Consolidated Financial Statements for 2009
The chief determinants of the passed year were sharp devaluation of the national currency, the fast growing deficit of a trade balance, adoption of the IMF “stand-by” program and implementation of measures aimed to reduce the country’s expense of hard currency. With the contraction of the world economy the overall exposure of the banking sector to credit and currency risks increased significantly. Nevertheless, the Bank’s managed to sustain rapid pace of business, which yielded high results by the end of the year.
Highlights of the Bank’s financial perfomance for 2009:
- The Bank’s net profit totaled BYR 104.9 billion increased by 62.9% compared with BYR 64.4 billion for 2009;
- Net interest income before provision amounted to BYR 187.0 billion up 44.3% from 2008;
- Net non-interest income was BYR 227.2 billion in 2009, up 1.4 % from 2008;
- Operating profit before provision totaled BYR 171.0 billion, up 8.8% from 2008;
- The loan portfolio before provision for loan impairment grew up by 18.4%;
- Retail accounts and deposits increased by 30.5% year-on-year to BYR 1,448.7 billion;
- Strong capital adequacy ratio – 17.7%;
- Reliable Bank’s solvency: 22.6% of Bank’s assets are represented by instruments, which term of liquidation falls within 1 month from reporting date.
The loan portfolio before provision for impairment losses amounted to BYR 3,577.7 billion at the year-end 2009. Allowance for loan impairment in % to gross amount of loans – 4.55%. The increase of issued loans was attributable to expansion of lending operations with legal entities: loans to corporates increased by 24.9% year-on-year – to BYR 3,215.3 billion, while retail loan portfolio reduced by 19.1% - to BYR 362.4 billion, mainly due to the demand reduction for consumer credits from individuals.
Due to business decline the proportion of non-perfoming loans in Bank’s credit portfolio grew up from 0.55% at the beginning of the year to 1.96% at the year-end 2009 and amounted to BYR 70.1 billion. The Bank’s allowance for impairment losses far exceed the size of non-performing loans: NPL coverage ratio was 2.3 at the year-end 2009.
Within the framework of “stand-by” program which, among other clauses, stated the adoption of balanced budget, the Ministry of Finance has not carried out new issues of government bonds during 2009. Market volume of government bonds has reduced by 63.5%. As a result, the Bank’s securities portfolio reduced by 32.4% year-on-year and amounted to BYR 252.6 billion against BYR 373.7 billion. The Bank’s investments in corporate bonds were insignificant.
Total assets amounted to 4,869.5 billion at the year-end 2009, assets growth rate compared with the beginning of 2009 was 14.8%. Earning assets to total assets ratio made 86.6%. Return on assets (ROÀA) made 2.3%.
Increase of funding during 2009 occured from all sources but customer accounts of legal entities. The Bank intensified its bond issuing activity, and total volume of issued bonds reached from BYR 91.6 billion to BYR 188.0 billion by the year-end 2009. Growth rate of issued bonds for individuals made 316.4%, for legal entities – 60.7%.
Growth of interest expenses from BYR 262.5 billion in 2008 to BYR 366.6 billion in 2009 was due as to the rise in the cost of funding in recent year, and to the increase of proportion of currency deposits. Growth of interest income from BYR 392.0 billion to BYR 553.6 billion was attributable to rising market interest rates, influenced by higher volatility of financial markets and higher risk-premiums, and high proportion of assets, nominated in hard currency, which value augmented in 2009.
Cost-to-income ratio before provision for impairment losses for 2009 was 59.2%. The increase of the indicator by 3.8 pct compared with 55.4% for 2008 came as a result of increased contributions to deposits protection fund. Less this expense item the ratios would make 55.3% and 55.2% for 2009 and 2008, respectively.
At 31 December 2009 according to the norms of the Basel Capital Accord the Group’s total capital amount for Capital adequacy purposes was BYR 652.8 billion and tier 1 capital amount was BYR 652.4 billion with ratios of 17.7% and 17.7%, respectively. Return on equity made 17.3%.
The Bank’s loss-absorbing capacity, calculated as maximum ratio of provision for impairment losses to issued loans the Bank is able to maintain not violating minimum capital adequacy requirements (10%), made 13.4% (assessed as moderate).
The Bank’s is being rated by three internationally recognized rating agencies – Standard & Poors, Moody's Investors Service, Fitch Ratings Ltd. After the purchase of controlling interest of BPS-Sberbank shares totalling 93.27% by JSC “Sberbank” in December 2009 ratings were updated in the following way:
- The international rating agency Standard & Poor's has confirmed BPS-Sberbank Long-term and Short-term credit ratings at the existing levels: “Â+/”;
- The international rating agency Moody's Investors Service placed the B1 long-term local currency deposit rating of BPS-Sberbank on review for possible upgrade. Simultaneously, other ratings of the Bank were confirmed at the existing levels;
- The international rating agency Fitch Ratings Ltd. has upgraded BPS-Sberbank's Long-term foreign currency Issuer Default Rating to 'B' from 'B-' and Support Rating to '4' from '5'.
Credit Ratings of BPS-Sberbank see here...