LOCKO Bank Half Year Results 2013 under IFRS

The Bank’s equity has grown to RUB 9,6 bln. in the first half of 2013: RUB 500 mln. capital injection in February 2013 along with 15% retained earnings increase as of 30.06.2013 resulted in 14% equity increase. This allowed the Bank to maintain high level of capital adequacy: total CAR at 16.6% and tier 1 CAR at 16.0% according to Basel.

Assets have grown by 9% reaching RUB 77,6 bln. at 30.06.2013. LOCKO Bank moved up 3 notches since end 2012 and ranked 76th among largest Russian banks by net assets according to RBC rating approach.

The Bank’s net income increased by 26% yoy to RUB 693 mln.

Net interest income rose by 28% compared to 1H2012 and reached RUB 1,3 bln. Net interest margin remained at a stable 5.3%.

The Bank’s Operational income (RUB 2,5 bln. gross) went up 23% compared to 1H2012 owing to net interest income increase (+28% yoy) and net fee and commission income increase (+31% yoy). Operational expenses grew by 22% reaching RUB 1,6 bln. The controlled increase was mainly driven by continued sales network growth and development of the Bank’s infrastructure. Cost to Income ratio declined from 50.4% to 49.9%.

Gross loan portfolio increased by 10% as compared to end of 2012 and reached RUB 49,9 bln. Loans to SME stood at 48% of total loan portfolio of the Bank which comprised RUB 23,8 bln. Retail portfolio grew by 17% to RUB 16,1 bln. and continues to expand its share in total loans of the Bank standing at 32% as of 30.06.2013 (30% at 30.06.2012). Net loans represent 62% of the Bank’s assets as of 1H2013. High loan book quality is confirmed by low-level of overdue amounts. NPL ratio (loans with 30+ days overdue or evidence of financial weakening) was 3.6% at 30.06.2013. The Bank’s provisioning policy was revised in June 2013 followed Ernst & Young recommendation. As a result historically high level of LLR coverage ratio was lowered to 109% whilst cost of risk ratio remained unchanged at 1.4% as of 30.06.2013. The loan loss provisions to total loan portfolio ratio grew up to 3.9% versus 3.6% at the end 2012.

Securities portfolio went up by 16% in 1H2013 and amounted to RUB 16,7 bln. as compared to RUB 14,3 bln. as of end 2012. High liquid securities maturing in less than 1 month comprised 93% of securities portfolio.

The Bank’s liabilities increased by 8% reaching RUB 68 bln. This growth was driven by an increase in current accounts and demand deposits from customers by 9% (to RUB 37,7 bln.) and deposits and balances from banks and other financial institutions by 19% (to RUB 12,1 bln.) along with an increase of own securities issued by 7% (to RUB 11,3 bln.). In 1H2013 the Bank successfully placed two issues of exchange bonds: RUB 4 bln. series BO-02 with 3 years maturity and RUB 3 bln. series BO-05 with 5 years maturity.

The Bank actively develops its network and has opened 6 new outlets since the beginning of the year including office in the new region – Tyumen in March 2013. Currently the Bank’s branch network comprises 5 branches, 29 subsidiary offices and 31 operational offices in 21 key economic regions of Russia.

During the first half of the year the Bank has demonstrated a strong organic growth based on key business segments which are retail and SME lending. The Bank adhered to a conservative approach to credit risk assessment and maintains the high level of capital adequacy supported by capital increase by RUB 500 mln. in February 2013.
-commented the Deputy Chairman of the Executive Board Pavel Voznesensky.