Rosbank Group announces its consolidated results for 9 months of 2016 according to IFRS
During the first 9 months of 2016 Rosbank Group* (hereinafter the Group) continued to improve profitability, net profit amounted to 263 million rubles. (For the same period last year - a loss of 7.6 billion rubles). Quarterly results have moved into positive territory, starting from the 2nd quarter of 2016 (105 million rubles), and reached 722 million rubles in Q3 2016.At the same time, these results include the costs incurred to refinance foreign currency mortgage portfolio. As a result of this work, we do not expect any further material negative impact of this activity on the Group's results.
Despite the difficult economic environment, the Group's activity in the Russian market largely recovered compared to 2015. In particular, the growth of the active customer base has resumed, the volume of lending to individuals is returning to pre-crisis level, and to legal entities has even exceed it, that allows the Group to maintain its market position in the retail business and increase market share in the corporate business.
*Rosbank, DeltaCredit Bank, Rusfinance and their subsidiaries
Key achievements in retail business
For the first 9 months of 2016 the volume of retail loans (consumer loans, mortgages and car loans) of the Group increased by more than 40% compared to the same period of 2015.
Despite our traditionally conservative credit policy, the Group has maintained its market share in retail lending, which now stands at 3.6%.
At the same time in consumer loans the dynamics of the Group is higher than the market. During the first 9 months of 2016 the volume of consumer loans issuance is two times higher than during the same period last year, which allow the Group to strengthen its position in the market and increase its market share from 2.1% up to 2.6%.
In addition, we maintain a leading position in the mortgage and car loan market due to strong performance of specialized subsidiaries DeltaCredit and Rusfinance bank.
Rusfinance bank consistently ranks in the top 3 banks in the car loan market with a market share of 13.2%. The total volume of car loans for 9 months of 2016 is by 22% over the same period of 2015. We continue to participate in the state program of preferential car loans, in which we occupy 2nd place (according to Ministry of Industry and Trade).
DeltaCredit is in the top 5 in terms of mortgage loans issuance (according to the analytical center Rusipoteka) with a market share – 3,1%. The total volume of mortgage loans for the first 9 months of 2016 is by 45% over the same period of 2015. The quality of the ruble mortgage portfolio is much higher than the average indicators. As of September 30, 2016 the 90+ delinquency in DeltaCredit ruble mortgage portfolio is amounted to 1.27%, compared with the market rate of 3.02%.
We register continued stable positive dynamics of individuals liabilities. In the past 12 months the stock of retail deposits increased by 14% (excluding forex effect), which exceeds the performance of the banking system during the same period (+11.5%). Especially worth noting an increase of 35% of the funds on demand (excluding forex effect), which is fully consistent with the Group's objectives for the development of the transactional business.
Key achievements in corporate business
As a part of an international group Societe Generale, Rosbank is continuing to increase its share in the market of banking services to the key Russian and international companies.
Societe Generale / Rosbank are the leaders on the Russian syndicated lending market with a share of 26.8% (according to Bloomberg news agency). Main transactions with the key customers during the first 9 months of 2016:
• Rosbank, along with the investment division of Societe Generale acted as a coordinating mandated lead arrangers and bookrunners in Uralkali loan agreement in the amount of $ 1.2 billion together with 16 international banks.
• Societe Generale and Rosbank acted as one of the co-ordinating mandated lead arrangers and Rosbank - also as a passport bank to the debut pre-export financing of FosAgro, teaming with international banks, totaling $ 250 million, with a four-year maturity.
• Jointly with Rosbank Societe Generale entered the pool of international banks that provided the group EuroChem pre-export loan in the amount of $ 800 million for five years.
We continue to develop our investment services: as of Q3 2016, Rosbank entered the top 4 investment banks in accordance with the Russian bonds’ arrangers ranking by Cbonds (Rosbank market share is 10%). In Q3 2016 Rosbank acted as the organizer of the largest transactions in the following Issues: MOESK (4 bln), Volkswagen Bank RUS (5 bln) and RN-Bank (5 billion rubles).
Rosbank Factoring took 9th place in the ranking of the top factoring companies for the I half of 2016, published by the Expert RA agency (RAEX). Rosbank Factoring continues to increase a portfolio of clients and turnover of assigned receivables, increasing the figures for the last 12 months almost twice.
High dynamics shows Rosbank Leasing - a portfolio of deals increased by more than 20% since September 2015.
The total loan portfolio of the Group decreased by 2% (excluding forex effect) from the beginning of the year. At the same time with the 3rd quarter of 2016 marked a return to quarterly growth dynamics with an increase of 2% of the portfolio.
Reducing the portfolio in the first half due to a continuing slowdown in the retail portfolio (-7% since the beginning of 2016, excluding forex effect).
At the same time corporate loan portfolio continued to grow, increased by 5% since the beginning of 2016 (excluding forex effect), of which 4% is a result of the 3rd quarter. Compared to September 2015 it increased by 10% (excluding forex effect), which is well above the market and helped to compensate the decline in the retail portfolio.
At the same time, it should be noted the change of the corporate loan portfolio structure by currency in the last 12 months: the proportion of foreign currency loans decreased (by 10%); the share of corporate loans in rubles increased (by 27%). These changes had a positive impact on the interest margin of the Group.
Deposits and current accounts
During the first 9 months of 2016 and last 12 months the portfolio of client liabilities of the Group remained stable (excluding forex effect). The volume of corporate funds decreased by 3% (excluding forex effect) for the first 9 months of 2016, primarily due to term deposits.
At the same time, individuals' funds showed a steady growth: 5% (excluding forex effect) for the first 9 months of 2016 (and by 14% over the past 12 months). Ruble liabilities were the main growth driver in this case (by 11% for the first 9 months of 2016 and by 25% over the past 12 months).
Net interest income of the Group for the 9 months of 2016 amounted to 28.9 billion rubles, increased by 9% compared to the same period last year. Positive dynamics is mainly due to improved interest margins by lowering the cost of financing.
For the first 9 months of 2016 net commission income amounted to 5.9 billion rubles. (14% increase relative to the 2015 year). On the one hand, the dynamics of the commissions is due to the activation of retail lending and, consequently, increase in commissions from insurance companies (retail business commission income rose by 11%). On the other hand, commission income of corporate banking increased due to the development of cash management services (+18%) and trade finance (+37%).
Operating expenses of the Group for the first 9 months of 2016 amounted to 24.8 billion rubles, increased by 2% in comparison with the similar period of 2015, which is below the annual inflation rate (+6.4%). Control of the expenses growth has been made possible as a result of measures to optimize the costs of the Group: the further reorganization of the retail network, as well as the reduction of personnel by 17% compared to the same period of 2015.
Allocations to reserves for the first 9 months of 2016 amounted to 12.3 billion rubles, decreased by 22%. Reserves’ reduction effect was achieved mainly by the improving of the retail portfolio quality and recovery processes optimizing. The quality of corporate portfolio remains high.
"We observe an improvement in all our key indicators. Group demonstrates the positive financial result due to the recovery in interest margins, a conservative credit policy and the effect of cost optimization. Net profit of the Group for three quarters amounted to 263 million rubles, despite the significant expenses on foreign currency mortgage refinancing. The positive dynamics of retail lending allowed us to stop the reduction of the portfolio in the 3rd quarter, at the same time retail liabilities have exceeded the average level of the banking system. I especially want to note the faster growth of demand deposits, which fully meets the purpose of the development of our transactional business ", - concluded Dmitry Olyunin, Rosbank CEO.
Rosbank and its subsidiaries maintain a strong liquidity position and capital ratios that significantly exceed mandatory standards set by the regulator. International rating agencies Fitch Ratings and Moody's Investors Service confirmed the ratings of Rosbank, Rusfinance bank and DeltaCredit in 2016 at the level of the sovereign rating of the country.
Main Balance Sheet items
Main PnL items