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Financial performance of Gazprombank Group for the year ended 31 December 2010 according to IFRS financial statements
Gazprombank (Open Joint-Stock Company) issued consolidated IFRS financial statements for the year ended 31 December 2010. Major financial indicators are presented below
billions of Rubles
|
|
31 December 2010 |
31 December 2009 |
Change for 2010 |
|
Total assets |
1,951.6 |
1,741.1 |
+12.1% |
|
Equity |
221.9 |
196.0 |
+13.2% |
|
Corporate loans, gross |
988.2 |
723.3 |
+36.6% |
|
Retail loans, gross |
95.8 |
81.3 |
+17.9% |
|
Investments in securities |
233.6 |
182.6 |
+27.9% |
|
Corporate accounts and deposits |
947.0 |
710.2 |
+33.3% |
|
Retail accounts and deposits |
238.4 |
170.6 |
+39.8% |
|
Eurobonds and local debt issued |
145.3 |
169.1 |
–14.1% |
|
Subordinated deposits |
143.4 |
144.6 |
–0.8% |
|
Total capital adequacy (Basel I) |
16.8% |
14.8% |
+2.0% |
|
Tier 1 capital adequacy (Basel I) |
10.6% |
9.7% |
+0.9% |
|
Non-performing loans to gross loans |
2.1% |
3.9% |
–1.8% |
|
Impairment provision to gross loans |
4.7% |
6.9% |
–2.2% |
|
|
2010 |
2009 |
Change for 2010 |
|
Net profit |
66.3 |
58.8 |
+12.8% |
|
Total comprehensive income |
76.6 |
65.1 |
+17.6% |
|
ROAE (return on average equity) |
29.6% |
36.4% | |
|
ROAA (return on average assets) |
3.7% |
3.1% | |
|
Net interest margin |
2.5% |
2.6% | |
|
Cost to income |
32.1% |
18.9% |
Growth of profit and capital adequacy
Gazprombank Group posted a record net profit of RUR 66.3 billion for 2010 compared to a previous high of RUR 58.8 billion in 2009. Total comprehensive income for 2010 amounted to RUR 76.6 billion versus RUR 65.1 billion in 2009. Return on equity for 2010 was 29.6%, while return on assets increased to 3.7%.
The Group’s equity increased by 13.2% to RUR 221.9 billion. Capital adequacy ratio according to Basel I stood at 16.8% as of 31 December 2010 compared to 14.8% at year-end 2009, while Tier 1 ratio equaled to 10.6% versus 9.7% in 2009. The capital adequacy ratios are significantly above the minimum required by the Basel Capital Accord.
Development of core banking business
In 2010, Gazprombank continued to expand lending to existing clients as well as to new borrowers, which represent strategic sectors of the domestic economy. Gross loan portfolio increased by 34.7% compared to year-end 2009 and reached RUR 1,084.0 billion. The volume of corporate loans outstanding increased by 36.6% compared to 2009 and comprised RUR 988.2 billion. Retail lending increased as well from RUR 81.3 billion as of year-end 2009 to RUR 95.8 billion as of 31 December 2010.
In 2010, securities portfolio increased by 27.9% to RUR 233.6 billion mainly due to growth of investments into corporate bonds by Russian issuers and domestic government bonds.
During 2010 the share of customer funds in total liabilities grew from 57.0% to 68.5%. At year-end 2010 customer accounts and deposits comprised RUR 1,185.4 billion, a 34.6% increase from 2009. Corporate deposits grew by 33.3% reaching RUR 947 billion; retail deposits increased by 39.8% to RUR 238.4 billion. As of 31 December 2010 gross loans to deposits ratio was 91.5% compared to 91.3% in 2009.
Interest margins became under pressure in 2010 because of the general tendency towards interest rate decline domestically. As a result, the income from lending and fee-based business for the year ending 31 December 2010 stood at the 2009 level totaling RUR 40.1 billion. Net interest margin for 2010 was 2.5%, which approximately equaled to the 2.6% reached in 2009. At the same time net interest margin started to increase in the second half of 2010 as a result of declining funding cost.
Improving asset quality
At year-end 2010 non-performing loans (overdue for more than 90 days) decreased in absolute terms as well as percentage-wise and equaled 2.1% of gross loans compared to 3.9% at year-end 2009.
The improving quality of Gazprombank’s loan book resulted in a decrease of impairment provision from 6.9% of gross loans at year-end 2009 to 4.7% as of 31 December 2010. At year-end 2010 non-performing loans coverage by impairment provision stood at 2.2 times.
Loan impairment expense in 2010 decreased by 93.6% amounting to RUR 1.7 billion versus RUR 25.9 billion in 2009. The increase in impairment provision was driven by growing lending activities.
Profiting from investment and trading operations
In 2010, Gazprombank disposed of some of its investments in non-banking assets, i.e. a 51% stake in ОАО «Sibneftegas», an oil & gas company, and a 27% stake in ОAО “SIBUR Holding”, a petrochemicals company. Profit from these transactions amounted to RUR 23.3 billion. Gazprombank’s management also decided to dispose of the rest of the investment in ОAО “SIBUR Holding”. As a result, in December 2010 the Group ceased the consolidation of SIBUR Holding Group.
In 2010, profit from other operations with securities amounted to RUR 4.6 billion compared to a profit of RUR 34.3 billion in 2009.
The net assets growth of non-banking equity investments in 2010 was RUR 37.7 billion compared to RUR 11.8 billion in 2009. The Group’s non-banking investments in 2010 included petrochemical assets (SIBUR Holding Group), machinery group of companies (the Uralmash-Izhora Group and other machinery assets), media business (Gazprom Media Group) and other investments.
In 2010, net gains from operations with foreign currency, including revaluation of derivative exposures, amounted to RUR 12.3 billion compared to RUR 28.0 billion in 2009.
Maintaining internal efficiency
Despite significant business growth Gazprombank imposes strict control over administrative costs. In 2010, the cost to income ratio was 32.1%, which is within Gazprombank’s targeted level.
As a result of disposal of non-banking assets Gazprombank expects a stronger growth of core banking business in 2011.
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