2012 Full Year Results
NOMOS today announces its audited Consolidated Financial Statements in accordance with International Financial Reporting Standards (IFRS) for the year ended 31 December 2012, delivering strong core revenue and asset growth
The Board of Directors of NOMOS on 28 March 2012 approved the Consolidated Financial Statements of NOMOS and its subsidiaries in accordance with IFRS for the year ended 2012.
During 2012, the Group has delivered successfully against its key performance indicators set for the year. In particular, NOMOS continued to meet its core objective of maintaining a high level of profitability while achieving sustainable growth.
Group achievements in 2012
PROFITABILITY: strong core revenue generation despite the continuing global financial crisis
In 2012, NOMOS continued to focus on profitability and creating shareholder value. Despite the unstable situation in the market and the continuing global financial crisis, the Group delivered strong core revenue generation of RUB 44.7 billion up by 21.5% compared to 2011. In 2012, 49.0% of the combined Group’s revenue was generated by the Corporate Business segment and 36.5% by the Small and Retail Business segment.1
Return on average equity (RoAE) remained strong at 18.3% compared to 18.2% in 2011. Return on average assets (RoAA) was stable at 2.0% in 2012.
NOMOS’ net profit amounted to RUB 15.0 billion, RUB 12.6 billion of which is attributable to Nomos Bank shareholders (25.7% higher than in 2011). Earnings per share for 2012 amounted to RUB
136.1. Earnings per GDR amounted to USD 2.2 priced at a 30.4 RUB/USD exchange rate as at December 31, 2012.
Combined operating income before provisions for impairments for 2012 was up 21.5% to RUB 44.7 billion compared to 2011. Net interest income and fees and commissions income are the key drivers of the Group’s revenue generation, comprising 70.2% and 17.8% of Group’s revenue respectively. Net interest margin declined slightly to 4.9%, affected by higher cost of funding and Subordinated Eurobond costs in particular.
Net interest income increased by 11.9% to RUB 31.4 billion in 2012 in line with the healthy growth of the loan portfolio, which outperformed the average market growth rate and also reflected the increasing share of the higher margin Retail loan portfolio.
Net Fees and commissions income increased by 29.6% to RUB 7.9 billion in 2012, in line with the Group’s focus on cross-selling its fee-based products and increasing its “share of wallet”. The fee and commission growth came primarily from settlements and documentary operations in the Corporate and Retail segments. NOMOS earned net fee and commission income from settlements (RUB 3.1 billion), documentary operations (RUB 2.3 billion) and cash operations (RUB 1.1 billion). The net fees and commissions income earned by the Retail segment in 2012 increased by 44% to RUB 3.2 billion compared to 2011. The significant increase in net fee and commission income demonstrated the continued focus of NOMOS’ management on the successful development of effective cross-selling opportunities.
During 2012 the Group earned RUB 3.3 billion of net trading income up 37.8% compared to 2011 with the main driver being operations with securities. Net trading income on operations with securities amounted to RUB 1.9 billion in 2012 (RUB 0.7 billion loss in 2011). The positive dynamic of net trading income on operations with securities was principally due to effective portfolio management and more stable market conditions in 2012 as compared to 2011.
Operating expenses increased 23.9% to RUB 21.4 billion in line with the Group’s budget and labour inflation. Payroll expenses accounted for 65.3% of the total operating expenses of the Group. This growth in operating expenses was in line with NOMOS’s development strategy for the branch network and largely represents internal investment to develop the Small Business and Retail businesses, where the Group sees a great opportunity for growth. NOMOS’ management team closely monitored operating expenses over the year and took the necessary steps to optimise spending efficiency.
The Cost-Income Ratio (operating expenses to operating income before provision for impairment) was 47.8% at the year-end (47.0% in 2011).
Sustainable loan growth at a higher than average market rate
In 2012 the Group’s total assets reached RUB 899.9 billion and increased by 35.9% compared to 31 December 2011, which is substantially higher than the 2012 average market growth rate of 18.9%. Net loans represent 65.6% of total assets compared to 67.6% end 2011.
As at 31 December 2012 Net loan portfolio of the Group increased by 31.9% to RUB 590.6 billion by the end of 2012 notably outperforming the market average (up 21.5%) with impressive results generated by all core business segments. The Corporate loan book increased by 31.5% in 2012 to RUB 422.0 billion. The Group Retail loan portfolio increased by 55.1% to RUB 90.1 billion, again substantially above the 39.5% average market growth in the Retail segment. Meanwhile, the SME loan portfolio increased by 30.1% to RUB 38.9 billion.
The Group’s rapid rate of business expansion was balanced by conservative and prudent risk management, which allowed the Group to keep the level of non-performing loans (NPLs: loans overdue more than 90 days) at the low level of 2.0%. The ratio of loan loss provisions to gross loans stood at 3.6% with a resulting conservative NPL coverage ratio of 183.0%.
Cost of risk was maintained at 0.9% in 2012 largely as a result of the stable quality of the loan book, with the majority of new provisions booked representing collective or statistical provisions on the growing non-impaired loan portfolio.
The Group’s total liabilities reached RUB 809.5 billion as at 31 December 2012 and increased by 38.0% compared to 2011. During the year, the Group continued to keep a diversified funding structure with customer deposit accounts comprising 58.3% of total liabilities as at the end of 2012.
As of 31 December 2012 the Group’s customer accounts totaled RUB 471.7 billion, a 23.3% increase compared with 31 December 2011. Current accounts made up 22.4% of customer deposits or RUB 105.8 billion as at the end of 2012. The rate of growth in deposits during the year was in line with the Group’s strategy of not paying excessive interest rates in order to safeguard profitability and maintain a stable Net Interest Margin. The Group’s net loans to deposits ratio amounted to 125.2% as at 31 December 2012.
Tier 1 capital ratio was 10.8% as at 31 December 2012 (2011: 12.0%) and the Group’s total equity was RUB 90.4 billion, including RUB 15.7 billion of non-controlling interest. The total capital adequacy ratio was 16.3% as of 31 December 2012.
Dmitriy Romaev, CEO of NOMOS-BANK, said, “2012 has been another successful year for NOMOS. Despite a tough economic backdrop on the financial markets, we have performed strongly across all our operations, growing to become the sixth largest banking group in Russia by total assets. We achieved our objective of profitable growth whilst maintaining the quality of our loan portfolio, conservative risk management policy and keeping the net interest margin at a satisfactory level”.
The consolidated financial statements for the year ended 31 December 2012 are available for viewing at https://ir.open.ru/en/
NOMOS is currently the sixth largest banking group in Russia by total assets and the second largest privately-owned Russian universal banking group with total assets of RUB 899.9 billion and equity of RUB 90.4 billion under audited IFRS accounts for 2012.
As at 31 December 2012, NOMOS had an extensive branch network in Russia with 300 offices in the economically important regions of the Russian Federation, with the majority of its business concentrated in Moscow, St Petersburg, Tyumen (including the Khanty-Mansiysk autonomous district), the Novosibirsk and Khabarovsk regions.
NOMOS provides a full range of banking services to corporate, small business and retail clients. As at 31 December 2012, NOMOS served approximately 13,500 corporate customers, 85,800 small business clients and almost 1.5m retail customers, including private banking clients.
NOMOS has long-term international credit ratings of BB from Fitch and Ba3 from Moody’s (stable outlook for both ratings).
1Calculated as the share of total revenue for business segments excluding the Treasury and asset and liability management unit and unallocated balances.