OREANDA-NEWS. TransCreditBank released its audited Consolidated Financial Statements under IFRS for the year ended December 31, 2012.

FY2012 Financial Summary:

—Net profit for the year rose x1.6 to RUB 14.2 billion compared to RUB 8.7 billion in 2011

—Operating income before provision for impairment increased 42% to RUB 37.8 billion

—Net interest income grew 30% to RUB 27.8 billion compared to RUB 21.3 billion at the end of 2011

—Net fee and commission income increased 23% to RUB 6.4 billion compared to RUB 5.2 billion at YE 2011

—Total assets amounted to RUB 518.7 billion (2011: RUB 505.8 billion)

—Gross retail loan portfolio rose 35% to RUB 120 billion; gross corporate loan portfolio increased 9% to RUB 270 billion

—Shareholders’ equity was up 51% to RUB 54.6 billion from YE 2011

—Net interest margin stood at 6.0% (2011: 5.2%), ROE was 28.5% (2010: 27.7%) and ROA was 2.7% (2010: 2.0%)

‘TransCreditBank’s financial result for the year 2012 rose to a record high and reached RUB 14.2 billion surpassing net profit for the previous year by 1.6 times. During 2012 all of the Bank’s business segments demonstrated a sustainable growth’ – comments Alexey Krokhin, TransCreditBank’s President. – ‘In 2012 integration process into VTB Group continued: by mid2012 the harmonization of product lines and tariffs between TransCreditBank and VTB24 was finalized, several Bank’s offices were reconstructed in accordance with VTB24 standards, preparation procedures for further consolidation were implemented. A comfortable migration of TransCreditBank’s customers to VTB Group and high quality of financial services provided to them remain a priority issue for the Bank during the integration’

Income statement review

Interest income rose 34% YoY to RUB 53.1 billion compared to RUB 39.5 billion at YE2011. The substantial growth was driven by higher margin assets, mostly retail loans. Interest income from customer lending grew 40% year-on-year, to RUB 41.3 billion and comprised 78% of the Bank’s total interest income.

Interest expenses grew 39% year-on-year to RUB 25.3 billion. The largest component of interest expenses was related to corporate deposits with 48% share and bank loans accounted for 20% of interest expenses. Interest expenses on the Bank’s own securities issued dropped by 22% to RUB 2.2 billion due to a reduction in its own securities circulation volumes.

Net interest income increased 30% compared to 2011 and amounted to RUB 27.8 billion comprising 73% of operating income before provisions.

Net fee and commission income grew 23% to RUB 6.4 billion (2011: RUB 5.2 billion). Fees and commissions from documentary operations demonstrated the strongest growth of 85% year-on-year to RUB 1.5 billion. Bank card fees and commissions grew 38% to RUB 4.1 billion from year-end 2011 and remained the main source of income growth from settlements operations. According to RBC (RosBusinessConsulting) in 2012 TransCreditBank was the 6th largest bank by number of active plastic cards.

Operating income before loan impairment charges was up 42% to RUB 37.8 billion due to mainly sizeable growth in interest and fee and commission income from retail lending.

Net provision charge for loan impairment amounted to RUB 4.2 billion compared to RUB 2 billion in 2011 following intense retail lending expansion in 2012. Provisions-to-gross portfolio ratio stood at a comfortable 4.3% (2011: 4.2%).

Operating expenses were RUB 15.5 billion, or 13% higher than in 2011. In 2012 cost-to-income ratio continued to decline and at theYE2012 fell to 40.3% from 49.9% in 2011. Despite increased headcount of 4%, operating income-to-employee ratio improved to RUB 4.2 million from RUB 3.4 million a year earlier.

Statement of financial position review

As at 31 December 2012 the Bank’s total assets were up 3% to RUB 518.7 billion.

TransCreditBank’s net loan portfolio increased 16% to RUB 373.8 billion as at 31 December 2012. Net corporate loan portfolio was up 9% to RUB 257.7 billion. According to the integration plan a part of corporate loans to leasing companies, amounted to RUB 35 billion, was disclosed as assets held for sale in TransCreditBank’s IFRS financial statements.

Net retail loan portfolio grew 35% to RUB 116.0 billion and comprised 34% of total TransCreditBank’s loan portfolio (2011: 27%). Consumer loans with a 67% share were the largest part of the portfolio, mortgage loans — 29% and bank cards – 3%. Bank cards lending showed the fastest x5.5 growth to RUB 4 billion due to the launch of the renewed overdraft lending program in the Q2.

Consumer lending was up 50% and reached RUB 79.7 billion as compared to RUB 53.1 billion at YE2011 and remained the key driver for the Bank’s retail portfolio growth. In 2012 TransCreditBank extended its mortgage property offer, reconsidered mortgage programs, interest rates and requirements to customers. According to Frank Research Group, a consulting company, TransCreditBank was top-8 Russian bank by volumes of mortgage loans at YE2012. TransCreditBank’s mortgage loans grew 3% to RUB 35.4 billion with 70% of those issued to Russian Railways’ employees under the social mortgage lending program. The share of loans to Russian Railways’ Group was 86% of total retail lending at the year-end 2012.

The share of non-performing loans (>90 days overdue) in total loan portfolio was 2.7%, that is significantly below the market and proves a high asset quality. Corporate NPLs increased by a modest 2.6% from 2.2% at YE2011, and retail NPLs – to 3.0% from 2.9% at YE2011. Provisions covered 166% of non-performing loans.

Total securities portfolio dropped by 8% in 2012 to RUB 53.3 billion as at 31 December 2012. The trade securities portfolio was mainly represented by federal government bonds (72%) and corporate bonds of largest Russian companies (23%).

As at 31 December 2012 the Bank’s total liabilities amounted to RUB 464.1 billion. TransCreditBank customer funding excluding deposits from Ministry of Finance, VEB etc. grew 2% to RUB 267,0 billion at YE2012 and is traditionally stable.

Total shareholders’ equity increased 51% to RUB 54.6 billion, due to profits generated during the period and additional share issue of RUB 7.6 billion in February 2012. As a result Tier 1 ratio rose 11.7%, up from 9.3% at YE2011. Total capital ratio at 31 December 2012, according to Basel I, was 14.0%, well above the 8% minimum requirement.