went down by RUB 464.1 billion to RUB 3.4 trillion due to a decline in the amounts due to credit institutions and debt securities issued. The total amount of debt securities issued and due to banks decreased by RUB 275 billion. Such a decrease was caused by a timely repayment of the maturing debt and the already mentioned growth of the ruble against US dollar and euro, which led to a decline in book value of the foreign currency denominated liabilities.