LOCKO-BANK announced its financial results for full year 2017 according to IFRS: Net income amounted to RUB 2 323 mln

LOCKO-Bank announces its consolidated Financial Statements for full year (FY) 2017 in accordance with International Financial Reporting Standards (IFRS).

In 2017 LOCKO-Bank’s Profit before tax amounted to RUB 2.8 bln and net profit - RUB 2.3 bln.

LOCKO-Bank’s key indicators of Profit and loss statement as of December 31, 2017:

• Total comprehensive income for FY2017 amounted to RUB 2.6 bln, 19% more than in 2016.
• Net interest income showed an increase of 8% compared to the previous year and reached RUB 5 bln.
• Net fee and commission income reached RUB 2.1 bln, up by 42.7% from FY2016.
• Net income from operations with financial instruments at fair value, including financial assets available-for-sale equaled to RUB 0.7 bln compared to RUB 0.6 bln the year before.
• Net interest margin was 6.8% increasing by 1.4 pp compared to the FY2016. The increase in net interest margin was provided by the decreasing cost of the liability base.
• Net provision costs reached 1.1 bln up by 5%.
• Operating expenses grew by 16% and reached RUB 5.1 bln compared to RUB 4.4 bln from the year-ago period.

Review of LOCKO-Bank’s key financial indicators:

Loan portfolio net of allowance for impairment increased by 9,6% amounted to RUB 47,8 bln

Assets increased by 7.5% up to RUB 85.6 bln due to increase in loan portfolio.

Current accounts and deposits from customers increased by 12.3% in FY2017 and reached RUB 60.6 bln.

Shareholders’ Equity increased by 18.72% and amounted to RUB 16.1 bln. Capital growth was due to an increase in retained earnings of more than 28.3% compared to FY2016.

Key financial ratios, %:

• In FY2017 Return on equity (ROE) amounted to 15.6%, increased by 1.2% in comparison with FY2016.
• In FY2017 Return on assets (ROA) amounted to 3% compared to 2.2% in FY2016.
• Cost to income (CTI) amounted to 50,6% and increased by 2 percentage points in comparison with the previous year, due to growth of investments in IT infrastructure and advertising campaign.
• In FY2017 total capital adequacy ratio under Basel Capital Accord amounted to 19.8% up by 0.7% compared to FY2016.
• NPL 90+ did not undergo significant changes in 2017 and amounted to 7.6%.

Operating income increased by 5% compared to FY2016 and amounted to RUB 7.9 bln. The share of net fee and commission income was 26% compared to 21% FY2016.

Retail loan portfolio net of allowance for impairment amounted to RUB 32.9 bln performing a 56.7% growth. The growth of the loan portfolio is a consequence of an increase in the incoming flow of loan applications as a result of the launch of federal advertising company; while maintaining a conservative approach to credit risk assessment. The total advertising budget for the last 2 years amounted to RUB 0.9 bln.

The high quality of the loan portfolio is one of the bank's priorities. Based on the results of FY2017, the share of non-performing loans in the loan portfolio (NPL 90+) is stable and amounted to 7.6%.

As for December 31, 2017 the Bank was represented by 52 branches in 21 economic regions of Russia.

Alexey Parfenenok, CFO commented:

“In 2017 LOCKO -Bank demonstrated positive dynamics of key performance indicators. The significant growth of the client base, the growing recognition of the LOCKO-Bank’s brand, internal business processes’ rebuilding and restructuring and significant investments in technology; these factors form the necessary base to meet the new "digital" challenges faced by the banking sector. Stable profitability, an effective business model and high customer loyalty allow us to build sustainable growth plans within the approved digital strategy framework, and provide return on capital above the market average.”