9M 2012 IFRS Results

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9M 2012 IFRS Results

  1. 1. 9M 2012 IFRS ResultsCore business strength fully intactConference CallNovember 21, 2012
  2. 2. 9M 2012 HighlightsNet income surged to RUB 1,787 mln, up 59,1% YoY Assets up 5.9% YtD to RUB 194,709 mln Corporate portfolio up 6.3% YtD to RUB 120,109 mln Retail portfolio up 28.8% YtD to RUB 31,376 mln Client funds up 4.0% YtD to RUB 150,982 mln NPLs came to 9.41% 1day+ overdues covered by 101%, 90days+ overdues – by 153% Net interest income was up 27,1% YoY to Rub 6,664 mln, Net fees up 8,2% from 9М’11 to RUB 3 737, NIM was up to 4,7% versus 4,0% in 9М’11 Cost to income decreased 876 b.p. to 56,4% for 9M’12 ROE improved to 12,3% up from 8,6% in 9М’11 Capital adequacy (tier 1 + tier 2) increased to14,2%, capital adequacy (tier 1) – 12,1% 2
  3. 3. Macroeconomic tailwinds in Q3 GDP growth of just 2.9% YoY in Q3 versus 4% in Q2 Retail trade growth slowed to 4.4% YoY in September from 7.3% in H1’12 Inflation accelerated to 6.7-6.8% in October, but failed to support consumer Despite deterioration spending of growth trends in Ruble exchange rate appreciated by 6% in Q3 the economy… Investments declined 1.3% YoY in September, given 7.2% fall in housing construction Capital outflow continued with $58 bln Ytd figure Refinancing rate up 25 bps to 8.25% to cool down retail growth Liquid assets maintained above 23%, while their structure shifted to more profitable one Corporate portfolio decline (-3% QoQ) offset by retail boost (+11% QoQ) …fortress balance Balanced currency and maturity structure of assets and liabilities with prevailing sheet provides Rouble-nominated instruments flexibility for decent Net interest income flat QoQ at Rub 2.3 bln, but non-interest income up 7.3% performance QoQ to Rub 1.6 bln, supporting revenue growth Operating efficiency improved with expenses down by 4.1% QoQ amid tight cost management 3
  4. 4. Assets Reliable assets structure… …with high level of liquid instrumentsRUB bln 22% 23% 194 195 Cash and 184 183 equivalents 177 6,0% Securities 6,1% 34 35 Due from 27 40 29 banks 0 14 12 12 17 19 Securities 25 27 30 21 23 Correspondent Retail loans 9,5% accounts 11,0% Corporate 103 101 106 111 107 loans Cash and Equivalents, Other assets 6,7% Obligatory Cash 6,0% Balances with the CBRF 9 10 10 10 10 Q311 Q411 Q112 Q212 Q312 Q2 2012 Q3 2012 IEA made up 77% of total assets LTD ratio at optimal levels RUB bln Cash and Other assets Gross loans equivalents Customer funds Due from other L/D ratio 5% banks 18% 99% 101% 100% 100% 95% 0% Securities 6% 16% 55% Corporate loan Retail loan 137 138 137 145 144 143 152 152 151 151 portfolio portfolio Q311 Q411 Q112 Q212 Q312 4
  5. 5. LoansSMEs are key growth driver in corporates… …consumer and mortgages – in retail Rub bln SME Individuals Administrations Large corporates Mortgages Consumer and auto loans Credit cards +10,8% +39,8% -0,5% +11% 42,7 41,1 2,1 38,1 41,2 2,1 40,2 3,4 1,8 2,2 8,4 3,9 3,3 2,2 7,6 2,7 28,3 31,4 2,3 6,8 22,5 24,4 25,9 6,8 6,5 18,5 20,8 72,3 70,1 73,6 78,0 77,2 15,4 17,0 13,6 Q311 Q411 Q112 Q212 Q312 Q311 Q411 Q112 Q212 Q312Balanced presence in all regions of interest Breakdown by industry *as of 30.09.2012 Other *as of 30.09.2012 Moscow Oblast Transport (40%) 9% Agriculture 5% 59 801 6% 27% Manufacturing Construction 7% RUB RUB Other 1% 151,485 151,485 regions(42%) 63 842 mln mln 23% Wholesale & 21% 27 842 retail trade 1% Individuals Moscow (18%) Administrations 5
  6. 6. Credit quality management NPLs dynamics Annualized cost of risk NPLs, RUB mln * Charges to provisions to avg Provisions, % of total portfolio gross loans, QoQ NPLs, % of total portfolio Charges to provisions to avg 9,52% gross loans, YtD 9,44% 2,86% 9,25% 9,09% 9,26% 2,24% 2,14% 1,92% 9,41% 1,02% 2,06% 8,40% 8,68% 8,08% 7,70% 1,77% 14 251 1,65% 11 488 10 576 12 490 12 297 1,71% 1,02% Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012* NPL includes the whole principal of loans at least one day overdue either onprincipal or interest as well as not overdue loans with signs of impairment NPLs categorization: deterioration in large corps, while absolute improvement in SME SMEs + Rub 581 mln new NPLs Large corporates Retail RUB mln - Rub 860 mln recoveries + Rub 2,156 mln new NPLs + Rub 304 mln new NPLs 11,3% 11,5% 11,1% - Rub 111 mln recoveries - Rub 116 mln recoveries 10,4% 10,5% 13,2% 6,2% 11,1% 10,7% 10,8% 10,0% 10,1% 12,2% 4,4% 4,3% 9,9% 8,7% 8,9% 5,0% 3,6% 3,5% 7,6% 3,4% 3,2% 8,3% 8,0% 2,7% 4,9% 5 445 3,1% 8 464 7 769 8 263 8 120 7 841 4,3% 3 400 3 400 1 980 1 399 827 827 777 965 1 625 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 NPLs, RUB mln Provisions, % of total portfolio NPLs, % of total portfolio 615
  7. 7. Credit quality Large SMEs Mortgages Other Total % of total as of 30.09.2012 corporates retail loansGross loans, including 41,116 78,993 20,807 10,569 151,485 100.0% Provisions to NPLs Ratio Current loans 35,671 71,152 20,363 10,048 137,234 90.6% 101% Past-due but not 0.3% impaired, of them - 32 260 105 397 Less than 90 days - 32 230 97 359 0.2% Over 90 days - - 30 8 38 0.1% Provisions to 90 days+ Impaired, of them 5,445 7,809 184 416 13,854 9.1% NPLs Less than 90 3,726 706 7 36 4,475 2.9% 153% days Over 90 days 1,719 7,103 177 380 9,379 6.2%Total NPLs 5,445 7,841 444 521 14,251 9.4% Provisions (5,006) (8,321) (541) (554) (14,422) 9.5% Rescheduled Loans 36,110 70,672 20,266 10,015 137,063Net Loans - 4.6% the whole amount of loans with principal overdue for more than 1 day as well NPL - as loans with any delay in interest payments. 7
  8. 8. Liabilities and capitalFunding grows in line with assets… … driven mostly by client funds RUB bln Retail deposits Corporate deposits Retail deposits RUB bln Retail accounts Corporate accounts 194 195 Retail accounts 184 183 +9,2% 177 -0,6% Corp. accounts Corp. deposits 32 30 77 78 33 31 72 72 32 32% 71 Securities issued 18 19 16 20 18 19 18 Due to other banks 16 20 18 31 32 30 32 33 72 77 78 Other Liabilities 71 72 22 24 25 Subordinated 19 20 6 8 8 8 loans 9 87 7 7 8 Equity 4 4 4 4 5 18 18 19 20 20 19 20 22 24 25Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012FX structure matched Capital position exceeds the requirements Data as of September 30, 2012 Tier 1 Tier 1 + Tier 2 CAR under CBR rules Assets Liabilities 14,2% (N1) 13,4% 13,8% 13,4% 13,2% 11,6% 11,9% 11,8% 11,6% 12,1% 11,6% RUB RUB 80% 11% 80% MIN USD EUR; 13% 7% EUR USD Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2013 30.09.12 7% 13% 8
  9. 9. Financial highlights 9M’12 9M’11 Q3’12 Q2’12Interest income 12 150 10 265 4 263 4 118Interest expense (5 486) (5 022) (2 010) (1 856)Fee and commission income 4 029 3 746 1 424 1 387Fee and commission expense (292) (292) (104) (96)Other operating income 649 433 302 220Total operating income b.p. 11 050 9 130 3 875 3 773Operating expenses (6 231) (5 948) (2 051) (2 138)Provisions (2 271) (1 646) (1 083) (830)Provisions on non-core assets (316) (133) (2) (1)Tax (445) (280) (156) (126)Net profit 1 787 1 123 583 678 9
  10. 10. Net interest income impacted by growth on both sidesof the balance sheetFlat net interest income QoQ… …with NIM slightly down due to higher base… +18.7% +3 bps NIM Interest Expenses +3.5% Interest Income -16 bps 3,7 3,8 4,1 4,3 3,6 4,6% 4,9% 4,7% 4,8% 4,6% -1,6 -1,5 -1,6 -1,9 -2,0 +8.3% +28.1% Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12…amid surging interest rates environment Interest Spread Yield on earning assets (net) Cost of funds 10,74% 10,82% 11,16% 11,37% 10,40% 0,30% 0,30% 0,01% 0,14% 7,13% 6,93% 6,72% 6,69% 6,38% 4,80% 4,64% 4,44% 4,68% 4,02% 3,61% 3,88% Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q2 NIM Loans Deposits Other Base Q3 NIM effect effect effect 10
  11. 11. Decent operating results from strong non-interestrevenues Solid operating revenues… … supported by well-diversified net feesRUB bln +13.1% RUB mln Settlements Cash transactions Other Cards +2.7% +5.1% Net interest income Net fees Other income +2.2% 0,2 0,2 0,3 1 368 1 291 1 320 0,1 0,1 1 256 364 1 126 348 360 364 1,4 1,3 1,3 325 1,3 1,1 253 245 250 265 219 337 300 310 304 256 2,0 2,2 2,1 2,3 2,3 353 414 326 377 391 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Strongest net fee margin among peers Segment breakdown of non-interest income Q3 2012 Q2 2012 Share of non-interest vbank income in total operating Other Corporate Other peer 1 business income b.p. 42% peer 2 4% 4% peer 3 31% Cards Cards 23% 24% 25% 55% 55% 13% 12% 18% 17% Net fee margin 0,0% 1,0% 2,0% 3,0% 4,0% Corporate * Vbank data as of 3Q’12, Peer1, Peer2, Peer 3, Peer 4 – 2Q’12 Retail business Retail business business 11
  12. 12. Cost efficiency in focus Operating expenses breakdown Consistent improvement of quarterly CIRRUB mln Personnel expenses Personnel expenses Non-personnel expenses Other expenses -0.4% -+7.2 pps -4.1% 64% 60% 60% 57% 1 053 53% 835 784 878 815 36% 36% 37% 34% 32% 1 224 1 352 1 258 1 260 1 236 24% 28% 23% 23% 21% Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Cost efficiency project Key points 1. Concept development of new operating model Define format of branches, IT requirements for Operating expenses were under strict control New motivation systemgeography and headcount of centralization (systems, development throughout 2012, year-on-year dynamics of 4.6% was centralized back-office processes, infrastructure) below inflation growth Decline in Q3’12 was partially attributable to cut in 2.Preparative process and pilot project staff costs and continued optimization of Amendments to internal Implementation of IT Staff coaching, KPIs administrative costs documents, launch of pilot solutions for automation and introduction, working groups projects centralization of the project Personnel expenses remained the key contributor with the share of 60% in OPEX. Decrease in Q3 was 3. Application of new operating model for the whole bank due to lower average headcount. Earned fees cover Transfer of supporting processes to the centralized back-office from branches Testing and launch of automated and centralized support systems staff costs by 107% 12
  13. 13. Net profit affected by elevated provisioningHigh provisions partially offsets strong operating Net profit developmentperformance +33.4% +41.8% Operating profit before provisions and taxes +11.6% Net profit -14% Provisions 1,6 1,8 1,4 1,4 1,4 0,678 0,526 0,583 -0,4 0,411 0,471 -0,7 -0,7 -0,8 -1,1 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12ROE, % ROA, % Operating profit before provisions and taxation/Average equity Operating profit before provisions and taxation / Assets ROE 36,6% ROA 33,9% 30,8% 29,7% 29,0% 3,75% 3,47% 3,12% 3,00% 2,96% 14,0% 10,4% 11,2% 11,7% 9,3% 1,44% 1,05% 1,15% 1,20% 0,94% Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 13
  14. 14. Key takeaways of Q3 2012Flexible assets structure… …on the back of reliable funding Strengthened capital position due to Liquid assets maintained above 23% subordination Good opportunities for growth in retail and SME High share of interest-free funds Improving yields across the portfolio Limited exposure to market fundingSolid core operating results … …with all eyes on efficiency Particular focus on efficiency improvement Increased funding costs are gradually passing lead to decline of Cost-to-Income ratio on to the borrowers Strict control over operating expenses Strong non-interest income supports revenues Project on operating efficiency is expected to Key target – to maintain margins bring fruits going forward 14
  15. 15. Questions and answers Elena Mironova Andrey Shalimov Deputy Head of IR Deputy Chairman of the Management +7 495 620 90 71 Board E.Mironova@voz.ru A.Shalimov@voz.ru investor@voz.ru http://www.vbank.ru/en/investors 15
  16. 16. DisclaimerSome of the information in this presentation may contain projections or other forward-looking statements regarding future events or thefuture financial performance of Bank Vozrozhdenie (the Bank). Such forward-looking statements are based on numerous assumptionsregarding the Bank’s present and future business strategies and the environment in which the Bank will operate in the future.The Bank cautions you that these statements are not guarantees of future performance and involve risks, uncertainties and other importantfactors that we cannot predict with certainty. Accordingly, our actual outcomes and results may differ materially from what we haveexpressed or forecasted in the forward-looking statements. These forward-looking statements speak only as at the date of this presentationand are subject to change without notice. We do not intend to update these statements to make them conform with actual results.The Bank is not responsible for statements and forward-looking statements including the following information:- assessment of the Bank’s future operating and financial results as well as forecasts of the present value of future cash flows and relatedfactors;- economic outlook and industry trends;- the Bank’s anticipated capital expenditures and plans relating to expansion of the Bank’s network and development of the new services;- the Bank’s expectations as to its position on the financial market and plans on development of the market segments within which theBank operates;- the Bank’s expectations as to regulatory changes and assessment of impact of regulatory initiatives on the Bank’s activity.Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materiallyfrom those expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include:- risks relating to changes in political, economic and social conditions in Russia as well as changes in global economic conditions;- risks related to Russian legislation, regulation and taxation;- risks relating to the Bank’s activity, including the achievement of the anticipated results, levels of profitability and growth, ability to createand meet demand for the Bank’s services including their promotion, and the ability of the Bank to remain competitive.Many of these factors are beyond the Bank’s ability to control and predict. Given these and other uncertainties the Bank cautions not toplace undue reliance on any of the forward-looking statements contained herein or otherwise.The Bank does not undertake any obligations to release publicly any revisions to these forward-looking statements to reflect events orcircumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required under applicable laws. 16

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