CREDIT BANK OF MOSCOW announces its IFRS results for 1H2016

22.08.2016

Key results

• Net income was RUB 5.1 bln ($78.9 mln).
• Net interest margin was 3.5%.
• Return on equity and return on assets increased to 10.7% and 0.8% respectively (2015YE: 2.1% and 0.2%).
• Assets grew by 1.1% y-t-d to RUB 1,221.8 bln ($19,013.7 mln).
• Gross loan portfolio decreased by 1.4% y-t-d to RUB 621.0 bln ($9,664.9 mln).
• Ratio of NPLs (90+ days) to gross loan portfolio reduced to 5.0%.
• Loan loss provisions grew from 5.9% to 7.4% of gross loan portfolio.
• Customer deposits increased by 4.8% to RUB 941.8 bln ($14,656.9 mln).
• Basel III capital amounted to RUB 160.2 bln ($2,493.5 mln), with the capital adequacy ratio of 17.6% and Tier I ratio of 10.6%.
• Cost-to-income ratio dropped to the all-time low 22.5%.

Key financial highlights

Balance sheet	1H 2016, RUB bln	2015, RUB bln	change, %
Assets	1,221.8	1,208.2	1.1
Liabilities	1,123.3	1,115.9	0.7
Equity	98.4	92.3	6.6
Capital (Basel III)	160.2	162.6	(1.4)
Gross loan portfolio before provisions	621.0	629.9	(1.4)

Key financial ratios, %	1H 2016	2015
Basel capital adequacy ratio (CAR)	17.6	16.5
90+ NPL ratio (before provisions)	5.0	5.1
Loan-loss provisions / Gross loans	7.4	5.9
Net loans / deposits	61.0	66.0

Income statement	6M 2016, RUB bln	6M 2015, RUB bln	change, %
Net interest income (before provisions)	20.5	10.4	96.3
Fee and commission income	6.3	4.3	46.8
Net income	5.1	1.2	324.1

Key financial ratios, %	6M 2016	6M 2015
Net interest margin (NIM)	3.5	3.6
Cost-to-income (CTI)	22.5	29.5
Return on capital (ROAE)	10.7	3.6
Return on assets (ROAA)	0.8	0.4

Net income for 6 months of 2016 amounted to RUB 5.1 bln and demonstrated a significant growth compared to RUB 1.2 bln in 1H2015. This positive trend was due to a considerable increase of net interest income and net fee income on the back of growing business of the Bank and the gradually stabilising business activity.

Net interest income was RUB 20.5 bln in 1H2016 having grown by 2 times y-o-y. Net interest margin for 6 months of 2016 was 3.5%, the same as in 1H2015.

Net fee income was RUB 5.3 bln in 1H2016 having grown by 78.0% y-o-y. The fee and commission income was mainly driven by cash collection fees which accounted for 20.3% of the gross fee and commission income (1H2015: 14.1%) as a result of the Bank's acquisition of NCO INKAKHRAN in November 2015.

Operating income (before provisions) grew by 96.3% to RUB 29.1 bln y-o-y. Operating expense increased by 35.4% to RUB 6.5 bln due to the growth of staff costs to RUB 3.8 bln and growth of some administrative expenses mainly caused by the consolidation of INKAKHRAN. The Bank demonstrates high operational efficiency: its CTI ratio dropped to the all-time low 22.5% in 1H2016 compared to 29.5% in the same period of 2015.

Gross loan portfolio slightly reduced in 1H2016 by 1.4% to RUB 621.0 bln. The corporate loan portfolio remained, despite the negative revaluation of foreign currency loans, at the level of RUB 509.3 bln, the same as at end-2015. The retail loan portfolio shrank by 6.7% to RUB 111.7 bln as the Bank tightened its criteria for retail borrowers.

The ratio of non-performing loans (NPL90+) in the gross loan portfolio decreased in 1H2016 from 5.1% to 5.0% (1Q2016: 5.4%). Loan loss provisions grew from 5.9% of the Bank's gross portfolio as at end-2015 to 7.4% as at the end of the reporting period while the cost of risk reduced from 5.4% to 5.2% and the NPL90+ coverage ratio increased from 113.7% to 147.9%.

Customer deposits grew by 4.8% in 1H2016 to RUB 941.8 bln or 83.8% of the Bank's total liabilities.

Capital adequacy ratio calculated in accordance with Basel III grew from 16.5% as at end-2015 to 17.6% as at the first half-year of 2016. Tier I capital ratio was 10.6%.

Infrastructure development

As of 30 June 2016, CREDIT BANK OF MOSCOW had 69 offices, 21 stand-alone cash desks, 965 ATMs and 5,473 payment terminals (31 December 2015: 62, 21, 927 and 5,443 respectively).