6m 2012 ifrs results
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H1 2012 IFRS ResultsBalanced growth across the board
Conference CallAugust 22, 2012
2
Net interest income was Rub 4,411 mln, up 37% from H1’11
Net fees grew to RUB 2,417 mln, up 10% from H1’11
NIM was up to 4.7% versus 3.7% in H1’11. In Q2’12 it reached 4.8%, up 12bps from Q1’12
ROE improved to 12.7% up from 8.3% in H1’11. In Q2’12 it was 14% - highest since 2008
H1 2012 Highlights
Assets up 5.9% for the quarter to RUB 193,908 mln
Corporate portfolio rose to RUB 124,002 mln, up 5.1% from Q1’12
Retail portfolio was RUB 28,274 mln, up 9.1% for the quarter
Client funds soared to RUB 151,827 mln, up 6.2% from Q1’12
NPL fell 60 bps to 8.08%; 1day+ overdues covered by 113%
Net income surged to RUB 1,204 mln, up 69,1%YoY
3
Balanced assets structure…
Assets
RUB bln
Q2'11 Q3'11 Q4'11 Q1'12 Q2'12133 137 137 144 152135 138 145 143 152
98% 99% 95% 101% 100%
Gross loans Customer fundsRUB bln
Liquid assets stood at 22% of total assets
5%
57%14%
6%0%
17%
LTD ratio at optimal levels
Corporate loan portfolio
Retail loan portfolio
Other assets
Due from other banks
Cash and equivalents
Securities
…contributes to higher yields on IEA
Q2'11 Q3'11 Q4'11 Q1'12 Q2'12
9 9 9 10 10
102 103 101 106 111
19 21 23 25 2714 17 9 14 1230 27 40 28 34
174 177184 183
194
0
Cash and equivalents
Due from banks
Securities
Retail loans
Corporate loans
Other assets
RUB bln
Q2'11 Q3'11 Q4'11 Q1'12 Q2'12
135 141 134 145 150
10.6% 10.4% 10.7% 10.8% 11.2%
Net interest-earning assets
4
26,115
63,062
63,099
Loans…consumer and mortgages – in retail
Balanced presence in all regions of interest
Moscow Oblast (41%)
Moscow (18%)
Other regions(41%)
*as of 30.06.2012
Breakdown by industry
SMEs are key growth driver in corporates…Rub bln
RUB152,276
mln
27%
19%2%
22%
1%
8%
6%4%
11%
*as of 30.06.2012
Construction Manufacturing
Agriculture
Wholesale &retail trade
Administrations
Other
Finance
Transport
Individuals
RUB152,276
mln
Q2'12Q1'12Q4'11Q3'11Q2'11
78.073.670.172.372.0
28.325.924.422.520.1
3.43.32.73.95.5
42.741.240.238.135.1
SME Individuals Administrations Large corporates
+14,7%+5,8%
Q2'11 Q3'11 Q4'11 Q1'12 Q2'12
12.1 13.6 15.4 17.0 18.5
5.86.5
6.86.8
7.6
2.22.3
2.22.2
Mortgages Consumer and auto loans Credit cards
+40,5%+9,1%
5
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
1,379 1,399
827 827 777
5.3%5.0%
4.4% 4.3%3.6%
6.9%6.2%
3.4% 3.2%2.7%
Retail
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
8,025 8,4647,769 8,263 8,120
11.0%11.3% 11.5%
11.1%10.4%
10.4%11.1%
10.7%10.8%
10.0%
SMEs
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
1,626 1,6251,980
3,400 3,400
7.0%7.6%
8.7% 8.9%
4.6%4.3%
4.9%
8.3% 8.0%
Large corporates
NPLs, RUB mln Provisions, % of total portfolio NPLs, % of total portfolio
Credit quality management
NPLs categorization: absolute improvement across all business segments
NPLs dynamics
15
Annualized cost of risk
* 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
Q2 2012Q1 2012Q4 2011Q3 2011Q2 2011
2.24%
1.02%
1.92%2.14%
1.78%1.65%
1.02%
1.77%1.71%
1.48%
Charges to provi-sions to avg gross loans, QoQ
+ Rub 248 mln new NPLs- Rub 391 mln recoveries + Rub 138 mln new NPLs
- Rub 188 mln recoveries
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
11,030 11,48810,576 12,490 12,297
9.09%9.26% 9.44%
9.25% 9.09%
8.31%8.40%
7.70%8.68%
8.08%
NPLs, RUB mlnProvisions, % of total portfo-lio
*
RUB mln
No changes
6
Credit qualityas of 30.06.2012
Large corporate
SMEs Mortgages Other retail
Total % of total loans
Gross loans, including 42,673 81,329 18,542 9,732 152,276 100.0%
Current loans 39,273 73,209 18,268 9,229 139,979 91,9%
Past-due but not impaired, of them - 92 79 65 236 0.2%
Less than 90 days - 92 51 56 199 0.2%
Over 90 days - - 28 9 37 0.0%
Impaired, of them 3,400 8,028 195 438 12,061 7.9%
Less than 90 days 2,558 413 15 62 3,048 2.0%
Over 90 days 842 7,615 180 376 9,013 5.9%
Total NPLs 3,400 8,120 274 503 12,297 8.1%
Provisions (4,327) (8,488) (481) (548) (13,844) 9.1%
Net Loans 38,346 72,841 18,061 9,184 138,432 -
Provisions to NPLs Ratio
NPL -
113%
Rescheduled Loans
4.5%
the whole amount of loans with principal overdue for more than 1 day as well as loans with any delay in interest payments.
Provisions to 90
days+ NPLs
153%
7
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
20 19 20 22 24
69 71 72 72 7717 16 20 18 1930 32 33 31 32
Corporate deposits Retail deposits Retail accounts Corporate accounts
… driven mostly by client fundsFunding base grows in line with assets…
Liabilities and capital
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
18 18 18 19 204 4 4 4 48 9 8 7 78 6 7 8 820 19 20 22 2430 32 33 31 3217 16 20 18 1969 71 72 72 77
174 177 184 183 194
Retail deposits
Retail accounts
Corp. accounts
Corp. deposits
Securities issued
Due to other banks
Other Liabilities
Subordinated loans
Equity
RUB bln
FX structure remains matched Capital position exceeds the requirements
Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 30.06.12
12.0% 11.8% 11.6% 11.9% 11.8% 11.6%
14.1% 13.6% 13.4% 13.8% 13.4% 13.2%11.4%
Tier 1 Tier 1 + Tier 2 CAR under CBR rules
(N1)
11%MIN
Assets Liabilities
Data as of June 30, 2012
RUB bln
+12.2%
+6.2%
34%
8
Financial highlights
H1’12 H1’11 Q2’12 Q1’12
Interest income 7 887 6 674 4 118 3 769
Interest expense (3 476) (3 453) (1 856) (1 620)
Fee and commission income 2 605 2 382 1 387 1 218
Fee and commission expense (188) (184) (96) (92)
Other operating income 347 285 220 127
Total operating income 7 175 5 704 3 773 3 402
Operating expenses (4 180) (3 889) (2 138) (2 042)
Provisions (1 188) (926) (830) (358)
Provisions on non-core assets (314) 2 (1) (313)
Tax (289) (179) (126) (163)
Net profit 1 204 712 678 526
9
4.3% 4.6% 4.9% 4.7% 4.8%
NIM
-1,671.0 -1,569.0 -1,481.0 -1,620.0 -1,856.0
3,528.0 3,591.0 3,694.0 3,769.0 4,118.0
Interest ExpensesInterest Income
Q1’12Q2’11 Q3’11
+16.7%
Q4’11
+9.3%
+11.1%
Interest Income and
Interest Expenses, RUB bln
NIM evolution
+54 bps
Q1’12Q2’11 Q3’11 Q4’11
Q2’12
Q2’12
+14.6%
- Interest income added up 9.3% for the quarter
supported by higher rates on corporate loans
and healthy volumes of issuance. Yields on
interest-earning assets were up 35 bps QoQ to
11.2%, highest level since 2010.
- Interest expenses grew by 14.6% reflecting
higher rates across the deposit base filtering
through the P’n’L. However, pricing of retail
deposits remained stable since March 2012.
- After a moderate decline in Q1 2012 net
interest margin on total average assets picked
up 12 bps to 4.8% supported by strong
interest income. NIM for H1 2012 of 4.7%
significantly improved from 3.7% in H1 2011.
Solid interest income offsets funding costs pressure
+12bps
10
Q2'11 Q3'11 Q4'11 Q1'12 Q2'12
6.0% 5.7% 5.7%
6.3%7.2%
6.1% 5.6% 5.1%
5.3% 5.8%
0.2% 0.2% 0.2% 0.1% 0.1%
Corporate term depositsRetail term depositsCurrent accounts
4.68%
0.74%-0,46%
-0,05% -0,11%
4.80%
NIM gains on repricing of loans and depositsLoan yields surged forward… …outpacing cost of deposits
NIM decomposition
+12 bps
Spread dynamics
Q2'11 Q3'11 Q4'11 Q1'12 Q2'12
10.4% 10.2% 10.3% 10.3% 10.8%
15.8%15.7% 15.7%
14.8% 14.9%
4.1% 4.1% 3.4%5.3% 6.1%
Yields on corporate loansYields on retail loans
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
6.3% 6.4% 7.1% 6.9% 6.8%
10.6% 10.4% 10.7% 10.8% 11.2%
4.3% 4.0% 3.6%3.9% 4.3%
Interest SpreadYield on earning assets (net)Cost of funds
11
26% 24% 28% 23% 23%
40%36%
36%37% 34%
Personnel expensesOther expenses
Operating efficiency benefits from strong revenues and costs discipline
1,857.0 2,022.0 2,213.0 2,149.0 2,262.0
1,192.0 1,256.0 1,368.0 1,126.0 1,291.0116.0 148.0 178.0 127.0 220.0
-2,091.0 -2,059.0 -2,405.0 -2,042.0 -2,138.0
Net interest income Net fees Other incomeOperating Expenses
Q2’11 Q3’11 Q4’11 Q1’12
+2.2%
+19.2%+10.9%
Operating Income and Expenses, RUB bln
Cost to Income before
provisions,%
-9.4 pps
Q2’11 Q3’11 Q4’11 Q1’12
+4.7%
Q2’12
Q2’12
- All components of operating income
demonstrated positive dynamics with net
interest income up 5.3% and net fees up
14.7% on the back of strong business activity.- Conservative trading portfolio preserves the
bank from significant losses during financial
markets turmoil, while gains from trading in
foreign currency on the back of turbulent
exchange rate brought trading income up
25%.
- Development of operating expenses in Q2’12
(+4,7% compared to Q1’12) fully complies
with the bank’s focus on cost control in 2012
– personnel costs were almost flat QoQ. On a
YoY basis operating expenses in Q2’12
increased just 2.2% mostly driven by
expenses on IT infrastructure.
- Continued improvement of cost efficiency and
stronger revenues supported the recovery of
cost to income ratio to 56.7% in Q2 2012 from
66.1% for the same quarter of 2011.
60%64%60%
66%
57%
12
Share of non-interest income in total operating income b.p.
54%
17%
24%
5%Chart Title
53%
17%
26%
4%
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
340 353 414 326 377
291 310337
256304
226 245253
219250
335 348364
325360
1,192 1,2561,368
1,1261,291
Settlements Cash transactions Other Cards
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%
25%
19%20%
24%
39%vbank
peer 1
peer 2
peer 3
Net fee margin
Fees and commissions
Key points
Net fee income distributionRUB mln
Non-interest revenues were solid in Q2 2012, supported by positive trading gains despite turbulent market environment
Net fee income grew by 14,7% QoQ on the back of strong business activity. Income from settlements grew by 16%, cash transactions – by 19% and banking cards business – by 11%
54% of non-interest income 54% was delivered by corporate business, bank cards business contributed 24% and 17% came from the retail
Non-interest income breakdown by segments
Cards
Financial
Corporate business
Retail business
Strongest non-interest income among peers
Cards
Financial Corporate business
Retail business
Q2 2012 Q1 2011
* Vbank data as of 1Q’12, Peer1, Peer2, Peer 3, Peer 4 – FY2011
+14.7%+8.3%
13
Costs
2007 2008 2009 2010 2011 H1 2012
62.7%
52.7%48.7%
72.5%
64.8%58.3%
Operating expenses breakdownRUB mln
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
1,271 1,224 1,352 1,258 1,260
820 8351,053
784 878
Personnel expensesNon-personnel expenses
Earned fees fully cover personnel expenses
+4.7%
+2.2%
Costs summary
Operating expenses were under strict control in H1 2012, fully in line with the bank’s plans for the year
Long-term operating efficiency project is ongoing on the phase of building IT infrastructure to centralize back-office operations
Personnel expenses remained almost flat on a quarterly basis and are again fully covered by earned fees and commissions
Cost to income ratio for H1 2012 declined from 68.2% for H1 2011 to 58.3% closer to normalized levels
Cost-to-Income ratio
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
94%
103%101%
90%
102%Net fee income / Personnel expenses
14
395.000
411.000
471.000
526.000
678.000
Continued improvement of performance despite conservative provisioning
-576.0 -720.0 -658.0 -358.0 -830.0
1,074.0
1,367.0
1,354.0
1,360.0
1,635.0
Operating profit before provisionsProvisions
+52.2%
Q2’11 Q3’11 Q4’11 Q1’12
+28.9%+71.6%
Operating profit and
provisions, RUB bln
Net profit, RUB bln
+20.2%
Q2’11 Q3’11 Q4’11 Q1’12
Q2’12
Q2’12
- Operating profit before provisions
demonstrated visible improvements both on
the quarterly (+20.2%) and year-on-year basis
(+52.2%), driven by solid revenue base and
moderate controlled expansion of operating
costs.
- Net profit gains momentum for the 10th
consecutive quarter, bringing ROE to 14% in
Q2’12. Thus, the bottom line grew by 72% YoY
and 29% QoQ.
- Significant hike of provisioning in Q2’12 to Rub
830 mln on contrast to quite low charges of the
previous quarter brought cost of risk for H1
2012 to 1.65% - comfortable level in a view of
uncertain market conditions.
Net profit
15
ROE, % ROA, %
Earnings generation capability
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
9.1% 9.3%10.4%
11.2%
14.0%
Value generation* % of average assets
4.80%
3.21% 1.76%
2.67%
1.86%
0.27% 1.44%
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
0.91% 0.94%1.05%
1.15%
1.44%
Key points
Profitability is on track – strong cost efficiency and optimal structure of assets and liabilities contributed to further improvement of ROE – it reached 14% in Q2 2012
The bank is taking advantages on continued repricing on both sides of the balance sheet due to careful A&L management. Still conservative on provisioning, operating efficiency is to add up value going forward
16
Sharpened focus on profitable SME and retail supported by healthy loan demand
Strong liquidity position maintained
Conservative securities portfolio defends from significant losses
Positive NPLs dynamic
Key takeaways of Q2 2012
Visible NIM expansion
Higher yields on loan portfolio offset increased funding costs
Strong fees support revenue base
10 consecutive quarters of mounting net profit
Benefits from wide client base – ability to attract funding at reasonable rates
Retail deposits – main contributor of growth
High share of interest-free funds
Loans-to-Deposits at optimal 100%
Strong focus on efficiency improvement lead to decline of Cost-to-Income ratio
Strict control over operating expenses
Future benefits from operating efficiency project:
- centralization of back-office- focus on remote channels - shift to front-office operations
Wel l -managed assets s t ructure…
…suppor ted by robust funding…
…leads to revenues boost……to fur ther benef i t f rom operat ing e f f ic iency
17
Questions and answers
investor@voz.ru http://www.vbank.ru/en/investors
Elena Mironova
Deputy Head of IR
+7 495 620 90 71
E.Mironova@voz.ru
Andrey Shalimov
Deputy Chairman of the Management Board
A.Shalimov@voz.ru
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DisclaimerSome 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.
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