OREANDA-NEWS. September 08, 2015.

Key highlights:

The Bank’s assets made RUB 437 bln. showing one per cent growth.

Total loan portfolio (before provisions) decreased by 5.5% to RUB 277.5 bln. from the beginning of the year.

The Bank significantly increased its customer accounts by 17.4% since the beginning of the year - to RUB 250.9 bln. The share of customer deposits in bank’s liabilities increased from 53.1% to 61.2% during the first half of 2015. According to the Bank of Russia, from the beginning of the year to 30 June, customer accounts of Russian banks increased by only 0.4%.

Increase in customer accounts to a large extent was predicated by significant increase in terms of corporates - by 17.2% since the beginning of the year, to RUB 125.6 bln. The share of accounts of legal entities in the customer accounts total portfolio showed rise from 62% to 64%.

The retail accounts and deposits portfolio showed a solid growth - by 13.5% to RUB 91.5 bln.

The total securities portfolio of AK BARS Bank increased 1.6 times to RUB 110.4 bln. Therewith, its share in the Bank’s assets increased to 25.3%.

The securities portfolio was increased within the possible ratios in order to enable presence in the market during the market recovery. Debt market upside resulted from a decrease in the rate of the Central Bank and the Russian Ruble strengthening. With the reduction in business activity in the country and, as a consequence, reduce in the volume of loans granted, the investments in quasi-government and government bonds was the most attractive alternative for high-quality asset allocation.

In the first half of 2015, there was an increase in market quotations of a substantial part of the Bank's securities portfolio, resulting in a gain on revaluation and sale of securities in the amount of RUB 7.5 bln.

AK BARS Bank ended the first half of 2015 with a total comprehensive loss of RUB3.6 bln. against the total comprehensive income of RUB 62 mln. for the same period in 2014. This resulted from the negative net interest income and almost threefold increase in allocation to reserve - up to RUB 5.9 bln. from RUB 2.3 bln. a year earlier. The period under review was defined by a sharp rise in funding base given a high key rate of the Central Bank of the Russian Federation (17% at the beginning of the year, 11.5% - from mid-June).

The Bank plans to optimize interest expenses based on market conditions through diversification of funding sources.

At the same time, during the reporting period the Bank was able to reduce operating expenses by 8.4% YoY to RUB 3.6 bln.

In June 2015, the Bank received a subordinated loan from the Deposit Insurance Agency in the amount of RUB 12.1 bln. within the capitalization program of Russian banks.

Strengthening of capital base continues in the third quarter. As part of the development strategy of the Bank, AK BARS Bank issued additional shares in the amount of RUB 9.8 bln. funded by the Government of the Republic of Tatarstan. The shares were acquired by the State Housing Fund under the President of the Republic of Tatarstan.

As a result of capital increase within the additional shares issue, the share capital of the Bank amounted to RUB 38.015 bln. as of 1 September 2015.

Also in August 2015, AK BARS Bank successfully closed a US\\$350 million of RegS 3-year senior unsecured Loan Participation Notes transaction. The Bank became the first Russian financial institution to issue a new benchmark international hard currency bond in 2015.

The Bank’s financial statements for the first half of 2015 is available through https://www.akbars.ru/about/free-info/reports/