OREANDA-NEWS. April 25, 2014. According to the preliminary reporting under the Russian Accounting Standards (RAS) net profit of PSB for 1Q 2014 amounted to RUB1.7 billion, compared with RUB0.4 billion for the same period of the previous year.

Operating income (profit before impairment charge, operating expenses and tax expenses) for 1Q 2014 grew by 27% to RUB14.4 billion, while operating expenses increased only by 11% to RUB8.1 billion. Loan loss provision charge increased in 1Q 2014 vs 1Q 2013 and amounted to RUB3.8 billion which is significantly less than operating income of the bank. Key drivers for the net profit increase in 1Q 2014 vs. 1Q 2013 were growth of net interest income and net fee and commission income (+17% and +41%, respectively), and a significant net foreign exchange gain (RUB3.3 billion), which was partially offset by negative revaluation of trading securities.

As at April 1, 2014, PSB assets totalled RUB770 billion, up 5% from January 1, 2014. Liquidity ratios continue to remain at a comfort level. As at April 1, 2014, CBR N2 and N3 liquidity ratios were 32% and 61%, exceeding the minimum requirements of 15% and 50% respectively. PSB plans to repay maturing eurobonds in the amount of USD500 million in April 2014 from its own funds with no further refinancing.

Corporate gross loan portfolio reached RUB548 billion, up 11% from January 1, 2014. Key driver for this increase were loans issued to new high quality borrowers as well as a revaluation of corporate loans in foreign currency. Retail gross loan portfolio grew by 5% to RUB80 billion in 1Q 2014. Total net loan portfolio (after provisions and excluding interbank loans) increased by 11% compared to January 1, 2014 and made up RUB596 billion as at April 1, 2014.

As at April 1, 2014 total customer accounts and deposits (both retail and corporate) remained almost unchanged and amounted to RUB548 billion. Corporate customer deposits grew by 3%, retail customer deposits decreased by 5% from the year end 2013. Share of demand deposits in total customer accounts grew from 31% as at January 1, 2014 to 33% as at April 1, 2014.

PSB capital (“own funds” as defined in the RAS) as at April 1, 2014 amounted to RUB93 billion. Despite the complicated macroeconomic environment in March 2014 PSB placed 7-year subordinated Eurobonds for the amount of USD 100 million  with Russian investors. Previously issued perpetual subordinated Eurobonds in the equivalent of USD 120 million were also in March 2014 recognized by CBR under 395-P rules which makes them elegible for inclusion into Tier 1 capital without any discounts since April 1, 2014. As at April 1, 2014 core Tier 1, Tier 1 and Total Capital ratios were 6.5%, 7.0% and 10.6% accordingly.

PSB Chief Financial Officer Vladislav Khokhlov comments on the published results: “Amidst the number of challenges that Russian banking system faced in March 2014, we are satisfied with our 1Q 2014 financial results. Current circumstances prove the necessity of excessive liquidity cushion maintenance and capital adequacy increase throughout the year. Among key priorities of PSB for 2014 are the improvement of asset quality in all business segments, continuing improvement of operating efficiency and focus on transactional business income growth/”.

For reference: RAS balance sheet data largely reflects the results of PSB operations in 1Q 2014. However, more detailed information about PSB 1Q 2014 results will be disclosed in IFRS financial statements to be released in 2Q 2014 and to be followed by a conference-call with investors and analysts.