OREANDA-NEWS. April 13, 2012. Renaissance Credit, a leading Russian consumer finance bank, announced its financial results for twelve months of 2011 according to International Financial Reporting Standards (IFRS).

The Bank’s net profit for the period reached RUR 2.7 bn which is 1.7 times above the 2010 level (RUR 1.6 bn).

During 2011 Renaissance Credit demonstrated a substantial business growth and issued consumer loans to individuals totaling RUR 45.2 bn, which is more than two times the figure for the same period of 2010. The Bank’s net credit portfolio reached RUR 49.8 bn (+59%).

Profitability growth was primarily due to a better asset quality, higher return on assets and improved operational effectiveness of the business. At the end of 2011, the credit portfolio quality reached its best historical results: share of non-performing loans (90+dpd) declined to 4.6% which is 1.4 and 4.3 times below 2010 (6.3%) and 2009 (20.0%) levels respectively. At the same time, the share of high-margin products – general purpose loans and credit cards – in the retail portfolio increased from 64% to 70%.

Improvements in the credit portfolio quality entailed a decrease of interest accrued on overdue loans and, as a result, a change in the net interest margin (NIM) from 28% to 19%. At the same time, reduction of overdue loans allowed the bank to reduce its reserves which led to an increase in the operating margin from 20% to 25%.

The Bank’s equity grew by 20% to RUR 13.6 bn during 2011. The capital adequacy ratio  equaled 23%.

Bank’s efficiency KPIs as at the end of 2011 remain on a high level: cost to average assets ratio slightly increased from 13.2% to 13.7% while return on average assets (ROAA) and return on average equity (ROAE) improved from 4% and 15% to 6% and 22% respectively.

In 2011, Renaissance Credit sales network increased by 40% up to 105 branches. The bank introduced ‘light-format’ branches (without cash desk) along with full-scale ones, which allowed to create additional sales channels in short time and at minimum costs. Renaissance Credit expanded its operations into new highly promising regions – Sakha and Komi Republics – as a result, the geography of bank’s operations now includes 61 regions of Russia.

The branch network growth was accompanied by a higher network efficiency which increased by 1.5 times. The number of products sales per branch grew by 1.9 times. The number of cash loans issued to new clients increased more than 3 times, while the share of direct sales at the branches – from 35% to 56%.

In 2011, Renaissance Credit POS network expanded by 66% up to 18,403. The bank resumed co-operation with large Federal partners – Euroset and Tehnosila.

Renaissance Credit started to actively develop a brand new channel – the Internet. Now the potential borrowers can fill-in the application on the web-site and obtain a credit decision within 10 minutes. The bank also introduced a new product for the WEB channel – a transparent credit card which can be delivered by post after making an application on the website.

In 2011, the number clients increased from 4.1 to 4.8 million.

In 2011, Renaissance Credit continued to pursue its funding strategy aimed at maintaining a diversified base of funding sources. To achieve this, the bank actively developed its retail deposit business line launched in May 2009; in November 2011 it started to take deposits from legal entities.

By the end of 2011, retail term deposits increased to RUR 27.3 bn (2 times vs. 2010 level) and constituted 57% of the Bank’s liabilities. Portfolio of corporate deposits reached RUR 1.9bn or 4% of liabilities.

In 2011, the bank issued exchange-traded bonds with a total value of RUR 3 bn and obtained nearly 4-year financing from the EBRD totaling RUR 2.2 bn.

The cost of funding fell from 12.2% as at 31 December 2010 to 9.9% as at 31 December 2011 as a result of more effective portfolio management and improvements on the capital markets.

In 2011, the bank obtained one more financially sound long-term partner – Onexim Group, which now controls 32.25% of the share capital.

Alexey Levchenko, Chief Executive Officer of Renaissance Credit: ‘The year 2011 confirmed the  effectiveness of the strategy we have chosen to pursue, therefore we intend follow it in 2012 as well. We  shall continue to develop out retail lending business with focus on high-margin products and operational efficiency. At the same time, maintaining the high asset quality we have achieved remains our key priority. In 2012, we plan to increase our credit portfolio by 30-35%, which is above the forecasted market growth rate.’

Dmitry Razumov, General Director of Onexim Group: ‘Performance demonstrated by Renaissance Credit in 2011 confirms ones again that Onexim Group took a correct decision having become the bank’s indirect shareholder.  Renaissance Credit has reached the KPIs it promised to the shareholders which points at an effective management, right strategy and – as a result – high profitability of the business.