OREANDA-NEWS. September 07, 2011. NOMOS Bank released its 2Q11 IFRS financial results posting a bottom line of RUB2.9bn, on target with the Interfax consensus, reported the press-centre of ATON.

The main takeaways include:
 
The loan book showed strong growth of 9% QoQ. Breaking this down:
Loans to brokerages jumped 11% QoQ with the rest of the corporate loan book increasing by 7%

The retail loan book expanded 19% QoQ with consumer loans leading the way (+36% QoQ)

These changes in the loan book definitely look positive for margins but, in our view, are risky at the moment, making the bank more exposed to the macro and capital markets’ volatility.
 
The same could be applied to the liabilities side, where the share of interbank borrowings in funding reached 17% vs an average of 5% for other traded Russian banks. Customer accounts rose just 1% QoQ and current accounts stand at 41% of total customer accounts. The loan-to-deposits ratio has reached 122%, a level last seen in 2009.
 
Net interest margin (NIM) rose 0.3 ppt QoQ to 5.2% due to the loan book and funding structure changes described above.
 
Strong growth in fee and commission income (+29% QoQ) is due to both organic growth and consolidation of Rapida, the payment system acquired in Mar 2011.
 
The cost-to-income ratio is up 6 ppts QoQ to 50%.
 
Bottom line. Despite a strong performance on the core revenue side and a NIM increase, we take a very cautious stance on NOMOS Bank’s 2Q results. Balance sheet changes continue to take the bank into more risky territory which could backfire severely, in our view, should the macro and capital environment deteriorate further. The large share of interbank borrowings in funding and liquidity gaps in short durations underscore the point.
 
The following table summarises the quarterly results. In 2010, NOMOS Banks’ financials did not consolidate Bank Khanty-Mansiysk (BKM), so YoY comparisons are not meaningful.