- Financial Performance Review
- Management Discussion and Analysis
- Statement of Comprehensive Income Analysis
Statement of Comprehensive Income Analysis
The principal factors that influenced the Bank’s financial results included:
- Net income amounted to RUB 4.8 bn, revenues amounted to RUB 23.0 bn;
- Net interest income increased by 38.4% compared with FY 2013 and amounted to RUB 18.5 bn;
- Net fee and commission income increased by 38.9% compared with FY 2013 and amounted to RUB 3.7 bn;
- Loan portfolio grew by 24.2% compared with January 1, 2014 to RUB 343.7 bn;
- Retail loan portfolio (mortgages, car and consumer loans) grew by 37.8% compared with January 1, 2014 to RUB 44.3 bn.
INCOME AND EXPENSES DATA*, RUB MLN
* Net gains from investment securities available-for-sale are excluded from Revenues and Net Trading Income as one-off. Acquisition gain is excluded also from Revenues for FY 2014 as one-off. Provisions for FY 2012 reduced by the gain from disposal of investment property.
The Bank’s interest income increased by 25.7% in 2014 to RUB 38.8 bn (compared with RUB 30.8 bn in 2013). The increase was mainly the result of the Bank’s expanded business and loan portfolio in 2014, particularly in retail lending.
Customer lending contributed to 78.5% of total interest income. Interest income from loans and advances to customers gained 18.8% over 2014, equalling RUB 30.4 bn (compared with RUB 25.6 bn in 2013).
Interest income from other operations, principally from trading securities, increased by 59.6% to stand at RUB 8.3 bn in 2014 (compared with RUB 5.2 bn in 2013). Overall, this interest income component still comprises an insignificant 21.5%.
Interest expense increased by 16.0% to stand at RUB 20.2 bn in 2014 (compared with RUB 17.5 bn in 2013).
Interest expense on retail term deposits increased by 2.0% and reached RUB 5.9 bn (29.3% of total interest expenses).
Interest expense on corporate term deposits decreased by 5.1% and amounted to RUB 4.9 bn (24.2% of total interest expenses).
Interest expense on due to banks increased by 75.2% reaching RUB 6.3 bn. This was caused mainly by current liquidity control and the expansion of short-term assets operations (30.9% of total interest expenses).
Interest expense on funds raised on the capital market (bonds issued and other borrowed funds) increased by 3.4% to RUB 2.5 bn (12.3% of total interest expenses).
NET INTEREST INCOME
Net interest income increased by 38.4% to RUB 18.5 bn (compared with RUB 13.4 bn in 2013).
FEE AND COMMISSION INCOME
The Bank’s fee and commission income increased by 39.3% in 2014 to reach RUB 4.4 bn (compared with RUB 3.2 bn in 2013).
Cash and settlement operation fees (44.0% of total fee and commission income) increased by 53.0% compared to 2013, to RUB 1.9 bn. Plastic cards and cheque settlements (26.8% of total fee and commission income) gained 40.9%, equalling RUB 1.2 bn. Income from fees for issuing guarantees and letters of credit (20.6% of the total fee and commission income) grew by 8.0% to reach RUB 912 mln.
FEE AND COMMISSION EXPENSE
Fee and commission expense increased by 41.5% in 2014 to RUB 700 mln (compared with RUB 495 mln in 2013). The biggest commission growth was connected to plastic cards and cheque settlements (+50.5%) – to RUB 403 mln in 2014 (against RUB 268 mln in 2013). The aggregate amount for commissions on plastic cards and cheque settlements, commissions on settlement transactions and commissions on guarantees and letters of credit, amounted to RUB 572 mln or 81.7% of the total fee and commission expenses.
NET FEE AND COMMISSION INCOME
In 2014, the net fee and commission income increased by 38.9% to RUB 3.7 bn.
NET TRADING INCOME
In 2014, an aggregate loss from financial markets operations amounted to RUB 123 mln (gain of RUB 4.4 bn in FY 2013), including a one-off gain from disposal of investment securities available-for-sale in the amount of RUB 265 mln. Gains from operations with foreign currencies and derivatives amounted to RUB 4.0 bn, while losses from operations with securities amounted to RUB 4.1 bn.
From 2007 onwards, Bank Saint Petersburg has been among the leaders in the most important segments of the Russian financial market and an active trader on foreign stock exchanges. The Bank is systematically included in the activity ratings of the market of the MOEX currency derivatives market and the MOEX futures and options market. The Bank's currency futures trading volume currently represents a sizeable share of the total trading volume of the Chicago Mercantile Exchange. The Bank is also a major participant of the REPO market and a partner of the leading domestic and international financial institutions.
The Bank’s operating expenses grew by 25.8% in 2014 compared with 2013, to RUB 9.7 bn. Growth in costs was driven by Bank Evropeisky acquisition and business expansion.
OPERATING EXPENSES*, RUB mln
* Property tax is excluded from Other operating expenses and included in Expenses related to premises and equipment.
Staff costs are a major component of the Bank’s operating expenses, comprising 46.4% of all costs (compared with 43.1% in 2013). Staff costs increased by 35.3% compared with FY 2013, to RUB 4.5 bn.
EXPENSES RELATED TO PREMISES AND EQUIPMENT
The Bank’s expenses related to premises and equipment amounted to RUB 1.5 bn in 2014 (+5.1% compared with FY 2013).
OTHER ADMINISTRATIVE AND OPERATING EXPENSES
The Bank’s other operating expenses include: rental payments, administrative costs, expenses for professional services, security, transportation and postal and other expenses. In 2014, these expenses increased 25.3% to RUB 3.7 bn.
KEY FINANCIAL INDICATORS
Net interest margin (NIM) for FY 2014 increased by 56 bp and amounted to 4.4%. The cost/income ratio for FY 2014 stood at 41.9% (compared with 37.4% in 2013).
COST-TO-INCOME AND NET INTEREST MARGIN
Net income for FY 2014 amounted to RUB 4.8 bn (-28.4% compared to FY 2013). The Bank’s return on equity (ROAE) for FY 2014 amounted to 9.7%.
The main reason for the difference between net income for FY 2014 and FY 2013 is a one-off gain from the disposal of investment securities posted in 2013 in the amount of RUB 2.6 bn. Excluding that one-off gain, net income remained at the level of the previous year (FY 2014: RUB 4.0 bn, FY 2013: RUB 4.1 bn).
The Bank’s financial results for FY 2014 benefited from a one-off gain from the acquisition of Bank Evropeisky in the amount of RUB 489 mln and the effect from its consolidation: revenues of RUB 1.2 bn, net interest income of RUB 572 mln, net fee and commission income of RUB 413 mln, and operating costs of RUB 533 mln.