Financial result

Net profit of Rosbank Group for 2019 amounted to RUB 10.9 bln decreased by 7 % compared to 2018.

The Group adhere to conservative policy of credit losses provisioning, while maintaining a consistently high quality of assets. Expenses to provisions creation in 2019 increased by 42% compared to 2018.

Net operating income from the Group's banking activities increased by 5% for 2019. The greatest contribution to the indicator improvement was made by the increase of interest income by 10%: mainly because of the growth of interest income on loans both retail and corporate business. Net fee and Commission income increased by 3% for 2019.

By the end of 2019, a smooth growth in the Group’s operating expenses was observed, amounting to 6% compared to 2018. The increase, in addition to the inflation rate, is explained by the growth of deposits base and, as a result, pay hikes to the Deposit Insurance Agency, as well as the rise of costs related to the business digitalizing as part of the transformation program.

Rosbank Group remains financially stable, has a sufficient liquidity level, and meets all capital adequacy requirements with a buffer:

thus, the Group's equity adequacy ratio was 13.42% as of 01.01.2020 (14.64% as of 01.01.2019), with a requirement of at least 8%;
the Group's short-term liquidity ratio was 145.11% as of 01.01.2020 (146.8% as of 01.01.2019), with a requirement of at least 100%.

Transformation program

In 2019 ROSBANK launched a transformation program aimed at changing the Bank's internal processes in order to increase the efficiency of resource use, improve the quality of products and services, and accelerate the pace of bringing new services and products to the market.

Within the framework of the program, among other things, the Bank implements DevOps practices, as well as Agile methods.

CSR

In 2019 ROSBANK continued to follow the principles of responsible business conduct. The Bank actively developed an accessible environment – ATMs with built-in options to use audio assistance and headphones, tactile keyboard, large font and high-contrast colors were introduced; alternative service channels for people with hearing disabilities were introduced (online chat); the site was adapted for the visually impaired clients (contrasting text, font size, disabling drawings , etc.).

The Bank offered investment products with a charity component to VIP clients.

ROSBANK also seeks to reduce the direct impact of its activities on the environment. In particular, the Bank was included in the project of Societe Generale group to neutralize the carbon footprint.

Ratings

Rosbank has highest credit ratings from national agencies and high credit ratings from international rating agencies constrained by the Russian Country Ceiling: Fitch (BBB), Moody’s (Baa3), ACRA (AAA(RU)) and Expert RA (ruAAA). Such assessment of Bank’s performance is attributable to strong market positions, increase of profitability, high assets quality and adequate liquidity position. Also ratings reflect strong corporate governance, robust capital buffer and high assets quality.

On 19 August 2019 an international rating agency Fitch Ratings upgraded a long-term issuer default rating of Rosbank in national and foreign currency from BBB- to BBB, a short-term issuer default rating in foreign currency from F3 to F2, a long-term rating for senior unsecured bonds was upgraded from BBB- to BBB and a short-term rating for senior unsecured bonds was upgraded from F3 to F2. On 10 December 2019 Fitch upgraded the Viability Ratings of Rosbank to 'bbb-' from 'bb+'.

On 23 May 2019 Moody's Investors Service ("Moody's") upgraded the baseline credit assessment (BCA) of PJSC ROSBANK (Rosbank) to ba2 from ba3, adjusted BCA to baa3 from ba1, deposit ratings to Baa3/Prime-3 from Ba1/Not-Prime, counterparty risk ratings (CRRs) to Baa2/Prime-2 from Baa3/Prime-3 as well as senior unsecured rating and senior unsecured credit facility to Baa3 from Ba1. Concurrently, Moody's has upgraded its the Counterparty Risk Assessment (CR Assessment) to Baa2(cr)/Prime-2(cr) from Baa3(cr)/Prime-3(cr).

In 2019 Analytical Credit Rating Agency (ACRA) affirmed the highest credit rating of Rosbank Group on the level of AAA (RU) with stable outlook. Also RAEX (Expert RA) has confirmed the highest credit rating of Rosbank at the ruAAA level with stable outlook.

Banks of Rosbank Group are included to the highest group of the annual rating of the most reliable banks in Russia according to Forbes magazine. Rosbank is consistently included in the TOP-3 of the most reliable banks in Russia.

Appendix

Key indicators of Statement of Financial position