OREANDA-NEWS. September 30, 2009. The Group of the Bank of Moscow is reporting the consolidated IFRS results for the first half of 2009.

1H 2009 financial highlights:
     • Total assets up 2.8% up to RUB 824 bln;
     • ROE — 1.92%, ROA — 0.16%;
     • Net profit of the Bank totaled RUB 650 mln;
     • Capital adequacy (Basel 1) — 15.7%.

Operating and financial review

As of June 30, 2009 the Group’s gross profit was RUB 1 097 mln, net profit to the shareholders — RUB 650 mln, ROE — 1.92%, ROA — 0.16%. The decline in the Group’s net profit was attributable to significant charges for loan impairment compared to previous periods, a 88% growth from the beginning of the year.

The Group’s assets grew 2.8% up to reach RUB 824 bln. As of June 30, the Bank’s gross loan portfolio amounted RUB 549.5 bln demonstrating a 3.8% increase in the first half of 2009. The growth of the loan portfolio was driven by rise in corporate lending: gross corporate loan book as of June 30, 2009 amounted to RUB 447.6 bln, а 7.5% increase for 1H 2009. At the same time loans to individuals (gross) decreased to RUB 101.9 bln from RUB 113.1 bln as of January, 2009 due to reduction in demand for loan products on the part of retail customers on the back of continuing economic uncertainty. The Group was increasing its loan loss provisions, which as of June 30, 2009 reached RUB 24.2 bln. The loan loss provisions to total loan portfolio was 4.41%. The non-performing loans constituted 2.98% of the gross loan book with the loan loss provisions coverage ratio standing at 1.48.

Total customer accounts grew 18.6% to RUB 482 bln. The Bank of Moscow continued ranking number 3 in terms of the volume of retail deposits among the Russian banks. As of June 30, 2009 retail funds increased to RUB 164.4 bln from RUB 151.2 bln as at January 1, 2009.

As of June 30, 2009 the Bank’s capital position was sound: total equity amounted to RUB 95.3 bln with the capital adequacy ratio according to Basel 1 standing at the level of 15.7%. Tier 1 Capital ratio was 10.3%. In July 2009, the 13th share issue was completed to boost the Bank’s Tier 1 Capital for RUB 20 bln. As of September 1, 2009 the capital adequacy ratio of the Bank (CBR N1) increased to 15.94%.

The Group’s operating income before provisioning for loan impairment for 1H 2009 increased by 27.6% compared to 1H 2008.
     • Net interest income grew 7.7%;
     • Net commission income grew 20.1%;
     • Provisioning for loan impairment increased 3.4 times;
     • Сost/Income ratio decreased to 36.18% (1H 2008 — 42.87%).

Group’s net income before provisioning amounted to RUB 19.7 bln for 1H 2009 compared to RUB 15.4 bln for 1H 2008, a 27.6% growth year-on-year. The growth in operating income was attributable to higher interest income from lending operations and higher commission income.

Net interest income amounted to RUB 13.5 bln, a 7.7% growth year-on-year. The Group’s fee and commission income totaled RUB 4.5 bln, a 16.9% growth year-on-year. Net fee and commission income comprised RUB 3.8 bln, a 20.1% increase year-on-year. Commission income increase was attributable to the growth of fee-generating operations with commissions on settlement and cash transactions in the first place.

Cost/Income ratio improved to 36.18% in the first half of 2009 vs. 42.87% in the first half of 2008 to reflect the tighter control over costs and expenses and optimization of the employees’ number. In the first half of 2009 the administrative expenses increased 7.8% compared to 1H 2008, however, having showed a 15.3% decrease vs. 2H 2008.

The Bank of Moscow possesses one of the largest branch networks among the Russian financial organizations. As of June 30, 2009 the Bank of Moscow operated 396 points-of-sale throughout the country. The Bank also delivered retail services in 471 Moscow based post offices.

As of June 30, 2009, the Group comprised 5 foreign banks: BM Bank (Kiev, Republic of Ukraine), Bank Moscow-Minsk (Minsk, Republic of Belarus), AS Latvijas Biznesa Banka (Riga, Latvia), AS Eesti Krediidipank (Tallinn, Estonia) and Bank of Moscow j.s.c. — Belgrade (Belgrade, Republic of Serbia). The Bank of Moscow owns 2 Russian banks — Mosvodokanalbank and Bezhitsa-bank.

The strategic priorities of the Bank of Moscow include maintenance of business efficiency, client base diversification, high in profitability as a longer term goal.