LOCKO-BANK announces its interim condensed consolidated financial results for 1H2015 according to IFRS with the KPMG Independent Auditors’ Report on Review of these Statements: Profit increased to RUB 1.61 billion, Assets exceeded RUB 95 billion.

Amid rapid decline of profit (in 8.5 times) and assets (5% down) of whole banking system in Russia in 1H2015 LOCKO-Bank performed significant growth of financial results: Profit increased by 224% and reached RUB 1.61 billion, Total Assets grew by 21,2% and rose to RUB 95.3 billion. An effective risk management system allows the Bank to deliver such strong financial results and traditionally maintain high quality of the Bank’s Assets.

LOCKO-Bank’s key indicators in 1H2015:

• Profit – RUB 1.61 billion (+224% compared to 1H2014)
• Interest income – RUB 5.4 billion (+20% compared to 1H2014)
• Assets – RUB 95.27 billion (+21,2% compared to 1H2014)
• Equity – RUB 12.24 billion (+16,4% compared to 1H2014)
• Return on equity (ROE) – 22,6% in annual terms (+14,9 ppt compared to 1H2014)
• Total capital adequacy ratio under Basel Capital Accord – 16,7%
• Current accounts and deposits from customers – RUB 46.44 billion (+27,1% compared to 1H2014)
• Gross loan portfolio – RUB 48.12 billion (-9,2% compared to 1H2014)
• SME loan portfolio – RUB 31.54 billion (-8,3% compared to 1H2014)
• Retail loan portfolio – RUB 16.57 billion (-12.2% compared to 1H2014)
• Cost to Income (CTI) – 41,7% (-2,9% compared to 1H2014)

Pavel Voznesenskiy, Deputy Chairman of the Executive Board, commented:

In the first half of 2015 Locko-Bank achieved the planned profitability and key performance indicators amid the unstable economic environment. Due to a balanced business model and excellent risk management the Bank improved its key financial indicators, while maintaining the high asset quality. Maintenance a positive financial result and constant risk and cost control will remain among our priorities for the second half of 2015.

Financial and operating highlights:

Statement of financial position	1H2015 RUB, mln	1H2014 RUB, mln	Change, %
Assets	95 270	78 622	21,2
Liabilities	83 027	68 104	22,0
Equity	12 243	10 518	16,4
Gross Loan portfolio	48 117	52 982	-9,2
Key performance indicators, %
Total capital adequacy ratio	16,7%	17%
NPL 90+	6,4%	4,8%
Income Statement
Interest Income	5 402	4 485	20
Net fee and commission income	456	492	-7,3
Net profit	1 293	404	219,8
Key performance indicators, %
Return on equity (ROE)	22,6	7,7
Return on assets (ROA)	3,1	1
Cost to Income (CTI)	41,7	44,6

Bank increased its profit to RUB 1.61 billion, while maintaining Return on Equity at 22, 6% in annual terms (14.9% growth compared to 7.7% in 1H2014). Return on assets (ROA) performs 3.1% in annual terms, which is 2.1 percentage points up from a year ago. Bank took the 28th place in the ranking of banks in terms of Net Profit by Banki.ru (63 points up compared to 1H2014)

Interest income amounted to RUB 5.4 billion for the six months of 2015, an increase by 20% compared to the same period last year due to effective margin management. Operating income increased by 18,3% compared to 1H2014. The main components of operating income were net gain on financial instruments at fair value through profit or loss (RUB 466 million) and net foreign exchange trading income (RUB 342 million).

Excellent cost control allowed Bank to reduce costs in the first half of the year. Operating expenses totaled to RUB 1.9 billion in 1H2015, decreased by 23% compared to 1H2014. Bank’s Operating efficiency (CTI) continued to improve and declined to 41.7% in 1H2015 versus 44.6% in 1H2014.

The Bank’s equity amounted to RUB 12.24 billion as of 30 June 2015, 16.4% increase compared to the same period of the last year. An increase was due to retained earnings growth by 20% compared to the beginning of the year. Total capital adequacy ratio under Basel Capital Accord was 16.7% which is higher than regulatory requirements.

Gross loan portfolio totaled to RUB 48.1 billion in the first half of 2015, decreased by 9.2% compared to 1H2014. The portfolio slight reduction was due to the Bank’s prudent approach to risk assessment as well as an objective decline in economic activity in many market segments.

SME loan portfolio remained at the same level of RUB 31.54 billion compared to 1Q2015. The share for SME loans comprised 66% of the total loan portfolio.

Retail loan portfolio amounted to RUB 16.57 billion as of 30 June 2015, 12,2% decrease compared to 30 June 2014 due to weaker real disposable incomes and consumer spending.

The Loan portfolio high quality continues to be a priority for the Bank.

At the end of 1H2015 the share of non-performing loans in total loan portfolio (NPL 90+) was 6.4%, decreased by 0,6% compared to 1Q2015.

Current accounts and deposits from customers increased by 27,1% at the half-year end and amounted to RUB 46.44 billion.

LOCKO-Bank has a wide branch network with more than 50 branches and outlets in 21 key economic regions of Russia.

Clients of bank are more than 120 000 individuals and more than 25 000 enterprises which represent various economic sectors of Russia.