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DGAP-News: CREDIT BANK OF MOSCOW delivers strong IFRS results for 1Q 2014

June 11, 2014

EquityStory.RS, LLC-News: CREDIT BANK OF MOSCOW / Key word(s): Quarter Results CREDIT BANK OF MOSCOW delivers strong IFRS results for 1Q 2014 11.06.2014 / 14:00 --------------------------------------------------------------------- CREDIT BANK OF MOSCOW delivers strong IFRS results for 1Q 2014 Key results - CREDIT BANK OF MOSCOW's 1Q 2014 IFRS net income increased by 10.0% on 1Q 2013 to RUB 1,919 mln (USD 53.8 mln) - Assets grew 2.1% reaching RUB 463,604 mln (USD 12,990.8 mln) - The gross loan portfolio increased by 4.8% in 1Q 2014 to RUB 333,254 mln (USD 9,338.2 mln) - Non-performing loans (loans overdue more than 90 days) were up to 1.6% in 1Q 2014 versus 1.3% as at year end 2013 due to growth of retail business share in the loan portfolio - Operational efficiency is proved by 14.9% return on equity and 1.7% return on assets - The cost-to-income ratio decreased to 33.0% at the end of 1Q 2014 from 34.8% the previous year - Equity increased by 3.5% in 1Q 2014 to RUB 52,443 mln (USD 1,469.5 mln) - Total capital according to Basel III standards grew by 2.4% in 1Q 2014 to RUB 72,739 mln (USD 2,038.3 mln), with a capital adequacy ratio of 15.2% and Tier I ratio of 10.7% "First quarter of 2014 was a success for CREDIT BANK OF MOSCOW, maintaining high asset quality together with delivering strong results, especially against slowdown in economic growth and uncertainty in the market. It is worth emphasizing that our focus on risk management is a foundation of sustainable growth of the business", said Chief Financial Officer Eric de Beauchamp. Key highlights Balance sheet 1Q 2014, RUB 2013YE, RUB change,% mln mln Assets 463,604 454,202 2.1 Liabilities 411,161 403,544 1.9 Equity 52,443 50,658 3.5 Capital (Basel III) 72,739 71,064 2.4 Gross loan portfolio 333,254 317,860 4.8 NPLs 5,195 4,194 23.9 Key ratios, % Basel III capital adequacy ratio 15.2 14.8 (CAR) 90+ NPL ratio (before provisions) 1.6 1.3 NPL coverage ratio 194.0 212.6 Loan-loss provisions / Gross loans 3.0 2.8 Net loans / deposits 115.3 112.4 Income statement 3m 2014, RUB 3m 2013, RUB change,% mln mln Net interest income (before 4,959 3,606 37.5 provisions) Fee and commission income 1,914 1,240 54.3 Net income 1,919 1,745 10.0 Key ratios, % Net interest margin (NIM) 4.8 5.1 Cost-to-income (CTI) 33.0 34.8 Return on equity (ROAE) 14.9 17.4 Return on assets (ROAA) 1.7 2.2 Conference call On June 16 at 5 pmMoscow time (3 pm CET) CREDIT BANK OF MOSCOW will hold a conference call for investors and analysts to discuss its IFRS financial and business results for 1Q 2014. The conference will be hosted by Vladimir Chubar, Chairman of the Management Board of the Bank, and Eric de Beauchamp, Chief Financial Officer. The conference will be held in English. Contact numbers for participants are as follows: Russia +7-495-662-57-93 UK + 44-20-7190-1595 (Local access) 0800-358-5263 (Toll free) USA + 1-480-629-9822 (Local access) 1-877-941-6013 (Toll free) Germany 49-6971-044-5555 (Local access) 0800-330-4463 (Toll free) Hong Kong +852-3009-5027 (Local access) 800-908-530 (Toll free) Singapore +65-6823-2087 (Local access) 800-448-1303 (Toll free) Conference ID is 4687197 In order to listen in and watch the presentation please log in following the link http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=2301. Analysis of financial results CREDIT BANK OF MOSCOW reported net income for 1Q 2014 of RUB 1.9 bln, an increase of 10.0% compared to 1Q 2013 net income of RUB 1.7 bln. Return on equity (ROAE) was 14.9%, and return on assets (ROAA) - 1.7%, demonstrating a slight decrease to compare with the same period of a previous year. Net interest income increased by 37.5% to RUB 5.0 bln, primarily due to growth of highly-profitable assets on the balance sheet, retail loan portfolio in particular. Net interest margin was pegged at the level of 4.8%, lower than for the full year 2013, as a result of the Bank's conservative liquidity policy against the backdrop of volatile economic environment. Fee and commission income increased by 54.3% compared to 1Q 2013, reaching RUB 1.9 bln, of which 37.3% is attributable to loan insurance contracts processing (increased by 55.7% compared to 1Q 2013), 31.5% - to settlement operation fees (increased by 82.5%), 27.2% - to plastic card fees (increased by 204.4%), and 25.3% - to cash handling fees (increased by 17.5%). Increase in plastic card fees for the 1Q 2014 resulted mostly from significant credit card portfolio growth for more than three times up to RUB 4.2 bln year-on-year basis. According to informational portal Banki.ru, the Bank's credit card loan portfolio demonstrated the fastest growth dynamics among financial institutions with total credit card loans exceeding RUB 1 bln. In 1Q 2014, operating income (before provisions) increased by 22.6% up to RUB 6.4 bln. with a relatively modest operating expenses (before other provisions) growth by 16.1% to RUB 2.1 bln. Outstripping growth rate of income versus expenses is yet one more proof of the Bank's growth strategy effectiveness. As a result, cost-to-income (CTI) ratio reached 33.0%, down from 34.8% for the 1Q 2013, being well below Russian banking sector average. The gross loan portfolio grew by 4.8% and reached RUB 333.3 bln at the end of 1Q 2014. The corporate loan portfolio grew by 2.7% to RUB 226.0 bln, and the retail loan portfolio by 9.6% to RUB 107.2 bln. The total loan portfolio net of provisions, representing 69.7% of total assets, increased by 4.6% in 1Q 2014 and reached RUB 323.2 bln. Slowdown of loan portfolio growth was primarily a result of the Bank's conservative approach to risk estimation amid the deteriorating economic environment. The Bank continued to fulfil its strategy by steadily increasing the share of retail loans in the loan portfolio. At the end of 1Q 2014 retail loans comprised 32.2% of total loans, up from 30.8% at the end of 2013. Loan portfolio quality maintained at a good level due to balanced approach to risk estimation. Share of non-performing loans (90+ NPL) was 1.6%, having increased due to projected outpacing growth of retail loan portfolio with relatively higher risk level. NPL coverage ratio reached 194.0%, which is higher than Russian banking sector average. The decrease in 1Q 2014 was primarily driven by the change-over to new risk assessment methodology in accordance with Basel standards as well as best global practices. Customer accounts and deposits grew slightly by 1.9% in the 1Q 2014 up to RUB 280.2 bln, keeping 68.2% share of total liabilities. Slowdown in customer deposits growth resulted from the Bank's excess liquidity as at the end of 2013 as well as scheduled raising of a syndicated loan in 1Q 2014. Net loans to deposits ratio has not shown significant changes as well, with an increase from 112.4% at the end of 2013 to 115.3% at the end of 1Q 2014. Capital markets activity In February 2014 CREDIT BANK OF MOSCOW repaid in full a RUB 3 bln domestic bond issue with a maturity of 3 years and annual coupon rate of 9.5%. In March 2014 CREDIT BANK OF MOSCOW signed a syndicated loan facility agreement in total amount of up to USD 500 mln with a pool of high quality lenders from across Europe, North America and Asia. The USD/EUR facility has tenors of 364 days and 18 months, and carries interest rates of LIBOR/EURIBOR + 1.75% p.a. (364-day tenor) and LIBOR/EURIBOR + 1.95% p.a. (18-month tenor). It is worth mentioning that the loan facility became the largest syndicated loan in the history of the Bank's presence in the syndicated loans market and was also marked by lower costs and longer terms. Total capital calculated in accordance with Basel III standards increased by 2.4% in 1Q 2014 reaching RUB 72.7 bln, and the capital adequacy ratio stood at 15.2% compared to 14.8% at the end of 2013. Tier 1 capital ratio increased to 10.7% from 10.2% in the reporting period. Infrastructure development At the end of 1Q 2014, CREDIT BANK OF MOSCOW's branch network comprised 61 offices and 27 operational cash desks in Moscow and the Moscow Region. CREDIT BANK OF MOSCOW's branch network was recognised as the most efficient in the Russian banking sector in 2013 by Renaissance Credit. The Bank's ATM network increased for the reporting period from 710 to 715 machines, payment terminal network - from 5,200 to 5,450 devices. The Bank continues to grow the number of credit and debit cards issued: in 1Q 2014 this increased by 7% to 1,267,725 cards from 1,190,103 at the end of 2013. Ratings At the end of 1Q 2014 international credit ratings of CREDIT BANK OF MOSCOW maintained at: - Fitch Ratings - Issuer Default Rating of "?B", Short-Term IDR of "B", Viability Rating of "bb", Support Rating of "5", National Long-Term Rating of "AA- (rus)", stable outlook; - Moody's - long-term global & local currency deposit rating of "?1/NP", financial strength rating of "E+", long-term national scale credit rating at of "A1.ru", stable outlook; - Standard & Poor's -Long-term credit rating of "?B-", Short-term credit rating of "?" , Russia national scale rating of "ruAA-", stable outlook. Awards In 1Q 2014 the Bank was recognized for its achievements in 2013 by the leading industry experts. CREDIT BANK OF MOSCOW was named "Bank of the Year 2013" by the leading Russian banking informational portal Banki.ru. The Bank's flagship United Card also took the award for credit card of the year. CREDIT BANK OF MOSCOW'sUSD 500 mln subordinated Tier II Eurobond issue due 2018 was named best financial institution bond at the EMEA Finance Achievement Awards 2013 and was also awarded highly commended CEE deal of the year 2013 by Euromoney magazine. Enquiries CREDIT BANK OF MOSCOW Investors Media Elena Finashina Sergey Lukyanov Nikita Likov Finashina@mkb.ruLukyanov@mkb.ruLikovNS@mkb.ru +7-495-797-4222 ext. 6202 +7-495-797-4222 ext. 6223 +7-926-579-87-82 For reference CREDIT BANK OF MOSCOW (CBM) is one of the leading privately owned universal banks in Russia, and focuses on providing banking products and services to corporate clients and individuals in Moscow and the Moscow Region. CBM's corporate banking business is primarily focused on retail and wholesale trading corporate customers, enabling CBM to capitalize on the fast-growing Russian consumer market. CBM's rapidly growing retail business is focused on consumer loans to high quality retail clients, with a particular emphasis on cross-sales of retail products to the employees and clients of its corporate customers. CBM offers a comprehensive range of banking services, including lending, deposit-taking, cash handling, international settlements, trade finance, guarantees and other products. By leveraging its leading cash handling platform and payment terminal network, CBM is able to monitor the cash flows and payment histories of its customers as well as, in the case of many of its retail customers, their employers, supporting strong portfolio performance and asset quality. According to INTERFAX-100, as at 1 April 2014, CBM is one of the top five privately owned Russian banks, measured by total assets. The Bank is currently rated BB- with a Stable outlook by S&P; B1 with a Stable outlook by Moody's; and BB with a Stable outlook by Fitch. CBM was founded in 1992 and acquired by Mr. Roman Avdeev in 1994. Mr. Avdeev beneficially owns 85% of CBM's shares. The European Bank for Reconstruction and Development, International Finance Corporation (IFC) and RBOF Holding Company I, Ltd. (100% owned by the IFC Russian Bank Capitalization Fund belonging to the same group of companies as the IFC) hold 15% of CBM's shares and are represented on CBM's Supervisory Board alongside five independent non-executive directors. For more information, please visit http://mkb.ru/en/. End of Corporate News --------------------------------------------------------------------- 11.06.2014 Dissemination of a Corporate News, transmitted by EquityStory.RS, LLC - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. EquityStory.RS, LLC's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- 273137 11.06.2014


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