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MDM Bank Announces First Merged Bank 1H2009 IFRS Results

16.10.2009

Today MDM Bank released reviewed International Financial Reporting Standards (IFRS) financial results for 1H2009. These are the first IFRS results for the merged bank.

  • The merger closed ahead of schedule with the strong support of all stakeholders, creating one of the largest private banks in Russia with a diversified asset and funding base;
  • MDM Bank is the best capitalized among Russia’s top 20 banks, with a tier 1 ratio of 15.0%. Total CAR was 17.3%. as of 1 July 2009;
  • High loss absorption capacity: the Bank can absorb loan loss provisions of up to 24% of gross loans by the end of 2009 and remain within regulatory and international capital adequacy requirements without needing additional capital;
  • Commitment from shareholders, including IFIs, to support the Bank if needed; no plans to rely on government support for recapitalization;
  • Annualized pre-provision operating income (on a pro forma basis) amounts to over 40% of equity;
  • Comprehensive loss amounted to RUB 4.3 bln; the Bank recorded an additional RUB 5 bln in provisioning charges in 2Q2009 as an adjustment for the current economic and credit conditions, making loan loss provisions the largest single profit driver in 1H2009;
  • Cost efficiency remains strong, with cost/income ratio (on pro forma basis) at 33.6% in 1H2009;
  • Liquidity remains strong, with a highly liquid balance sheet and an untapped CBR limit of ca. RUB 80 bln; during 1H2009 MDM Bank’s debt repayments, bond repurchases, and repayment of CBR funding totaled ca RUB 100 bln;
  • Total assets increased 26% during the period, primarily due to the merger of MDM Bank and URSA Bank. However, on a pro forma basis assets declined 22% during the period, partly driven by loan portfolio contraction in connection with the banks’ conservative capital management policies;
  • MDM Bank is the first private Russian bank since mid-2008 to successfully access debt capital markets: a syndicated loan with an oversubscribed book of approx. USD 300 mln will be closed soon;
  • Retail deposits grew at an annualized rate of 22% in 1H2009. Retail term deposits increased by 12.6%, from RUB 58,903 mln to RUB 66,337 mln;
  • Pre-provision operating income for the period increased 16.7% y-o-y to RUB 11,141 mln, primarily driven by a re-pricing of assets outpacing the rising cost of funding during the period;
  • Net interest income increased to RUB 8,170 mln up 8.7%, from RUB 7,516 mln in 1H2008. Net interest margin (on pro forma basis) totaled 8.8%, up 2.3pp (1H2008: 6.5%);
  • Net fee and commission income increased 16.5% y-o-y to RUB 1,263 mln from RUB 1,084 mln for 1H2008;
  • Operating expenses were down 12.9% y-o-y to RUB 4,196 mln from RUB 4,817 mln in 1H2008 due to staff and other cost optimizations;
  • Loan impairment losses were the primary factor influencing the bank’s financial result for the period, in line with the entire Russian banking sector. The bank booked loan loss provisions of RUB 11,548 mln for the period (an increase of 8.4 times vs. RUB 1,380 mln for 1H2008);
  • The NPLs/Gross loans ratio amounted to 14.2%. At the same time MDM Bank maintained 100% provisioning coverage of NPLs. The Bank has focused on long-term client relationships with its borrowers, and expects this will help to achieve a better recovery on NPLs, as well as facilitating broader business opportunities with these clients in the future.

 

onference Call on 1H 2009 Results

MDM Bank will hold its 1H2009 results conference call on Friday, 16 October 2009, at 5 p.m. Moscow time (2 p.m. London time, 9 a.m. New York time). MDM Bank management will discuss the merged Bank’s financial results for the six month period ended 30 June 2009 according to international financial reporting standards. For registration and instructions, please go to the following link:

 

The Bank’s 1H2009 Financial Statements, press release and results presentation will be available on the day of the call on MDM Bank’s website.

The call will be held in English. A recording and transcript of the call will be made available on the MDM Bank website.


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