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6M 2013 IFRS Results

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  • 1. H1 2013 IFRS Results Consistent operating results in cooling economy Conference Call August 27, 2013
  • 2. Assets and liabilities Interest-earning assets growth lagging… RUB bln 194 195 32 33 0,4 0,4 12 12 40 37 41 6 216 210 209 1 8 …strong inflow of customer deposits 1 11 12 RUB bln Cash and equivalents Due from banks 209 194 210 216 57 195 53 56 48 51 138 142 137 149 IEA: 76% 150 12 12 12 13 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Continuous widening of funding base… Corporate deposits Corporate accounts Retail deposits Retail accounts 103 107 88 53 20 8 Q2'12 Other assets 12 Due to other banks 74 3 20 Loan portfolio Q3'12 101 IBL: 88% 110 IBL: 90% 113 Subordinated loans Other liabilities 8 7 7 6 4 21 Q4'12 9 87 3 21 8 7 1 21 Q1'13 Equity Q2'13 …will support future loan expansion RUB bln Gross loans Customer funds 100% 95% +3,6% 19 Term deposits Securities issued Securities IEA: 77% Current accounts L/D ratio 101% 99% +3 21 18 35 +6 20 36 RUB bln 36 32 18 30 77 78 81 84 87 24 25 26 26 26 151 151 156 164 164 163 167 169 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'12 Q4'12 Q1'13 Q2'13 2
  • 3. Loan portfolio Corporate book stalled with some realigning inside SME Large corporates 2 1 2 41 Administrations 45 RUB bln Retail portfolio – key driver of growth Mortgages Consumer and car loans 1 +3.9 new loans -1.5 repayment 46 51 2,1 2,1 83 77 77 2,1 8,5 2,1 8,4 2.6 – outgrew SME bracket and moved to large corps 8,7 78 20,8 22,3 22,8 Q2 2013 Q3'12 Q4'12 Q4 2012 Q1 2013 Enhanced crossselling to existing clients Introduction of new mortgage program in March’13 Q1'13 +8.8 new loans -11.4 repayment Q3 2012 RUB bln Credit cards 9,8 24,9 Q2'13 Loans to large corporates - segment with high risk profile - are well-diversified Other Moscow Oblast 24% South regions as of June 30, 2013 12% Transport 8% Agriculture 33% RUB 50.8 bln 24% North-West regions Construction 7% 9% Manufacturing RUB 50.8 bln 44% 2% 16% Moscow 3% 18% Other regions Wholesale & retail trade 3
  • 4. Credit quality management NPLs dynamics Annualized cost of risk NPLs, RUB mln * Provisions, % of total portfolio NPLs, % of total portfolio 9,40% 9,52% 9,09% 10,13% 9,54% 9,41% Charges to provisions to avg gross loans, QoQ Charges to provisions to avg gross loans, YtD 10,35% 10,28% 3,12% 2,86% 9,02% 2,46% 2,24% 8,08% 1,83% 2,06% 1,65% 12 297 14 251 14 102 16 879 Q3 2012 Q4 2012 Q1 2013 Q2 2013 1,17% 17 270 Q2 2012 2,79% 2,46% Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 * NPL includes the whole principal of loans at least one day overdue either on principal or interest as well as not overdue loans with signs of impairment NPLs categorization: stable with some FX repricing SMEs Large corporates + Rub 344 mln new NPLs - Rub 177 mln recoveries Retail + Rub 131 mln new NPLs no recoveries + Rub 207 mln new NPLs - Rub 114 mln recoveries 17,6% 16,2% 13,2% 10,4% 10,5% 10,5% 9,8% 10,6% 10,0% 9,9% 9,8% 9,2% 10,0% 8 120 7 841 7 765 7 772 7 939 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 12,2% 10,1% 12,2% 13,3% 14,1% 11,9% 3,6% 8,0% 2,7% 3 400 5 445 5 445 8 098 8 229 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 NPLs, RUB mln Provisions, % of total portfolio 777 3,5% 3,5% 3,1% 2,7% 965 892 3,6% 3,7% 3,0% 3,0% 1 009 1 102 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 NPLs, % of total portfolio 4 15
  • 5. Credit quality as of 30.06.2013 Gross loans, including Current loans RUB mln Large corporates SMEs 50,801 83.8% Mortgages 79,364 Other retail 24,867 11,905 Total 166,937 90.0% 98.1% 94.6% 89.7% - 0.1% 1.2% 1.3% - 0.1% 0.4% 1.2% 0.2% Over 90 days - 0.8% 0.1% 0.7% 4.0% 98% 0.3% Less than 90 days Provisions to NPLs Ratio Past-due but not impaired, of them Impaired, of them - 16.2% 9.9% Less than 90 days 5.5% 0.5% Over 90 days 10.7% 9.4% 16.2% -14.1% Total NPLs Provisions Net Loans 43,617 0.4% 1.9% 0.7% 3.6% 10.0% 1.9% 5.3% 10.3% -10.6% -2.9% -5.2% 123% 8.1% 70,975 - 0.1% Provisions to 90 days+ NPLs 10.0% 24,139 11,288 -10.1% Rescheduled Loans 150,019 5.1% the whole amount of loans with principal overdue for more than 1 day as well NPL - as loans with any delay in interest payments. 5
  • 6. How we address credit quality challenges Key challenges Our response • • To reduce concentration the cap for credit exposure on a new single borrower was cut from 15% to 10% of equity, on a group of borrowers – from 25% to 15% • Exposure to Top-20 Largest groups of borrowers shall not exceed 210% of Capital • The bank established a new division to centralize work with collateral with the following objectives: Review and appraisal of colletarized property Expertise of third-party appraisal Regular monitoring of collateral portfolio Large corporates proved to be the segment with the highest risk-profile, requiring heavy provisioning during the recent quarters Q3 2012 Q4 2012 -32 -67 -67 -337 Q1 2013 -101 -66 Q2 2013 -90-125 -352 -679 Stage 1 (August 2013) -818 Charges on large corps Charges on SMEs - -1 075 Charges on retail Primary expertise for borrowers with exposure above Rub 150 mln Monitoring of collateral on Top-20 borrowers Stage 2 (October 2013) • Workout of bad loans could take several years including all the legal issues, overtake and sale of collateral. Adequate appraisal and liquidity of collateralized property become crucial to smoothen the procedure Primary expertise for borrowers with exposure above Rub 100 mln Monitoring of collateral on borrowers with exposure above Rub 150 mln Stage 3 (January 2014) Primary expertise and monitoring of collateral for borrowers with exposure above Rub 100 mln 6
  • 7. NIM stabilized on the back of interest income growth Net interest income improvement Deposit costs raised on the back of gradual repricing Interest Income Interest Expenses 2 262 Corporate term deposits 2 253 2 394 2 180 Retail term deposits Yields on corporate loans Yields on retail loans 2 237 14,9% 4 263 4 461 4 451 4 646 15,4% 14,9% 14,7% 10,8% 10,9% 11,3% 10,6% 10,9% 7,2% 4 118 14,9% 7,6% 6,7% 7,4% 7,7% 6,4% 6,4% 6,5% Q4 2012 Q1 2013 Q2 2013 6,1% -1 856 -2 010 -2 067 -2 271 -2 409 5,8% Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q2 2012 Q3 2012 NIM decomposition Spread dynamics Interest Spread Yield on earning assets (net) Cost of funds 11,2% 11,4% 11,7% 6,7% 6,7% 7,1% 4,4% 4,7% Q2 2012 Q3 2012 11,2% 4,9% 5,0% Q4 2012 Q1 2013 Q2 2013 Other -0,05% -0,19% Base effect -0,07% 6,5% 4,6% +0,35% Deposits 11,5% 6,3% Loans 4,8% 4,6% 4,7% 4,2% Q2 2012 Q3 2012 Q4 2012 4,2% Q1 2013 Q2 2013 7
  • 8. Fees and commissions in focus Fee income rebound New developments in remote banking RUB mln 1 291 125 Payrolls 314 1 320 123 326 1 324 +9.8% 136 1 107 355 1 215 58% of clients use remote banking. 73% of them used more convenient and safe Internet bank as of July 2013, up from 42% in the YE2012. 97 105 352 Cards 322 Cash transactions Settlements 373 375 376 304 384 397 415 • Adding new types of documents • More flexibility in managing operations 422 Retail and bank card business synergy: “Vbank with you” Internet bank for retail clients with new functions coming in H2 2013 – H1 2014: 191 203 192 174 178 Cards -79 Other exp. -17 -85 -19 -100 -93 -110 -50 -22 -40 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q2 2012 Options to be introduced in 2013: • Deposit opening 316 317 Other rev. Corporate business: • Deposit management • Payments to any recipient via Internet • New partnership agreements Low-cost fee generating products deliver 32% of total operating income adding stability to revenue base • Remote sales – tailored decisions for clients 8
  • 9. Cost optimization Strict control over operating expenses 2 421 2 138 2 091 2 051 RUB mln 2 135 Personnel expenses – main burden on C-I-R H1’13 4% 7% 6% 4% 5% 3% RUB 4,2 bln 8% Q2'12 Q3'12 Q4'12 Q1'13 62% Q2'13 Pilots of H1’13 • Centralization of Internet-Bank client support service Release of IT and Security administrators from unusual excessive functions • Uniting cashier and teller functions Speed up of processing client applications • Automation of Internet-Client payments processing 1 manager can process same number of payments like 2 managers before the pilot introduction • FRAUD-analysis and payment controller function for pilot branch moved to HQ • New road map for retail offices Staff costs Administrative expenses Taxes other than income tax Contributions to the State Deposit Insurance Agency Depreciation of premises, equipment and amortisation of intangible assets Other costs relating to premises, equipment and intelligible assets Rent Other Centralization: pilots to be implemented • HR documentation handling • Security Administrators function • Accounts opening • Establishing IT Help Desk/Service Desk • Fixed cash collection routs planning • Credit middle and back office centralized • Work with orders and requests of Federal Bailiffs Service and Federal Tax Service • FX control • Handling payroll services 9
  • 10. Net profit affected by continuous heavy provisioning Operating efficiency Positive operating performance RUB mln Cost-to-Income ratio, % +9.5% Operating profit before provisions and taxes Provisions 72,5% 1,6 1,8 -0,8 Q2’12 1,5 64,8% 1,3 1,4 -1,1 -0,6 -1,0 -1,3 Q3’12 Q4’12 Q1’13 Q2’13 58,5% 2010 2011 59,9% 58,2% 2012 Q1'13 Q2'13 ROA, % ROE, % Operating profit before provisions and taxation/Average equity ROE 36,6% 33,9% 25,8% 26,7% Operating profit before provisions and taxation / Assets ROA 28,8% 3,5% 3,8% 2,6% 2,7% 2,9% 14,0% 11,7% 10,6% 6,3% Q2 2012 Q3 2012 Q4 2012 Q1 2013 1,4% 3,5% Q2 2013 Q2 2012 1,2% Q3 2012 1,1% Q4 2012 0,6% Q1 2013 0,4% Q2 2013 10
  • 11. Questions and answers Andrey Shalimov Deputy Chairman of the Management Board A.Shalimov@voz.ru Elena Mironova Deputy Head of IR +7 495 620 90 71 E.Mironova@voz.ru investor@voz.ru http://www.vbank.ru/en/investors 11
  • 12. Disclaimer Some of the information in this presentation may contain projections or other forward-looking statements regarding future events or the future financial performance of Bank Vozrozhdenie (the Bank). Such forward-looking statements are based on numerous assumptions regarding 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 important factors that we cannot predict with certainty. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecasted in the forward-looking statements. These forward-looking statements speak only as at the date of this presentation and 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 related factors; - 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 the Bank 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 materially from 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 create and 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 to place 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 or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required under applicable laws. 12