OREANDA-NEWS. September 14, 2010. TransCreditBank Group today released reviewed Interim Condensed Consolidated Financial Statements under IFRS for the six-month period ended June 30, 2010.

TransCreditBank earned RUB 2.8 billion of net profit in the first six months of 2010, including RUB 1.3 billion of net profit in Q2:2010.

Key P&L items Q2:2010

Net interest income increased 19.0% from Q1:2010 and 13.3% YoY

Net fee & commission income was up 15.3% from Q1:2010 and down 39.6% YoY

Allowance for impairment dropped to RUB 1.1 billion from RUB 3.0 billion in the same quarter a year earlier

Operating income before loan loss provisions was up 8.0% from Q1:2010 and 4.5% YoY

Operating expenses grew 10.9% from Q1:2010 and 43.2% YoY.

Key Balance Sheet items H1:2010

Total assets grew 27.2% to RUB 328.8 billion in the first six months of 2010

Gross loans to customers were up 22.7% to RUB 189.9 billion from YE 2009

NPLs (>90 days overdue) were 4.2% of gross loans, down from 5.0% at YE 2009

Solid operating results

In Q2:2010 TransCreditBank produced solid operating results. Net interest income increased 13.3% YoY and 19.0% from Q1:2010 to RUB 3.6 billion. The share of net interest income in operating income rose to 65.5% from 59.5% in Q1:2010.

Net fee & commission income increased 15.3% from Q1:2010 to RUB 960 million. The decrease of net fee & commission income by 39.6% from Q2:2009 is explained by a significant one-off cancellation fee of RUB 686 million received in Q2:2009.

Provision charge for loan impairment was RUB 1.1 billion in Q2:2010 vs. RUB 3.0 billion in Q2:2009, when provisioning peaked. Decreased provisions reflect improvement in credit quality.

Operating expenses increased 10.9% from Q1:2010 and 43.2% YoY to RUB 2.6 billion as a result of the increased number of employees (by 5% since YE 2009) and 5 new bank offices opened since YE 2009. The new hires and network expansion will support the implementation of the Bank’s strategy in retail and SME businesses.

Net interest margin stood at 5.3% in H1:2010, down from 7.4% in H1:2009. The margin improved to 5.5% in Q2:2010 from 5.1% in Q1:2010, reflecting improved net interest income.

Return on average equity (ROE) significantly improved to 26.0% in H1:2010 from 11.3% in H1:2009; return on average assets (ROA) increased to 1.9% in H1:2010 from 0.8% in H1:2009.

Continued asset growth

Total assets grew 27.2% in the first six months of 2010 to RUB 328.8 billion, driven by growth of the loan portfolio, securities portfolio and cash & cash equivalents position.

Trading securities portfolio grew 120.8% from YE 2009 to RUB 52.1 billion following short-term placement of customer funds, primarily in Russian state bonds (OFZ). Equity securities in the portfolio remained virtually unchanged from YE 2009 at RUB 2.4 billion. Customer funds were also placed in corporate Eurobonds in the AFS portfolio, with matching maturities.

The Bank continued to maintain a strong liquidity position. Cash and cash equivalents of RUB 41.6 billion fully covered the Bank’s wholesale debt (RUB 31.2 billion) at the end of H1:2010. The Bank repaid its USD 348 million Eurobond issue in May 2010 and RUB 3 billion local bond in June 2010. Outstanding debt for 2010 includes put option on RUB 3 billion local bond in December 2010.

Asset and loan portfolio growth will moderate in H2:2010, according to the Bank’s financial plan. 

Corporate lending remains focus, retail lending picks up

Gross loans to customers grew 22.7% to RUB 189.9 billion in H1:2010. The Group attracted a number of new clients among private-sector companies, including large manufacturing, infrastructure construction companies, country-wide retail chains, and regional telecoms.

Retail portfolio grew by 5.1% in Q2:2010, with growth recorded for the first time since Q1:2009. Resumed retail programs in early 2010, which had been suspended during the crisis, decreasing lending rates, and seasonal demand resulted in the growth of consumer and mortgage loans to employees of Russian Railways by 4% and 2%, respectively, and of consumer loans to other customers (mainly employees of corporate clients) by 9% in Q2:2010.

Non-performing loans (>90 days overdue) were down to 4.2% of gross loans from 4.6% in Q1:2010 and 5.0% at YE 2009.  The quality of retail portfolio showed first signs of stabilization, with the total amount of retail NPLs down to RUB 2.7 billion from RUB 2.8 billion and the share of retail NPLs in the portfolio down to 4.7% from 5.1% in Q1:2010. At the same time, corporate NPLs increased to RUB 5.4 billion from RUB 5.1 billion, with the share of corporate NPLs down to 4.0% from 4.4% in Q1:2010 on the back of increased size of the portfolio.   

The share of restructured loans in the portfolio was 3.8%. Loans with extended loan maturities are considered restructured. Loans whose interest rates were lowered following recent market pressure on lending rates and loans with altered payment schedules and unaffected maturities, are not considered restructured.

Provisions provided coverage for 167% of non-performing loans, up from 156% in Q1:2010 and 150% at YE 2009.

Surge in customer funding

Customer accounts grew for the fifth consecutive quarter. Deposits and current accounts increased 57.9% from YE 2009. Accounts from state-controlled companies grew strongest (124.9%) following inflow of funds from Russian Railways and its subsidiaries, as well as other state-controlled companies and municipal authorities. Retail customer accounts increased 22.4% from YE 2009 and 8.2% in Q2:2010, driven by sales channels development and increased visibility of the Bank among retail customers.

Capital adequacy ratios weakened but under control

Shareholders’ equity grew by RUB 2.4 billion (11.8%) to RUB 22.5 billion. Total capital adequacy ratio according to Basel Accord was at 12.1% and Tier 1 capital ratio was at 7.3%, down from 14.6% and 8.4% at YE 2009, respectively. Ratios declined following the Bank’s expanded lending activities in H1:2010.

Pavel Golenkov, Senior Vice-President and CFO, says: “We project full year profits at about 15% higher than in 2009. According to the dividend policy, the Bank pays out about 10% of profits as dividends, and retains the rest. The policy allows the Bank to grow its business and at the same time maintain capital adequacy at levels, which secure its financial stability”.