Moscow, August 25, 2005 - Vneshtorgbank (VTB) today announces IFRS results for the three-month period ended March 31, 2005.
|Loans and advances to customers||11,078||10,135|
|Shareholders' equity||2,682||2, 628|
|Net interest income||200||92|
|Net fee and commission income||34||24|
The financial results for the first three months of 2005 demonstrate a continued dynamic growth in different business segments of VTB that is striving to achieve the overall strategic goal to strengthen its position as a full-service commercial bank:
The total asset growth up to U.S.$19,146 million as of March 31, 2005 from U.S.$17,810 million as of December 31, 2004 was primarily due to a 9.3% increase (U.S.$943 million) in net client loans, a 7.5% increase (U.S.$192 million) in financial assets at fair value through profit or loss and a 7.7% increase (U.S.$ 290 million) in net cash and due from banks. The increase reflected focus on commercial banking activities that involve servicing clients through deposit taking and lending, as well as rapid expansion of the regional network in the Russian Federation and acquisition of United Georgian Bank (Georgia).
Loans and advances to customers increased by 9.3% to U.S.$ 11,078 million as of March 31, 2005 from U.S.$ 10,135 million as of December 31, 2004. As a result, the percentage of net client loans and advances in total assets grew from 56.9% as of December 31, 2004 to 57.9% as of March 31, 2005.
Whilst securities remained as a percentage of total assets at 14.4% as of March 31, 2005, the absolute value of the VTB`s financial assets at fair value through profit or loss grew to U.S.$2,758 million, up 7.5% from December 31, 2004.
As of March 31, 2005, VTB had total liabilities of U.S.$16,380 million, compared to total liabilities of U.S.$15,101 million as of December 31, 2004. The increase in total liabilities of 8.5% in Q1/2005 was primary due to a 17.4% increase (U.S.$1,045 million) in client accounts and additional U.S.$750 million in subordinated debt issue.
Client accounts increased by 17.5% to U.S.$7,063 million as of March 31, 2005 from U.S.$6,018 million as of December 31, 2004. This increase was primarily attributable to the continued expansion of VTB's branch network.
VTB continues to improve the quality of and to diversify its client loan portfolio. As a result, the allowance for loan impairment as a percentage of total client loans and advances decreased to 5.0% as of March 31, 2005 from 5.2% as of December 31, 2004.
As of March 31, 2005 Tier 1 Capital amounted to U.S.$2,676 million, compared to U.S.$2,540 million as of December 31, 2004. As of March 31, 2005 Total Capital amounted to U.S.$3,185 million. The VTB`s international risk based total capital adequacy ratio, computed in accordance with the Basle Accord guidelines increased from 12.0% as of December 31, 2004 to 15.5% as of March 31, 2005 due to VTB's efforts to strenghten its capital position. In February 2005, VTB obtained a U.S.$750 million subordinated loan, financed via a bond offering, which received Tier 2 capital treatment from the Central Bank of the Russian Federation. The ratio is well above 8.0% minimum required in accordance with the Basle Accord guidelines.
Net profit decreased by 13.0% to U.S.$67 million as of March 31, 2005 from U.S.$77 million as of March 31, 2004. The decrease was mainly attributable to an increase in operating expenses by 58.4% to U.S.$160 million as of March 31, 2005 from U.S.$101 million as of March 31, 2004 resulting from significant expansion of VTB`s operations and branch network, promotion of its retail and investment banking businesses and acquisition of United Georgian Bank.
The profit before income taxes did not change significantly during the period under review, being U.S.$98 million in Q1/2005 and U.S.$97 million in Q1/2004. In Q1/2005, VTB incurred an income tax expense of U.S.$32 million versus U.S.$20 million in Q1/2004.
Operating income for Q1/2005 grew by 30.3% to U.S.$ 258 million compared to U.S.$198 million for Q1/2004, due to the increased net interest income of U.S.$200 million, as well as net fee and commission income of U.S.$34 million. These positive factors were partially offset by losses arising from dealing in foreign currencies of U.S.$18 million in Q1/2005.
Net interest income before provision for loan impairment increased by U.S.$108 million, or 117.4%, in Q1/2005, to U.S.$200 million, from U.S.$92 million in Q1/2004. Net interest margin increased to 1.2% for Q1/2005 vs. 0.8% for Q1/2004. The increase in net interest margin in Q1/2005 was primarily due to the growth in the percentage of client loans and advances in VTB's total interest-earning assets and an increase in investments in higher-yielding Russian corporate securities.
Interest income increased by 96.3% to U.S.$371 million in Q1/2005 in comparison with U.S.$189 million in Q1/2004. The major component of Q1/2005 interest income is represented by interest income from corporate loans and advances (78.2% of total interest income) which grew by 9.3% to U.S.$11,078 million.
Natalia Loginova, Head of Financial Institutions
Telephone: +7 (095) 783-21-61
Irina Mokeeva, Head of Investor Relations
Telephone: +7 (095) 783-21-16
Katya Pavlova, Manager, Investor Relations
Telephone: +7 (095) 775-72-12
VTB and its subsidiaries are a leading Russian commercial banking group, offering a wide range of banking services and conducting operations across Russia through its network of 55 branches, located in Moscow and all major Russian regions and in parts of Europe. VTB has operated under a full banking license from the Central Bank of the Russian Federation since 1990. With 14,793 employees as of March 31, 2005 VTB operates in the commercial banking sector including deposit taking and commercial lending, support of clients' export/import transactions, foreign exchange, securities trading, and trading in derivative financial instruments. The Government of the Russian Federation is the main shareholder of VTB and owns through the Federal Property Management Agency 99.9% of its registered share capital. For more information please visit www.vtb.ru.
Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of VTB. We caution you that these statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that we cannot predict with certainty. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecasted in the forward-looking statements. We do not intend to update these statements to make them conform with actual results.Financial Statements