OREANDA-NEWS. May 07, 2010. Financial Highlights of the Bank of Moscow Group’s performance in 2009:

     •  Net profit of the Group for the year totaled RUB 717 mn
     •  Net interest income grew by 10.2%
     •  Conservative approach to provisioning for loan impairment: provision charge for impairment of loans to customers in 2009 amounted to RUB 30.4 bn, which signified an increase of 3.4 times over 2008
     •  Sound capital adequacy position: the Group’s total capital ratio under Basel Accord as at 31 December 2009 stood at 18.9%
     •  Rigorous cost control: in 2009 the Group’s cost to income ratio decreased to 30.8% compared to 49.3% for 2008
     •  Corporate loan portfolio grew by 17.6% to RUB 489.5 bn
     •  Customer accounts grew by 5.3%, where retail accounts soared by 17.4%

The Group’s interest income for 2009 grew by 33.6% YOY to RUB 82.3 from RUB 61.6 bn for 2008. This increase was attributable primarily to the increase in interest income from loans to customers, which in turn resulted from increases in interest rates and volume of corporate loans.

Interest expenses for 2009 recorded a 53.5% rise YOY to RUB 51.0 bn from RUB 33.2 bn for 2008 as the high interest rate environment, naturally, told on the Group’s cost of funding in the first half of 2009.

Consequently the net interest income for 2009 reached RUB 31.3 bn compared to RUB 28.4 bn in 2008, a 10.2% growth YOY.

The Group’s net fee and commission income declined by 5.1% from RUB 5.8 bn for 2008 to RUB 5.5 bn. This reduction resulted primarily from a decrease of commissions on operations with plastic cards and commissions on transactions with securities.

The Group took advantages of a recovery on the financial markets which began in 2Q09 and received substantial gains from securities operations in 2009. In 2009 the trading portfolio increased 3.3 times to RUB 118.5 bn. The Group expanded the share of high quality Russian fixed income securities issued by governmental agencies and leading corporates in its portfolio. As a result, the Group recorded net gains from financial assets at fair value of RUB 9.6 bn for 2009.

The Group posted net profit of RUB 717 mn for 2009. The major factor that affected the Group’s net profit in 2009 was a significant increase of the provision charge for loan impairment. During the first half of 2009 the Group also maintained a significant volume of highly liquid assets, which put a negative impact on the operating income growth compared to previous periods.

As of 31 December 2009, the Group’s total assets reached RUB 825.1 bn showing a 3.0% growth for the year.

Gross loan portfolio increased 9.1% to RUB 577.8 bn as at December 31, 2009 compared to RUB 529.5 bn as at December 31, 2008. Corporate loans, which soared 17.6% to RUB 489.5 bn, were the main driver of the loan book growth. The Group continued to develop client relationship based on a comprehensive approach towards satisfaction of customer needs, seeking to more actively explore cross selling opportunities.

The retail segment was one of the key development priorities for the Group. The Bank of Moscow ranks #3 in Russia in terms of volume of retail deposits. In 2009, the Group’s retail accounts demonstrated a 17.4% growth from RUB 151.2 bn as at December 31, 2008 to RUB 177.5 as at December 31, 2009. Loans to individuals (gross) declined by 21.9% to RUB 88.3 bn in 2009 as a result of the economic crisis and lower demand for retail loans. The Group seeks to leverage its strong brand name, solid market positions and extensive branch network to resume growing across key retail lending products in 2010.

In 2009 the Group put special emphasis on the growth of provisions for loan impairment to safeguard against economic downturn. As at December 31, 2009 the provisions for loan impairment totaled RUB 43.3 bn, having increased 3.4 times since the year start. At the end of 2009 the Group’s non-performing loans reached 3.94% of the total loan book. As at December 31, 2009, the non-performing loans were more than 190% covered by the provisions. The Group’s success in preserving the quality of the loan portfolio was due to the robustness and conservatism of its risk managements policies.

Total customer accounts increased 5.3% to reach RUB 428 bn as at December 31, 2009 from RUB 406.5 bn as at December 31, 2008.

The Group’s total capital amounted to RUB 121.6 bn as of 31 December 2009, a 33.7% increase for the year. In late July 2009 the Bank of Moscow completed the 13th share issuance, which increased the Bank’s capital by RUB 20 bn. In October 2009 the Bank of Moscow received an unsecured subordinated loan from Vnesheconombank in the amount of RUB 11.1 bn, which coupled with a capital injection by the shareholders strengthened the Group’s capital position. As of 31 December 2009 the Group’s capital adequacy ratio (Tier 1 and Tier 2) calculated according to Basel Accord was 18.9%, well above the 8% minimum limit; the Tier 1 ratio stood at the level of 12.8%.

The Bank of Moscow Group’s IFRS figures for 2009 have been audited by BDO.