OREANDA-NEWS. May 27, 2011. B&N Bank has issued IFRS Consolidated Financial Statements for the year ended December 31, 2010, reported the press-centre of B&N Bank.

For the accounting period B&N Bank (ranked Top-50 among Russian banks by size of assets) demonstrated evident progress in its key financial highlights. As of 1 January 2011, the Bank was ranked 40 th among ‘Top-200 Russian Banks by Net Assets’, 20 th among ‘Top Banks by Retail Deposits’ and 4 th among ‘Top-100 Most Reliable Russian Banks’ according to business magazine ‘Profile’. Moreover, B&N Bank remains included in Top-30 major Russian banks according to Russia’s Central Bank Consolidated Statistical Data for biggest Russian banks. 

Total assets of the Bank grew from RUB 85.3 bln. (as at the end of 2009) up to RUB 111.2 bln.   (+30%), showing quite good dynamics as compared to the average growth of assets in Russian banking sector. Increase in assets is basically driven by noticeable growth of the trading security portfolio up to RUB 17.6 bln. (+87%) and the loan book up to RUB 56.4 bln.(+22%). Meanwhile, increase in the loan portfolio is related to corporate lending activity (+32%). At the same time, retail loans decreased by 23% and amounted to RUB 8.7 bln. due to temporary suspension of some retail lending programs in  2009-2010.

Loan book quality has significantly improved since the beginning of 2010. Due to stabilization of the credit risks NPL 90+ ratio (calculated as overdue payments plus the principal amount of the loan) as of 1 January 2011 stood at 6.8% of the total loan portfolio against 9.6% a year earlier. Furthermore, in 1Q2011 positive dynamics is obvious: NPL level has declined to 6.4% of the total loan book.    

As at the end of 2010 total liabilities of the Bank increased by 33% and reached RUB 104.3 bln. The main positive shifts in the structure of liabilities were driven by the Bank’s strong market position, which resulted in a substantial growth of the customer accounts up to RUB 84 bln. (+28%).  Retail deposits still remain the core source of funding showing progress from RUB 51.9 bln. to RUB 60 bln. (+16%). At the same time, share of corporate funding demonstrated upward trend (29% of the total customer accounts vs 21% a year earlier). There are some changes in the funding structure: share of individual deposits in the total liabilities reduced from 66% to 58% owing to growth of corporate deposits from 18% up to 23%. The issue of 1 bln. three-year Ruble Bonds during the first half of 2010 provided a supplementary source of long-term funds and diversification. At the end of 2010 B&N Bank Ruble Bond Issue of series 02 was admitted to the Lombard List of the Bank of Russia.  

Interest income of the Bank increased up to RUB 9 bln. (+7%), however due to increase in interest expense by 18% net interest income (before provision for impairment losses) declined from RUB 2.7 bln. to RUB 2.2 bln. Increase in expenses was driven by quite expensive individual deposits drawn by the Bank in 2009. Currently, these deposits are being actively substituted by new ones at lower rates (annual average decrease in deposit rate is about 3%). As a result, interest expense on the drawn funds is declining smoothly.

Net non-interest income amounted to RUB 1.5 bln. (+31%) mostly due to fee and commission income of RUB 1.2 bln.(+37%).

In 2010 the Bank succeeded in recovering profitability due to positive trend for loss reduction which occurred in the second half of the year. Net profit amounted to RUB 27.5 mln. against the loss of 1.7 bln. a year earlier. Earnings growth was driven by decrease in cost of liabilities, growth of fee and commission income and successful implementation of restructuring/collecting measures on a number of problem loans. 

In 2010 total capital adequacy ratio (CAR) decreased from 14.1% to 11.5% (Tier 1 capital – from 9.7% to 7.7%) in response to growth of the risk-weighted assets, though in absolute terms the Bank’s capitalization rose. In 1Q2010 the Bank’s capital was increased by a subordinated loan to the amount of \\$50 mln. Furthermore, by the end of 2011 B&N Bank intends to increase Tier 1 capital by additional issue of ordinary shares for amount of \\$50 mln. Next injection (other \\$50 mln.) into Tier 1 capital is expected early in 2012 according to the Bank’s business strategy.  
    
B&N Bank’s liquidity profile is stable as usual. As of 1 January 2011 liquid assets accounted for 30% and were represented by cash, correspondent account balances at Central Bank of Russia and financial institutions, Federal Government debt securities, debt issued by foreign governments and corporate bonds included in CBR Lombard List. CBR prudential ratios governing liquidity stood at high level: N2 ‘Instant Liquidity’ – 143.75% at min. 15%; N3 ‘Current Liquidity’ 140.65% at min. 50%; N4 ‘Long-Term Liquidity’ – 87.38% at max. 120%. 

As of 1 January 2011, the Bank’s branch network accounted for 123 offices: 30 branches, 84 sub-branches, 8 cash and operating offices and 1 representative office. In 2011 B&N Bank plans to open 11 new offices in Moscow and Moscow region, St. Petersburg, Yekaterinburg, Rostov-on-Don, Kaliningrad and Saransk.