OREANDA-NEWS. Gazprombank (Open Joint-Stock Company) issued consolidated IFRS financial statements for the year ended 31 December 2013.

During 2013 Gazprombank Group's (the “Group”) total assets per IFRS financial statements increased by 28.4% and amounted to RUB 3 647.0bn as of 31 December 2013. The loan book grew faster than assets, increasing by 34.0% over the course of the year, totaling to RUB 2 355.9bn (net of impairment provisions) at the end of 2013. As a result the share of the loan portfolio (net of impairment provisions) in the Group's asset structure increased from 61.9% at the end of 2012 to 64.6% at the end of 2013. This increase of assets was a result of banking operations organic growth.

Gross corporate loans have posted a growth of 33.1% since the end of 2012 to reach RUB 2 147.0bn (88.2% of the loan book). Commercial lending constituted 71.6% of the corporate loan portfolio and investment financing - 28.4% of the corporate loan portfolio.

The retail loan book (before impairment provisions) increased from RUB 210.3bn at the end of 2012 to RUB 287.6bn at the end of 2013, posting growth of 36.8% over the period. Mortgage loans constituted 68.1% of retail loan portfolio, consumer finance loans - 25.3%, car loans - 6.6%.

Consequently the Group posted above-market-average loan book growth. During 2013 the average market growth of corporate loans was 12.7%, retail loans - 28.7% (per the Central Bank of the Russian Federation data).

Despite high growth rates, asset quality remained traditionally high. As of 31 December 2013 the non-performing loans (overdue 90 days or more) were 0.9% of gross loans (31 December 2012 - 1.2%); the loan loss provisions were 3.2% of gross loans (31 December 2012 - 3.6%). The coverage ratio of non-performing loans by allowance for impairment amounted to 357%.

The Group's securities portfolio posted a growth of 27.1% over 2013 to reach RUB 419.8bn driven by an increase in investments in fixed income securities of Russian sovereign and corporate issuers. As a result, 73.4% of the Group's securities portfolio is represented by fixed income instruments as of 31 December 2013. The securities portfolio constitutes 11.5% the Group's total assets as of 31 December 2013.

The Group's funding base growth was mainly driven by corporate and retail funding. Corporate deposits amounted to RUB 1 867.5bn as of 31 December 2013, up by 30.8% since the end of 2012. Retail deposits grew by 24.7% to reach RUB 393.3bn as of 31 December 2013. The customer accounts remain the principal source of the Group's funding: their share in the funding base was 69.7% as of 31 December 2013.

The borrowings from debt capital markets - Eurobonds, domestic bonds and syndicated loans, increased by 26.4% over 2013 to RUB 396.5bn as of 31 December 2013; their share in total liabilities was 12.2%.

In the second half of 2013 the Group has increased CBR funding volume. Funding facilities with CBR with loans and securities pledged as collateral contributed RUB 209.0bn (6.4% of Group's total liabilities).

Profitability and capital adequacy

The Group's net profit per IFRS financial statements for 2013 increased by 6.8% to RUB 33.0bn vs. RUB 30.9bn for 2012. Comprehensive income which includes revaluation of investments in unlisted corporate shares and foreign subsidiary banks increased to RUB 33.9bn for 2013 from RUB 27.3bn for 2012 by 24.2%.

The core banking business revenue, net interest and fee income, grew by 32.4% compared to 2012 and totaled RUB 97.0bn. Its share in operating income increased to 76.7% in 2013 in comparison with 62.9% in 2012.

Net interest margin continued to grow in the fourth quarter of 2013 and amounted to 3.6% compared to 3.4% for the third quarter of 2013. Therefore, NIM for the twelve months of 2013 increased to 3.2%, posting a growth of 0.3 p.p. vs. the twelve month of 2012. The gradual growth of interest income was driven both by decline in cost of funding and improvement of the interest-earning assets structure, which represented 79.4% of the total assets as of 31 December 2013.

Unfavorable financial market conditions during 2013 resulted in a lower revenues from securities, foreign currency and derivatives - they amounted to RUB 14.9bn in 2013 in comparison with RUB 20.6bn in 2012.

Overall, the Group's operating revenues increased by 8.5% vs. 2012 and reached RUB 126.5bn.

Notwithstanding significant growth of banking operations achieved by the Group in 2013, cost optimization efforts resulted in a moderate growth of operating expenses, which increased by 9.0% in 2013 vs. 2012. This allowed the Group to maintain cost-to-income ratio on the level of 2012: the ratio amounted to 47.1% in 2013 vs. 46.9% a year earlier.

The Group's capital per IFRS posted a growth of 10.9% over 2013, which was achieved through capitalisation of profit and resale of treasury shares to one of the Group's shareholders - Non-state Pension Fund "GAZFOND". The Group's capital per IFRS amounted to RUB 403.1bn as of 31 December 2013.

Tier 1 capital adequacy ratio per Basel II was 9.9% as of 31 December 2013 vs. 11.0% at the end of 2012, while total capital adequacy ratio was 13.2% at the end of 2013 vs. 13.9% at the end of 2012. Some contraction of capital adequacy ratios was a result of active loan portfolio growth during the year. Group maintained comfortable levels of capital adequacy ratios, which was achieved through capitalisation of profit, as well as raising Tier II capital (subordinated Eurobonds) for the total amount of RUB 39.2bn. In addition the Group improved the quality of its capital structure by amending the terms of existing subordinated Eurobonds in line with new CBR Basel III requirements.

“We view the Bank's financial performance in 2013 as positive: we were able to achieve high growth rates of our business, maintaining traditionally high asset quality. Our efforts to improve interest-earning asset structure and optimise cost of funding allowed the Bank to achieve significant growth of interest margin. Business growth was supported by capital base strengthening, which allowed to maintain capital adequacy ratios at comfortable levels. The achieved results allow us to continue further development of the Bank in 2014 with confidence despite challenging market conditions and external uncertainty factors”, noted Mr. Alexander Sobol, Deputy Chairman of the Management Board of Gazprombank.