The fiscal year was eventful for the Bank in terms of corporate actions and business development.
Zufar Garaev, the Chairman of the Management Board of AK BARS Bank outlined the main changes in the Bank’s activity with reference to the reporting results:
— Implementation of measures to improve the performance and cost optimization of the Bank was one of the key areas of focus during the year. With the support of the shareholders, the Bank optimized the assets and liabilities structure based on their profitability and costs. This significantly improved the operational efficiency indicators. Special attention was given to the enlargement of the capital base of the Bank.
Reduced operating profit margin and a significant increase in provision were the main reasons for the negative financial result for the year. In the first quarter of 2016, we are already seeing a positive trend in operating performance intending to retain that at a current year end.
The last year was closed with the loss (2.7 bln. rub. against 1.1 bln. rub. for 2014). The financial result of the Bank for the year was mainly driven by an increase in funding costs, a sevenfold increase in provision — to 14.7 bln. rub. As a result of the actions taken by the Management Board and the shareholders, the Bank managed to reverse the negative trend reaching the operating profit fr om the second half of 2015. This led to a positive financial result in the amount of 2 bln. rub for the period from 1 July to 31 December, 2016.
In 2015, the net interest margin of the Bank decreased to 0.3% from 2.3% in 2014. At the same time, it is important to note the significant growth of this indicator in the second half of the year. The growth was achieved as a result of decrease in costly resources and revision of the Bank’s portfolio. Thus, in the second half of the year the net interest margin has been partially restored, reaching 1.5%. The positive trend was observed in the net fee and commission income, which rose by 19.1% and approached 2 bln. rub. at the end of 2015.
Operating expenses increased insignificantly in 2015 — by 2.3%, to 8.7 bln. rub against the growth of 9.9% a year earlier.
Cash and liquid securities amounted to more than 87 bln. rub as of 31 December 2015, increasing by 5 bln. rub during the year 2015.
Total loan portfolio of the Bank decreased by 8.2% to 252.4 bln. rub. for the year 2015. Loans to individuals amounted to 56.3 bln. rub., decreasing by 5.9%, which is comparable to the reduction of the loan portfolio to individuals across the whole banking sector.
Customer accounts amounting to 239.6 bln. rub., increased by 12.1% at the end of 2015. The increase in customer accounts was mainly due to deposits of individuals, which were increased by 23% (or by 18.6 bln. rub.). The growth of the deposit base in the current macroeconomic environment is the evidence of a high degree of public trust in AK BARS Bank. The accounts of corporate clients increased by 7.2 bln. rub. (5.4%).
The total value of past due and impaired loans for 2015 decreased by 23.6% to 52.7 bln. rub. As a whole, the change of the current indicator reflects a positive trend on the background of the deteriorating market conditions and reduced solvency of borrowers.
The share of more than 90 days overdue loans (NPL) increased slightly, amounting to 4.8% of the total loan portfolio versus 3.9% a year earlier. It is almost 2% less than the general past due rate in the banking sector (6.7% according to the Central Bank of the Russian Federation).
The Bank’s equity increased by 17.7% in 2015 to 35.6 bln. rub. In June 2015, the Bank received a subordinated loan from the Deposit Insurance Agency in the amount of 12.1 bln. rub. under the capitalization program for Russian banks. As part of the development strategy of the Bank, AK BARS Bank shareholders increased the share capital in the amount of RUB 9.8 bln. funded by the Government of the Republic of Tatarstan. The shares were acquired by the State Housing Fund under the President of the Republic of Tatarstan. Strengthening of the capital base has been important in the course of the Bank’s business in 2015.
Total equity of the Bank (including subordinated debt) amounted to 73 bln. rub. (in 2014 — 51 bln. rub.), the capital adequacy ratio made 18.38% (in 2014 — 13.71%).
For more information about IFRS reports please refer to the relevant sections of the Bank’s website: