OREANDA-NEWS. May 18, 2011. MDM Bank announced results for the full year 2010 based on International Financial Reporting Standards (IFRS).

Key highlights:

— Net and comprehensive income amounted to RUB 2.1 bn and RUB 2.2 bn, respectively (a net loss of RUB 1.4 bn and comprehensive income of RUB 0.4 bn in 2009);

— Equity grew by 3,6% as compared to year-end 2009 (by 1,7% in the fourth quarter) and amounted to RUB 63.8 bn;

— Assets insignificantly decreased (by 4,8%) and amounted to RUB 383.4 bn. The decrease occurred mainly in the item “Due from banks” — by 50% as compared to the end of 2009 (by 19% in the fourth quarter). The main driver for the decrease was wholesale debt repayments.

— Liquid assets (cash and cash equivalents, and interbank loans with the remaining maturity of up to one month) totaled RUB 79.9 bn, or 21% of all assets;

— Liabilities have decreased by 6,3% and totalled RUB 319.6 bn;

— Decrease in liabilities was mainly due to planned repayments of wholesale funding that was partly replaced by inflow of customer funds (customer accounts grew by 15,8%);

— Pre-provision operating income grew by 90,8% and reached RUB 18.7 bn, with net interest income (RUB 17.8 bn) and net commission income (RUB 3.2 bn) remaining its key components. Main driver was decrease in loan impairment charges by 67,9% due the problem debt reduction measures;

— Operating expenses totaled RUB 15.37 bn;

— Loan impairment charges totaled RUB 5.09 bln (reversal in loan impairment charges totaled RUB 396 mln in the fourth quarter), or 1,8% of average total loans, annualized (2,6% for nine months for the year 2010). Loan impairment losses decreased 28,4% as a result of credit risk minimization and amount of non-performing loans;

— The Bank’s Tier 1 capital adequacy ratio calculated according to the standards of the Basel Committee on Banking Supervision (Basel I) totaled 18,6%;

— Net profit to average capital totaled 3,3%, annualized, while comprehensive income to average equity was 3,5%, annualized.

— Cost of risk decreased by 4.2 p.p. and totaled 1,8% as a result of reduction in non-performing loans in the loan portfolio by 3 p.p.

“An upward trend in our consolidated statements and positive financial result demonstrated by MDM Bank for the year 2010 were the result of the balanced lending policy of the Bank. A more detailed approach to customers’ appraisal with a view to minimize credit risk as well as decreasing non-performing loans allowed to decrease loan impairment charges by 28,4%, which contributed to the net interest income. Moreover, customer accounts grew by 15,8% as compared to 2009, whereas individual customer accounts rose by 35,4% as compared to 2009. The deposit portfolio growth in home regions exceeds average market rates 1.6 times (51,3% and 31,7% respectively). Loan to deposit ratio improved and reached 103,8% (as compared to 121,6% in 2009). Due to these measures the Bank’s funding structure became more balanced,” remarked Konstantin Rogov, Chief Financial Officer of MDM Bank.