OREANDA-NEWS. The Alfa Banking Group, which includes ABH Financial, Alfa-Bank and subsidiaries, reported IFRS financial results for the full year 2016. The Alfa Banking Group demonstrated a significant improvement in financial performance, enhanced market position proving once again sustainability of its business model.

Net profit of the Alfa Banking Group increased by 9.8% and amounted to USD 527 million in 2016 (against USD 480 million in 2015).

«2016 was another successful year for the Alfa Banking Group, which once again demonstrated the growth of its financial indicators. This result was a consequence of increasing effectiveness of our work, significant increase in the number of customers last year, increase in share of risk-free income as well as work on improving of loan portfolio quality. Taking this opportunity, I would also like to thank the clients for the trust and choice of our bank» — comments Alexei Tchoukhlov, Deputy Chairman and Chief Financial Officer.

Net interest margin improved due to funding cost reduction in 2016. Net interest income increased in USD terms by 3.6% to USD 1 325 million (in RUB terms — by 13.9%). NIM ratio grew to 4.5% in 2016 from 4.0% in 2015.

Cost of risk ratio of the Alfa Banking Group also improved significantly — it decreased from 3.12% to 1.30% due to substantial improvement of the loan portfolio quality. Non-performing loans ratio (more than 90 days overdue) decreased to 4.2% from 6.9% as of 31 December 2015. NPL 90+ provision coverage ratio remains at conservative high level of 113.1%. Provisioning rate amounted to 4.8% in 2016.

Due to the client base growth net fee and commission income increased by 8.4% in USD terms (in RUB terms — by 19.2%) compared to the last year and amounted to USD 634 million. The share of net fee and commission income in operating profit before provisions reached historically record level of 32.0% in 2016. This reflects the Alfa Banking Group’s strategy focusing on increase of stable risk-free income and strengthening of the transaction business.

Total assets increased by 21.5% compared to the last year and amounted to USD 38 247 million as of December 31, 2016. The increase excluding FX revaluation effect due to ruble strengthening amounted to 11.9%.

Gross loan portfolio increased by 10.4% and amounted to USD 23 901 million as of December 31, 2016 compared to USD 21 654 million as of December 31, 2015. During the reporting period the Alfa Banking Group has retained its approach to maintain the quality of the loan portfolio, lending the most reliable borrowers.

Total liabilities amounted to USD 32 513 million as of December 31, 2016. Customer accounts increased by 22.4% in dollar terms to USD 21 721 million (excluding FX revaluation effect — by 10.3%). Wherein current accounts grew by 1.5 times (+49.8%), and its share in total customer accounts comprised 50.7%. Such dynamics reflects clients’ high confidence in the Alfa Banking Group as one of the most reliable financial institutions in Russia.

Total equity increased by 32.0% to USD 5 734 million in 2016 compared to USD 4 344 million in 2015. This increase was also ensured by the issue of perpetual subordinated loan participation notes in the amount of USD 700 million. This issue was unique for the Russian market. After the Basel III standards implementation it was the first in Russia issuance of perpetual Eurobonds. The Alfa Banking Group continued to maintain high level of capital adequacy ratios under Basel I: total capital adequacy ratio and tier 1 ratio amounted to 21.8% and 16.2% respectively, which guarantees stability and sustainability of the Group’s even in tough economic realities.