6M 2013 IFRS Results Reporting
Upcoming SlideShare
Loading in...5
×
 

6M 2013 IFRS Results Reporting

on

  • 267 views

 

Statistics

Views

Total Views
267
Views on SlideShare
267
Embed Views
0

Actions

Likes
0
Downloads
0
Comments
0

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    6M 2013 IFRS Results Reporting 6M 2013 IFRS Results Reporting Document Transcript

    • BANK VOZROZHDENIE International Financial Reporting Standards Interim Condensed Consolidated Financial Statements (unaudited) June 30, 2013
    • Bank Vozrozhdenie CONTENTS Interim Condensed Consolidated Statement of Financial Position................................................................................. 2 Interim Condensed Consolidated Statement of Comprehensive Income ....................................................................... 3 Interim Condensed Consolidated Statement of Changes in Equity................................................................................ 4 Interim Condensed Consolidated Statement of Cash Flows .......................................................................................... 5 Notes to the Interim Condensed Consolidated Financial Statements 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Introduction ......................................................................................................................................................... 5 Principles of Accounting Policies, Critical Accounting Estimates and Judgments .............................................. 5 Cash and Cash Equivalents ............................................................................................................................... 5 Trading Securities ............................................................................................................................................... 6 Due from Other Banks ........................................................................................................................................ 6 Loans and Advances to Customers .................................................................................................................... 6 Investment Securities Available for Sale........................................................................................................... 11 Other Assets ..................................................................................................................................................... 11 Due to Other Banks .......................................................................................................................................... 11 Customer Accounts .......................................................................................................................................... 11 Debt Securities in Issue .................................................................................................................................... 12 Subordinated Loans.......................................................................................................................................... 13 Interest Income and Expense ........................................................................................................................... 14 Fee and Commission Income and Expense ..................................................................................................... 14 Administrative and Other Operating Expenses ................................................................................................. 15 Segment Analysis ............................................................................................................................................. 15 Financial Risk Management ............................................................................................................................. 22 Contingencies and Commitments ..................................................................................................................... 26 Fair value of financial instruments… ................................................................................................................. 26
    • Bank Vozrozhdenie Interim Condensed Consolidated Statement of financial position as at June 30, 2013 Note June 30, 2013 (unaudited) December 31, 2012 39 829 40 885 2 381 7 956 1 412 150 019 3 850 3 002 947 684 1 332 4 756 2 097 5 884 5 794 141 662 2 476 3 064 1 103 898 1 222 3 977 216 168 209 062 8 374 169 310 9 136 235 756 7 006 7 647 163 876 7 032 2 803 350 496 6 051 194 817 188 255 EQUITY Share capital Share premium Retained earnings Revaluation reserve for investment securities available for sale 250 7 306 13 631 164 250 7 306 13 124 127 TOTAL EQUITY 21 351 20 807 216 168 209 062 In millions of Russian Roubles ASSETS Cash and cash equivalents Mandatory cash balances with the Central Bank of the Russian Federation Trading securities Due from other banks Loans and advances to customers Investment securities available for sale Premises and equipment Other financial assets Non-current assets classified as held for sale Differed tax asset Other assets 3 4 5 6 7 8 8 TOTAL ASSETS LIABILITIES Due to other banks Customer accounts Debt securities in issue Other borrowed funds Other financial liabilities Other liabilities Subordinated loans TOTAL LIABILITIES TOTAL LIABILITIES AND EQUITY 9 10 11 11 12 Approved and signed on August 26, 2013 Mr Alexander V. Dolgopolov Chairman of the Management Board Ms Alla A. Novikova Chief Accountant 1
    • Bank Vozrozhdenie Interim Condensed Consolidated Statement of Comprehensive Income as at June 30, 2013 Note In millions of Russian Roubles Interest income Interest expense Net interest income Provision for loan impairment 13 13 9 097 (4 680) 7 887 (3 476) 4 646 (2 409) 4 118 (1 856) 6 4 417 (2 275) 4 411 (1 188) 2 237 (1 290) 2 262 (830) 2 142 3 223 947 1 432 2 587 (265) (6) 2 605 (188) (9) 1 365 (150) (11) 1 387 (96) (1) (155) 252 (114) 140 465 (72) 286 (44) 114 (4 226) 2 3 173 (4 180) (314) 54 (2 135) (19) (1) 126 (2 138) (1) 658 (137) 1 493 (289) 223 (35) 804 (126) 521 1 204 188 678 52 25 22 17 (15) (39) (7) (46) 37 (14) 15 (29) 558 1 190 203 649 21 48 7 27 Net interest income after provision for loan impairment Fee and commission income Fee and commission expense Losses less gains from trading securities Losses less gains /Gains less losses from trading in foreign currencies Foreign exchange translation gains less losses /(Losses less gains) Gains less losses /(Losses less gains) on disposed investment securities available for sale Other operating income Administrative and other operating expenses Provision for impairment of other assets Profit before tax Income tax expense PROFIT FOR THE REPORTING PERIOD 6M ended 6M ended 3M ended 3M ended June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012 (unaudited) (unaudited) (unaudited) (unaudited) 14 14 15 Other comprehensive income: Investment securities available for sale: Gains less losses during the year Income tax expense recorded directly in other comprehensive income Other comprehensive income for the reporting period TOTAL COMPREHENSIVE INCOME FOR THE REPORTING PERIOD Earnings per share for profit attributable to the equity holders of the Bank, basic and diluted (expressed in RR per share) Ordinary shares 2
    • Bank Vozrozhdenie Interim Condensed Consolidated Statement of Changes in Equity as at June 30, 2013 Share capital Share premium Revaluation reserve for investment securities available for sale Retained earnings Total 250 7 306 127 13 124 20 807 Profit for the six months ended June 30, 2013 Other comprehensive income - - 37 521 - 521 37 Total comprehensive income for six months 2013 - - 37 521 558 Dividends declared - - - (14) (14) 250 7 306 164 13 631 21 351 Share capital Share premium Revaluation reserve for investment securities available for sale Retained earnings Total 250 7 306 99 10 807 18 462 Profit for the six months ended June 30, 2012 Other comprehensive income - - (14) 1 204 - 1 204 (14) Total comprehensive income for six months 2012 - - (14) 1 204 1 190 Dividends declared - - - (14) (14) 250 7 306 85 In millions of Russian Roubles Balance at January 1, 2012 Balance at June 30, 2013 In millions of Russian Roubles Balance at December 31, 2011 Balance at June 30, 2012 11 997 19 638 3
    • Bank Vozrozhdenie Interim Condensed Consolidated Statement of Cash Flows as at June 30, 2013 In millions of Russian Roubles Cash flows from operating activities Interest received Interest paid Fees and commissions received Fees and commissions paid Net losses paid /(income received) from trading in trading securities Net (losses paid) /income received from trading in foreign currencies Other operating income received Administrative and other operating expenses paid Income tax paid 6M ended June 30, 2013 (unaudited) 6M ended June 30, 2012 (unaudited) 9 111 (4 157) 2 588 (265) (5) (155) 96 (3 764) (246) 7 642 (3 208) 2 578 (188) (7) 252 153 (3 831) (472) 3 203 2 919 (284) (1 823) 4 420 (10 205) 188 14 636 2 812 2 083 (117) (23) (2 803) (107) (664) 559 (14 931) 133 149 (641) 6 237 1 452 1 140 (111) - Net cash used in operating activities (1 899) (3 865) Cash flows from investing activities Acquisition of investment securities available for sale Proceeds from disposal of investment securities available for sale Acquisition of premises and equipment Proceeds from disposal of non-current assets held for sale Proceeds from disposal of premises and equipment Proceeds from disposal of investment properties (2 981) 1 674 (123) 89 7 4 (2 052) 61 (277) 47 16 21 Net cash used in investing activities (1 330) (2 184) 1 000 (321) (151) (14) (235) (14) 514 (249) 1 659 90 Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the year (1 056) 40 885 (6 208) 37 755 Cash and cash equivalents at the end of the reporting period 39 829 31 547 Cash flows from operating activities before changes in operating assets and liabilities Changes in operating assets and liabilities Net increase in mandatory cash balances with the Central Bank of the Russian Federation Net increase in trading securities Net decrease in due from other banks Net increase in loans and advances to customers Net decrease in other financial assets Net decrease in other assets Net increase/(decrease) in due to other banks Net increase in customer accounts Net increase in debt securities in issue Net (decrease)/increase in other financial liabilities Net decrease in other liabilities Net decrease in other borrowed funds Cash flows from financing activities Receipt of subordinated loans Repayment of subordinated loans Repayment of funding from an international financial institute Dividends paid Net cash from / (used in) financing activities Effect of exchange rate changes on cash and cash equivalents 4
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 1 Introduction These interim condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IAS) 34 “Interim Financial Reporting” (“IFRS (IAS) 34”) for the six months ended on June 30, 2013 for Bank Vozrozhdenie (the “Bank”) and its special-purpose entities, Closed joint stock company “Mortgage agent Vozrozhdenie 1” and Closed joint stock company “Mortgage agent Vozrozhdenie 2” (together referred to as the “Group”). Presentation currency. These interim condensed consolidated financial statements are presented in millions of Russian Roubles (“RR millions”). CBRF principal rates of exchange used for translating foreign currency balances were USD 1 = RR 32.8766 as at June 28, 2013, USD 1 = RR 30.3727 as at December 31, 2012, USD 1 = RR 32.9412 as at June 29, 2012 and EUR 1 = RR 42.8349, 40.2286 and 41.1963 respectively. 2 Critical Accounting Estimates and Judgements in Applying Accounting Policies These interim condensed consolidated financial statements are to be considered along with the Group’s annual financial statements for the year ended December 31, 2012. These interim condensed consolidated financial statements do not contain all notes which are obligatory to disclosure in a full version of financial statements. Principles and methods of accounting policy applied in these interim condensed consolidated financial statements comply with the principles and methods applied and described in the Group’s annual Financial Statements for the year ended December 31, 2012. Judgments made by the Group’s management while applying accounting policy comply with the judgments described in the Bank’s annual Financial Statements for 2012. The Group’s Management did not apply any new estimates and judgments. As a result of applying estimates and judgments described in the Group’s financial statements for the year ended December 31, 2012, the Group’s assets, revenues and income for the six months ended June 30, 2013 did not change materially. 3 Cash and Cash Equivalents In millions of Russian Roubles June 30, 2013 (unaudited) December 31, 2012 Cash on hand Correspondent accounts and overnight placements with banks of - Russian Federation - Other countries Cash balances with the CBRF (other than mandatory cash balances) 6 738 8 616 11 405 15 271 6 415 1 049 16 550 14 670 Total cash and cash equivalents 39 829 40 885 Cash and cash equivalents are not impaired and are not collateralized. 5
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 4 Trading Securities June 30, 2013 (unaudited) December 31, 2012 Corporate Eurobonds Corporate bonds Municipal bonds Russian Federation Eurobonds Federal loan bonds (OFZ) 4 139 2 903 563 350 - 1 517 3 636 102 603 Total debt securities 7 955 5 858 1 26 7 956 5 884 In millions of Russian Roubles Corporate shares Total trading securities All the securities included into trading securities portfolio have market quotations. Trading securities are carried at fair value which also reflects any credit risk related write-downs. As trading securities are carried at their fair values based on observable market data, the Group does not analyse or monitor impairment indicators. Trading securities are used by the Group basically for managing liquidity risk. The Bank is licensed by the Federal Commission on Securities Markets for trading in securities. 5 Due from Other Banks In millions of Russian Roubles Short-term placements with other banks Insurance deposits with non-resident banks Total due from other banks 6 June 30, 2013 (unaudited) December 31, 2012 928 484 5 406 388 1 412 5 794 June 30, 2013 (unaudited) December 31, 2012 Loans and Advances to Customers In millions of Russian Roubles Corporate loans - large Corporate loans - medium Corporate loans - small Mortgage loans Other loans to individuals 50 801 52 110 27 254 24 867 11 905 44 587 51 849 27 079 22 302 10 548 Total gross loans and advances to customers (before provision for loan impairment) 166 937 156 365 Less: Provision for loan impairment (16 918) (14 703) Total loans and advances to customers 150 019 141 662 Loans are divided into corporate and retail. For 2013 and 2012, the corporate portion of borrowers is further divided on the basis of total amount owed by the customer into the following categories: large – from of RR 750 million and over, medium – from RR 100 million to RR 750 million, small – less than RR 100 million. Retail loans are divided into categories by product: mortgage loans and other loans to individuals including consumer loans, car loans and bank card loans. Mortgage loans include securitised mortgage loans of RR 6 092 million. As at June 30, 2013, the carrying value of those mortgage loans equals to their nominal value. 6
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 6 Loans and Advances to Customers (Continued) Movements in the provision for loan impairment during the six months of 2013 are as follows: In millions of Russian Roubles Corporate loans large Corporate loans medium Corporate loans small Mortgage loans Other loans to individuals Total 5 291 5 426 2 831 611 544 14 703 1 893 112 79 117 74 2 275 - - (33) - (1) (34) - - (26) - - (26) 7 184 5 538 728 617 Provision for loan impairment at January 1, 2013 Provision for impairment during the year Amounts written off during the year as uncollectible Result from disposal of loans under cession agreements Provision for loan impairment at June 30, 2013 2 851 16 918 Movements in the provision for loan impairment during 2012 are as follows: In millions of Russian Roubles Corporate loans large Corporate loans medium Corporate loans small Mortgage loans Other loans to individuals Total 3 514 5 501 2 876 432 642 12 965 1 844 397 292 179 10 2 722 - - Provision for loan impairment at January 1, 2012 Provision for impairment during the year Amounts written off during the year as uncollectible Result from disposal of loans under cession agreements Provision for loan impairment at December 31, 2012 (67) 5 291 (472) 5 426 (283) - (9) (292) (54) - (99) (692) 2 831 611 544 14 703 Economic sector risk concentrations within the customer loan portfolio are as follows: In millions of Russian Roubles Manufacturing Individuals Trade Construction Real estate Agriculture Transport and communication Finance State and public organisations Other Total gross loans and advances to customers June 30, 2013 (unaudited) Amount % December 31, 2012 Amount % 48 631 36 772 36 325 11 852 10 264 8 828 5 433 2 372 949 5 511 29 22 22 7 6 5 3 2 1 3 42 466 32 850 35 602 9 446 8 381 9 310 8 225 1 773 1 670 6 642 28 21 23 6 5 6 5 1 1 4 166 937 100 156 365 100 State and public organisations exclude government owned profit orientated businesses. As at June 30, 2013, the Group had 36 borrowers with aggregated loan amounts above RR 750 million. The total aggregate amount of these loans was RR 50 801 million or 30.4% of the gross loan portfolio before provision for impairment. As at December 31, 2012, the Group had 33 borrowers with aggregated loan amounts above RR 750 million. The total aggregate amount of these loans was RR 44 587 million or 28.5% of the gross loan portfolio before provision for impairment. 7
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 6 Loans and Advances to Customers (Continued) Analysis by credit quality of loans outstanding at June 30, 2013 is as follows: Corporate Corporate Corporate Mortgage loans loans loans loans - large - medium - small In millions of Russian Roubles Neither past due nor impaired - Borrowers with credit history over two years - New large borrowers - Corporate loans assessed on a portfolio basis issued in 2013 - Corporate loans assessed on a portfolio basis issued before 2013 Loans to individuals assessed on a portfolio basis: - Mortgage loans issued in 2013 - Mortgage loans issued before 2013 - consumer loans - credit cards - car loans Other loans to individuals Total 38 225 4 347 - - - - 38 225 4 347 - 23 270 14 900 - - 38 170 - 23 831 9 424 - - 33 255 - - - 4 736 19 671 - 9 040 1 892 331 4 736 19 671 9 040 1 892 331 42 572 47 101 24 324 24 407 11 263 149 667 Past due but not impaired - less than 30 days overdue - 30 to 90 days overdue - 91 to 180 days overdue - 181 to 360 days overdue - - 55 - 58 39 19 180 131 8 12 6 244 47 31 186 Total gross past due but not impaired - - 55 296 157 508 Loans collectively determined to be impaired - less than 30 days overdue - 30 to 90 days overdue - 91 to 180 days overdue - 181 to 360 days overdue - over 360 days overdue - 135 398 3 019 145 153 89 239 2 185 - 18 13 18 109 145 306 102 655 5 313 Total gross collectively impaired loans - 3 552 2 811 - 158 6 521 Loans individually determined to be impaired - 30 to 90 days overdue - 91 to 180 days overdue - 181 to 360 days overdue - over 360 days overdue 2 785 5 444 1 457 64 3 1 160 34 27 33 233 2 822 27 34 7 358 Total gross individually impaired loans 8 229 1 457 64 164 327 10 241 Less impairment provision (7 184) (5 538) (2 851) (728) (617) (16 918) Total loans and advances to customers less provision for impairment 43 617 46 572 24 403 Total gross neither past due nor impaired 24 139 11 288 150 019 8
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 6 Loans and Advances to Customers (Continued) Analysis by credit quality of loans outstanding at December 31, 2012 is as follows: Corporate Corporate Corporate Mortgage loans loans loans loans - large - medium - small In millions of Russian Roubles Neither past due nor impaired - Borrowers with credit history over two years - New borrowers - Corporate loans assessed on a portfolio basis issued in 2012 - Corporate loans assessed on a portfolio basis issued before 2012 Loans to individuals assessed on a portfolio basis: - Mortgage loans issued in 2012 - Mortgage loans issued before 2012 - consumer loans - credit cards - car loans Other loans to individuals Total 30 909 8 233 - - - - 30 909 8 233 - 34 282 20 121 - - 54 403 - 12 746 4 014 - - 16 760 - - - 12 096 9 816 - 7 756 1 901 389 12 096 9 816 7 756 1 901 389 39 142 47 028 24 135 21 912 10 046 142 263 Past due but not impaired - less than 30 days overdue - 30 to 90 days overdue - 91 to 180 days overdue - 181 to 360 days overdue - - 141 - 20 20 171 36 60 13 5 5 221 33 176 41 Total gross past due but not impaired - - 141 247 83 471 Loans collectively determined to be impaired - less than 30 days overdue - 30 to 90 days overdue - 91 to 180 days overdue - 181 to 360 days overdue - over 360 days overdue - 347 449 2 568 3 43 150 294 2 256 - 12 12 16 102 3 55 509 759 4 926 Total gross collectively impaired loans - 3 364 2 746 - 142 6 252 Loans individually determined to be impaired - 30 to 90 days overdue - 91 to 180 days overdue - 181 to 360 days overdue - over 360 days overdue 3 726 960 759 1 457 57 143 22 13 17 225 22 3 739 977 2 641 Total gross individually impaired loans 5 445 1 457 57 143 277 7 379 Less impairment provision (5 291) (5 426) (2 831) (611) (544) (14 703) Total loans and advances to customers less provision for impairment 39 296 46 423 24 248 Total gross neither past due nor impaired 21 691 10 004 141 662 The Group believes that the borrowers with long credit history have a less degree of credit risk. The primary factors that the Group considers in determining whether a loan is impaired are its overdue status and realisability of related collateral, if any. 9
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 6 Loans and Advances to Customers (Continued) The Group applied the portfolio provisioning methodology prescribed by IAS 39 Financial Instruments: Recognition and Measurement, and set up portfolio provisions for impairment losses that were incurred but have not been specifically identified with any individual loan by the reporting date. The Group’s policy is to classify each loan as “neither past due nor impaired” until specific objective evidence of impairment of the loan is identified. The impairment provisions may exceed the total gross amount of individually impaired loans as a result of this policy and the portfolio impairment methodology. Loans collectively determined to be impaired are represented by corporate small and medium loans, and loans to individuals except for mortgage loans, which have an overdue status as an impairment trigger event. Past due but not impaired loans represent collateralised loans where the fair value of collateral together with consideration of discounting covers the overdue interest and principal repayments. The amount reported as past due but not impaired is the whole balance of such loans, not only the individual instalments that are past due. Information about collateral at June 30, 2013 is as follows: In millions of Russian Roubles Unsecured loans Loans collateralised by: residential real estate other real estate equipment, inventories, motor vehicles securities (promissory notes, shares) cash deposits state guarantees and guarantees of the RF constituents other guarantees and third parties' guarantees other assets (other types of property, rights) Total gross loans and advances to customers (before provision for impairment) Corporate loans large Corporate loans medium Corporate loans small Mortgage loans Other loans to individuals Total 3 580 2 465 1 759 1 310 8 203 17 317 22 722 23 335 10 545 23 430 45 25 845 23 455 57 492 8 903 12 201 8 128 - 423 29 655 1 611 - 346 - 50 6 23 14 3 27 2 033 47 810 1 438 652 - - 2 900 10 960 10 674 5 638 45 2 330 29 647 2 215 1 651 476 - 49 4 391 50 801 52 110 27 254 24 867 11 905 166 937 Information about collateral at December 31, 2012 is as follows: In millions of Russian Roubles Unsecured loans Loans collateralised by: residential real estate other real estate equipment, inventories, motor vehicles securities (promissory notes, shares) cash deposits state guarantees and guarantees of the RF constituents other guarantees and third parties' guarantees other assets (other types of property, rights) Total gross loans and advances to customers (before provision for impairment) Corporate loans large Corporate loans medium Corporate loans small Mortgage loans Other loans to individuals Total 7 371 3 043 1 932 1 151 5 582 19 079 16 833 23 294 11 049 21 010 40 28 918 21 038 52 134 5 766 13 425 8 430 - 490 28 111 - 207 - 40 35 14 8 8 250 62 812 1 142 545 - - 2 499 10 430 9 099 4 827 52 2 355 26 763 3 375 1 639 256 - 1 159 6 429 44 587 51 849 27 079 22 302 10 548 156 365 10
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 7 Investment Securities Available for Sale In millions of Russian Roubles June 30, 2013 (unaudited) December 31, 2012 Corporate bonds Municipal bonds Corporate Eurobonds 2 901 430 - 875 573 559 Total debt securities 3 331 2 007 519 469 3 850 2 476 Corporate shares Total investment securities available for sale 8 Other Assets In millions of Russian Roubles Investment properties Non-current assets classified as held for sale Inventory Prepayments Precious metals Other Total other assets (before provision for impairment of other assets) Less: Provision for impairment of other assets Total other assets 9 June 30, 2013 (unaudited) December 31, 2012 1 301 868 3 500 259 74 167 1 847 905 2 296 202 31 381 6 169 (729) 5 440 5 662 (787) 4 875 Due to Other Banks June 30, 2013 (unaudited) December 31, 2012 Placements of other banks Correspondent accounts of other banks 8 367 7 7 630 17 Total due to other banks 8 374 7 647 In millions of Russian Roubles 10 Customer Accounts In millions of Russian Roubles State and public organisations - Current/settlement accounts - Term deposits June 30, 2013 (unaudited) December 31, 2012 138 1 593 84 - Other legal entities - Current/settlement accounts - Term deposits 35 653 24 447 35 982 25 896 Individuals - Current/demand accounts - Term deposits 20 105 87 374 20 900 81 014 Total customer accounts 169 310 163 876 State and public organisations exclude government owned profit orientated businesses. 11
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 10 Customer Accounts (Continued) Economic sector concentrations within customer accounts are as follows: In millions of Russian Roubles June 30, 2013 (unaudited) Amount % December 31, 2012 Amount % Individuals Trade Finance Manufacturing Construction Transport and communication Agriculture State and public organisations Other 107 479 21 922 11 249 10 219 6 936 5 799 2 829 1 731 1 146 63 13 7 6 4 3 2 1 1 101 914 22 771 10 927 8 405 8 362 8 298 2 314 84 801 62 14 7 5 5 5 2 - Total customer accounts 169 310 100 163 876 100 11 Debt Securities in Issue June 30, 2013 (unaudited) December 31, 2012 Promissory notes Mortgage backed bonds in issue Deposit certificates 4 471 4 493 172 4 765 2 082 185 Total debt securities in issue 9 136 7 032 In millions of Russian Roubles 11 Debt Securities in Issue (Continued) In April, 2013, the Group issued bonds amounting to RR 4 000 mln of total face value on the frame of the second deal of mortgage securitization. The securities were issued by SPV Closed Joint Stock Company “Mortgage agent Vozrozhdenie 2” (CJSC “MAV 2”). Class A bonds in the amount of RR 2 960 mln were placed via public offering on MICEX, and Class B bonds in the amount of RR 1 040 mln were acquired by Bank Vozrozhdenie and for that reason, were not reflected in these Condensed Consolidated Financial Statements. Moody’s Investors Service international ratings agency assigned credit rating to Class A bonds at the level of Baa3. With the balance value of RR 2 960 mln, Сlass A bonds have fixed coupon rate of 8.50% and shall be fully repaid by August 25, 2045. As a result of the mortgage bonds placement, the Group refinanced loan in amount of RR 2 803 mln (interim financing), raised in the frame of the second deal of mortgage loans securitisation in December, 2012. In December, 2011, in the frame of the second deal of mortgage loans the Group issued bonds for the total face value of RR 4 071 mln. The securities were issued by SPV Closed Joint Stock Company “Mortgage agent Vozrozhdenie 1” (CJSC “MAV 1”). Class A bonds in the amount of RR 2 931 mln were placed via public offering on MICEX, and Class B bonds in the amount of RR 1 140 mln were acquired by the Group and for that reason, were not reflected in these Condensed Consolidated Financial Statements. Moody’s Investors Service international ratings agency assigned credit rating to Class A bonds at the level of Baa2. Сlass A bonds have fixed coupon rate of 8.95% and shall be fully repaid by August 10, 2044. As of June 30, 2013, mortgage-backed bonds include bonds issued by Closed Joint Stock Company “Mortgage agent Vozrozhdenie 2” (CJSC “MAV 2”) with balance value of RR 2 790 mln and bonds issued by Closed Joint Stock Company “Mortgage agent Vozrozhdenie 1” (CJSC “MAV 1”) with balance value of RR 1 703 mln, as the funds from prepayment of mortgage loans were channelled to repayment of the rest of Class A bonds face value, in accordance with the terms of the bonds issue. 12
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 12 Subordinated Loans Subordinated loans represent long-term deposits of the Group’s customers. The subordinated debt ranks after all other creditors in case of the Group's liquidation. The details of subordinated loans attracted by the Group are disclosed in the table below: Start date Maturity Currency Subordinated loan 1 June 2005 June 2013 Subordinated loan 2 December 2005 December 2013 Subordinated loan 3 March 2006 March 2014 Subordinated loan 4 May 2006 May 2014 Subordinated loan 5 June 2006 June 2014 Subordinated loan 6 December 2006 December 2013 Subordinated loan 7 April 2007 April 2014 Subordinated loan 8 July 2008 August 2018 Subordinated loan 9 August 2010 August 2018 Subordinated loan 10 July 2012 July 2020 Subordinated loan 11 December 2012 July 2020 Subordinated loan 12 February 2013 July 2020 USD USD USD USD USD RR RR USD USD RR RR RR June 30, 2013 (unaudited) ContracValue, tual RR interest million rate, % 8.00 6.50 6.50 6.50 8.25 8.25 11.21 8.00 9.25 9.25 9.25 Total subordinated loans 230 165 99 165 1 041 520 1 687 99 1 000 1 000 1 000 7 006 December 31, 2012 Contractual interest rate, % Value, RR million 5.75 8.00 6.50 6.50 6.50 8.25 8.25 9.21 8.00 9.25 9.25 - 304 213 152 91 152 1 000 500 1 548 91 1 000 1 000 - 6 051 The contractual interest rates are regularly revised in accordance with the terms of subordinated loan agreements No.6 and No.7. Under the Subordinated loan agreement №8, the Group should follow certain financial norms. As of December 31, 2012, the Group broke two norms. Subordinated loans No. 2, 9 were received by the Group from a related party. 13
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 13 Interest Income and Expense 6M ended June 30, 2013 (unaudited) 6M ended June 30, 2012 (unaudited) Interest income Loans and advances to customers - legal entities Loans and advances to customers - individuals Correspondent accounts and due from other banks Trading securities Investment securities available for sale 6 134 2 437 256 178 92 5 591 1 860 92 313 31 Total interest income 9 097 7 887 Interest expense Term deposits of individuals Term deposits of legal entities Debt securities in issue Subordinated loans Due to other banks Other borrowed funds Current/settlement accounts of legal entities 2 728 985 327 301 195 61 83 2 049 744 309 167 188 19 Total interest expense 4 680 3 476 Net interest income 4 417 4 411 6M ended June 30, 2013 (unaudited) 6M ended June 30, 2012 (unaudited) 739 674 508 202 152 112 200 715 594 565 241 171 124 195 2 587 2 605 Fee and commission expense Credit/debit cards and cheques settlements Settlement operations Settlements with currency and stock exchanges Cash transactions Other 203 37 7 7 11 150 12 7 5 14 Total fee and commission expense 265 188 2 322 2 417 In millions of Russian Roubles 14 Fee and Commission Income and Expense In millions of Russian Roubles Fee and commission income Settlement operations Credit/debit cards and cheques settlements Cash transactions Payroll projects Guarantees issued Cash collection Other Total fee and commission income Net fee and commission income 14
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 15 Administrative and Other Operating Expenses 6M ended June 30, 2013 (unaudited) 6M ended June 30, 2012 (unaudited) Staff costs Administrative expenses Other expenses related to premises and equipment Contributions to the State Deposit Insurance Agency Depreciation of premises and equipment Rent expenses Taxes other than on income Repairs of premises and equipment Advertising and marketing services Other 2 620 339 226 204 186 161 133 42 55 260 2 518 336 228 180 212 152 137 59 50 308 Total administrative and other operating expenses 4 226 4 180 In millions of Russian Roubles Included in staff costs are statutory contributions to non-budget funds of RR 543 million (2012: RR 520 million). 16 Segment Analysis Operating segment is a distinguishable component of the Bank that is engaged in providing products or services (business segment) with the purpose to generate income, whose operating results are regularly reviewed by the Bank’s Management Board based on statutory management accounts in terms of each operating segment. The functions of the chief operating decision maker (CODM) are performed by the Management Board of the Bank. Operating management and performance of an operating segment are the responsibility of the Chairman of the Management Board or the Deputy Chairman of the Management Board of the Bank supervising corresponding business line. Transactions between the operating segments are on normal commercial terms and conditions. Funds are ordinarily reallocated between operating segments, resulting in funding cost transfers disclosed in interest income and expense. Interest rates for these funds are differentiated depending on the attraction terms and are based on market indicators. Segment assets and liabilities include operating assets and liabilities representing a major part of the Bank’s assets and liabilities, as well as funds reallocated between operating segments, but excluding taxation. Internal charges and transfer pricing adjustments have been reflected in the performance of each operating segment. Segment performance is based on profitability and cost-effectiveness of operating assets. The CODM evaluates performance of each segment based on profit before tax. The table below represents the segment information of interest-bearing assets and interest-bearing liabilities per reportable segments for the six months ended June 30, 2013 and for the year ended December 31, 2012. 15
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 16 Segment Analysis (Continued) Corporate business Retail business Bank cards transactions Total assets of reportable segments 135 785 30 575 6 979 44 463 - - 217 803 Total liabilities of reportable segments 76 513 86 903 20 711 5 458 - - 189 584 119 486 24 171 2 523 35 742 - - 181 922 64 314 74 952 18 001 4 766 - 1 555 163 588 (in millions of Russian Roubles) Financial Liquidity business Other Total June 30, 2013 December 31, 2012 Total assets* of reportable segments Total liabilities* of reportable segments * For the purpose of preparation of the management accounts the amount of assets and liabilities, as of December 31, 2012, is calculated as average balances for the respective accounting period. The table below represents the information of income and expenses per reportable segments for the six months ended June 30, 2013. The Group’s management considers operating income before provision for loan impairment as a key measurement of reportable segments results. (in millions of Russian Roubles) Corporate business Retail Bank cards business transactions Financial business Liquidity Other Total June 30, 2013 - Interest income - Non-interest income - Transfer income 5 920 1 647 2 275 1 954 464 3 585 193 898 295 520 193 167 947 8 - 8 587 3 210 7 269 Total revenues 9 842 6 003 1 386 880 947 8 19 066 - Interest expense - Non-interest expense - Transfer expense (1 594) (48) (5 396) (2 657) (5) (1 429) (70) (209) (78) (146) (10) (301) - (4) (65) (4 467) (276) (7 269) Total expenses (7 038) (4 091) (357) (457) - (69) (12 012) 2 804 1 912 Operating income before provision for loan impairment Provision for loan impairment Operating income Administrative and other operating expenses Depreciation of premises and equipment Financial result from cession Profit/(loss) before tax (Segment result) (2 319) 485 (172) 1 740 1 029 (11) 1 018 423 947 (61) 7 054 - - (6) (2 508) 423 947 (67) 4 546 (1 664) (1 250) (675) (43) - (33) (3 665) (88) (60) (35) (2) - (1) (186) (65) - - - - - (65) (1 332) 430 308 378 947 (101) 630 16
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 16 Segment Analysis (Continued) The table below represents segment information on the major reportable business lines of the Group for the six months ended June 30, 2012: (in millions of Russian Roubles) Corporate business Retail Bank cards business transactions Financial business Other Liquidity Total June 30, 2012 - Interest income - Non-interest income - Transfer income 5 369 1 572 1 476 1 410 490 2 876 191 859 159 426 146 135 1 809 (17) 70 7 396 3 050 6 525 Total revenues 8 417 4 776 1 209 707 1 809 53 16 971 - Interest expense - Non-interest expense - Transfer expense (1 123) (40) (5 190) (2 011) (7) (1 065) (38) (160) (82) (99) (22) (188) - (70) (4) - (3 341) (233) (6 525) Total expenses (6 353) (3 083) (280) (309) - (74) (10 099) 2 064 1 693 929 398 1 809 (21) 6 872 - - (9) (1 608) 1 809 (30) 5 264 Operating income before provision for loan impairment Provision for loan impairment Operating income Administrative and other operating expenses Depreciation of premises and equipment Financial result from cession Profit/(loss) before tax (Segment result) (1 557) 507 (37) (5) 1 656 924 398 (1 637) (1 188) (675) (37) - (15) (3 552) (86) (59) (37) (2) - (1) (185) 97 - 3 - - - 100 (1 119) 409 215 359 1 809 (46) 1 627 17
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 16 Segment Analysis (Continued) The reconciliation of assets, liabilities, income and expenses of the Group’s reportable segments for the six months ended June 30, 2013. Reconciliation of reportable segment assets (in millions of Russian Roubles) June 30, 2013 (unaudited) Total reportable segment assets Assets unallocated between operating segments Differences in fair valuation of securities Provision for loan impairment Provision for impairment of other assets Impairment of investment securities available for sale Recognition of commission income from lending using the effective interest method Recognition of financial instruments using the effective interest method Consolidation 217 803 11 364 212 (16 918) (729) (71) Total assets under IFRS 216 168 (49) 109 4 447 Reconciliation of reportable segment liabilities (in millions of Russian Roubles) June 30, 2013 (unaudited) Total reportable segment liabilities Liabilities unallocated between operating segments Accrued expenses Recognition of fee and commission income on the time-proportionate basis Recognition of liabilities at amortised cost Consolidation 189 584 178 561 138 (11) 4 367 Total liabilities under IFRS 194 817 18
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 16 Segment Analysis (Continued) The reconciliation of assets, liabilities, income and expenses of the Group’s reportable segments as of December 31, 2012. Reconciliation of reportable segment assets (in millions of Russian Roubles) Total reportable segment assets Assets unallocated between operating segments Interest claim Differences in financial statements format * Deviation due to recording of reportable segment assets without regard to the events after the end of the reporting period Differences in fair valuation of securities Adjustment of provisions for loan impairment based on the incurred loss model Recognition of commission income from lending using the effective interest method Recognition of financial instruments using the effective interest method Impairment of investment securities available for sale Consolidation Total assets under IFRS December 31, 2012 181 922 30 564 920 (8 928) 29 136 (316) (58) 87 (71) 4 777 209 062 Reconciliation of reportable segment liabilities (in millions of Russian Roubles) December 31, 2012 Total reportable segment liabilities Liabilities unallocated between operating segments Liabilities on interest payment Differences in financial statements format * Deviation due to recording of reportable segment liabilities without regard to the events after the end of the reporting period Recognition of liabilities at amortised cost Consolidation 163 588 846 1 881 17 225 Total liabilities under IFRS 188 255 (8) (12) 4 735 * Differences in financial statements format arise from presentation of assets and liabilities of reportable segments calculated as average balances for the reporting period and reflecting assets of reportable segments before provision for the purpose of management account preparation. 19
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 16 Segment Analysis (Continued) Reconciliation of profit and losses before tax of the reportable segments The table below represents reconciliation of profit before tax and other material income or expenses for the reportable segments with the statement on comprehensive income under IFRS for the six months ended June 30, 2013: Before tax profit Interest income Noninterest income Interest expense 630 8 587 3 210 (4 467) 10 10 - NonProvision interest for loan income impairment (in millions of Russian Roubles) Total reportable segment result Recognition of commission income from lending using the effective interest method Recognition of other fees and commissions by reference to completion of the specific transaction Recognition of interest income/expense using the effective interest method Differences in fair valuation of trading securities Adjustment of provisions for loan impairment based on the incurred loss model Accrued Bank’s expenses of reportable period Recognition of financial instruments using the effective interest method Reclassification of management accounts items Provision for impairment of other assets Consolidation Other Total under IFRS Administ rative and other operating expenses (276) (2 573) (3 851) - - - - (28) - (28) - - - - (1) - 3 (4) - - - 5 - 5 - - - - 268 (1) 10 - - 259 - - - - - - 22 22 - - - - - 218 (43) - (150) (17) (8) 58 38 (3) 263 (2) 9 (209) - - 58 - (16) (10) 9 097 3 166 (4 680) (426) (2 273) (4 226) (341) 658 (341) - 20
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 16 Segment Analysis (Continued) The table below represents reconciliation of profit before tax and other material income or expenses for the reportable segments with the statement on comprehensive income under IFRS for the six months ended June 30, 2012: Before tax profit Interest income Noninterest income Interest expense (3 341) NonProvision interest for loan income impairment (in millions of Russian Roubles) Total reportable segment result Recognition of commission income from lending using the effective interest method Recognition of other fees and commissions by reference to completion of the specific transaction Recognition of interest income/expense using the effective interest method Differences in fair valuation of trading securities Adjustment of provisions for loan impairment based on the incurred loss model Accrued Bank’s expenses of reportable period Difference in depreciation of premises and equipment Recognition of financial instruments using the effective interest method Reclassification of management accounts items Provision for impairment of other assets Consolidation Other Total under IFRS 1 627 7 396 3 050 48 51 (3) 30 - 29 Administ rative and other operating expenses (233) (1 508) (3 737) - - - - 30 - - - - 29 - - - - - 1 - 1 - - - - 358 - (13) - - 371 - (330) - - - - - (330) (21) - - - - - (21) 2 - 3 (1) - - - - 175 88 (134) (27) (51) (51) 236 - (143) 11 - - (314) - (24) (17) 7 887 3 024 (3 476) (260) (1 502) (4 180) (314) 69 (6) 1 493 21
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 17 Financial Risk Management The risk management function within the Group is carried out in respect of financial risks, operational risks and legal risks. Financial risk comprises market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The primary objectives of the financial risk management function are to establish risk limits, and then ensure that exposure to risks stays within these limits. The operational and legal risk management functions are intended to ensure proper functioning of internal policies and procedures to minimise operational and legal risks. Policy and methods of financial risk management accepted by the Bank comply with the policy and methods described and applied in the Group’s annual financial report for the year ended December 31, 2012. The tables below summarize the Group’s exposure to currency risk and Bank’s liquidity position taking into account expected contractual time left before redemption of assets and liabilities. Currency risk. The Group is exposed to currency risk due to the fact that its assets and liabilities are denominated in different currencies as well as due to existence of open currency positions resulting from foreign currency transactions. The table below summarises the Group’s exposure to foreign currency exchange rate risk at June 30, 2013: RR USD Euro Other Total In millions of Russian Roubles Monetary financial assets Cash and cash equivalents Mandatory cash balances with CBRF Trading securities Due from other banks Loans and advances to customers Investment securities available for sale Other financial assets 23 528 10 456 5 821 24 39 829 1 822 3 466 928 133 814 403 3 556 484 11 822 156 933 4 383 - 2 381 7 955 1 412 150 019 3 331 661 279 7 - 3 331 947 Total monetary financial assets 167 550 27 000 11 300 24 205 874 Monetary financial liabilities Due to other banks Customer accounts Debt securities in issue Other borrowed funds Other financial liabilities Subordinated loans 4 540 138 853 9 115 206 4 561 986 21 957 21 23 2 445 2 848 8 480 6 - 20 - 8 374 169 310 9 136 235 7 006 Total monetary financial liabilities 157 275 25 432 11 334 20 194 061 Net balance sheet position 10 275 1 568 (34) 4 11 813 Credit related commitments 24 582 860 809 - 26 251 The above analysis includes only monetary assets and liabilities. The Group considers that Investments in equities and non-monetary assets are not considered to give rise to any material currency risk. 22
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 17 Financial Risk Management (Continued) The table below summarises the Group’s exposure to foreign currency exchange rate risk at December 31, 2012: RR USD Euro Other Total In millions of Russian Roubles Monetary financial assets Cash and cash equivalents Mandatory cash balances with CBRF Trading securities Due from other banks Loans and advances to customers Investment securities available for sale Other financial assets 23 421 10 772 6 657 35 40 885 1 531 4 341 5 403 127 432 399 1 473 391 9 825 167 44 4 405 - 2 097 5 858 5 794 141 662 1 448 778 559 244 81 - 2 007 1 103 Total monetary financial assets 164 354 23 663 11 354 35 199 406 Monetary financial liabilities Due to other banks Customer accounts Debt securities in issue Other borrowed funds Other financial liabilities Subordinated loans 3 544 135 546 7 000 2 803 315 3 500 1 146 19 955 32 24 2 551 2 957 8 356 11 - 19 - 7 647 163 876 7 032 2 803 350 6 051 Total monetary financial liabilities 152 708 23 708 11 324 19 187 759 Net balance sheet position 11 646 (45) 30 16 11 647 Credit related commitments 23 979 455 862 - 25 296 23
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 17 Financial Risk Management (Continued) Liquidity risk. Liquidity risk is defined as the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities. The Group is exposed to daily calls on its available cash resources from overnight deposits, current accounts, maturing deposits, loan draw-downs, guarantees and from margin and other calls on cash-settled derivative instruments. The analyses of Group’s liquidity risk as at June 30, 2013 is as follows: Demand and less than 1 month From 1 to 6 months From 6 to 12 months Over 12 months Total 39 829 - - - 39 829 916 7 956 928 3 774 947 947 497 48 138 1 340 - 366 34 317 1 044 - 602 484 63 790 519 - 2 381 7 956 1 412 150 019 3 850 947 Total financial assets 55 297 49 975 35 727 65 395 206 394 Financial liabilities Due to other banks Customer accounts Debt securities in issue Other borrowed funds Other financial liabilities Subordinated loans 167 66 099 806 235 - 430 33 395 2 882 2 991 541 25 847 908 927 7 236 43 969 4 540 3 088 8 374 169 310 9 136 235 7 006 Total financial liabilities 67 307 39 698 28 223 58 833 194 061 Net liquidity gap based on expected maturities at June 30, 2013 (12 010) 10 277 7 504 6 562 12 333 Cumulative liquidity gap as at June 30, 2013 (12 010) (1 733) 5 771 12 333 - - - In millions of Russian Roubles Financial assets Cash and cash equivalents Mandatory cash balances with the CBRF Trading securities Due from other banks Loans and advances to customers Investment securities available for sale Other financial assets Financial guarantees Other credit related commitments 13 360 12 891 13 360 12 891 The above analysis is based on expected maturities. The entire portfolio of trading securities is therefore classified within demand and less than one month based on management’s assessment of the portfolio’s realisability. The expected maturity of investment securities available for sale is based on offer agreement date. 24
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 17 Financial Risk Management (Continued) The analyses of Group’s liquidity risk as at December 31, 2012 is as follows: Demand and less than 1 month From 1 to 6 months From 6 to 12 months Over 12 months Total 40 885 - - - 40 885 868 5 884 5 406 6 458 1 103 413 40 387 1 540 - 342 30 761 467 - 474 388 64 056 469 - 2 097 5 884 5 794 141 662 2 476 1 103 Total financial assets 60 604 42 340 31 570 65 387 199 901 Financial liabilities Due to other banks Customer accounts Debt securities in issue Other borrowed funds Other financial liabilities Subordinated loans 155 68 500 1 406 350 - 462 31 051 2 179 346 502 26 189 1 340 1 213 6 528 38 136 2 107 2 803 4 492 7 647 163 876 7 032 2 803 350 6 051 Total financial liabilities 70 411 34 038 29 244 54 066 187 759 Net liquidity gap based on expected maturities at December 31, 2012 (9 807) 8 302 2 326 11 321 12 142 Cumulative liquidity gap as at December 31, 2012 (9 807) (1 505) 821 12 142 Financial guarantees Other credit related commitments 10 181 15 115 - - - In millions of Russian Roubles Financial assets Cash and cash equivalents Mandatory cash balances with the CBRF Trading securities Due from other banks Loans and advances to customers Investment securities available for sale Other financial assets 10 181 15 115 25
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 18 Contingencies and Commitments Credit related commitments. The primary purpose of these instruments is to ensure that funds are available to a customer as required. Guarantees and standby letters of credit, which represent irrevocable assurances that the Group will make payments in the event that a customer cannot meet its obligations to third parties, carry the same credit risk as loans. Documentary and commercial letters of credit, which are written undertakings by the Group on behalf of a customer authorising a third party to draw drafts on the Group up to a stipulated amount under specific terms and conditions, are collateralised by the underlying shipments of goods to which they relate or cash deposits and, therefore, carry less risk than a direct borrowing. Commitments to extend credit represent unused portions of authorisations by the Group's management to extend credit in the form of loans, guarantees or letters of credit. With respect to credit risk on commitments to extend credit, the Group is potentially exposed to loss in an amount equal to the total unused commitments. However, the likely amount of loss is less than the total unused commitments since most commitments to extend credit are contingent upon customers maintaining specific credit standards. The Group monitors the term to maturity of credit related commitments, because longer-term commitments generally have a greater degree of credit risk than shorter-term commitments. Outstanding credit related commitments are as follows: June 30, 2013 (unaudited) December 31, 2012 Guarantees issued Unused limits on overdraft loans Undrawn credit lines Import letters of credit 13 360 11 283 1 549 59 10 181 13 921 1 163 31 Total credit related commitments 26 251 25 296 In millions of Russian Roubles The total outstanding contractual amount of undrawn credit lines, letters of credit, and guarantees does not necessarily represent future cash requirements, as these financial instruments may expire or terminate without being funded. 19 Fair Value of Financial Instruments Fair value is the amount at which an asset could be exchanged or which could be paid for the purpose of transfer of liability in the frame of a current transaction between market participants as of the date of valuation, so called “exit price”, from the point of view of market participant having the asset or liability regardless whether such price is observable or calculated by means of another valuation method. The price of the main market or - in the absence thereof - the price of the most favourable market, applied for fair value determination of asset or liability, should not be adjusted with regard to the transaction expense. (a) Analysis by fair value hierarchy of financial instruments carried at fair value. The Group uses the following hierarchy for determining and disclosing fair values of financial instruments: Level 1: current quoted (unadjusted) prices of financial assets or quoted prices for similar financial assets. Level 2: valuation technique, whose inputs that have a significant impact on the fair value can be directly or indirectly observed in the market. Level 3: valuation technique taking into account significant adjustments of market data or based on a significant volume of data inaccessible to objective observation. 26
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 19 Fair Value of Financial Instruments (Continued) For financial instruments carried at fair value, the level in the fair value hierarchy into which the fair values are categorised are as follows: June 30, 2013 December 31, 2012 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 FINANCIAL ASSETS Trading securities - Corporate Eurobonds - Corporate bonds - Federal loan bonds (OFZ) - Municipal bonds - RF Eurobonds - Corporate shares 4 139 2 903 563 350 1 - - 1 517 3 636 603 102 26 - - Investment securities available for sale - Corporate bonds - Municipal bonds - Corporate shares - Corporate Eurobonds 2 901 430 226 - - 293 - 875 573 176 559 - 293 - Other financial assets - Term deals - 15 - - 4 - 11 513 15 293 8 067 4 293 In million of Russian Roubles TOTAL FINANCIAL ASSETS CARRIED AT FAIR VALUE Management applies judgement in categorising financial instruments using the fair value hierarchy. If a fair value measurement uses observable inputs that require significant adjustment, that measurement is a Level 3 measurement. (b) Reconciliation of movements in instruments belonging to Level 3 of the fair value hierarchy. A reconciliation of movements in Level 3 of the fair value hierarchy by class of instruments is as follows: In million of Russian Roubles Fair value at January 1 Fair valuation Impairment June 30, 2013 Securities available for sale Corporate shares 293 - December 31, 2012 Securities available for sale Corporate shares 365 (1) (71) Fair value at June 30 293 293 Losses recognised in profit or loss for the current or prior years for assets held at June 30, 2013 (71) (71) As at June 30, 2013, the fair value of non-quoted securities available for sale was assessed based on the amount calculated by an independent appraiser in 2012. 27
    • Bank Vozrozhdenie Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013 19 Fair Value of Financial Instruments (Continued) (c) The methods and assumptions applied in determining fair values. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation, and is best evidenced by an active quoted market price. If there is no active market price, the Group applies analysis based on both observable and non-observable market data. The estimated fair values of financial instruments have been determined by the Group using available market information, where it exists, and appropriate valuation methodologies. However, judgement is necessarily required to interpret market data to determine the estimated fair value. The Russian Federation economy continues to display some characteristics of an emerging market and economic conditions continue to limit the volume of activity in the financial markets. Market quotations may be outdated or reflect distress sale transactions and therefore not represent fair values of financial instruments. Management has used all available market information in estimating the fair value of financial instruments. (d) Fair values of financial instruments carried at amortised cost. Fair values of financial instruments carried at amortised cost corresponds to the value determined on the basis of discounted cash flow model. Discount rates used to calculate the estimated fair value of instruments carried at amortised cost depend on the Group’s credit risk, as well as the currency and maturity of the counterparty’s instrument. 28