Promsvyazbank announces its audited financial results under IFRS for the year 200808.04 | 2009
Today Promsvyazbank (PSB) has released its consolidated financial statements for the year ended 31 December 2008, prepared in accordance with the International Financial Reporting Standards (IFRS) and audited by KPMG. The key financial highlights are as follows:
Weaker bottom line reflected a significant deterioration of the Russian economy and the financial sector in H2 2008, which caused worsening loan quality and a corresponding increase in provisioning for impairment – the key negative P&L driver for PSB in 2008. At the same time, the strong growth in operating income, rooted in PSB’s expanding customer base, represented the key positive P&L driver, which brought about a material improvement of the cost-to-income ratio. Another positive factor included enhanced overheads controls and modernized accounting systems; combined with measures aimed at increasing productivity, these resulted in revenues significantly outpacing expenses in 2008 (81% annual growth vs. 55%, respectively). Shareholders’ equity was boosted by the two share issues in the total amount of RUB 8.3 billion, placed among PSB’s existing shareholders. Coupled with the continuous policy of full profit retention, this led to a slightly improved tier 1 capital ratio. Other financial highlights include:
The share of net interest income in operating income remained at a high 78% as PSB focused on its core business – customer lending – and reduced both the volume and the duration of its fixed income portfolio in times of increased financial market volatility. Fees and commission income, which PSB considers to be the key strategic source of non-interest income, remained well-diversified: documentary operations remained the largest contributor with a 23% share of total fee and commission income, followed by money transfer fees (19%), plastic cards (16%), foreign currency operations (12%), operations with cash (11%) and banknote operations (6%). PSB posted a RUB 1.8 billion net loss on trading securities (2007: net loss of RUB 124 million), attributable to the financial markets meltdown in 2008 as the Bank reduced its trading book and realized losses. However, interest income on securities and reverse repos in the amount of RUB 2.4 billion overcompensated for the trading loss. In addition, thanks to increased exchange rate volatility in 2008, PSB posted net foreign exchange (FX) gain of RUB 2.1 billion, combining net FX trading gain and net FX translation gain. Loans to corporate clients (42% growth in 2008) accounted for the bulk of the loan book, although their share shrank from 83% to 78%, following even faster loan growth in the retail and SME segments. Keeping loan quality under control in times of an economic downturn and borrowers’ inability to refinance maturing obligations became the main issue in lending in 2008. The proportion of loans overdue 90 days and more increased as follows: in corporate loans – from 0.15% to 1.37%, in SME loans – from zero to 1.89%, and in retail loans – from 3.94% to 10.54%. Furthermore, the level of restructured loans also increased, namely to 2.4% in corporate loans and 1.3% in SME loans. PSB’s strategic priorities in H2 2008 were focused on attracting customer funding and increasing the liquidity cushion. This resulted in a reduced proportion of loans and an increased share of customer deposits on the Bank’s balance sheet. Deposits of state and local authorities were the fastest-growing funding component (five-fold growth in 2008). PSB also demonstrated its ability to compensate for the reduced access to international funding by increasing term deposits of corporate clients, which doubled in 2008. Similarly, the growth in retail deposits at PSB (by 51% to RUB 53 billion) significantly outpaced the 15% Russian market average (as calculated from CBR data). Key financial metrics include:
“We are satisfied with the operating income dynamics, particularly with the increased proportion of fees and commission income”, comments Ms. Alexandra Volchenko, Senior Vice-President and Head of “Finance & Risks” block at PSB. “Keeping impaired loans under control, further enhancing risk management and recovery procedures and diversifying the funding base will be our key tasks over the near-term. However, the mere fact of posting a positive net result in times of the exacerbating global financial and economic crisis proves the viability of PSB’s business model. We base our work upon close co-operation with our customers and always look for mutually acceptable solutions both in upturns and crises”.
____________________________________________________________________________________________________________________ About Promsvyazbank OJSC Promsvyazbank, founded in 1995, is one of the leading privately-owned Russian banks, with total assets of RUB461.8 billion, and total capital of RUB49.9 billion under IFRS as of 31 December 2008. Holding company Promsvyaz Capital B. V. owns 84.68% of the Bank, the remaining 15.32% are owned by Commerzbank Auslandsbanken Holding AG, a subsidiary of the second-largest German bank Commerzbank AG. PSB has the following international credit ratings: “Ba2” from Moody’s Investors Service; “BB-” from Standard & Poor's; “B+” from Fitch Ratings. As of 1 April 2009, the regional network of the Bank in Russia encompassed 48 branches, 196 sub-branches and other types of outlets and 1 representative office; a foreign branch in Cyprus; and foreign representative offices in Kyrgyz Republic, Ukraine, China, and India. ____________________________________________________________________________________________________________________  |
© 2009 