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Financial Results for the I quarter of 2013

28.06.2013

NOMOS-BANK (“NOMOS” or “the Bank”) today announces its Condensed Interim Consolidated Financial Statements in accordance with International Financial Reporting Standards (IFRS) for the three months ended 31 March 2013, delivering on the business’ key indicators set for the period.

The Board of Directors of NOMOS on 28 June 2013 approved the Condensed Interim Consolidated Financial Statements of NOMOS and its subsidiaries in accordance with IFRS for the three months ended 31 March 2013.

In the first quarter of 2013, the Group has delivered positive results despite an uncertain macro-economic environment in Russia with slower than expected GDP growth, a decline in oil prices and fluctuating inflation forecasts.

Group achievements in Q1 2013

In the first quarter of 2013, NOMOS delivered a strong performance with an annualized return on average equity (RoAE) ratio of 18.0% compared to 18.3% for 2012.

NOMOS’s net profit was RUB 4.4 billion, RUB 3.5 billion of which was attributable to shareholders, up 7.2% year on year. Earnings per share for the first quarter of 2013 was RUB 37.33. Earnings per Global Depositary Receipt (GDR) was USD 0.6 based on an exchange rate at 31 March 2013 of 31.08 RUB/USD.

First-quarter combined operating income before provisions for impairments rose 11.4% year on year to RUB 11.9 billion. Net interest income, net fees and commissions and trading income are the key drivers of the Group’s revenue generation, comprising respectively 73.7%, 16.3% and 5.8% of Group revenue. The net interest margin declined to 4.4%, affected by the higher costs of term funding due to the challenging market situation.

Net interest income increased in the first quarter of 2013 by 20.4% year on year to RUB 8.8 billion in line with the healthy growth of the loan portfolio, which outperformed the market average growth rate.

Net Fee and Commission income increased 15.9% year on year in the first quarter of 2013 to RUB 1.9 billion as a result of the Group’s strategic focus on cross-selling its fee-based products and increasing its “share of wallet” across its clients. The net fee and commission income growth came primarily from settlements (RUB 0.9 billion) and documentary operations related to letters of credit and guarantees (RUB 0.6 billion). The net fee and commission income earned by the Retail Banking segment in the first quarter of 2013 increased 29.6% year on year to RUB 0.8 billion.

Operating expenses fell 16.5% quarter on quarter to RUB 5.5 billion. Payroll expenses accounted for 70.5% of the total operating expenses of the Group. NOMOS’ management team closely monitored operating expenses over the period and took the necessary steps to optimise spending efficiency.

The Cost-Income Ratio (operating expenses to operating income before provision for impairment) improved to 45.8% (47.8% in 2012) again illustrating the increased efficiency of the Bank.

Positive loan growth at a higher than average market rate

In the first quarter of 2013 the Group’s total assets reached RUB 929.4 billion and increased 3.3% quarter on quarter, higher than the first quarter 2013 average market growth rate of 0.7%. Net loans represented 68.4% of total assets compared to 65.6% end 2012.

As at 31 March 2013 the net loan portfolio of the Group increased 7.7% quarter on quarter to RUB 636.0 billion outperforming the market average of a 2.0% increase. Positive results were seen across all core business segments. The Corporate loan book increased 7.5% quarter on quarter to RUB 453.8 billion and the Group Retail loan portfolio increased 6.2% quarter on quarter to RUB 95.7 billion. At the same time, the SME loan portfolio increased 6.9% quarter on quarter to RUB 41.6 billion.

Despite this growth, the quality of the loan portfolio was maintained as the ratio of loan loss provisions to gross loans declined to 3.4% in the first quarter 2013 versus 3.6% at the end of 2012. The share of non-performing loans (NPLs: loans overdue more than 90 days) stood at 2.1% (2.0% in 2012). The NPL coverage ratio remained at a comfortable level of a conservative 167.7%.

Cost of risk declined to 0.6% driven by the Bank’s conservative risk management approach, its well-diversified loan portfolio and stable asset quality.

The Group’s total liabilities reached RUB 834.6 billion as at 31 March 2013 and increased 3.1% quarter on quarter. During the period, the Group continued to keep a diversified funding structure with the increasing share of customer accounts comprising 62.9% of total liabilities compared to 58.3% at the end of 2012.

As of 31 March 2013 the Group’s customer accounts were RUB 525.0 billion, an 11.3% increase compared with 31 December 2012. Term deposits were up 13.9% to RUB 416.9 billion and made up 79.4% of total customer accounts as at 31 March 2013, which is also reflected in the increase in the cost of term funding to 7.1% compared to 6.7% in 2012.

All other sources of funding remained stable: bonds and promissory notes issued accounted for 8.1% of total liabilities (RUB 67.3 billion), subordinated debt stood at RUB 53.7 billion or 6.4% of total liabilities. The Group’s net loans to deposits ratio improved to 121.1% as at 31 March 2013 compared to 125.2% as at 31 December 2012.

Tier 1 capital ratio was 10.6% as at 31 March 2013 (31 December 2012: 10.8%) and the Group’s total equity was RUB 94.8 billion, including RUB 16.4 billion of non-controlling interest. The total capital adequacy ratio was 16.0% as of 31 March 2013.

The consolidated financial statements for the year ended 31 March 2013 are available for viewing at www.nomos-bank.com.

Company profile

NOMOS is currently the sixth largest banking group in Russia by total assets and the second largest privately-owned Russian universal banking group with total assets of RUB 929.4 billion and equity of RUB 94.8 billion under IFRS accounts for the Three Months Ended 31 March 2013.

As at 31 March 2013, NOMOS had an extensive branch network in Russia with 298 offices in the economically important regions of the Russian Federation, with the majority of its business concentrated in Moscow, St Petersburg, Tyumen (including the Khanty-Mansiysk autonomous district), the Novosibirsk and Khabarovsk regions.

NOMOS provides a full range of banking services to corporate, small business and retail clients. As at 31 March 2013, NOMOS served approximately 13,500 corporate customers, 81,900 small business clients and approximately 1.5m retail customers, including private banking clients.

NOMOS has long-term international credit ratings of BB from Fitch and Ba3 from Moody’s (stable outlook for both ratings).