OREANDA-NEWS. September 25, 2009.
Overview of Financial Results
LOCKO-Bank delivered solid results in 1H2009 despite the challenging operating environment produced by the turbulence on financial markets in the second half of 2008. The Bank reported net income of RUR 337.3 million up 31% versus RUR 257 million as at 1H2008. Income before taxes amounted to RUR 444.8 million up 41% versus RUR 315.2 million as at 1H2008. Operating income demonstrated 65.5% growth up to RUR 1.7 billion versus RUR1 billion for the same period last year with significant gains being generated on financial instruments at fair value (RUR 638million) and net FX operations (RUR 205.7 million), reported the press-centre of LOCKO-Bank.

Operating expenses less loan loss provisions (LLP) went down 6% to RUR 587.6 million in 1H2009 primarily as a result of LOCKO’s optimization efforts. The Bank managed to minimize expenses on employee compensation and occupancy. In the meantime, LOCKO-Bank considerably increased net LLPs from RUR 374.8 million as at 1H2008 to RUR 1.35 billion as at 1H2009 reflecting the continued weakness in the economy.

Total assets declined by a moderate 3% to RUR 31.9 billion compared with 2008 results. Loan portfolio also went down by 10% to RUR 19 billion during 1H2009, keeping its share in total assets at 60%. Current accounts and deposits from customers went up 4% to RUR 12.9 billion as at 1H2009.

In current market conditions LOCKO-Bank adheres to maintain a comfortable level of liquidity cushion with a 19.7% share (RUR 6.3 billion) of highly liquid assets and another 18.2% of assets in carefully managed trading portfolio (RUR 5.8 billion, out of which RUR 3.9 billion were eligible for refinancing with CBR under REPO operations).
 
Key Performance Indicators
During 1H2009 LOCKO-Bank improved almost all major performance indicators. Hence, net interest margin evidenced a decrease from 6.8% as at the year end to 5.4% as at 1H2009 due to reduction in the Bank’s total loan portfolio. However, with sufficient reduction of the cost to income ratio from 53% to 34% in the same period the Bank managed to improve its profitability with ROAE growing from 9.9% to 14.0% and ROAA from 1.3% to 2.1%. Capital adequacy ratio further rose from 20.4% to 21.8% during the first half of 2009.

Share of non-performing loans (NPLs) went up from 3.7% to 6.6% during 1H2009 reflecting on the general market tendency. Nevertheless, NPLs remain 100 % covered by the existing LLP.