Nomos-Bank Announces Financial Results for First Half of 2013
OREANDA-NEWS. NOMOS-BANK (“NOMOS” or “the Group”) announces its Condensed Interim Consolidated Financial Statements in accordance with International Financial Reporting Standards (IFRS) for the six months ended 30 June 2013, delivering on the key indicators set for the period.
The Board of Directors of NOMOS on 21 August 2013 approved the Condensed Interim Consolidated Financial Statements of NOMOS and its subsidiaries in accordance with IFRS for the six months ended 30 June 2013.
In the first half of 2013, the Group has delivered positive results in its core business segments, demonstrating solid profitability in each segment and strong loan growth outperforming the market average.
Group achievements in the first half of 2013
In the first half of 2013, NOMOS achieved RUB 6.1 billion in net profit, RUB 5.0 billion of which was attributable to shareholders. The annualized return on average shareholders' equity (RoAE) was 12.9% compared to 18.3% for 2012.
Earnings per share for the first half of 2013 were RUB 53.72. Earnings per Global Depositary Receipt (GDR) were USD 0.8 based on an exchange rate of 32.709 RUB/USD as at 30 June 2013.
First half core revenue (excluding trading and foreign exchange results) rose 15.2% year on year to RUB 22.8 billion. Net interest income and net fee and commission income continued to be the key drivers of the Group's revenue generation, comprising respectively 82.1% and 19.1% of Group revenue. The net interest margin remained stable at 4.4%.
Net interest income increased in the first half of 2013 by 20.7% year on year to RUB 18.1 billion in line with the healthy growth of the loan portfolio, which outperformed the market average growth rate.
Net Fee and Commission income increased 16.5% year on year in the first half of 2013 to RUB 4.2 billion as a result of the Group's strategic focus on cross-selling its fee-based products and increasing its “share of wallet” across clients. The net fee and commission income growth came primarily from settlements (RUB 1.8 billion) and documentary operations related to letters of credit and guarantees (RUB 1.3 billion).
Profitability was negatively affected by a revaluation of the Group's securities portfolio, largely represented by high quality Russian corporate bonds. Up to 40% of these losses have been recovered as of today.
Operating expenses - NOMOS' management team has closely monitored operating expenses over the period and taken the necessary steps to optimise its expenditure efficiency. The Group also constantly looks to increase operational efficiency, introducing advanced IT and lean technologies in the Group's main business processes. The introduction of such technologies has allowed the Group to increase the volume of business activity significantly without creating an increase in the number of staff in the business and support divisions. NOMOS has also completed the centralisation of all its support functions and the unification of its purchase system for all goods and services across the Group. These measures have enabled the Group to decrease operating expenses by 3.6% quarter on quarter (19.5% compared to the fourth quarter 2012) to RUB 10.8 billion. Payroll expenses accounted for 67.2% of the total operating expenses of the Group.
The Cost-Income Ratio (operating expenses to operating income before provision for impairment) was 48.8% (47.8% in 2012) in line with management guidance.
Positive loan growth at a higher than average market rate
In the first half of 2013 the Group's total assets reached RUB 977.0 billion, increasing 8.6% compared to 31 December 2012, higher than the average market growth rate of 6.5% for the first half of 2013. Net loans represented 71.9% of total assets compared to 65.6% at the end of 2012.
As at 30 June 2013, the net loan portfolio of the Group increased 19.0% compared to 31 December 2012 to RUB 702.8 billion outperforming the market average of a 7.5% increase. Positive results were seen across all core business segments. The Corporate loan book increased 19.0% to RUB 502.1 billion and the Group Retail loan portfolio increased 16.4% to RUB 104.9 billion. At the same time, the SME loan portfolio increased 14.3% to RUB 44.5 billion.
Despite this growth, the quality of the loan portfolio was maintained as the ratio of loan loss provisions to gross loans declined to 3.1% in the first half of 2013 versus 3.6% at the end of 2012. The share of non-performing loans (NPLs: loans overdue more than 90 days) stood at 2.2% only marginally up compared to 2.0% at the end of 2012.
Cost of risk was stable at 1.0% (0.9% in 2012) largely as a result of the stable quality of the loan book.
The Group's total liabilities reached RUB 880.3 billion as at 30 June 2013, increasing 8.7% compared to 31 December 2012. During the period, the Group continued to keep a diversified funding structure with the share of customer accounts comprising 63.0% of total liabilities compared to 58.3% at the end of 2012.
As of 30 June 2013, the Group's customer accounts were RUB 554.7 billion, a 17.6% increase compared with 31 December 2012. Term deposits were up 22.8% to RUB 449.4 billion and made up 81.0% of total customer accounts as at 30 June 2013, which is also reflected in the increase in the cost of term funding to 7.3% compared to 6.7% in 2012.
The Group's net loans to deposits ratio was 126.7% as at 30 June 2013 compared to 125.2% as at 31 December 2012.
The Group's Tier 1 capital ratio was 10.2% as at 30 June 2013 (31 December 2012: 10.8%) and the Group's total equity was RUB 96.7 billion, including RUB 16.9 billion of non-controlling interest. The total capital adequacy ratio was 15.5% as of 30 June 2013.
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