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Financial Results for the III quarter of 2013

06.12.2013

NOMOS-BANK (“NOMOS” or “the Group”) today announces its Condensed Interim Consolidated Financial Statements in accordance with International Financial Reporting Standards (IFRS) for the nine months ended 30 September 2013, delivering on the key indicators in line with guidance.

The Board of Directors of NOMOS on 6 December 2013 approved the Condensed Interim Consolidated Financial Statements of NOMOS and its subsidiaries in accordance with IFRS for the nine months ended 30 September 2013.

During the nine months of 2013, the Group has delivered positive results in its core business segments, demonstrating good profitability in each segment and strong loan growth outperforming the market average.

 

Key achievements in the nine months of 2013

During the nine months of 2013, NOMOS reported net income of RUB 13.2 billion, which is equivalent to the annualized return on average shareholders’ equity (RoAE) of 18.4% (18.3% for the year ended 31 December 2012). The return on average assets (RoAA) was 1.8%. NOMOS achieved RUB 11.0 billion in net profit attributable to shareholders, a 17.4% year on year increase.

Earnings per share for the nine months of 2013 were RUB 118.06. Earnings per Global Depositary Receipt (GDR) were USD 1.8 based on an exchange rate of 32.345 RUB/USD as of 30 September 2013.

Combined operating income before provisions for impairments rose by 23.0% year on year to RUB 38.5 billion. Net interest income and net fee and commission income continued to be the key drivers of the Group’s revenue generation, comprising respectively 75.6% and 17.0% of the Group’s revenue. The net interest margin increased to 4.6% compared to 4.4% in 1H2013.

Net interest income increased by 26.9% year on year for the nine month period to RUB 29.1 billion in line with the healthy growth of the loan portfolio, which outperformed the market average growth rate of 13.2%.

Net Fee and Commission income increased by 14.1% year on year during the nine months of 2013 to RUB 6.5 billion as a result of the Group’s strategic focus on cross-selling its fee-based products and increasing its “share of wallet” across clients. The net fee and commission income growth came primarily from settlements (RUB 2.7 billion) and documentary operations related to letters of credit and guarantees (RUB 2.0 billion).

During the nine months of 2013 net trading income decreased by 41.4% year on year to RUB 772 million. The strong core operational performance of the Group was impacted by a revaluation of the Group’s fixed income securities portfolio in second quarter of 2013, resulting into a RUB 1.9 billion write-down. However, during the third quarter of 2013, the Group recovered RUB 0.8 billion of these losses and the overall trading loss on the securities portfolio therefore amounted to RUB 0.9 billion for the nine months of 2013.

During the nine months of 2013, operating expenses decreased by 0.6% year on year to RUB 21.2 billion on annualised basis. Payroll expenses accounted for 66.3% of the Group’s total operating expenses, consistent with the existing structure of operating expenses in the banking sector.

 

The Cost-Income Ratio (operating expenses to operating income before provision for impairment) was 41.4% (47.8% in 2012) outperforming the management guidance.

 

Positive assets growth at a higher than average market rate

During the nine months of 2013 the Group’s total assets reached RUB 1,034.0 billion, up 14.9% compared to 31 December 2012, exceeding the average market growth rate of 9.8% for the same nine months period. Net loans represented 69.7% of total assets compared to 65.6% at the end of 2012.

As of 30 September 2013, the net loan portfolio of the Group increased by 22.1% compared to 31 December 2012 to RUB 720.9 billion, outperforming the market average which rose by 13.2%. Positive results were seen across all core business segments. The Corporate loan book increased 21.2% to RUB 511.6 billion and the Group’s Retail loan portfolio increased by 18.4% to RUB 106.7 billion. At the same time, the SME loan portfolio increased 12.4% to RUB 43.8 billion.

Despite this growth, the quality of the loan portfolio was maintained as the ratio of loan loss provisions to gross loans declined to 3.1% in the nine months of 2013 versus 3.6% at the end of 2012. The share of non-performing loans (NPLs: loans overdue more than 90 days) stood at 2.2% only very marginally up compared to 2.0% at the end of 2012.

Cost of risk remained stable at 1.1% (0.9% at the end of 2012) reflecting the stable quality of the loan book.

The Group’s total liabilities reached RUB 929.9 billion as of 30 September 2013, increasing 14.9% compared to 31 December 2012. During the period, the Group continued to keep a diversified funding structure with the share of customer accounts comprising 64.7% of total liabilities compared to 58.3% at the end of 2012.

As of 30 September 2013, the Group’s customer accounts were RUB 602.1 billion, a 27.6% increase compared with 31 December 2012. Term deposits were up by 36.9% to RUB 501.1 billion and made up 83.2% of total customer accounts as of 30 September 2013, which is also reflected in the increase in the cost of term funding to 7.5% compared to 6.7% in 2012.

The Group’s net loans to deposits ratio was 119.7% as of 30 September 2013 compared to 125.2% as of 31 December 2012.

The Group’s Tier 1 capital ratio was 10.4% as of 30 September 2013 (31 December 2012: 10.8%) and the Group’s total equity was RUB 104.0 billion, including RUB 18.0 billion of non-controlling interest. The total capital adequacy ratio was 15.8% as of 30 September 2013.

The consolidated financial statements as of 30 September 2013 are available for viewing at www.nomos-bank.com.