CREDIT BANK OF MOSCOW announces its IFRS results for 3M2017


Key results

• Net income grew by 177.1% yoy to RUB 4.6 bln ($81.5 mln).
• Return on equity and return on assets were 17.4% and 1.2% respectively.
• Net interest margin was 3.0%.
• Net interest income as percentage of average RWA expanded to 4.3% compared to 3.9% in 1Q2016.
• Assets amounted to RUB 1.5 trln ($26.4 bln).
• Gross loan portfolio rose 2.6% ytd to RUB 684.3 bln ($12.1 bln).
• Ratio of NPLs (90+ days) to gross loan portfolio reduced to 1.9% from 2.3% as at end-2016.
• Cost of risk (COR) decreased to 2.9% from 4.6% as at end-2016.
• Provisioning rate remains stable at 6.1%.
• Customer deposits rose by 10.3% to RUB 760.5 bln ($13.5 bln).
• Equity increased by 4.4% to RUB 107.9 bln ($1.9 bln).
• Basel III capital grew by 18.5% to RUB 189.3 bln ($3.4 bln), with the capital adequacy ratio of 19.0%, and Tier I ratio of 10.7%.
• Cost-to-income ratio was 26.0%.

Key financial results

Net income for the 3 months of 2017 increased by 2.8 times yoy to RUB 4.6 bln and was mainly driven by increasing interest and fee income on the back of good quality growth of the Bank’s operations amid gradually stabilising business activity. The Bank’s net interest income rose by 14.0% to RUB 10.4 bln, and its fee and commission income increased by 41.5% to RUB 4.3 bln.

Net interest margin for the 3 months of 2017 was 3.0% as highly liquid assets represented a wide percentage of the Bank’s balance sheet. However, its net interest income as percentage of average RWA (the net interest income for a period to the average risk-weighted assets classified into the banking book and trading book) expanded from 3.9% in 3M2016 to 4.3% in 3M2017. This change speaks of increasingly effective utilisation of the Bank’s funding base amid overall reduction of interest rates in the Russian economy.

Operating income (before provisions) for the 3 months of 2017 grew by 15.4% yoy to RUB 14.3 bln. Operating expense increased by 11.5% to RUB 3.5 bln as the Bank expanded its business. The Bank’s operational efficiency remained at a high level, as witnessed by the traditionally low cost-to-income (CTI) ratio which was 26.0% in the reporting period.

Gross loan portfolio grew by 2.6% in 1Q2017 to RUB 684.3 bln, owing to the corporate loan portfolio expanding by 3.7% to RUB 587.1 bln mainly due to loans issued to high-quality large caps. The retail loan portfolio shrank by thin 3.4% to RUB 97.2 bln in the 3 months of 2017, which reflects the Bank’s traditionally cautious approach to retail lending. The share of corporate loans in the total loan portfolio grew to 85.8% from 84.9% as at end-2016. The ratio of non-performing loans (NPL90+) decreased by 0.4 pp to 1.9%. The improvement of the loan portfolio quality was also evidenced by a reduction in the cost of risk to 2.9% in the reporting period from 4.6% as at end-2016. The NPL90+ coverage ratio increased from 263.3% as at end-2016 to 324.6% as at 1Q2017.

Total assets amounted to RUB 1,488.7 bln as at 1Q2017.

Customer deposits increased by 10.3% in 1Q2017 to RUB 760.5 bln representing 55.1% of the Bank's total liabilities. The net loans to deposits ratio was 84.5%.

The Basel III capital adequacy ratio grew from 14.7% as at end-2016 to 19.0% in 1Q2017. The tier I capital ratio rose from 9.4% to 10.7%. The Bank’s total capital according to the Basel III standards increased by 18.5% in the 3 months of 2017 to RUB 189.3 bln, mainly due to a $600 mln subordinated Eurobond placed in April.

Infrastructure development

As of 31 March 2017, CREDIT BANK OF MOSCOW had 91 offices, 23 stand-alone cash desks, 1,045 ATMs and 5,741 payment terminals (31 December 2016: 91, 24, 1,026 and 5,725 respectively).