OREANDA-NEWS. TransCreditBank released reviewed Interim Condensed Consolidated Financial Statements under IFRS for the six-month period ended June 30, 2013.

H1:2013 Financial Highlights

Net profit for H1:2013 was RUB 7.5 billion, which was 44% higher than net profit earned in H1:2012.

Net interest margin increased by 7.0% versus net interest margin of 5.6% in the comparable period of 2012.

Retail loan portfolio grew 8% to RUB 129 billion in the first half 2013.

Net commission income was RUB 3 billion, up 7% YoY.

Operating income before loan impairment provisions grew 10% to RUB 17.1 billion.

ROE increased to 37.2%, up from 24.0% in H1:2012.

ROA rose by 1.6 p.p. to 3.7% compared to 2.1% in H1:2012.

“First-half year results were consistent with our expectations. - comments Mr. Dmitry Olyunin, TransCreditBank's President and Chairman of the Management Board, - TransCreditBank integration into VTB Group entered its closing phase. The Bank is now focused on retail business development. Starting this year the retail loan portfolio grew 8% to RUB 129 billion thanks to efficient sales of products and services fully standardized with those of VTB 24. The Bank's net profit increased by 44% to RUB 7.5 billion resulting in ROA of 3.7% and ROE of 37.2% for the six-month period of 2013”.

Statement of financial position review

During the first six months of 2013 there were significant changes in TransCreditBank loan portfolio structure. As of June 30, 2013 the share of retail loans increased to 81% versus 34% at YE 2012. Retail loan portfolio before provisions for impairment grew 8% to RUB 129 billion. Credit cards lending rose by 28% to RUB 5 billion and was the main driver of the retail portfolio expansion. Consumer lending grew 9% in H1:2013, mortgage - 3%. According to Rusipoteka, analytical center, as of June 30, 2013 TransCreditBank was top-8 Russian bank by mortgage loan portfolio of RUB 36 billion. The share of loans issued to Russian Railways Group employees stood at 86% of retail portfolio for recent reporting periods. TransCreditBank corporate lending fell by 87% to RUB 30.4 billion. In H1:2013 corporate loans in amount of RUB 174 billion were transferred to VTB Group under cession agreement.

TransCreditBank consistently maintains a good quality of the loan portfolio. The share of non-performing loans (>90 days overdue) in retail lending remained unchanged at 3.3%. Major part of corporate portfolio was transferred to VTB Group in H1:2013. Sales of corporate loans individually identified impaired were shifted to the beginning of the third quarter of 2013. This caused the upsurge in the share of non-performing loans in total loan book and loan loss provisioning of 28.6% at the reporting date.

Following a strategy involving a reduction in volumes of securities trading operations and investments, trading portfolio decreased by 47% to RUB 30.7 billion and accounted for 10.5% of total assets as of June 30, 2013 (2012: 10%). Amounts due from credit institutions grew by 77% to RUB 72.4 billion due to short-term interbank lending and significant liquidity on hand.

Overall, in the first half of 2013 the Bank's total assets decreased by 44% to RUB 292.5 billion compared to RUB 518.7 billion as of December 31, 2012.

TransCreditBank total liabilities were RUB 271.8 billion as of June 30, 2013, 41% less than at the beginning of the year. Customer accounts remained the Bank's key funding source with a 73% share in liabilities (2012: 63%). The share of corporate customers accounted for 47%. The share of retail customer accounts and deposits tended to grow and increased from 17% at the beginning of the year to 27% as of June 30, 2013.

Total shareholders' equity decreased by 62% over H1:2013 to RUB 20.8 billion as of June 30, 2013 due to dividend payments in amount of RUB 41.2 billion, of which: RUB 27.8 billion were paid for the period up to and including 2011; RUB 11.7 billion - for the year 2012; and RUB 1.7 billion - for the first quarter of 2013. Subordinated loan of RUB 4 billion, obtained from VTB Bank in June 2013, was included into Tier 2 capital. Tier 1 capital ratio was 9.8%. Total capital adequacy ratio, calculated in accordance with Basel, rose to 16.9% compared to 14.0% at YE 2012.

Income statement review

TransCreditBank corporate loan portfolio cession predetermined a modest 1% increase of net interest income to RUB 12.6 billion. Share of net interest income in net operating income was 77%.

Net fee and commission income rose by 7% to RUB 3 billion mainly due to robust development of credit cards lending in retail business and growth of commissions from documentary operations.

Other non-interest income amounted to RUB 1.5 billion, which was a substantial increase compared to H1:2012 thanks to earnings upturn from foreign exchange operations and securities. Dividends received and gain on disposal of subsidiaries also contributed to further growth of non-interest income. Operating income before provision for loan impairment grew 10% to RUB 17.1 billion compared to the first half of 2012.

Administrative expenses for the six-month period of 2013 were RUB 7.2 billion, only 6% higher in comparison with H1:2012. The growth was attributed to integration costs and compensation payments to employees. Cost-to-income ratio was 42.1% versus 43.6% in H1:2012.

Net interest margin went up by 1.4 p.p. to 7.0%. Return on equity increased up to 37.2% over H1:2013 compared to 24.0% for the corresponding period in 2012. Return on assets reached 3.7% from 2.1% over the same prior-year period.

Net income in H1:2013 grew 44% to RUB 7.5 billion. Profit for the second quarter 2013 increased by 31% to RUB 3.4 billion compared to RUB 2.6 billion for the same period in 2012.