Bank Uralsib Reports on 1H 2011 Financial Results under IFRS

OREANDA-NEWS. December 14, 2011. BANK URALSIB (Bank) (RTS: USBN) reports on IH2011 financial results under IFRS for six-month period ended June 30, 2011.

Financial Results

The Bank’s net income amounted to 236 mln rubles in IH2011 vs 2.9 bln rubles net loss in IH2011.

Financial result of the Bank in IH2011 was generated with the influence of considerable growth of operating income as well as reduction of allowances for loan losses. Net operating income before allowances increased by 30.7% to 12.1 bln rubles and was formed on the basis of core banking income: net interest income together with net fee and commission income amounted to 84% of net operating income before allowances for loan losses.

Return on equity (ROE) amounted to 0.84%.

Net interest margin (NIM) in 6M2011 increased to 5.74% y-o-y vs 5.42% in IH2010. The growth of margin was based on the increase of the total volume of net interest income amid the decrease of average assets generating interest income. In its turn, the growth of net interest income was conditioned upon the outrunning reduction of gross interest expenses against gross interest income (vs IH2010 respectively).

Due to the outrunning growth of the net operating income against the increase of operating expanses, Cost-to-Income ratio (C/I) shrank to 83.0% during 6M2011 vs 97.5% y-o-y 2010.   

Balance Sheet Structure

The improvement of social and economic environment in Russia stimulated the demand for loans during IH2011. The Bank’s gross loan portfolio grew by 11.1% to 253.8 bln rubles. Concurrently, the growth of corporate loan portfolio (14.7% y-t-d) exceeded the growth of retail loan portfolio (2.7% y-t-d). 

The Bank diversified its loan portfolio during IH2011. In the corporate loan portfolio the share of loans to trading enterprises decreased to 33.2% y-t-d from 37.2%. At the same time, the share of loans to manufacturing enterprises increased to 11.1% y-t-d from 8.9%.

The share of residential mortgages in retail loan portfolio dropped to 46.9% vs 49.8% y-t-d. Therewith, the Bank was following the market trend during the reporting period and increased high-yielding consumer lending (by 10.5% y-t-d) and credit cards lending (by 20.0% y-t-d).

Customer accounts are the main source of the Bank’s funding, their share in liabilities amounting to 77.3%. Customer accounts increased by 0.7% to 288.0 bln rubles y-t-d. The share of loans to corporates amounted to 57.5% of total customer accounts.

BIS capital adequacy ratio amounted to 16.07% as of 30.06.2011, twice exceeding the minimum level of 8% (according to Basel 1 requirements). Tier 1 capital ratio amounted to 12.18%.