OREANDA-NEWS. Gazprombank (Open Joint-stock Company) issued consolidated IFRS financial statements for the nine months of 2013. Key financial indicators of Gazprombank Group are presented below.

billions of Roubles

30.09.2013

31.12.2012

Change

Assets

3 375.6

2 841.0

+18.8%

Equity

389.2

363.5

+7.1%

Corporate loans [1]

1 946.6

1 613.0

+20.7%

Retail loans [1]

270.5

210.3

+28.6%

Securities [2]

427.6

330.3

+29.5%

Corporate deposits

1 723.7

1 427.5

+20.7%

Retail deposits

358.0

315.5

+13.5%

Capital market borrowings [3]

357.7

313.6

+14.1%


9M2013

9M2012

Change 2013 / 2012

Net income

24.0

20.1

+19.3%

Total comprehensive income

31.9

18.5

+72.8%

30.09.2013/ 9M2013

31.12.2012 / 12M2012

Change

Total capital adequacy [4]

14.0%

13.9%

+0.1 p.p.

Tier I capital adequacy [4]

10.1%

11.0%

-0.9 p.p.

Non-performing loans [5] to gross loans to customers

1.0%

1.2%

-0.2 p.p.

Allowance for impairment to gross loans to customers

3.4%

3.6%

-0.2 p.p.

Loans-to-deposits ratio

106.5%

104.6%

+1.9 p.p.

Net interest margin [6]

3.1%

2.9%

0.2 p.p.

Cost-to-income ratio [7]

48.4%

47.2%

1.2 p.p.

[1] Gross amounts (before allowance for impairment).

[2] Includes trading securities, investments available-for-sale, investments in associates and investments held-to-maturity.

[3] Includes bonds issued and syndicated loans.

[4] According to Basel II Framework (Basel II simplified standardised approach).

[5] Loans are regarded as "non-performing" if the loan has been in default as to payment of principal or interest for 90 days or more.

[6] Calculated as net interest income for the reporting period over the chronological average of the balances of interest earning assets as at the end of each three-month period included in the reporting period. Interest-earning assets include due from credit institutions, loans to customers and debt securities (all - before allowances for impairment).

[7] Operating expenses include banking salaries, employment benefits and administrative expenses. Operating income includes net interest income, non-interest income and non-banking operating profits.

Profitability and capital adequacy

Gazprombank Group’s (the "Group") net income per IFRS financial statements for the nine months of 2013 amounted to RUB 24.0bn vs. RUB 20.1bn for the nine months of 2012, increasing by 19.3%. Total comprehensive income for the nine months of 2013 was RUB 31.9bn vs. RUB 18.5bn for the same period of 2012, increasing by 72.8%.

Net income for 3Q2013 posted a growth of 70.7% vs. the second quarter of 2013 to reach RUB 11.6bn, which was driven by several factors. The core banking business revenue, net interest and fee income, grew by 22% compared to the second quarter of 2013 and totaled RUB 26.1bn. Improving market conditions during 3Q2013 resulted in a positive revaluation of the securities book and growth of the gains from securities, foreign currency and derivatives, which partly compensated the losses due to negative revaluation of the securities book experienced in the first six months of 2013. As a result, gains from securities, foreign currency and derivatives amounted to RUB 5bn in 3Q2013 in comparison with the loss of RUB 1bn in 2Q2013.

Overall, net interest and fee income for the nine month of 2013 increased by 31.8% vs. the nine months of 2012 and reached RUB 66.8bn. The core banking business revenue constituted 78.9% of the operating income for the nine month of 2013.

Net interest margin for the third quarter of 2013 amounted to 3.4% compared to 2.9% for the second quarter of 2013. Therefore, NIM for the nine months of 2013 increased to 3.1%, posting a growth of 0.2 p.p. vs. the nine month of 2012. The gradual growth of interest income was driven both by improvement of the interest-earning assets structure, which represented 79% of the total assets as of 30 September 2013, and decline in cost of funding.

The Group’s operating expenses reached RUB 41bn for the nine month of 2013, up by 9.3% in comparison with the same period of 2012. At the same time, the Group achieved a reduction of the administrative costs by 17.5% over the reporting period. Efforts by the management to optimise operating expenses resulted in a lower growth rate of operating expenses compared to the growth rate of operating income. The Group’s operating income for the nine months of 2013 increased by 13.5% vs. the nine months of 2012 and reached RUB 84.7 bn. Cost-to-income ratio amounted to 48.4%.

The Group’s capital per IFRS increased by 7.1% over the nine month of 2013 and reached RUB 389.2bn as of 30 September 2013. The growth was achieved through capitalisation of profit and revaluation of the securities.

As a result of the loan portfolio growth during the nine months of 2013, Tier 1 capital adequacy ratio per Basel II was 10.1% as of 30 September 2013 vs. 11.0% at the end of 2012, while total capital adequacy ratio was 14.0% at the end of the third quarter of 2013 vs. 13.9% at the end of 2012. Total capital adequacy ratio was maintained during the third quarter of 2013 by raising Tier II capital (subordinated Eurobonds) for the total amount of RUB 39.2bn.

Business growth and asset quality

The Group’s total assets increased by 18.8% per IFRS during the nine months of 2013 and amounted to RUB 3 375.6bn as of 30 September 2013. The asset growth was driven by the organic growth of the Group’s banking operations.

Gross corporate loans have posted a growth of 20.7% since the end of 2012 to reach RUB 1 946.6bn. Commercial lending constituted 72.4% of the corporate loan portfolio and investment financing - 27.6% of the corporate loan portfolio.

Retail loan book grew from RUB 210.3bn at the end of 2012 to RUB 270.5bn at the end of September 2013, increasing by 28.6%.

The share of loan portfolio in the total assets increased from 61.9% as of the end of 2012 to 63.4% as of 30 September 2013.

The Group posted above-market-average loan growth. For the nine months of 2013 the average market growth of corporate loans was 10.8%, retail loans - 21.5% (per the Central Bank of the Russian Federation data).

Asset quality of the Group remains traditionally high: as of 30 September 2013 the non-performing loans (overdue 90 days or more) were 1.0% of gross loans; the loan loss provisions were 3.4% of gross loans. The coverage ratio of non-performing loans by allowance for impairment amounted to 3.5x.

The Group’s securities portfolio increased by one third over the reporting period to reach RUB 427.6bn driven by an increase in investments in fixed income securities of Russian sovereign and corporate issuers. 76.0% of the Group’s securities portfolio is represented by fixed income instruments as of 30 September 2013. The share of the securities portfolio constitutes 12.7% the Group’s total assets as of 30 September 2013.

Corporate deposits amounted to RUB 1 723.7bn as of 30 September 2013, up by 20.7% since the end of 2012. Retail deposits grew by 13.5% to reach RUB 358.0bn as of 30 September 2013. The customer accounts continue to be the principal source of the Group’s funding: their share in the funding base was 69.7% as of 30 September 2013.

The borrowings from debt capital markets increased by 14.1% over the nine months of 2013 to RUB 357.7bn at the end of September 2013; their share in total liabilities was 12.0%.