Bank GPB (JSC) key financial indicators for 2017 / as at 31 December 2017:
The key financial indicators are presented below:
RUB, bn
|
31 December, 2017 |
31 December, 2016 |
Change |
|
|
Assets |
5,534.1 |
4,879.2 |
+13.4% |
|
Shareholders’ equity |
576.8 |
494.5 |
+16.6% |
|
Cash and cash equivalents |
649.4 |
473.5 |
+37.2% |
|
Loans to corporate customers 1 |
3,384.0 |
3,174.8 |
+6.6% |
|
Retail loans 1 |
389.1 |
329.1 |
+18.2% |
|
Securities 2 |
675.2 |
589.1 |
+14.6% |
|
Corporate customer accounts |
3,072.6 |
2,652.5 |
+15.8% |
|
Retail customer accounts |
842.9 |
678.3 |
+24.3% |
|
Capital borrowings 3 |
339.6 |
317.3 |
+7.0% |
|
Subordinated debt |
164.5 |
182.8 |
-10.0% |
|
|
|||
|
|
2017 |
2016 |
Change |
|
Net income |
33.8 |
29.0 |
+16.6% |
|
Comprehensive income |
35.6 |
8.1 |
+339.5% |
|
12 M 2017 |
12 M 2016 |
Change |
|
|
Total Capital Adequacy Ratio 4 |
13.1% |
13.5% |
-0.4 p.p. |
|
Tier 1 Capital Adequacy Ratio 4 |
10.3% |
10.0% |
+0.3 p.p. |
|
Non-performing loans 5 (NPL), % of gross loans |
2.5% |
3.0% |
-0.5 p.p. |
|
Allowance for impairment to gross loans to customers ratio |
5.1% |
7.3% |
-2.2 p.p. |
|
Loans-to-deposits ratio 1 |
96.4% |
105.2% |
-8.8 p.p. |
|
ROE |
6.2% |
5.6% |
+0.6 p.p. |
|
ROA |
0.6% |
0.6% |
- |
|
Net Interest Margin 6 |
3.1% |
3.0% |
+0.1 p.p. |
|
Cost of risk 7 |
0.6% |
0.1% |
+0.5 p.p. |
|
Cost-to-income ratio 8 |
49.5% |
46.5% |
+3.0 p.p. |
Financial results
As a whole, the year 2017 proved successful to the Group – net income was RUB 33.8 bn, and comprehensive income, including also revaluation of non-trading investments and exchange differences on translation of the Group’s foreign operations, was RUB 35.6 bn. By comparison, in 2016 the Group’s net income and comprehensive income amounted to RUB 29.0 bn and RUB 8.1 bn respectively. The Group’s ROE improved in 2017 by 0.6 p.p. to 6.2%. ROA in 2017 remained stable and stood at 0.6%.
The Group’s net interest income for 2017 was up by 7.8% to RUB 131.5 bn against 2016, with interest income down by 3.9% to RUB 365.3 bn, and interest expense down by 9.4% to RUB 233.8 bn. A drop in the components of net interest income was due to lower market rates. Meanwhile, the net interest margin in 2017 was up 0.1 p.p. at 3.1% year-on-year.
The Group’s recurring core banking income, including net interest income before impairment of interest earning assets and net commission income totalled RUB 147.2 bn in 2017 in comparison to RUB 136.7 bn in 2016, − up 7.7%. The growth was mainly due to interest (+7.8%), as well as commission income (+7.1%).
Income from operations with securities9 totalled RUB 13.4 bn in 2017 compared to RUB 37.2 bn in 2016 due to decrease of income from dealing in shares and the disposal of a number of non-banking assets in 2016-2017.
As a result the share of steady income in the Group’s operating income increased by 5 p.p. to 92.5% from 87.5% in 2016, and income from operations with securities declined by 15.3 p.p. to 8.4%.
Non-banking segments ended 2017 posting an operating profit of RUB 5.1 bn. In 2016 they saw the operating loss of RUB 15.0 bn.
The abovementioned developments were factored into the Group’s operating income (before allowance for impairment of interest earning assets) of RUB 159.1 bn in 2017 compared to RUB 156.3 bn in 2016 (up 1.8%).
Operating expenses in 2017 reached RUB 78.8 bn compared to RUB 72.8 bn year-on-year. Higher expenses were due to the launch of several business development (including retail operations) and performance improvement projects. The cost-to-income ratio in 2017 also increased by 3.0 p.p. from 46.5% to 49.5%.
Assets quality
Provision expenses in 2017 stood at RUB 26.5 bn compared to RUB 2.0 bn in 2016. The main factor was that in 2016 a portion of provisions created at the height of the crisis of 2014-2015 was recovered following the restructuring of several loans. The Group’s cost of risk (provisions for the period to the average value of interest bearing assets) in 2017 reached the pre-crisis level of 0.6% (up against 0.1% in 2016).
At the same time the share of NPL (non-performing loans10) in the total loan portfolio declined to 2.5% as at 31 December 2017 compared to 3.0% at the year-end 2016. The provisioning ratio (total loan loss provisions to the loan book) also fell from 7.3% as at 31 December 2016 to 5.1% at the year-end 2017, owing, among other things, to the inclusion of a number of impaired assets in the non-performing loans (NPL) and their further write-off in the reporting period, and also to the disposal of several non-performing loans.
At the same time, the loan loss provisions exceeded NPLs twofold (provisioning coverage was 2.5 times at the year-end 2016).
Business volumes
The Group’s total assets as at 31 December 2017 stood at RUB 5, 534.1 bn, up 13.4% compared to RUB 4,879.2 bn at the year-end 2016.
In particular, cash and cash equivalents accounted for RUB 649.4 bn as at 31 December 2017 compared to RUB 473.5 bn year-on-year. Cash and cash equivalents grew by RUB 175.9 bn. Relative growth was 37.2% because of low base effect – in 2016 the item volume fell by RUB 160.0 bn.
Loan book before provision for impairment as at 31 December 2017 stood at RUB 3,773.1 bn – 7.7% above RUB 3,503.9 bn as at 31 December 2016. The loan book contributed 64.7% to the Group’s total assets compared to 66.6% at the year-end 2016.
Corporate loans reached RUB 3,384.0 bn as at 31 December 2017 – 6.6% higher than at the year-end 2016 (RUB 3,174.8 bn), while retail book amounted to RUB 389.1 bn at the year-end 2017, up 18.2% from the year-start, with its share in the gross loan book up by 0.9 p.p. to 10.3%.
In 2017, retail loans recorded growth not only in mortgage loans, which are traditionally the bulk of the Group’s retail book, but also in consumer loans. Specifically, consumer loans to retail customers stood at RUB 111.6 bn as at 31 December 2017 compared to RUB 84.5 bn a year earlier (up 32.1%), and their share in the retail book grew from 25.7% to 28.7% during 2017. Mortgage loans amounted to RUB 270.1 bn at the year-end 2017 − 15.1% higher than total mortgage loans disbursed as at 31 December 2016 (RUB 234.7 bn). Based on 2017 performance results the Group ranks third among Russian banks for disbursed mortgage loans in the rating of the Rusipoteka consulting company, the ludiipoteki.ru Portal, etc.
The Group’s securities portfolio expanded 14.6% to RUB 675.2 bn in 2017 compared to RUB 589.1 bn at the year-end 2016. The share of securities in the Group’s assets remained virtually unchanged and stood at 12.2% as of the reporting date compared to 12.1% a year earlier. The structure of the Group’s securities portfolio is characterized by the prevalence of fixed income instruments representing investments in Russian government debt instruments, bonds and promissory notes of Russian issuers. At the same time, in 2017 the share of debt securities declined by 6.3 p.p. to 72.9% compared to 79.2% at the year-end 2016, while the percentage of equity instruments increased accordingly due to higher equity investments in Q42017, in particular, following the purchase of 18.97% shares of PJSC Megafon.
In 2017, corporate and retail deposits increased by 17.6% to RUB 3,915.4 bn as at 31 December 2017 compared to RUB 3,330.8 bn at the year-end 2016. In particular, corporate deposits stood at RUB 3,072.6 bn as at 31 December 2017 – up 15.8% mostly due to growing funds of government-related entities on Group accounts. Retail deposits and accounts reached their record high of 24.3% in 2017 amounting to RUB 842.9 bn as at 31 December 2017 compared to RUB 678.3 bn at the year-end 2016.
The share of customer deposits in the Group’s liabilities stood at 79.0% as at 31 December 2017 compared to 76.0% at the year-end 2016.
Borrowings from debt capital markets, including Eurobonds and local bonds, stood at RUB 339.6 bn as at 31 December 2017 compared to RUB 317.3 bn at the year-end 2016. Within 12 months of 2017, CNY 1 bn Eurobonds issued in 2014, and Eurobonds issued in 2012 with the total nominal value of USD 1 bn, and RUB 0.1 bn bonds were redeemed, while RUB 83.6 bn bonds were placed. The share of borrowings on debt capital markets in the resource base declined in 2017 from 7.2% to 6.9% on the back of increased customer funds.
As at 31 December 2017, borrowings from the Bank of Russia declined from RUB 95.5 bn as at 31 December 2016 to RUB 45.5 bn as at 31 December 2017. The share of borrowings from the Bank of Russia in the Group’s liabilities also declined by 1.3 p.p. in 2017 (from 2.2% to 0.9%).
Capital adequacy
The Group’s Basel I total capital based on consolidated IFRS financials was up 11.2% to RUB 689.7 bn as at 31 December 2017 compared to RUB 620.4 bn at the year-end 2016. The capital growth was mainly due to the additional issue of the Bank’s ordinary shares in the summer of 2017 (the effect of RUB 60 bn), due to new demand and interest-free deposits of RUB 9.5 bn, and also, due to the net income generated by the Group. The Group’s risk weighted assets increased by 15.0% in 2017. As a result, the Group’s total capital adequacy ratio declined by 0.4 p.p. to 13.1% (13.5% at the year-end 2016); while the Tier 1 capital adequacy ratio grew 0.3 p.p. to 10.3% (10.0% at the year-end 2016).
1 Before allowance for impairment
2 Including trading securities, investments available for sale, investments in associates and investments held to maturity
3 Including debt securities issued and syndicated loans of banks
4 In accordance with Basel I Framework
5 Defined as loans overdue over 90 days or facilities of defaulted borrowers
6 Net interest income to chronological mean of quarter-end interest earning asset for the year. Interest-earning assets include due from lending institutions, loans to customers and debt securities (all before allowances for impairment)
7 Impairment allowance charges to chronological mean of quarter-end interest earning asset for the year
8 Operating expenses include salaries and administrative expenses. Operating income includes net interest income, non-interest income and non-banking operating profits.
9 Includes both realized and unrealized gains from securities, change of investment value and net derivative results, as well as expense from operations involving financial liabilities designated as at fair value, changes in which are reflected through profit or loss for the period upon initial recognition, as well as income from the disposal of subsidiaries.
10 Outstanding loans, failure to pay principle or interest on a loan for a period of 90 days or more, or for which default has been declared.