OREANDA-NEWS. TransCreditBank released its Interim Condensed Consolidated Financial Statements under IFRS for the three-month period ended March 31, 2013.

1Q:2013 Financial Highlights

• TransCreditBank's net profit for the 1st quarter 2013 was RUB 4.1 billion, up 58% compared to RUB 2.6 billion in 1Q2012

• Net interest income grew 15% YoY to RUB 6.9 billion (1Q2012: RUB 6 billion)

• Net interest margin rose to 6.4% from 6.0% in 1Q2012

• Net commission income increased 8% YoY to RUB 1.4 billion compared to RUB 1.3 billion in 1Q2012

• Operating income was RUB 9.0 billion, up 2.3% YoY

• ROE increased to 33.1% from 29.8% in 1Q2012

• ROA was 3.6%, up from 2.7% in 1Q2012

Commenting on the first-quarter performance, Mr. Dmitry Olyunin, TransCreditBank's President, said: 'We are quite satisfied with the results of the first quarter. Today the Bank's main priority is integration into the VTB Group. Corporate business activity is currently slowing down; loans are being transferred under cession agreements. On the contrary, retail segment is rapidly developing supported by VTB24. The Bank significantly improved its efficiency indicators: net interest margin increased to 6.4% and return on assets - up to 3.6%, cost-efficiency improved to 39.7%. In the first quarter TransCreditBank ranked among top 10 Russian most profitable banks with net profit increased by 58% YoY to RUB 4.1 billion'.

Statement of financial position review

In the first quarter loan portfolio structure changed: share of retail loans increased to 39% from 34% at YE2012, share of corporate loans dropped to 61% from 66%. According to the integration plan a part of corporate loans in the amount of RUB 32.8 billion was transferred to VTB Group under cession agreement. Gross loan portfolio consequently decreased by 11% to RUB 315.2 billion (2012: RUB 354.9 billion). Corporate loan portfolio fell 18% to RUB 193.1 billion. The share of loans issued to Russian Railways Group (RR Group) was 7.9% (2012: 7.8%).

Retail loan portfolio grew 2% to RUB 122.0 billion due to the consumer loans growth with a 67% share of the retail portfolio. Share of bank cards lending was up to 4% from 3% as at YE2012. The share of loans to RR Group employees was 85% of total retail lending at the 31 March 2013.

TransCreditBank's loan portfolio quality remained good

The share of non-performing loans (90 days overdue) in total loan portfolio was 2.2%, down from 2.7% at YE2012. Corporate NPLs decreased to 1.5% from 2.6% at YE2012 thanks to the loans portfolio cession and overdue loans write-off. Share of NPLs in retail portfolio stood at 3.0%. NPL provisioning remained unchanged - RUB 15.2 billion compared to YE2012.

Following the change in trading portfolio strategy involving reduction in the volume of securities trading operations the portfolio decreased 10% to RUB 51.8 billion. The decrease of the securities portfolio was mainly attributed to diminished holdings of Russian state bonds (OFZ) with short maturities, as well as corporate domestic bonds. For the first three months of 2013 holdings of OFZ dropped 35% to RUB 11.9 billion. Amounts due from credit institutions were RUB 20.4 billion, down 40% from RUB 41 billion at YE2012.

As the result TransCreditBank's in the first quarter 2013 total assets fell 20% to RUB 416.7 billion compared to RUB 518.7 billion as at YE2012.

TransCreditBank's total liabilities were RUB 370.8 billion. The share of customer accounts in total liabilities comprised 70%, up from 63% as at YE2013; share of retail customer accounts grew to 20%, or RUB 72.5 billion, compared to 17% as at YE2012; interbank loans were 22% of liabilities, or RUB 80.6 billion.

In the course of integration into VTB Group TransCreditBank takes measures to provide the most comfortable services to their corporate customers and maintain their loyalty to the Bank. Corporate customer accounts were RUB 186.9 billion or 50% of total liabilities, up from 47% at the YE2012. Customer current accounts grew to RUB 69.8 billion compared to RUB 50.9 billion at YE2012.

TransCreditBank is still a main operational Bank for OAO “RZhD”: RR Group's current accounts grew 37% to RUB 33.5 billion. RR Group's term deposits dropped to RUB 36.7 billion from RUB 81.6 billion due to due to excessive liquidity accumulated by the company at YE2012 and gradually distributed during the 1st quarter of 2013 to finance its operating activities and investment program implementation.

In the first quarter 2013 total shareholders' equity decreased 16% to RUB 45.8 billion as a result of dividend payment for the periods before and 2011 year included in the amount of RUB 12.8 billion in February 2013. Tier 1 capital ratio (under Basel I accord) was 12.2%, up from 11.7% at YE2012. Total capital ratio improved to 15.1 % from 14.0% at YE2012.

Income statement review

Interest income rose 15% YoY to RUB 6.9 billion mainly due to retail lending growth. The share of net interest income in operating income was 77%.

Net fee and commission income was 8% higher compared with the same quarter in 2012 and amounted to RUB 1.4 billion. Bank card business was RUB 1 billion contributed 53% to net fee and commission income. The share of net fee and commission income in operating income was 16%.

Operating income before loan impairment charges increased by 2% YoY to RUB 9.0 billion.

Net provision charge for loan impairment significantly fell 86% compared with 1Q2012 and amounted to RUB 0.2 billion following the shrinkage in lending balances and provision recovery partially due to loan portfolio cession to VTB Group. In the 1st quarter 2013 the provision charges structure was different from that in 1Q2012: retail provision charges grew to RUB 0.5 billion compared to RUB 0.3 billion; and corporate - declined to RUB 0.2 billion from RUB 1.6 billion.

Effective operating expenses control resulted in its 5% decrease to RUB 3.6 billion compared to the 1Q2012. Salaries and other employee benefits were the largest component of operating expenses at 68%, or RUB 2.5 billion and increased faster relative to other expenses - by 12% YoY. Administrative expenses dropped 26% to RUB 0.9 billion from RUB 1.2 billion in 1Q2012 mainly due to operating cost cutting e.g. operating taxes, advertising expenses and etc. For these reasons the Bank's cost efficiency improved to 39.7% from 43.2% in Q1:2012.

Net interest margin rose to 6.4% from 6.0% in 1Q2012.

Net profit for the first quarter 2013 was RUB 4.1 billion, up 58% from RUB 4.1 billion compared to the first quarter of 2012.