OREANDA-NEWS. September 17, 2010. Alfa Banking Group, which includes Alfa-Bank and its subsidiaries, reported a USD 296 million net profit according to its IFRS financial results for the first half of 2010, reported the press-centre of Alfa-Bank.

During the first six months of 2010 Alfa Banking Group’s total assets increased from USD 21.6 billion at the end of 2009, up 4.3% to USD 22.6 billion as a result of macroeconomic recovery and the ability of Alfa-Bank to attract new customers both in corporate and retail segments. The Alfa Banking Group’s customer accounts decreased by 5.1% to USD 13.0 billion (2009 — USD 13.7 billion), with a 25% decrease in Amsterdam Trade Bank’s (ATB) customer accounts being offset by a moderate increase in Alfa-Bank’s customer accounts. Total equity increased by 6.9% to USD 2.9 billion (2008 — USD 2.7 billion) due to organic income generation.

The Alfa Banking Group’s gross loan portfolio increased by 1.2% from USD 15.0 billion at 31 December 2009 to USD 15.1 billion at 30 June 2010 while Alfa-Bank’s loan portfolio growth from USD 13.6 billion to USD 14.1 billion was partially offset by a 15% reduction in ATB’s loan portfolio.

The rate of provisioning as a percentage of gross loan portfolio decreased by 0.6% resulting from significantly improved loan portfolio quality. The slight decrease is in line with Alfa Banking Group’s conservative provisioning policy. Provisions decreased to USD 1 441 million (9.5% of loan portfolio) at 30 June 2010, down from USD 1 504 million (10.1% of loan portfolio) at 31 December 2009.

The proportion of overdue loans (i.e. loans with a delay of one day or more in payment of interest or principal) within the Alfa Banking Group’s loan portfolio as at 30 June 2010 decreased as compared to 31 December 2009 as a result of significant part of the problem loans being repaid or effectively restructured during the first six months of 2010. As at 30 June 2010, 12.1% of the Alfa Banking Group’s total gross loans and advances to customers were overdue (USD 1 826 million of total gross loans and advances to customers of USD 15 136 million), as compared to 21.2% of the Alfa Banking Group’s total gross loans and advances to customers as at 31 December 2009 (USD 3 167 million of total gross loans and advances to customers of USD 14 953 million).

Net margin from lending operations increased by 12.1% to USD 640 million (1H 2009 — USD 571 million) mainly as a result of significantly lower interest expenses, primarily interest paid on amounts due to other banks. Profit before tax and provisions increased by 41.6% to USD 602 million (1H 2009 — USD 425 million), with cost-to-income ratio at 40.4% for the period. Net profit attributable to equity holders increased to USD 295 million primarily as a result of higher net interest and commission income as well as a 57.5% decrease of loan loss provisions charge from USD 395 million to USD 168 million.

Alfa Banking Group has paid careful attention to the management of its liquidity and capitalization risks although they did not represent a serious threat in the first half of 2010. At 30 June 2010, Alfa Banking Group held approximately 18% of its total assets in cash and short-term interbank instruments. Furthermore, Alfa-Bank has access to various additional liquidity sources provided by the Central Bank of Russia, such as secured borrowing backed by customer loans. The strong capitalization of the Alfa Banking Group is supported by a 22.1% capital adequacy ratio according to Basel I as of 30 June 2010.

In March 2010 Alfa Banking Group placed USD 600 million in Medium Term Notes maturing in 2015 and bearing a fixed interest rate of 8% per annum. Since 2008, a large proportion of previously issued debt securities have been redeemed, and the Alfa Banking Group plans to raise additional funding on the capital markets in the near future.

Alfa Banking Group has maintained its position as the top Russian private bank by total assets, total equity and customer accounts. In first half of 2010 Alfa Banking Group continued its development as a universal bank with the following core business lines: corporate and investment banking including SME, trade finance and leasing, retail banking (including branch banking, auto and mortgage lending). Current strategic priorities include effective management of assets and liabilities in order to further increase profitability, steady increase of the loan portfolio with focus on borrowers’ quality, maximizing commission income, capital markets borrowing and further development of settlement business and banking e-services.

In May 2010, Moody’s Rating Services confirmed Alfa Banking Group’s credit rating at Ba1, outlook negative. In June 2010, S&P changed Alfa Banking Group’s outlook from stable to positive and confirmed the credit rating at B+, while Fitch upgraded the credit rating to BB/stable in July 2010.

Alfa Banking Group’s IFRS figures have been reviewed by PricewaterhouseCoopers.