Press Release. PSB Publishes 9M and Q IFRS Financial Results

Transcription

1 Press Release PSB Publishes 9M and Q IFRS Financial Results Moscow, 11 December 2015 PromSvyazBank (PSB) publishes interim consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) for the first 9 months of 2015, reviewed by PriceWaterhouseCoopers. Key Profit and Loss Statement Indicators Net loss for Q amounted to RUB 2.9 bn, compared with a loss of RUB 2.8 bn for the previous quarter. Consequently, net loss for 9M 2015 rose to RUB 7.7 bn against a RUB 1.4 bn profit for the same period last year. Net interest income for Q was RUB 8.1 bn, an increase of 14% qoq. Net interest income for 9M 2015 amounted to RUB 20.5 bn, which is 18% less than in the first 9 months of Net interest margin for Q was 3.2%, up 0.2 pp qoq. Net interest margin recovery slowed down in Q3 amid weaker dynamics of the CBR key rate reduction. Net fee and commission income for Q rose 14% to RUB 3.5 bn, while its share in operating income remained quite substantial at 26%. 9M 2015 net fee and commission income totaled RUB 9.7 bn, remaining virtually flat compared to 9M 2014, while its share in operating income for the period was 26%. Positive result from transactions with securities and financial instruments for Q was RUB 1.4 bn, a 39% increase qoq. 9M 2015 income from this type of operations rose to RUB 6.0 bn, compared to a loss of RUB 3.4 bn for the same period last year. Net FX gain for 9M 2015 amounted to RUB 2.6 bn, compared to a loss of RUB 0.9 bn for the same period last year. Considerable income from foreign exchange operations was generated by strong customers demand for conversion operations amid high ruble volatility. Operating income for Q grew 14% qoq and amounted to RUB 13.6 bn. Operating income for 9M 2015 totaled RUB 36.9 bn, which is more than 16% above operating income for the same period last year. General and administrative expenses for Q amounted to RUB 4.6 bn, a 7% decrease compared to the same period last year. General and administrative expenses for 9M 2015 totaled RUB 14.2 bn, which is 12% less than for 9M 2014 and cost-to-income ratio decreased by 13 pp to 38%. Provision for loan impairment for Q rose 8% compared to the previous quarter and amounted to RUB 11.6 bn, which corresponds to a cost of risk of 5.7% per annum against 5.6% in Q2. 9M 2015 provision for loan impairment totaled RUB 30.9 bn, which corresponds to a cost of risk of 5.2% (9M 2014: 2.9%). Key Balance Sheet Indicators Total assets as of 30 September 2015 increased by 9% compared to the beginning of the year and amounted to RUB 1.2 trln. About 75% of asset growth was due to foreign currency revaluation, and the main contributor to the rest of the growth was a consolidation of Avtovazbank. 1

2 Liquid assets remained at a traditionally comfortable level. As at 30 September 2015, the share of liquid assets stood at 17% of total assets (2014: 16%) and 27% of total customer accounts and deposits (2014: 26%). Net loans to customers for 9M 2015 grew 4% to RUB 786 bn, with the bulk of growth driven by revaluation of foreign currency loans, whose share in the portfolio as at 30 September 2015 was 38%. Changes in the loan portfolio volume for 9M 2015 were due to multidirectional dynamics across PSB business segments: corporate loans increased by about 11% to RUB 668 bn, SME loan portfolio decreased by 32% to RUB 49 bn, and retail loan portfolio fell 10% to RUB 70 bn. The share of non-performing loans (NPL) (90+ days overdue) in PSB loan portfolio decreased to 4.6% at the end of Q (Q2 2015: 5.3%). NPL coverage ratio was at a conservative level of 158% for 9M 2015, an increase by approximately 36 pp from Q (2014: 165%). Securities portfolio increased more than 3.5 times over 9M 2015, to RUB 59 bn. The share of securities portfolio on the balance sheet remains moderate at 5%. Customer accounts for 9M 2015 grew 12% and totaled RUB 738 bn, compared to RUB 660 bn at the end of The bulk of growth occurred in Q3 2015, with customer accounts up more than 12%. During Q3 2015, the share of current accounts increased from 23% to 29% (2014: 26%). Funding from the CBR at the end of Q amounted to approximately RUB 111 bn. The share of this type of funding in total PSB liabilities was 10%, remaining flat qoq (2014: 7%). 70% of funding from the CBR was in the form of foreign currency loans. The loan-to-deposit ratio for Q remained unchanged at 107% level (2014: 114%), which is within the internal target range of %. Shareholders equity for 9M 2015 increased by 11%, driven by a RUB 13.8 bn cash contribution from majority shareholders in May 2015, and amounted to RUB 76.3 bn. Overview of Financial and Operating Results Interest income for Q increased by 3% qoq and amounted to RUB 26.5 bn. 9M 2015 interest income totaled RUB 77.2 bn, a 34% increase compared to the same period last year. Interest expense for Q remained flat qoq and amounted to RUB 18.5 bn. 9M 2015 interest expense totaled RUB 56.7 bn, a 72% increase compared to the same period last year. Net interest income for Q was RUB 8.1 bn, a 14% increase qoq, reflecting the continuing trend of banking margins recovery amid a progressive reduction and stabilization of interest rates in the Russian financial market. 9M 2015 net interest income totaled RUB 20.5 bn, an 18% decrease compared to the same period last year. Net fee and commission income for Q rose 14% qoq and amounted to RUB 3.5 bn and its share in operating income was 26%. 9M 2015 net fee and commission income totaled RUB 9.7 bn, remaining virtually flat compared to the same period last year. 9M 2015 fees and commissions from customer money transfers and trade finance transactions remained strong. Positive result from transactions with securities and financial instruments at the end of Q was RUB 1.4 bn, a 39% increase qoq. 9M 2015 income from this type of transactions totaled RUB 6.0 bn, compared to a loss of RUB 3.4 bn for the same period last year. Operating income for Q was up 14% qoq and amounted to RUB 13.6 bn. 9M 2015 operating income totaled RUB 36.9 bn, a 16% increase compared to RUB 31.7 bn for the same 2

3 period last year. 9M 2015 operating income growth was supported by a significant increase in income from financial and FX markets, which offset a decline in net interest margin in General and administrative expenses for Q amounted to RUB 4.6 bn. Cost-to-income ratio improved by 5 pp compared to Q and stood at 33%. 9M 2015 general and administrative expenses decreased by 12% to RUB 14.2 bn, compared to RUB 16.2 bn for the same period last year. 9M 2015 cost-to-income ratio was 38%, down 13 pp from the same period last year. The key driver of improvement in operating efficiency was optimization of the branch network and headcount. Total number of employees decreased by 16% for 9M 2015 to 8.7 thousand as at 30 September Provision for loan impairment for Q grew 8% qoq and amounted to RUB 11.6 bn, which corresponds to a cost of risk of 5.7% per annum (Q2: 5.6%). Cost of risk in the corporate loan portfolio decreased by 0.3 pp qoq, to 5.6%. The bulk of Q3 provisions were made for the real estate, transport and trade industries. Q cost of risk in the SME segment was 6.1% per annum. Provisioning for retail loans has been declining, with a cost of risk at the end of Q3 down 1.4 pp to 7.0%, amid a significant reduction in lending volumes. 9M 2015 cost of risk was 5.2%, up from 2.9% for the same period last year. The share of non-performing loans (NPL) (90+ days overdue) in the total loan portfolio increased to 4.6% as at 30 September 2015, compared to 2.9% at the end of 2014, but decreased by 0.8 pp from 5.3% for Q The share of NPLs in the corporate loan portfolio for Q was 3.4%, down from 4.3% for the previous quarter (2014: 2.3%). In the SME portfolio, on the other hand, the share of NPLs rose from 15.1% to 16.0% (2014: 5.5%), and in the retail portfolio - from 6.4% to 6.7% (2014: 5.0%). 9M 2015 total NPL coverage ratio was 158%, an increase of approximately 36 pp during Q (Q2 2015: 122%). PSB continues to maintain adequate liquidity. As at 30 September 2015, the share of liquid assets stood at 17% of total assets (2014: 16%) and 27% of customer accounts (2014: 26%), which is an adequate level in a stress scenario. A strong liquidity position enabled PSB at the beginning of October 2015 to repurchase its Eurobond Series PSB'19 and PSB'21, totaling more than US$135 mln. Over 9M 2015, PSB repurchased its wholesale debt totaling over US$200 mln. In November, PSB made the scheduled repayment of a syndicated loan totaling approximately US$120 mln. Securities portfolio increased more than 3.5 times compared to the beginning of the year and amounted to RUB 59 bn. The share of securities portfolio on the balance sheet grew from 2% to 5% as at the end of Q The bulk of growth was driven by sovereign and blue chip corporate bonds. The share of such securities in PSB securities portfolio as at the end of Q stood at 34% and 61%, respectively. PSB maintains a conservative approach to the structure of its securities portfolio, with more than 95% of securities included in the CBR Lombard List. 9M 2015 total customer accounts increased by 12% compared to the beginning of 2015 and amounted to RUB 738 bn, with the bulk of growth occurring in Q The increase was due in equal proportions to real growth in customer accounts and revaluation of foreign currency deposits. Q share of current accounts was 29%, up from 23% for the previous quarter. Retail customer accounts rose 11% in Q3 2015, with a 36% share in total customer accounts (2014: 36%). 3

4 Funding from the CBR at the end of Q amounted to RUB 111 bn. The share of CBR funding in PSB total liabilities was 10%, flat at Q2 level, due to a high proportion (about 70%) of foreign exchange loans received from the CBR in early 2015 at an attractive rate for one-year term. Unused CBR credit line available to PSB as at the end of Q amounted to RUB 93 bn. Concentration of top-20 borrowers in PSB net portfolio of provisions increased to 34% as at 30 September 2015 (2014: 29%). Q share of top-20 depositors in total customer accounts was 31%, remaining virtually unchanged qoq (2014: 32%). Significant concentration on both the active and passive sides of the balance sheet was due to a new strategy, which PSB launched in 2014, aiming to attract major blue chip corporate customers. The ratio of lending to related parties to total IFRS capital as per Basel III accords decreased slightly in Q3 2015, to 21.9% (2014: 23.6%). Capital Total IFRS capital adequacy ratio as per Basel III at 30 September 2015 was 15.5% (2014: 13.5%), against the required minimum of 8.0%; tier 1 capital adequacy ratio was 7.4% (2014: 8.0%), against the required minimum of 6.0%; core capital adequacy ratio was 6.7% (2014: 6.8%), against the required minimum of 4.5%. Total RAS Basel III capital adequacy ratio at 30 September 2015 was 14.8% ( : 12.0%), against the CBR required minimum of 10%; tier 1 capital adequacy ratio was 6.9% (2014: 6.9%) against the required minimum of 6.0%; core capital adequacy ratio was 6.1% (2014: 5.7%), against the required minimum of 5%. PSB Deputy Chairman of the Management Board and CFO Vladimir Mamakin comments on the results: «Q was successful and challenging at the same time. Our profitability continued to recover following a decline in Q1, fee and commission income was consistently strong, and the results posted by our investment department reflect the success of our strategies in the financial markets for the third quarter in a row. Our operational efficiency has been improving, with the cost-to-income ratio falling below 40% to 38% for the first time, which is one of the best performances among the leading banks. At the same time, we adequately assess the current challenging economic environment, and we see that the trend of further deterioration in the quality of borrowers persists. Due to this we are maintaining a conservative provisioning policy aiming to anticipate the dynamics of non-performing assets. In this challenging macroeconomic environment and taking into account the introduction in 2016 of additional regulatory capital buffers for the Bank, an undoubtedly positive factor is the availability of our majority shareholders to supply the necessary capital. In November 2015, majority shareholders for the second time in 2015 made a RUB 15.7 bn asset contribution to increase PSB capital, proving their willingness to support the business and its development trajectory in accordance with the adopted strategy». About Promsvyazbank Promsvyazbank (PSB), Moscow (founded in 1995) is one of the leading Russian private banks with total assets of RUB1.2 trln and Basel III total capital of RUB162 bn as at 1 October 2015 according to IFRS. Promsvyaz Capital B.V. and the European Bank for Reconstruction and Development own, respectively, 60.05% and 11.75% of PSB registered shares. Future OPS (former Blagosostoyanye OPS) controls 10% of PSB shares, European Pension Fund NPF, Regionfund and Doveriye NPF own 10% shares, Marbale Universal Corp. controls 10%. PSB holds the following long-term credit ratings from international rating agencies: ВВ- /credit watch negative from Standard & Poor s, Ba3 /negative from Moody s Investors Service, and AA+ 1 All 2014 data under RAS includes subsequent events. 4

5 individual credit rating from the National Rating Agency. PSB has a network of approximately 260 offices across Russia, a branch in Cyprus and representative offices in China and India. In April 2015, PSB shares reached the highest listing level on the Moscow Stock Exchange. PSB press contact: Press-center@psbank.ru, +7(495) Contact for investors: ir@psbank.ru, +7(495) ext