Russian Agricultural Bank announces its FY2016 IFRS results
Russian Agricultural Bank (the Group, RusAg) announces its consolidated financial results for the full-year 2016 under International Financial Reporting Standards (IFRS).
In the reporting period, the Group worked towards moderately growing its loan book while maintaining high quality of new loans issued both to agribusiness and other industries prioritized by the Russian Government, and in sectors being of strategic interest for the Group.
The successful accomplishment of the above targets amid macroeconomic stabilization was underpinned by the acquisition of a large number of corporate and retail clients, and the subsequent expansion of the Group’s funding sources.
While the system-wide lending shrank by YE2016 the Group’s gross loan portfolio rose 0.2% as compared to YE2015 totaling RUB 1.808 trillion.
Corporate loans showed a slight decline of 1.8% as compared to YE2015, due to the fast-paced settlement and write-off of non-performing loans. At the same time, in the reporting period, the Bank fulfilled its commitments under of the Agreement with the State Corporation ‘Deposit Insurance Agency’ (the DIA) to finance agribusiness and other prioritized economic sectors.
In 2016, the Group’s retail loans increased 10.2% up to RUB 327.1 billion, significantly outperforming the market average. This was mainly driven by further development of mortgage and consumer lending.
As at 31 December 2016, RusAg’s assets rose 5% and added up to RUB 2.463 trillion.
During 2016, RusAg specifically focused on upgrading its IT platform, streamlining internal business processes, and developing modern client services. These measures contributed to building a high quality, sustainable and diversified funding mix. In 2016, RusAg’s deposit and customer accounts grew 32.6% reaching RUB 1.578 trillion, with corporate customer accounts rising 37.2% up to RUB 964.7 billion and retail customer accounts – 26% up to RUB 613 billion. The share of customer funding in total liabilities reached 69% versus 55% at YE2015.
A record growth in deposits and customer accounts resulted in significant improvement of the Group’s long-term liquidity ratios. Loan-to-deposit ratio dropped to 114.6% by YE2016 from 151.7% at YE2015.
On the back of lower costs and longer maturities of its funding sources the Group substantially reduced its borrowings from the Bank of Russia by 30.7% down to 28.9 billion from 41.7 billion at YE2015.
Moreover, the Bank further reduced its reliance on international capital markets borrowings. In 2016, the Group repaid Eurobonds, including subordinated Eurobonds, in the equivalent of RUB 95.8 billion, with RUB 51.3 billion repaid before maturity. The share of funding raised in the international capital markets in total liabilities declined from 24.4% to 14.7% at YE2016.
In 2016, the Bank delivered a highly efficient operating performance. The Group substantially boosted its core income generation while keeping administrative expenses under control. Interest and fee and commission income rose 22.4% year-on-year. The Group increased its net interest income 2.4x times up to RUB 56.5 billion as compared to RUB 23.9 billion in 2015. Driven by growing net interest income RusAg’s net interest margin widened from 1.2% to 2.4% in 2016. Net fee and commission income increased 19.1% up to RUB 14.4 billion in 2016 versus RUB 12.1 billion in 2015.
The Bank made strong progress in terms of cost efficiency with Cost/income ratio (operating expenses divided by pre-impairment net operating income) decreasing to 61.2% in 2016 from 117.1% in 2015.
As a result of consistent steps to enhance the loan book quality, the share of past due instalments in the Group’s gross loan book went down to 12.6% at YE2016 from 13.7% at YE2015. In the reporting period, RusAg decreased charges for loan impairment provisions to RUB 86.5 billion from 92.8 billion a year earlier. The Group’s bottom-line result for the period remained negative at RUB 58.9 billion, however, improving versus a loss of RUB 94.2 billion in 2015.
In the reporting period, RusAg maintained strong capital adequacy ratios. Alongside the pre-scheduled capital replenishment worth RUB 8.0 billion by the Government the Group introduced and for the first time ever offered to the domestic market local perpetual subordinated bonds totaling RUB 15.0 billion. Capital adequacy ratio (N1.0) as at 1 January 2017 stood at 16.3%, N1.1 – 9.6%, N1.2 – 10.2%.
Overall, the Group reinforced both its capital and liquidity cushions, which created additional opportunities for expanding lending to Russia agribusiness and other prioritized sectors. RusAg will continue to grow financial support of agricultural producers, including in the framework of the new subsidized lending procedure, thereby promoting better efficiency and production capacity in agribusiness, and enhancing the country’s export potential.
Russian Agricultural Bank announces its 9M 2016 IFRS results
Russian Agricultural Bank (the Group, RusAg) announces its interim condensed consolidated financial results for 9M 2016 under International Financial Reporting Standards (IFRS).
In the reporting period, the Group worked towards building a high quality loan portfolio, in particular by issuing new loans to agribusiness and other priority sectors, expanding its funding base, and maintaining strong capital adequacy ratios.
As at 30 September 2016, RusAg’s gross loans amounted to RUB 1.826 trillion expanding by 1.1% from YE 2015. Retail loans grew by 8.1% up to RUB 320.8 billion. This was mainly driven by an increase in mortgage and consumer lending. A sustainable growth of retail loans was underpinned by higher consumer demand supported by gradual stabilization of macroeconomic conditions in overall terms and also by the state subsidized mortgage lending program.
RusAg’s corporate loan portfolio stayed almost flat as compared to YE 2015 (RUB 1.5 trillion). Additionally, in the reporting period the Bank increased lending to the prioritized economic sectors in line with the commitments under of the Agreement with the State Corporation ‘Deposit Insurance Agency’ (the DIA).
In 9M 2016, RusAg’s assets rose 5.2% as compared to YE 2015 and exceeded RUB 2.470 trillion.
In 9M 2016, the Group’s customer accounts being the core funding source grew 27.8% and amounted to RUB 1.521 trillion. Corporate customer accounts increased 35.2% up to RUB 950.6 billion, retail accounts – 17.2% up to RUB 570.1 billion. RusAg worked towards building a stable and diversified funding base by developing modern client services with a focus on the high quality of its product offering. These steps contributed to a further increase in the share of customer accounts in total liabilities, which went up from 55% at YE 2015 to 66% as at 30 September 2016.
The growing deposits and customer accounts secured a gradual substitution of borrowings earlier raised in the international capital markets. At the same time, the Group worked to reduce its reliance on international wholesale funding and attract cheaper funding sources. To achieve this, in early July 2016 the Group exercised the call option to redeem its subordinated USD 800 million Eurobond before maturity. Overall, in 2016, the Group repaid an equivalent of RUB 96 billion due under its international debt issues. In 9M 2016, the share of international debts in total liabilities went down to 16.8% from 24.4%.
In 9M 2016, the Bank decreased its borrowings from the Bank of Russia by 43% - from RUB 41.7 billion at YE 2015 down to RUB 23.8 billion.
In 9M 2016, RusAg grew its income at a high rate while efficiently managing costs. Interest and fee and commission income rose 26.6% year-on-year. In 9M 2016, the Group increased its net interest income threefold up to RUB 42.8 billion as compared to RUB 14.9 billion in the same period of 2015. On the back of net interest income growth RusAg’s net interest margin rose from 1% to 2.5% in 9M 2016 year-on-year.
The expanding client base and transaction business which involved a full-scale rollout and replication of modern banking technologies across the branch network contributed to a sustainable upward dynamics of the Bank’s fee and commission income. Net fee and commission income increased 18.4% - to RUB 10.2 billion in 9M 2016 versus RUB 8.6 billion in 9M 2015.
The Group’s cost-to-income ratio (operating expenses divided by net operating income before provisions) has significantly improved from 106.6% in 9M 2015 down to 57.6% in 9M 2016.
As a result of consistent steps to maintain the loan book quality against the background of a mild stabilization of macroeconomic environment, the Group in the reporting period decreased charges for loan impairment provisions down to RUB 59.2 billion from 69.4 billion a year earlier. This resulted in an improvement of the Group’s bottom-line performance. Net loss for the period decreased by half from RUB 67.9 billion in 9M 2015 to RUB 35.1 billion in 9M 2016.
In the reporting period, RusAg maintained a strong capital adequacy. The Group accumulated a comfortable capital cushion thanks to both a direct capital replenishment worth RUB 8 billion made in April 2016 by the Government and the capital market instruments compliant with the criteria for inclusion in Tier 1 capital, which were introduced and for the first time ever offered to the domestic market by the Group. In July and October 2016, RusAg placed local perpetual subordinated bonds totaling RUB 15 billion. Capital adequacy ratio (N1.0) at 1 October 2016 stood at 16.02%.
The Group will further work towards expanding lending to priority economic sectors while retaining an undisputed leadership in servicing agribusiness. RusAg will keep a special focus on ensuring fast-paced import substitution and the country’s food independence.
Russian Agricultural Bank announces its 1H 2016 IFRS results
Russian Agricultural Bank (RusAg) announces its interim condensed consolidated financial results for 1H 2016 under International Financial Reporting Standards (IFRS).
In 1H 2016, the Bank’s interest and fee and commission income reached an all-time high totaling RUB 127.7 billion.
Backed by a gradual recovery of interest margin during 1H 2016, facilitated by the easing of the Bank of Russia’s monetary policy and optimization of the Bank’s funding costs, RusAg grew its net interest income fourfold up to RUB 26.7 billion from RUB 7 billion in 1H 2015. Net interest margin rose from 0.8% in 1H2015 to 2.3% in 1H 2016.
Transaction business development, alongside points-of-sale upgrading and customer service quality enhancement contributed to a significant growth of the Bank’s fee and commission income. The most substantial growth in fees and commissions was generated by cash and settlement services, insurance products sales, guarantee issuance and bank card transactions. RusAg’s net fee and commission income increased 28% - to RUB 6.6 billion in 1H 2016 against RUB 5.2 billion in 1H 2015.
In 1H 2016, the Bank’s assets rose 3.1% (by RUB 72 billion) as compared to YE2015 and exceeded RUB 2.42 trillion.
The Bank substantially increased new loan issuance to its target industries – agribusiness and related sectors. In January – June 2016, the Bank extended more than 267,000 loans under the State Program for Agribusiness Development and Regulation of Farm Produce, Raw Materials and Foodstuffs Markets for 2013-2020 totaling RUB 389 billion, which is twice as much as in 1H 2015. Additionally, the Bank fulfilled its commitments to increase lending to the economic sectors prioritized by the Government under of the Agreement with the State Corporation ‘Deposit Insurance Agency’ (the DIA).
In 1H 2016, the Bank continued to actively grow its corporate and retail customer accounts with a view to diversifying the Bank’s liabilities, cutting funding costs and gradually substituting the borrowings earlier raised on the international capital markets. In the reporting period, customer accounts increased 18.2% to RUB 1.407 trillion. Corporate customer accounts grew 21.9% to RUB 857 billion, retail accounts – 12.8% to RUB 549 billion. The share of customer accounts in total liabilities grew to 63% from 55% at YE2015.
In 1H 2016, the Bank decreased its borrowings from the Bank of Russia by 48.8% - from RUB 41.7 billion at YE2015 down to RUB 21.4 billion at 30 June 2016.
Further improvements in customer relationship management and cost optimization helped the Bank to secure a Cost-to-income ratio of 58.3%.
In 1H 2016, in view of positive signs in the sector and favourable conditions in agribusiness markets, RusAg engaged in clearing up its balance sheet from problem assets. Charges for loan impairment provisions, related to these procedures, amounted to RUB 40.8 billion. Combined with a gradual margin recovery to 2014 levels, this led to a loss for the period in the amount of RUB 25.3 billion. However, compared to 1H 2015 this figure went down almost twice (against RUB 45.4 billion).
While creating its loan impairment provisions in the appropriate amounts, RusAg maintains a strong capital adequacy. Capital adequacy ratio (N1.0) at 01.07.2016 stood at 16.7% versus 16.3% at YE2015.
In general terms, in 1H 2016 Russian Agricultural Bank was successful in providing financial support to Russian agribusiness taking into account the Government’s target to ensure fast-paced import substitution and also increased lending to other priority economic sectors as part of the Agreement with the DIA. At the same time, the Bank continued its efforts to increase operational efficiency and loan portfolio quality.
Russian Agricultural Bank announces its 1Q 2016 IFRS results
Russian Agricultural Bank (RusAg) announces its interim condensed consolidated financial results for 3M 2016 according to International Financial Reporting Standards (IFRS).
During 1Q 2016, amid gradual stabilization of the economic environment and the financial market, the Bank has ensured loan growth and increase in customer accounts. RusAg’s loan portfolio increased RUB 16.6 billion (+1%) in 1Q 2016 and amounted to RUB 1.821 trillion before provisions for loan impairment. Corporate loans grew RUB 10.5 billion (+0,7%) and reached RUB 1.519 trillion, retail loans - RUB 6 billion (+2%) – to RUB 302.9 billion.
The Bank’s assets increased 4.4% (by RUB 102.7 billion) and amounted to RUB 2.451 trillion as of 1Q 2016.
In 1Q 2016, the Bank continued to increase the share of customer accounts in its liabilities structure for the purpose of substitution of the amortizing funds raised on international capital markets. The share of customer accounts in total liabilities grew to 61% against 55% as of YE 2015. In the reporting period customer accounts increased 16.2% and amounted to RUB 1.383 trillion, including corporate customer accounts - 22% to RUB 859 billion, retail deposits - 8% to RUB 524 billion.
The proportion of funds raised on the international capital market in total liabilities of the Bank decreased in 1Q 2016 from 24.4% to 20%.
RusAg’s capital adequacy ratio (N1) is maintained at the level that ensures financial strength and prospective development of the Bank. As of 01.04.2016 the ratio stood at 16.4%.
Outperforming growth rates of the Bank’s lending business as compared to the market contributed to a significant increase in interest income. Against the backdrop of the structure and cost optimization of the Bank’s funding base that has led to a four-fold increase in net interest income – to RUB 13.3 billion compared to RUB 3.6 billion in 1Q 2015. Net interest margin grew from 0.8% in 1Q 2015 to 2.7% in 1Q 2016.
Advanced customer relations management and product line enhancement has led to a significant increase in fee and commission income across the entire range of the Bank’s commercial operations, such as cash and settlement services, insurance products sales, guarantee issuance, bank cards transactions etc. Net fee and commission income of the Bank increased 51% to RUB 3.2 billion in 1Q 2016, as compared to RUB 2.1 billion in 1Q 2015.
The Banks total comprehensive income, including loss for the period (RUB 4,023 million) and positive revaluation of securities at fair value (RUB 4,417 million), amounted to RUB 394 billion against the total comprehensive loss of RUB 15.6 billion in 1Q 2015.
Following the results of Q1 2016, Russian Agricultural Bank has successfully completed the task of increasing the volume of lending to Russian agribusiness as well as the additional commitments for providing financial support to other priority sectors of the Russian economy.
Russian Agricultural Bank (RusAg) announces its FY2015 consolidated financial results according to International Financial Reporting Standards (IFRS).
In 2015, RusAg not only increased lending to priority industries of the Russian economy but also achieved a growth rate outpacing that of the banking system while maintaining conservative approaches to risk management.
In 2015, the Bank’s gross loan portfolio increased by RUB 250.9 billion (16.1%) and amounted to RUB 1.805 trillion. Corporate loans increased by RUB 235.2 billion (18.5%) up to RUB 1.508 trillion. In 4Q2015, total loans increased by RUB 46.4 billion (4.1%), with corporate loans growing by RUB 33 billion.
During the reporting period, retail loans grew 15.7 billion (5.6%) up to RUB 296.8 billion. Following a drop in 1H2015 caused by diminished economic activity of population, retail lending growth resumed in 2H2015. During 2H2015, retail loans increased by 10%, or RUB 27.2 billion, adding RUB 13.3 billion in 4Q2015. The rise was driven both by a decline in the market interest rates and implementation of state programs for retail lending stimulation, and the Bank’s measures towards higher operational efficiency.
As at 31 December 2015, RusAg’s total assets grew by 22.6% and totaled RUB 2.348 trillion.
During the reporting period, amid market volatility the Bank maintained strong liquidity ratios. A substantial rise in customer accounts contributed to further decrease in the Bank’s reliance on international capital markets and diversification of its domestic funding sources in terms of cost and maturities. In 2015, customer accounts increased by 56.2% and totaled RUB 1.190 trillion, with 79.3 billion attracted in 4Q2015. Corporate customer accounts grew 54.6% up to RUB 703.3 billion. Retail customer accounts increased by 58.6% and amounted to RUB 486.5 billion. The enhancement of the product range and consistent measures taken towards higher POS efficiency resulted in the share of customer accounts in total liabilities expanding to 55% as compared to 44% at YE2014.
High funding costs combined with a shortage in available funding sources and the slow key rate reduction by the Bank of Russia after its spike at the end of 2014 resulted in a 2.5 times decline of net interest income to RUB 23.9 billion in 2015 year-on-year. Starting from 2Q2015 the Bank’s net interest margin gradually recovered. Moreover, new client attraction, product offering enhancement drove a rise of net fee and commission income, which grew 37.5% up to RUB 12.1 billion. In the past year, fee and commission income was primarily generated by cash and settlement services, insurance products sales and guarantee issuance.
In 2015, given the negative forecasts, conservative approach to assessing the borrowers’ debt service quality in line with the consistent application of risk management policies the Bank increased charges to loan impairment provisions, which grew RUB 90.4 billion in 2015. Alongside rising funding costs these factors resulted in a net loss of RUB 94.2 billion for 2015.
Targeting the expansion of efficient financial support of agribusiness, a priority sector of the domestic economy, while ensuring a capital cushion needed for creating loan impairment provisions in challenging macroeconomic environment, the Bank in 2015 raised capital both from the shareholder and market sources. The Bank’s share capital was increased by RUB 78.8 billion, with RUB 68.8 billion coming from the Deposit Insurance Agency (the DIA) as part of Russian banks’ capital replenishment program. Tier 2 capital has been substantially strengthened by a market placement of subordinated bonds and attracting deposits in the amount of RUB 40 billion and USD 1.15 billion respectively. Total capital adequacy ratio under Basel III requirements as at 31 December 2015 stood at 16.3% (YE2014 – 13.0%).
In 2015, against the background of economic recession and crisis developments in the banking sector RusAg successfully accomplished the task of providing financial support to Russian agribusiness, fast-paced substitution of imported foodstuffs, and ensuring the country’s food security while having strongly reinforced its capital base and liquidity.