Financial Results for the I quarter of 2011
A good start in 2011 in a challenging external environment
Assets growth faster than the market in Q1 2011: up 7.4% to RUB 569.7 billion driven by further expansion of small business and retail lending (up 7.5%) and stable funding base Strong profitability allows to support growth: RoAE remains at a high 21.2%, net profit attributable to Nomos equity holders totaled RUB 2.6 billion, and total net profit – RUB 3.2 billion Revenues reached RUB 8.2 billion: further improvement of revenue structure on the back of organic growth in core segments and stabilization of interest margins from 2nd half of 2010 Improved capital position: Tier 1 ratio of 11.2% and CAR of 15.9% Low risk profile: cost of risk at 0.6% with NPL ratio at a stable 2.4% and NPL coverage at 181.4% The Supervisory Board of NOMOS Bank on 3 June 2011 approved Condensed Interim Consolidated Financial Statements in accordance with IFRS as of 31 March 2011 and for the 3 months ended 31 March 2011, including review report by independent auditor.
Nomos total assets increased by 7.4% in the Q1 2011 compared to 31 December 2010 and reached RUB 569.7 billion. The structure of consolidated assets didn’t change significantly with the loan portfolio representing 62.3% of total assets (31 December 2010: 64.0%).
Loan portfolio amounted to RUB 355.0 billion and increased by 4.6% at the end of Q1 2011 as compared to the year end 2010 driven by healthy growth of customer lending: small business loans grew by 9.2% to RUB 20.9 billion and retail loans grew by 6.6% to RUB 38.9 billion. The corporate banking segment with its focus on medium-sized companies remains the largest segment of NOMOS, representing 73.0% of the total loan portfolio 1. Corporate loans showed an increase of 4.2% to RUB 259.1 billion.
Nomos remains committed to the prudent credit risk management policy which allows it to achieve a low share of non-performing loans (NPLs: loans overdue more than 90 days). As of 31 March 2011, the NPL ratio remained at a low level of 2.4% while provision for loan impairment to total gross loans was 4.3% compared to 4.4% at 31 December 2010. NOMOS maintains a very conservative provision coverage of non-performing loans of 181.4%.
Total liabilities as of 31 March 2011 comprised to RUB 508.4 billion and increased by 7.6% compared to the beginning of the year. NOMOS has a balanced and diversified funding structure with customer accounts comprising 61.9% of total liabilities (31 December 2010: 66.4%). Customer accounts amounting to RUB 314.6 billion represent the most stable and diversified source of funding with retail and small business accounts accounting for 46.1%2 of the total deposit base. The net loans to deposits ratio was 112.8% as of 31 March 2011 (31 December 2010: 108.3%).
As of 31 March 2011, the Group’s total equity amounted to RUB 61.3 billion, including RUB 12.1 billion of non-controlling interest. Strong capital generation, aided by slower increase in risk-weighted assets, strengthened Tier 1 ratio to 11.2% from 10.6% at the year end 2010, the total capital adequacy ratio under the Basel Capital Accord comprised 15.9%, up by 3 bp.
In the first quarter NOMOS continued its focus on profitability and creating shareholder value. NOMOS delivered net profit of RUB 3.2 billion, RUB 2.6 billion of which are attributable to Nomos equity holders.
Annualized return on average equity (RoAE) to NOMOS equity holders remained at a strong 21.2% compared to 21.1%3 for 2010.
Annualized return on average assets (RoAA) was 2.36% compared to 2.32%3 for 2010.
Operating income before provisions for impairment for the Q1 2011 was RUB 8.2 billion, an increase of 6.1% on annualized basis compared to 2010 (pro-forma).
Net interest income and fee and commissions continued to be the key drivers of the NOMOS revenue generation.
Net interest income amounted to RUB 6.2 billion and increased by 20.7% on annualized basis compared to 2010 pro-forma result. Net interest income remained the core component of revenue – 75.4% compared to 66.3% for 2010. Net interest margin was 5.2% compared to 5.3%3 in 2010 reflecting a stabilization of the NOMOS’ margin.
Net fee and commission income continued to strengthen gradually in Q1 2011, rising by 17.4% on annualized basis to RUB 1.1 billion. Net fee and commission income represents an increasing portion of revenue (13.9% for Q1 2011 compared to 12.5%3 for 2010), with stronger share of retail and small business.
Cost of risk reduced to 0.6% vs 1.3%3 in 2010 largely as a result of continuing improvement in quality of the loan book.
In the Q1 2011, 50.7% of NOMOS revenue was generated by the corporate business segment and 29.7% by small and retail business4.
NOMOS demonstrated high levels of operating efficiency in the Q1 2011 with operating expenses to operating income before provision for impairment (Cost to income ratio) of 44.5% (2010: 43.0%3).
1 Calculated as the share of total loans to customers for business segments excluding the Treasury and asset and liability management unit and unallocated balances
2 Calculated as the share of total customer accounts for business segments excluding the Treasury and asset and liability management unit and unallocated balances.
3 Pro-forma if the acquisition of Bank of Khanty-Mansiysk would take place on 1 January 2010.
4 Calculated as the share of total revenue for business segments excluding the Treasury and asset and liability management unit and unallocated balances.