OREANDA-NEWS. August 09, 2007. We are pleased to report continuing strong business and financial results for the first half of 2007. Under International Financial Reporting Standards (IFRS) our profit after tax was 674 million rubles or $26,1 million, almost twice the profit of the first half of 2006, reported the press-centre of Vozrozhdenie.

Our Return on Equity (ROE) was 20,1%, above the average for last year at 19,1%, despite the large increase in equity resulting from our 20th share issue which was registered on May 23. The Bank has profitably employed the funds raised primarily in expansion of loans to small and medium size businesses.

Business volumes continue to grow strongly with balanced growth coming from both retail and corporate sectors. Retail loan volumes are double the same time last year. Mortgages make up almost half (49%) of our retail portfolio and are the most rapidly growing part of our retail lending. Credit quality has shown no deterioration in the first half of this year. We continue to provide very conservatively for possible losses, with provisions at twice the level of loans past due.

During the second quarter the bank completed its 20th additional issue of ordinary shares, raising $177 million in an issue which was widely subscribed. Preemptive rights were exercised by both domestic and international investors. As a result of the issue roughly 50% of the bank’s shares are considered ‘free float’ and are traded freely on the Russian stock exchanges. A small portion, 2,3%, of the Bank’s shares trade on German exchanges as ADRs.

The new share issue was registered by the Central Bank of Russia on May 23 at which time we received use of these funds. Therefore we have weighted the Return on Equity and earnings per share calculations to give proper consideration to the increased equity and number of shares during the quarter. Return on Equity at 20,1% on an adjusted weighted basis, slightly exceeded the bank’s long term target of 20%. Market capitalization of the bank reached $1,5 billion.

 “The strength of our capital base has helped us provide new loans to both existing and new borrowing clients. This assists our customers in expanding their businesses and increases employment and the general level of economic activity. I am very pleased with the solid relationships we have with our customers which is reflected in a very low level of potential problem loans,” said Dmitry Orlov, Chairman of the Management Board of Vozrozhdenie.

The bank's full IFRS reports are available at: www.vbank.ru/en