OREANDA-NEWS. October 15, 2010. MDM Bank announced results for the first half of 2010 based on International Standards for Financial Statements (IFRS).

Key highlights:

Net and comprehensive income amounted to RUB 1.06 bln and RUB 0.52 bln, respectively;

Equity increased by 0.8% and reached RUB 62 bln;

Assets contracted by 9.0% and totaled RUB 366 bln;

The asset contraction by RUB 36 bln occurred mainly due a decrease in cash and cash equivalents (by RUB 20 bln) and loans issued to other banks (by RUB 22 bln);

Liquid assets (cash and cash equivalents, and interbank loans with the remaining maturity of up one month) totaled RUB 62 bln or 17.0% of all assets;

Liabilities have decreased 8.9% and totaled RUB 304 bln;

The decrease in liabilities by RUB 37 bln occurred due to a decrease in deposits from other banks (by RUB 21 bln) and debt securities in issue (down by RUB 31 bln) while the client account balances grew (by RUB 15 bln);

Pre-provision operating income reached RUB 13.61 bln, with net interest income (RUB 10.34 bln) and net fee and commission income (RUB 1.45 bln) remaining its key components;

Operating expenses totaled RUB 7.18 bln;

Loan impairment charges totaled RUB 4.30 bln, or 3.1% (annualized) of the average loan book for the period;

The Bank’s Tier 1 capital adequacy ratio calculated according to the standards of the Basel Committee on Banking Supervision (Basel I) totaled 18.8%; 

Net profit to average capital totaled 3.4% (annualized), while comprehensive income to average equity was 1.7% (annualized).

“We recognize obvious positive trends in the Russian operating environment and respectively in the business of the Bank. The financial position of borrowers has improved, and between May and August we recorded growth of customer loans by approximately 9% due to borrowers with good credit quality”, remarked the CEO and Management Board Chairman of MDM Bank Sergey Timofeev. “Over the same period, retail deposits grew by 13%. We are confident that the signing top management five-year contracts with incentives tied to implementing the Bank’s long-term strategy will enable us to continue successful sustainable business development.”

MDM Bank’s CFO Vadim Sorokin remarked that the loan book quality has begun to gradually improve: “The share of loans over 90 days overdue in the loan book has decreased to 17.6% from 19.2% over the second quarter of this year, and the share of all overdue loans contracted to 21.4% from 28.8% over the same period. The Bank’s high capital position allows us to raise loan loss provisions to 26% from the current 15% of the total loan book while maintaining capital adequacy of 12% per Basel I standards. The declining impairment charges and stable operating income have allowed us to reach acceptable profitability: over the year past the merger of MDM Bank and URSA Bank (H209 and H110) the net profit amounted to RUB 5.3 bln or 8.9% of the average capital over the period.”