OREANDA-NEWS. June 04, 2010. BANK URALSIB (OJSC “URALSIB” or the Bank) (RTS: USBN) reported IFRS1 results of its operational performance for the twelve-month period ended December 31, 2009.

Key financial ratios

31.12.2009

31.12.2008

Return on assets (RoA)

0.4%

0.6%

Return on equity (RoE)

3.2%

4.8%

Total capital adequacy (under Basel Accord)

18.0%

14.8%

Tier 1 capital adequacy (under Basel Accord)

13.7%

11.2%

Operating expenses/Net operating income (C/I)

55.9%

57.9%

NIM

11.1%

11.4%

Core banking income/Operating expenses

134.1%

177.9%

Net income of the Bank for 2009 amounted to 1.8 bln rubles, while the pre-tax income reached 2.6 bln rubles.

Net fee/commission income and net interest income decreased by 23.5% and by 29.4% respectively in 2009 vs 2008. This reduction is compensated by net gains from securities in the amount of 5.1 bln rubles vs net loss of 3.2 bln rubles in 2008.

Net operating income before impairment of interest-earning assets amounted to 33.7 bln rubles, shrinking insignificantly by 1.5% vs 2008.

Operating expenses reduced by 4.9% in 2009 vs 2008; the major share of this reduction were provided by general and administrative expenses (decreased by 11.4%) and personnel expenses (decreased by 12.2%).

Core banking income/operating expenses ratio amounted to 134.1% in 2009. Operating expenses/net operating income ratio (C/I) shows the improvement of operating efficiency in 2009.

Key financials

2009

2008

Change (%)

mln rubles

Net interest income

20,210

28,619

-29.4%

Net fee and commission income

5,036

6,584

-23.5%

Net gains/(losses) from securities

5,104

(3,171)

-

Net gains from foreign currencies, derivatives and operations with precious metals

555

1,289

-56.9%

Other income

1,563

1,116

40.1%

Net operating income before impaiment of interest earning assets

33,653

34,170

-1.5%

Impairment of interest earning assets

12,275

10,509

16.8%

Net operating income

21,378

23,661

-9.6%

Operating expenses

18,820

19,787

-4.9%

Pre-tax income

2,558

3,874

-34.0%

Net income

1,825

2,478

-26.4%

Other comprehensive income, net of tax

1,200

(1,244)

-

Total comprehensive income

3,025

1,234

145.1%

Economy recession impacted the Bank’s activities in 2009, especially in its first half.

During 2009, the overall loan portfolio2 of the Bank decreased by 17.3%, including loans to individuals - by 15.6% and loans to corporate clients -  by 18.1% .

The share of loans to retail trade enterprises decreased from 22.0% to 18.2%, while the share of loans to real estate and construction industry decreased from 12.2% to 8.6%. Apart from these changes, the structure of the loan portfolio by industry did not change significantly. The share of loans to SME in the corporate loan portfolio remained steadily high at 47.7%.

NPL amounted to 21.9 bln rubles or 10% of the loan portfolio as of 31.12.2009.  The LLP/NPL ratio on the overall loan portfolio amounted to 115.1%, breaking down into 136.6% for corporate loans and 80.8% for individuals.
The customer accounts-to-loan portfolio ratio was 128.8% as of 31.12.2009.

The structure of borrowed funds changed significantly. During 2009 the Bank reduced borrowings by 80% to 10 bln rubles. All borrowings from the CBR and Ministry of Finance of Russia were fully repaid in February 2010. Borrowings from international financial institutions were replaced by customer savings deposits. The share of customer deposits in total borrowings was 78.9% as of 31.12.2009.

 Balance sheet

2009

2008

Change (%)

mln rubles

Assets

441,659

470,125

-11.4%

Loan portfolio (gross)

243,531

294,617

-17.3%

Loans to individuals

77,147

91,379

-15.6%

Loans to corporates

166,384

203,238

-18.1%

Securities portfolio

48,357

41,527

16.4%

Debt securities

28,639

36,832

-22.2%

Equity securities

18,639

2,944

533.1%

Promissory notes

784

1,715

-54.3%

Units in investment funds

1,252

746

67.8%

Allowances for impairment

-957

-710

34.8%

Liabilities

356,209

417,594

-14.7%

Amounts due to credit institutions

46,478

139,833

-66.8%

Time deposits and loans

30,568

99,902

-69.4%

Subordinated loans

7,485

7,216

3.7%

Current accounts

4,744

4,736

0.2%

Syndicated loans

3,247

24,052

-86.5%

Repurchase agreements

434

3,927

-88.9%

Customer accounts

281,166

246,196

14.2%

Individual accounts

100,707

74,046

36.0%

Corporate accounts

180,459

172,150

4.8%

Equity

60,450

52,531

15.1%

Total equity reached 60.5 bln rubles, increasing by 15% during 2009. Tier 1 capital amounted to 52.7 bln rubles at 31.12.2009, growing by 14.8% vs 31.12.2008 (45.9 bln rubles). The Bank improved capital adequacy ratio under the Bank for International Settlements (BIS) methodology from 14.8% to 18.0%, as well as under Russian accounting legislation (N1 ratio) - from 12.7% as of 31.12.2008  to  16.6% as of 31.12.2009.

The Bank forecasts NPL stabilization without considerable change in 2010. Impairment of the loan portfolio is not expected to influence the financial result of 2010 as significantly as in 2009.

In 2010, the Bank anticipates the recovery of economy in Russia and the corresponding increase in demand for credit products from both individuals and businesses, which should result in the growth of Bank's net interest income and fee/commission income.

1 OJSC “URALSIB-YUG BANK” is consolidated in the financial statements under the de-facto control concept

2 Loans to corporates and to individuals (gross)