OREANDA-NEWS. May 04, 2010. In the reporting period Alfa-Banking Group recorded a reduction of its total assets of 20.0% from USD 27.1 billion at the end of 2008 to USD 21.6 billion reflecting the results of the difficult economic environment of the past year, reported the press-centre of Alfa-Bank.

At the same time, total equity increased by 25.6% to USD 2.7 billion (2008 — USD 2.2 billion), following a capital increase of USD 320 million in June 2009 and good organic profit generation during the year. Total comprehensive income increased significantly from USD 42 million at the end of 2008 to USD 216 million at the end of 2009 mostly due to strong results in the investment banking business, which were partially offset by the effects of lower total net interest income resulting from a reduced credit portfolio, combined with Alfa-Bank's conservative provisioning policy.

The corporate loan portfolio at the end of 2009 amounted to USD 12.9 billion (2009: USD 16.5 billion), while loans to retail clients accounted for USD 2.1 billion (2008: USD 2.7 billion). In the same period, provision for doubtful debts grew to 10.1% of the total loan book from 6.2% as at year-end 2008. With effect from the fourth quarter 2009, Alfa-Banking Group's loan portfolio returned to growth, fuelled by a number of large new loans to highly rated customers.

In the funding structure of the Alfa-Banking Group, customer accounts grew 8.8% from USD 12.6 billion at the end of 2008 to USD 13.7 billion at the end of 2009, allowing for the bank to re-pay all of the short term non-collateralised funding support received from the Central Bank of Russia. Total funding received from the Central Bank of Russia decreased from USD 5.0 billion at the end of 2008 to USD 0.3 billion at the end of 2009.

In January 2009 Alfa-Banking Group was the first private bank to receive an unsecured subordinated loan from Vnesheconombank in the amount of RUB 10.2 billion (approximately USD 300 million) and in October 2009 additional subordinated loans were granted in the total amount of RUB 29.4 billion (approximately USD 1 billion), which, together with a capital injection by shareholders in June 2009 in the amount of USD 320 million, increased Alfa-Banking Group's total capital adequacy ratio to 20.0% at the end of 2009 as compared to 9.2% at the end of 2008.

Despite turbulent market conditions Alfa-Banking Group remains the top Russian private bank and has successfully overcome the financial crisis, paying careful attention to its liquidity, credit, currency and capitalization risks. Alfa-Banking Group maintains a significant liquidity buffer, has access to various additional liquidity instruments provided by state institutions and possesses a portfolio of highly liquid bonds available for sale or repo.

The Alfa-Banking Group was one of the first Russian banks to raise funding on the international capital markets — in March 2010 it placed USD 600 million in Medium Term Notes maturing in 2015 and bearing a fixed interest rate of 8% per annum. In 2009 Alfa-Banking Group repaid two syndicated loans totaling USD 705 million, Medium Term Notes in the amount of USD 400 million as well as all of its Euro-Commercial Paper in the amount of USD 219 million. Currently Alfa-Banking Group has approximately USD 389 million of foreign borrowings maturing by year-end with another USD 208 million maturing in 2011. Repayment of these liabilities is expected to be financed from organic cash flows.

Significant internal achievements in 2009 include integration of the corporate and investment businesses into a single business division in order to improve efficiency and to offer customers a full range of corporate and investment products. In 2009 the rebranding of Severnaya Kazna Bank's branches and integration of banking products and clients with Alfa-Banking Group was completed. Current strategic priorities include asset quality improvement, effective restructuring and collection of impaired loans, conservative increase of the size of the loan portfolio taking into account borrowers' quality as well as increasing profitability by diversification of sources of income with particular focus on commission income and new products introduction.

In 2009 Alfa-Banking Group proved once again its leading position in the banking sector of Russia by winning numerous awards — among which are Best Bank in Russia in 2009 by Euromoney, best bank in the "Customer Experience Index" research by PricewaterhouseCoopers and Senteo and Russian Private Bank of the Year 2009 by Spear's magazine.

By April 1, 2009 Alfa-Banking Group served over 40 000 active corporate customers and 4.1 million retail clients, while the branch network extended to 326 offices across Russia and abroad.
In February 2009, Moody's Rating Services confirmed Alfa-Banking Group's credit rating at Ba1, outlook Negative. In September 2009 Standard & Poor's downgraded the credit rating by one notch to B+ citing deteriorating economic conditions and asset quality in the Russian banking sector, while the outlook was changed to Stable from Negative. Alfa-Bank's survivability assessment by Standard & Poor's was assigned at BB+.

Alfa-Banking Group's IFRS figures have been audited by PricewaterhouseCoopers.