OREANDA-NEWS. April 28, 2012. TransCreditBank Group released its audited Consolidated Financial Statements under IFRS for the year ended December 31, 2011, reported the press-centre of TransCreditBank.  

“TransCreditBank’s profit for 2011 of RUB 8.7 billion was its highest to date, and 16% higher than in the previous year. Subordinated loans from VTB Bank supported robust growth of the Bank’s assets, first and foremost of its loan portfolio, which rose 56%. The Bank concentrated on its traditional client base and continued to operate within a rather conservative risk appetite. We expect 2012 to be another dynamic year for the Bank, as we have ambitious business targets set for us by our shareholders,” said Alexey Krokhin, TransCreditBank’s President.

FY2011 Financial Summary

TransCreditBank’s profit for the year amounted to RUB 8.7 billion, up 16% from 2010
Core income was the main driver of net income growth. Net interest income rose 47% to RUB 21.3 billion and net fee & commission income increased 16% to RUB 5.2 billion
Net interest margin stood at 5.2% (2010: 5.3%), ROE was 27.7% (2010: 31.9%) and ROA was 2.0% (2010: 2.3%)

Total assets increased 29% to RUB 505.8 billion

Gross loan book rose 56% to RUB 335.9 billion, driven by corporate loan portfolio expansion by 65% to RUB 246.9 billion and retail loan portfolio growth by 35% to RUB 89.0 billion. The share of non-performing loans NPLs (>90 days overdue) fell to 2.4% compared to 3.6% at YE 2010

Amounts due to customers increased 23% to RUB 341.4 billion; funding from individuals grew faster (by 30%) than funding from corporate clients (by 21%)

Shareholders’ equity was up 28% to RUB 36.1 billion from YE 2010 thanks to retained earnings
Total capital adequacy ratio (according to Basel Accord I) improved to 15.2% from 10.8% at YE 2010, and Tier 1 ratio to 9.3% from 7.1%.

Income statement review

Net interest income was up 47% YoY to RUB 21.3 billion, driven by the faster growth of interest income compared to interest expense. A considerable increase of loan portfolio and a bigger share of higher-margin consumer loans in the retail portfolio contributed to interest income increase. The share of net interest income in operating income was 80%, up from 67% in 2010.

Net fee & commission income rose 16% YoY to RUB 5.2 billion. Bank card fees and commissions grew 46% YoY and remained the largest source of income with the share of 45%. Fees and commissions for documentary business operations demonstrated the biggest growth of 82% YoY.

Other non-interest income amounted to RUB 76 million compared to RUB 2.6 billion earned in 2010.

Non-interest income was negatively affected by the revaluation of securities at fair value and loss from sale of securities in Q3:2011 during substantial financial market volatility, which was offset by net gains from other operations, such as FX revaluation.

Strong growth of core income drove the increase of operating income before loan impairment charges by 23% YoY to RUB 26.6 billion.

Loan impairment charges amounted to RUB 2.0 billion compared to RUB 346 million in 2010 and were attributable mainly to new lending. Credit quality continued to improve, and provisions-to-gross portfolio ratio decreased to 4.2% at YE 2011 compared to 5.5% at the end of 2010.

Operating expenses in 2011 grew 18% to RUB 13.7 billion. Expense growth slowed down compared to previous year, resulting in improved efficiency. Cost-to-income ratio fell to 49.9% from 53.5% in 2010. Despite increased headcount of 4%, operating income-to-employee ratio improved to RUB 3.4 million from RUB 2.9 million a year earlier. In 2012, the Bank plans to further improve its cost efficiency.

Statement of financial position review

Total assets amounted to RUB 505.8 billion, up 29% from YE 2010. Net loans to customers remained the largest balance sheet item at 64% of assets or RUB 321.9 billion.

Trading securities portfolio was broadly in line with YE 2010 levels and amounted to RUB 56.5 billion. In relative terms, its share in assets declined to 11% from 15% at YE 2010. Holdings of Russian state bonds in the portfolio rose to 63% compared to 54% at YE 2010.

Corporate customer lending surged 65% to RUB 246.9 billion from YE 2010. Growth was mainly fuelled by lending to private companies, which increased 90%. By industry, lending to companies in infrastructure construction, transportation, telecom and food industries showed the biggest increase in 2011. Loans to companies operating in rail, air, road, and water transportation sectors amounted to 27%, largest part of the corporate loan book. The Bank expects that lending to transportation, infrastructure and trading sectors will drive corporate portfolio growth in 2012.

Retail loan book grew 35% to RUB 89.0 billion. Customer loans showed the biggest growth, doubling from the beginning of the year to RUB 53.1 billion. Consequently, the share of consumer loans increased by 19 pp to 60% of the retail portfolio. Consumer loans were almost exclusively offered to existing customers of the Bank – employees of Russian Railways and other corporate clients. The share of loans granted to employees of Russian Railways Group (both consumer loans and mortgages) rose to 85% of the portfolio from 74% at YE 2010. The Bank expects that consumer loans, mortgages and credit card business will drive retail business expansion in 2012.

The share of non-performing loans (>90 days overdue) in total loan portfolio fell to 2.4% from 3.6% at YE 2010. Corporate NPLs fell to 2.2% from 3.4% at YE 2010, and retail NPLs – to 2.9% from 4.1% at YE 2010. The decline in overdue loans reflected the Bank’s strengthened collection practices and continued focus on maintaining high asset quality. Provisions covered 173.8% of non-performing loans, up from 154.1% at YE 2010.

Customer deposits remained the largest source of funding for the Bank. As at December 31, 2011, amounts due to customers were 73% of liabilities, or RUB 341.4 billion, compared to 76%, or RUB 276.5 billion at YE 2010. Corporate funding amounted to 55% of liabilities, retail deposits and current accounts – 17% of liabilities. Corporate funding increased 21% to RUB 259.8 billion at YE 2011. This includes funding from state-owned companies and entities under significant influence of the state, which grew 30% to RUB 170.7 billion. Deposits and current accounts from Russian Railways were a significant share of corporate funding at 50% at YE 2011 and were in line with the levels in the past years. Retail deposits and current accounts grew 30% to RUB 81.7 billion.

The Bank’s loan book is fully supported by clients funding. Gross loan-to-deposit ratio rose to 98% from 78% at YE 2010.

In 2011 the Bank substituted market funding with interbank loans. The latter rose x3.9 to RUB 62.1 billion. Borrowings from VTB Bank amounted to 10% of total liabilities.

Total shareholders’ equity increased 28% to RUB 36.1 billion, driven by profits generated during the period. Basel I capital adequacy ratios improved: Total capital ratio was 15.2%, up from 10.8% at YE 2010, and Tier 1 ratio was 9.3%, up from 7.1% at YE 2010. Two subordinated loans totaling RUB 8.5 billion received from VTB Bank in 2011 were included in Tier 2 capital.

Events after the reporting date
In February 2011, the Bank of Russia registered TransCreditBank’s additional share issue. VTB Bank acquired 100% of the issue and increased its stake in TransCreditBank’s authorized capital to 77.78%. The share of Russian Railways declined accordingly, to 21.81%. Fresh Tier 1 capital allowed TransCreditBank to prepay RUB 5.5 billion subordinated loan received from VTB Bank, and thereby to reduce its interest expense.