FY 2011 IFRS Results

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FY 2011 IFRS Results

  1. 1. FY2011 IFRS ResultsIntermediary targets hit, move onConference CallMarch 29, 2012
  2. 2. 2011 HighlightsResults above planned: NI of RUB 1 594 mln, up 2,7 times YoY Assets increased by 10.7% YoY to RUB 183 888 mln Total net loan growth was 19.2% YoY to RUB 137 365 mln Corporate loan portfolio up by 14.6% YoY to RUB 113 003 mln Retail loan portfolio up by 46.7 % YoY to RUB 24 362 mln Increase in client funds by 11.4% YoY to RUB 145 142 mln Loan/deposit ratio improved by 621 bps YoY to 94,6% NPL ratio decreased by 278 bps YoY to 7,7%  NIM stood at 4.3% for 2011, up by 64 bps YoY. In Q4 it reached 4.9%, highest since 2009  Spread was 6.2% for 2011, in Q4 grew by 68 bps QoQ to 7.1%  Net fees and commissions grew by 55.5% for 2011 to RUB 4,822 mln  Cost of risk was 1.8%, same level as in 2010  Sufficient capital base (CAR: 13.8%, core Tier 1: 11.9% ), well above regulatory requirements  ROE was 9,1% for 2011 up from 3,5% in 2010 2
  3. 3. 2011 Key financials FY11 FY10 4Q11 3Q11 Interest income 13 959 13 600 3 694 3 243 Interest expense (6 503) (8 109) (1 481) (1 992) Fee and commission income 5 232 4 295 1 486 1 134 Fee and commission expense (410) (360) (118) (90) Other operating income 611 473 178 148 Total operating income 12 889 9 800 3 759 3 426 Operating expenses (8 353) (7 180) (2 405) (2 059) Provisions (2 304) (1 872) (658) (720) Provisions on non-core assets (216) (121) (83) (135) Tax (422) (145) (142) (101) Net profit 1 594 581 471 411 3
  4. 4. NIM recovery on the back of significant decrease of fundingcosts +2,6% +13,2%Interest 13.6 14,0 Interest income +2,9% Interest expensesIncome andInterest 3.3 3.1 3.5 3.6 3.7Expenses, R -1.9 -1.8 -1.7 -1.6 -1.5UB bln -6.5 -8.1 -5,6% -19,8% -20,4% 2010 2011 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 +0,7 pps +1,4 pps 6.3% 6.2% NIM Net interest spread 7.1% 4.3% 6.3% 6.4%NIM and 3.6% 5.8% 5.1% 4.9% 4.3% 4.6%Spread 3.5% 3.2%evolution 2010 2011 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 4
  5. 5. Strong dynamics of operating income contributes tooperating efficiency +30,2% Net interest income Net fee income 0.6 Other income Operating expenses +43,8% 0.5 4.8 +9,7%Operating 3.9 0.1 0.1 0.2 0.1 0.2 1.4Income and 7.5 1.1 1.0 1.2 1.3 5.5 2.2 2.0Expenses, R 1.4 1.4 1.9UB bln 1 -7.2 2 -8.4 -2.3 -1.8 -2.1 -2.1 -2.4 +16,8% +6,8% +16,3% 2010 2011 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 -7,7 pps -22,2 pps Other expenses 86,2% Personnel expenses 72,5%Cost to 32% 64,8% 27% 70,8% 66,1% 35% 60,1% 64,0%Income 29% 26% 24% 28%before 40% 38%provisions,% 51% 42% 40% 36% 36% 2010 2011 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 5
  6. 6. Solid profit growth despite significant charges to provisions +274% +66,8% Operating income before provisions Provisions -1,0% Operating 4.5 profit and 2.7 1.4 1.4 1.1 provisions, R 0.4 0.7 UB bln 0.0 -0.4 -0.6 -0.7 -1.9 -0.7 -2.3 +23,1% 2010 2011 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 +174% +156% Net profit +14,6% Net profit, RUB 1.6 0.5 bln 0.6 0.3 0.4 0.4 0.2 2010 2011 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 6
  7. 7. Assets Balance sheet remains profitable… …despite seasonal inflow of liquid assetsRUB bln RUB bln 177 184 25% 174 174 24% 166 Cash and 0.7 30 27 40 equivalents 7.5 34 3.8 CBR bonds 33 Due from 14 17 91 banks 4.5 6 17 14 19 21 23 Municipal and federal 16 Securities 8.5 bonds 16 Corporate bonds and 27.2 Retail loans eurobonds 98 102 103 101 Corporate 18.4 88 Corr. Accounts and loans balances with the CBR Other Cash 10.6 9 9 9 9 10 assets 6.5 Q410 Q111 Q211 Q311 Q411 Q3 2011 Q4 2011IEA share comprises 73% of total assets LTD ratio implies future growth RUB bln Other assets Gross loans Customer funds Cash and L/D ratio equivalents 5% 15% 98% 99% 95% 88% 92% Due from other 0% banks 5% Securities 13% 58% Corporate loan 137 138 Retail loan 115 130 126 137 133 135 137 145 portfolio portfolio Q410 Q111 Q211 Q311 Q411 7
  8. 8. LoansPortfolio growth in line with expectations… …with shift towards promising retail Rub bln SME Individuals Administrations Large corporates Credit cards Consumer lending Mortgages +19.2% +46.7% +0.5% +8.5% 2.2 35.1 38.1 40.2 2.3 34.2 2.2 6.8 30.7 5.5 3.9 2.7 6.5 8.5 2.1 2.1 8.1 20.1 22.5 24.4 5.8 17.5 4.7 4.8 16.6 13.6 15.4 65.9 72.0 72.3 70.1 12.1 59.8 9.8 10.5 Q410 Q111 Q211 Q311 Q411 Q410 Q111 Q211 Q311 Q411Moscow oblast remains the key region Breakdown by industry *as of 31.12.2011 Other *as of 31.12.2011 Transport Moscow Oblast (39%) 9% Agriculture 4% 6% 53,567 Construction 27% Manufacturing 7% RUB RUB Other 4% 137,348 137,348 59,377 regions(43%) mln mln Wholesale & 23% 18% 24,404 retail trade 2% Individuals Moscow (18%) Administrations 8
  9. 9. Credit quality managementNPLs dynamics Annualized cost of risk Charges to provisions to NPLs, RUB mln * avg gross loans, QoQ Provisions, % of total portfolio NPLs, % of total portfolio Charges to provisions to avg gross loans, YtD 2.14% 10.48% 9.44% 1.78% 1.92% 9.26% 9.15% 9.09% 1.16% 9.71% 1.77% 8.78% 1.71% 8.31% 8.40% 1.83% 12,078 7.70% 1.48% 11,061 11,030 11,488 1.16% 10,576 0.01% Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011* 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 impairmentNPLs categorization: visible progress in SME and retail segments SMEs Large corporates Retail RUB mln +325 new NPLs +363 new NPLs +88 new NPLs 12.1% -1,020 recoveries -8 recoveries - 660 recoveries 11.6% 11.3% 11.5% 9.3% 7.1% 6.9% 11.0% 8.7% 6.4% 7.6% 6.2% 11.2% 11.1% 5.3% 5.0% 12.1% 5.6% 7.0% 6.2% 6.2% 10.4% 10.7% 4.4% 6.4% 4.6% 4.9% 8,464 4.3% 3.4% 8,117 8,195 8,025 7,769 2,936 4.6% 1,399 1,242 1,379 827 1,980 1,025 1,624 1,626 1,625 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 NPLs, RUB mln Provisions, % of total portfolio NPLs, % of total portfolio 915
  10. 10. Credit quality as of 31.12.2011 Large SMEs Mortgages Other Total % of total corporate retail loansGross loans, including 40,168 72,818 15,384 8,978 137,348 100.0% Provisions to Current loans 38,188 65,049 15,124 8,411 126,772 92,3% NPLs Ratio Provisions (2,085) (1,441) (195) (175) (3,896) 122.6% Past-due but not 0.3% impaired, of them 215 56 69 56 396 Less than 90 days 215 56 33 41 345 0.25% Over 90 days - - 36 15 51 0.05% Provisions to Provisions (44) (1) (47) (15) (107) 90 days+ NPLs Impaired, of them 1,765 7,713 191 511 10,180 7.4% 151% Less than 90 days 923 697 - 50 1,670 1.2% Over 90 days 842 7,016 191 461 8,510 6.2% Provisions (1,385) (6,935) (190) (452) (8,962)Total NPLs 1,980 7,769 260 567 10,576 7.7% Rescheduled Loans Provisions (3,514) (8,377) (432) (642) (12,965) 9.44% 36,654 64,441 14,952 8,336 124,383 3.8%Net Loans - the whole amount of loans with principal overdue for more than 1 day as well NPL - as loans with any delay in interest payments. 10
  11. 11. Liabilities and capital Funding base remains reliable… … with higher share of long-term resourcesRUB bln 184 Retail deposits Up to 1 month 174 177 2010 2011 166 174 1 - 6 months Retail accounts 6 - 12 months More than 1 year 72 Corp. accounts 38% 70 69 71 37% 69 Corp. deposits 15 17 16 20 Securities issued 17 31 30 32 33 Due from other 20% 27% 28 banks 17 21 20 19 20 24% 17% 7 8 6 7 Other Liabilities 6 8 9 8 8 4 8 Subordinated 4 4 4 4 18% 17 17 18 18 18 loans 19% Equity Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011Matched FX structure Capital position in line with requirements Data as of December 31, 2011 Tier 1 Tier 1 + Tier 2 CAR under CBR rules Assets Liabilities 15.2% 14.1% (N1) 13.6% 13.4% 13.8% 12.7% 12.0% 11.8% 11.6% 11.9% 11.9% USD USD 11% 14% 13% MIN RUB EUR EUR RUB 80% 7% 7% 79% Other Other 0% 0% Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 31.12.11 11
  12. 12. Customer accountsSeasonal inflow of client funds in Q4 Retail funds maturity Retail deposits Retail accounts RUB bln Up to 1 month Corporate accounts Corporate deposits Q3 2011 1 - 6 months Q4 2011 +11.4% 6 - 12 months +5.0% More than 1 year 23% 26% 71 72 69 70 69 36% 19% 21% 27% 15 17 16 20 17 28 31 30 32 33 17 21 20 19 20 20% 28% Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011High share of interest-free funds Key points Due to cautious pricing policy inflow of retail Current accounts/ deposits in Q4 2011 after interest rate hikes, Liabilities 32.3% following the market, were mainly on shorter term products – the bank will be able to reprice faster in case of possible rates cut Customer funds/ Share of almost interest-free funding sources remains high, supported by seasonal inflow of Liabilities retail current accounts of Rub 3.9 bln, that 87.7% represented 37% of total client funds. 12
  13. 13. NIM developmentNIM keeps recovering … … bringing YE’11 figure slightly above the target NIM +130bps Interest Spread +68bps NIM Interest Spread 7,1% 6.3% 6.4% 5.8% 6.3% 5.9% 6.2% 5.7% 5.1% 5.1% 4.6% 4.9% 4.3% 4.0% 4.3% 3.5% 3.2% 3.6% 3.2% 3.7% Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 2010 3M’11 6M’11 9M’11 2011 Key points 0,07% NIM was improving throughout the year on the back of -0,12% stronger net interest income. Healthy dynamic of the 0.13% last three quarters was partly offset by weak Q1, still 0.22% leaving the whole YE result above the target of 4.2% In Q4 NIM improvement was to a larger extent driven by 4.91% increasing share of retail loans as well as the last bulk 4.61% +30 bps of repricing on deposits attracted in 2009-2010 4.9% for Q4 is the highest level of NIM for the last 2 years Q3 NIM Loans Deposits Other Base Q4 NIM effect effect effect 13
  14. 14. Spread continues to expandWhile loan yields were almost flat… … cost of funds kept contracting Yields on corporate loans Yields on retail loans Corporate term deposits Interest spread Yields on securities Retail term deposits Current accounts 2011: 17.3% 16.0% 15.8% 15.7% 15.7% 8.2% 6.23% 7.1% 6.1% 5.7% 5.7% 11.3% 6.0% 6.0% 9.8% 10.4% 10.2% 10.3% 5.3% 5.6% 5.1% 4.6% 4.1% 0.1% 0.2% 0.2% 0.2% 0.2% 3.6% 3.3% 3.8% Q410 Q111 Q211 Q311 Q411 Q410 Q111 Q211 Q311 Q411Spread recovery in Q4 Key takeaways Yield on earning assets (net) Cost of funds Loan rates remained flat with some improvement on Spread (net) the corporate side – recent rates increase in H2’11 started to filter through P’n’L 11.0% 10.6% 10.4% 10.7% 9.8% Mix of IEA became more high-yielding with major 7.1% contribution from retail lending and lowered securities 5.8% 6.3% 6.4% portfolio 5.1% 5.2% Expansion of yields of IEA coupled with record low 4.7% 4.3% 4.0% cost of funds brought spread up 68 bps QoQ to 7,1% 3.7% Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 14
  15. 15. Fees and commissions Strong non-interest income based on long-term relations with customers Net fee income distribution Cards Other Cash transactions Settlements RUB mln Share of non-interest income in total operating +25.6% income b.p. +8.9% vbank 37% 41% peer 1 1,256 1,368 1,192 peer 2 1,089 364 1,006 335 348 335 26% 27% 26% peer 3 292 253 226 245 190 196 337 291 310 277 230 Net fee margin 287 288 340 353 414 0.0% 1.0% 2.0% 3.0% 4.0% Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 * Vbank data as of 4Q’11, Peer1, Peer2, Peer 3, Peer 4 – 2Q’11 Non-interest income breakdown by segments Key points Q3 2011 Q4 2011 The bank continued to earn healthy fees and commissions - net fee margin remained one of the Financial Corporate highest among peers and stood at 3% in Q4 2011. business Financial Share of non-interest income reached 41% in total 4% 3% operating income Cards Cards 20% 23% Healthy business activity in Q4 brought net fee income 56% 64% up 8,9% QoQ with growth mostly coming from 13% settlements and cash transactions Retail business 17%Retail business Corporate business contributed 64% to fee income, up Corporate from 57% in Q3, banking cards business delivered 20% business and 13% was delivered by retail segment 15
  16. 16. Costs Operating expenses breakdown Personnel efficiency is improvingRUB mln Personnel expenses Non-personnel expenses Staff costs/Operating income b.p. +6.7% 41.9% 16.8% 40.4% 40.9% 1,053 39.0% 922 820 38.1% 835 735 1,330 1,271 1,224 1,352 1,063 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Cost-to-Income ratio Key points Operating expenses remain one of the key concerns for the bank, implementation of cost efficiency initiatives will 72.3% 72.5% be in focus in 2012 62.7% 64.8% Personnel efficiency was improving throughout 2011 with 52.7% 48.7% the share of staff costs in total expenses increasing to 59% in 2011 vs 56% in 2010 Progress in cost efficiency and recovery of revenues brought Cost-to-income ratio for YE2011 to 64,8% from 2006 * 2007 2008 2009 2010 2011 72.5% for 2010. Mid-term target on CIR remains below 50% *2006 - less extraordinary items 16
  17. 17. Earnings generation capabilityROE, % ROA, % 10,4% 9.1% 9.3% 7.5% 1.04% 0.91% 0.94% 4.4% 0.74% 0.46% Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011Value generation Key points * % of average assets 3.4% -2,0% In 2011 profitability was steadily recovering - ROE for 2011 stood at 9,1%, up from the trough of 3,5% in 2010. -2,8% Responsible resources management coupled with 4.9% taking advantages of opportunities in lending led to -1,9% strengthened core income and ensures further revenue generation. -0,2% 1.0% Solid non-interest income supported by long-term relations with clients contributes to stronger result. NIM Non-interest Provisions HR costs Non-HR Tax Net profit income costs 17
  18. 18. Questions and answers Elena Mironova Andrey Shalimov IR manager 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 18
  19. 19. 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. 19

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