Bank Vozrozhdenie earned RUB428 million in net income in Q1 2014, a 28.5% increase over Q1 2013. Key highlights include: - Assets were flat at RUB210.8 billion while loans grew 2% to RUB171.6 billion, driven by expansion in SME and mortgage lending. - Net interest income declined 2.1% from Q4 2013 to RUB2.6 billion due to higher deposit rates increasing costs, while net interest margin was maintained at 4.9%. - Provisions for loan losses increased to RUB0.9 billion, resulting in a 40.9% decline in net profit from the previous quarter.

1. Press-release
Bank Vozrozhdenie earned RUB428 million of net income in Q1
2014
Moscow, May 28, 2014 Bank Vozrozhdenie disclosed the results of Q1 2014 under IFRS.
• Assets were flat at RUB210.8 billion ($5.9 billion)
• Loan portfolio before provisions rose by 2% YTD to RUB171.6 billion ($4.8 billion)
• Operating income before provisions of RUB2.8 billion ($77 million) was up by 9.9%
compared to the similar period of 2013
• Q1 2014 net income was RUB428 million ($12 million), 28.5% up versus Q1 2013
“For the three months of 2014 we have capitalized on opportunities of expanding loan
portfolio in most promising segments – SME and mortgages, and in core regions – Moscow
and Moscow oblast. It supported the bank’s interest income and net interest margin at the
level of quite strong Q4 2013. Despite high devaluation and inflation risks we have preserved
sound liquidity position, which has proven reliability of our assets structure. Due to high
quality securities portfolio and loans in prioritized segments we are capable of raising
additional funding that could be exploited for assets growth in case of necessity”, commented
Andrey Shalimov, Deputy Chairman of the Management Board.
Assets were flat throughout the quarter and totaled RUB210.8 billion ($5.9 billion) while the
share of interest-earning assets improved by 2.1 pps to 82% as a result of growth of net
loans (+RUB2.6 billion) and securities portfolio (+RUB1.3 billion). The share of liquid assets
was 18.3% as of April 1, 2014, which is in line with the targeted level. Loan-to-Deposit ratio
increased to 112% driven by client funds outflow of RUB8.4 billion during the reported
quarter.
Loan portfolio before provisions added 2% reaching RUB171.6 billion ($4.8 billion) due to
expansion of lending in key business segments, SMEs (+RUB2.4 billion for the quarter) and
mortgages (+RUB1.1 billion for the quarter). Corporate loan portfolio added up 1.7% for the
quarter to RUB127.8 billion ($3.6 billion) on the back of more active lending to small and
medium enterprises that were up by 3.2% to RUB75.6 billion ($2.1 billion) in Q1 2014 and
represented 59.2% of the corporate portfolio as of the end of the reporting period versus
58.4% as of the year beginning. Large corporate loans were flat throughout the quarter at
RUB51.6 billion ($1.4 billion).
Retail lending evolved to RUB43.9 billion ($1.2 billion), up by 2.8% over the quarter, with its
share in total portfolio increasing to 25.6%. Compared to the similar period of the previous
year loans to individuals added 30.6% versus the sector growth of 26.3% as per the data of
the Bank of Russia. Mortgage is the flagship product in the retail segment with a share of
70% in the total retail loan book. Mortgages grew by 3.7% in Q1 2014 to RUB30.6 billion
($0.9 billion). Taking into account escalation of economy slowdown risks the bank restricted
growth of consumer lending. As a result, consumer, car and credit card loans remained at
the level of the year-start and amounted to RUB13.2 billion ($0.4 billion) as of the end of the
reporting period.
NPL’s share in the loan book before provisions totaled 7.7% versus 7.4% as of January 1,
2014. Some widening of impaired loans by RUB0.7 billion resulted from growth of retail loans
overdue less than 30 days and increase of SME loans impaired less than 90 days.
Over Q1 2014 the bank has charged RUB0.9 billion to provisions for possible loans
impairment. The main portion of provisions made was related to the large credit exposure
that became overdue in 2013. It resulted in an annualized cost-of-risk of 2.1%. We managed
to reach the complete coverage of all problem loans by provisions for possible impairment.
Coverage ratio for non-performing loans, including all indebtedness with at least 1 installment

2. 1day+ overdue and impaired but not past due amounts, totaled 100.6%. Same ratio for
90days+ overdue loans stood at 116%.
Clients’ funds decreased by 5.2% since the beginning of the year to RUB153.1 billion ($4.3
billion) as of April 1, 2014. In Q4 2013 we have successfully coped with the client funds’
outflow resulted from people’s concerns about the banking sector stability after toughening
the regulator’s policy. However, amid escalating risks on a macro level, rouble devaluation
and mounting inflation, the negative dynamics resumed. The trend was more visible in
relation to Rouble part of corporate term deposits and current accounts that dropped YTD by
18.4% and 7.5% respectively.
The total share of current and card accounts balances in the customer funding was 29.1%.
Retail clients’ funds experienced a minor decline of 1.5% since the beginning of 2014,
compared to 2.3% weakening for the banking sector as a whole, and totaled RUB104.5
billion ($2.9 billion). It was reasoned primarily by the regular seasonal withdrawals from
individuals’ card accounts related to long New Year and Christmas holydays in January.
Retail time savings advanced by 1.8% over the quarter to RUB88.8 billion ($2.5 billion) with
growth coming from their FX part. People’s concerns on rouble devaluation led to FX
deposits increase by 3.4% YTD excluding revaluation effect, moving their share in total retail
funds up to 31%.
In order to offset a decline in client funding we widened the use of financial instruments. As a
result, over the quarter due to other banks amount grew by RUB6.9 billion on the back of
raising RUB5.5 billion collaterised by securities pledge from the Bank of Russia via
participation in 1-week REPO auction and attracting interbank loans for RUB1.4 billion. In
total, due to other banks was equal to RUB15.9 billion ($0.4 billion), accounting for 8.5% of
the bank’s liabilities as of April 1, 2014.
Mortgage backed bonds in issue increased by RUB2.6 billion and totaled RUB6.4 billion
($0.2 billion) after finalizing the second stage of the third mortgage securitization deal in
March 2014. Bonds of class “A” for the amount of RUB3.0 billion were placed via an open
subscription on MICEX, while bonds of class “B” for the amount of RUB0.45 billion were
purchased by the Bank itself via private placement.
At the end of the quarter the bank’s capital totaled RUB24.7 billion ($0.7 billion) as per the
Basel III standards and the Bank of Russia regulations, adding 6.3% YTD mainly by retained
earnings. As of April 1, 2014, total regulatory capital adequacy (N1.0 norm) was equal to
11.6%, up by 40 bps since the year-start while minimum acceptable level is set at 10%.
Common equity Tier1 capital adequacy (N1.1 norm) reached 9.7%, up by 90 bps YTD
significantly exceeding minimum requirement of 5%.
Interest income for Q1 2014 grew by 1.2% on a quarterly basis reaching RUB5.1 billion
($142 million) contributed by healthy interest revenue stream from the retail business on the
back of loans to individuals robust widening. Interest expenses rose 4.8% versus the
previous quarter to RUB2.5 billion ($69 million), as a result of growing expenses on retail
deposits, which were up by 3.2% reaching RUB1.5 billion. We have increased deposit rates
on a row of retail savings products that led to retail deposit cost increase by 30 bps to 7%
causing negative dynamic of expenses. Thus net interest income for Q1 2014 declined by
2.1% compared to Q4 2013 and totaled RUB 2.6 billion ($73 billion). The progress on net
interest income versus the similar period of the previous year was 18.9%.
Over Q1 2014 net interest spread was to some extent squeezed up to 6.59% (-29 bps per
quarter) pressed by more rapid expansion of funding costs, adding 33 bps over the quarter to
5.3%, compared to growth of assets yields by just 3 bps to 11.9%. Meanwhile, widening of
interest-earning assets share in total assets helped us to maintain the net interest margin on
average assets at the level of Q4 2013, equal to 4.9%, outstripping the current year target of
4.5%.
Non-interest income increased during the reporting period by 1.7% to RUB1.1billion
($30 million) and represented 29% of the bank’s quarterly operating income before
provisions. During the quarter the bank earned RUB0.9 billion ($26 million) as net fees &

3. commissions, a decrease of 2.6% versus Q4 2013. Other operating income grew by RUB114
million on Q-o-Q basis as a result of partial sale of non-core assets at a profit.
Operating expenses decreased by 9.5% from the previous quarter and totaled RUB2.2
billion ($61 million) supported by a seasonal decline in personnel and administrative
expenses versus Q4 2013. Cost-to-income ratio before provisions was maintained at the
level of Q1 2013 equal to 60%.
Financial results
Operating income before provisions expanded by 15.3% compared to the previous quarter to
RUB1.5 billion ($41 million) contributed by a drop in operating expenses. However,
significant charges to provisions resulted in net profit weakening by 40.9% on Q-o-Q basis to
RUB428 million ($12 million). Nevertheless, stable dynamics of operating income ensured
the indicator growth versus the same period of 2013 by 28.5%. ROE for Q1 2014 totaled
7.6% that exceeded Q1 2013 result by 1.2 pps.