Subject to the adopted Strategy, implementation of primary lines of business enabled Vneshtorgbank in the first six month of the year 2004 to strengthen relations with customers, which was instrumental in further growth of financial indicators of the Bank. Vneshtorgbank`s net assets reported a 17% growth to 305.1 billion roubles as compared to 1 January of 2004, and totalount of raised funds rose by 21% to 240.7 billion roubles. The book profit was 3.9 billion roubles, while the net profit was 2.6 billion roubles as of 30 June 2004.
In the first six months of the year 2004, Vneshtorgbank continued improving and expanding the existing range of retail services, which enabled to achieve notable results in retail business development, to win leadership positions in this market segment and to stabilise the funding base of the Bank. Balances on deposit and bankcard accounts with Vneshtorgbank posted a 37% increase to 36.6 billion roubles as from 1 January 2004. International payment bankcards issued by Vneshtorgbank increased by 128,000 to 470,000 in number, while the merchant network of Vneshtorgbank`s bankcard reached 2,790 points of sale.
Vneshtorgbank-run socially important projects were further implemented. Under the Mortgage Housing Programme, a centre for mortgage and consumer lending was established in Saint Petersbourg. All VTB branches started making mortgage loans. Total household loans made outperformed US$50 million as of 30 June 2004. The Small Business Programme was launched to support individual entrepreneurs. Four Moscow-based sub-offices of the Bank and 11 regional branches started implementing the Programme.
Vneshtorgbank`s part in developing the manufacturing sector of the national economy has become more important: In the first six month of the year 2004,ount of loans made to the non-finance sector rose by over 30% to 169.7 billion roubles. The existing customer base expanded remarkably both in terms of coverage of economy industries and geographical expansion. Co-operation agreements with strategic customers totalled 82, including 47 agreements signed with corporate clients, 8 agreements with federal ministries and agencies, 27 agreements with Governments of federal constituencies and municipal administrations.
Major borrowers of the Bank belong to energy, defence, engineering, and other core industries of the Russian economy. In particular, Vneshtorgbank co-operated successfully with Russian Railways Inc., which in the first half of the reporting year was financed for over US$450 million. The Bank continued lending oil and gas companies such as Gazprom, NK Rosneft and others. More active efforts were made in co-operation with Norilsk Nickel, which took loans for US$40 million with a documentary credit limit worth US$235 million.
Vneshtorgbank went on developing sophisticated and demanded corporate-oriented services in investment banking. In the first six months of the reporting year, VTB took part in arrangement and underwriting of 20 corporate and sub-federal bond issues for about 60 billion roubles, that is twice as much against similar indicators for the whole year 2003.
As of 30 June 2004, Vneshtorgbank maintained leadership positions in domestic foreign currency market and domestic securities market, and first and foremost, in terms of trading volumes with foreign exchange-denominated bonds.
In raising finance in the first six months of the year 2004, Vneshtorgbank successfully distributed a proprietary bond issue for 5 billion roubles for a five-year term in the domestic market. This issue of bonds, which became "blue chips" of the Russian corporate bond market, was a record for the domestic banking sector in terms of volume, and had an unprecedentedly low rate at 5.5% p.a. for borrowed funds.
The US$2 billion middle-term debt instrument issue programme continued. In March 2004, VTB distributed a eurobond issue totalling US$250 million, followed in April by the second issue of eurobonds for US$325 million. Moody`s Investors Service assigned those two issues, and the third issue which took place in June 2004 for US$300 million, with an investment rating of Baa3, equal to the sovereign rating of the Russian Federation. So high rating to Vneshtorgbank`s debt instruments, under certain destabilisation of the Russian banking sector, reflects full marks of the Bank`s financial strength and its core function on the domestic financial market.
In June 2004, Vneshtorgbank was granted a US$275 million syndicated loan for a 1-year term (extendable for up to two years) at LIBOR+1.4% p.a. Moreover, VTB continued successfully raising long-term credit-related funding from foreign partners to finance investment demands of its customers. With these purposes in view, master credit facility agreements were entered into with BCEN-Еurobank, ING BANK, Nordea Bank Finland Plc., and some other foreign financial institutions.
Under the VTB development policy as a nation-wide network-scale bank, Vneshtorgbank offers its customers services through a diversified network of offices comprising 44 branches and over 100 sub-offices and teller offices in provinces, and more than 30 offices in the Moscow area. To this end, Vneshtorgbank is also engaged in implementing a participation project in Promstroibank`s equity (Saint Petersbourg), which would enable us to made more active efforts in the north-western area, where in the first six months of the reporting year we actively expanded the network of offices. In particular, a centre for mortgage and consumer lending was established in Saint Petersbourg, and offices located in that city reached 6 in number as of 30 June 2004.
Till the end of the year 2004, Vneshtorgbank is going to open 9 regional offices more such as located in Grozni, Kaluga, Nalchik, Orenbourg, Petropavlovsk-on-the Kamchatka, Riazan, Smolensk, Syktyvkar, and Ulianovsk.
Vneshtorgbank widely uses the existing opportunities to enlarge international transactions through its Group comprising 4 subsidiary banks located in Western Europe. In the first six months of the year 2004, VTB Group focused in its development on enhanced presence in promising banking markets of other CIS countries. In pursuing such goals, in March 2004 Vneshtorgbank became a controlling shareholder in Armenian Savings Bank, the largest in Armenia. A subsidiary bank of Vneshtorgbank is close to be established in Ukraine, a transaction is under way to purchase a controlling stake in United Georgian Bank. In the short run, VTB plans to further strengthen its competitive positions in handling foreign trade payments between CIS countries by making more active efforts in Moldova and Kazakhstan.
Owing to expanded scale, lines and volume of Vneshtorgbank`s business development, its positive performance record, Vneshtorgbank`s competitive strength is ever increasing indeed both in global financial market and in the Russian banking sector.