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Vneshtorgbank strikes the balance for 2002

14 May 2003

Record net profitounted to 9.3 billion roubles was a remarkable balance of the year 2002. Suchount outstripped considerably both scheduled figures and the year 2001 level by 2 billion roubles. Book profit for the year 2002 was 13.1 billion roubles.

Positive financial results had a relevant impact on transaction profitability of the Bank in relative terms. Return on assets grew up to 6 percent for the year 2002, while return on equity was 19 percent. Net profit per one employee was over 1.7 million roubles.
Total net assets posted a 24 percent rise to 179.4 billion roubles, and total equity increased from 48.8 billion to 58.7 billion roubles as of 31 December 2002.
The year 2002 saw a transfer of a Vneshtorgbank stake owned by the Bank of Russia to the Russian Government within the Russian banking system restructuring scheme. The transfer of the Vneshtorgbank stake to the Russian Government was made in parallel with a decision to transfer Vnesheconombank`s commercial  activities to Vneshtorgbank for about US$500 million.
Owing to changes in Vneshtorgbank functions, the Bank of Russia notably reduced transactions with VTB, and in the course of the second half of the year 2002 withdrew deposits totalled to over US$950 million, which were repaid through sale of domestic foreign currency denominated bond and Russian Federation eurobond packages. However, year-end results did not cause decline in treasury of the Bank, as it gave a dynamic impetus to customer service expansion. Within the year, co-operation agreement were signed and implementation of joint projects started with several major Government-owned entities such as the Ministry of Railroads, the Ministry of Industry, Science and Technologies, Gazprom, LUKOIL, AFK "Systema", Magnitogorsk metallurgical works, regional administrations.
International co-operation of the Bank grew in scale. A record US$240 million syndicated loan facility, the greatest in all times of the Russian banking history, was raised. Over 30 major worldwide financial institutions from 13 countries took part as arrangers of the facility such as Citibank NA and Deutsche Bank AG,ong others. Vneshtorgbank increased transactions involving use of credit lines made by foreign banks against export credit insurers of developed countries. Promotion of such operations allowed to offer Vneshtorgbank`s customers long terms financing, without any impact on liquidity ratio of the Bank.
At year-end 2002, corporate customers increased to about 46,000 in number (a 18 percent rise against figures at year-start), deposits they placed with the Bank grew from 26.7 billion roubles to 38.2 billion roubles. Deposits on corporate demand and time accounts within total borrowings (120.7 billion roubles) were 32 percent. Foreign trade payments made by customers reached US$15 billion, which meant almost a 50 percent increase compared to the year 2001, inter alia, due to active use of credit lines made by foreign banks and export credit insurance agencies. Export payment turnover exceeded US$9 billion, and import payment turnover was US$5.5 billion.
As a leading lender to the Russian economy, in 2002 Vneshtorgbank increased even more its manufacturing sector loan portfolio from 63.6 billion roubles to 82.4 billion roubles as of 31 December 2002. Interest earned on corporate loans showed an increase from 3.7 billion roubles for the year 2001 to 8.4 billion roubles at year-end 2002. Vneshtorgbank`s loan portfolio became more diversified, and at present, together with dynamic lending to fuel and energy enterprises, substantial funding was directed to metallurgy, automotive industry, forestry, food industries, and agriculture.
In 2002, Vneshtorgbank secured its leadership positionsong Russian banking community as far as precious metal trading is concerned. At year-end 2002, Vneshtorgbank purchased 21 tons of gold from gold-mining businesses, which is a 17 percent rise against the 2001 figures. Within the implementation of the Programme developed by Vneshtorgbank to finance cost incurred by sub-soil miners as part of the preparation for the next season, and the Programme to finance heavy machinery and equipment for sub-soil miners in 2002, the Bank made credits to precious metal mining businesses for over US$130 million.
In 2002, Vneshtorgbank branches located in Khabarovsk, Magadan, Blagoveschensk, Chita, Krasnoyarsk, and Irkutsk were actively involved in implementation of programmes to finance precious metal mining businesses. In 2003, branches in Yakutsk, Cheliabinsk, Yekaterinburg, and some other towns will start serving sub-soil miners.

In the year under review, Vneshtorgbank went on broadening corporate customer oriented investment and banking services aimed at securing vested interest and investment demands of Vneshtorgbank`s clients and intended to foster and to develop manufacturing sector of the Russian economy, in particular, through raising long-term funding to output modernisation projects. For example, throughout the year 2002, Vneshtorgbank was originator and agent of securities issuance for our customers such as Avtovaz automaker, Khanty-Mansi Autonomous District administration, Seventh Continent chain supermarkets, Associated Engineering Plants Inc., Irkutsk Industrial Group and many other major Russian companies.

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