On December 5 Ural Bank for Reconstruction and Development has additionally placed 9 month Euro-commercial papers in the amount of USD 7.5 mln. The decision to arrange forth tranche under the Programme was made given the interest of foreign investors to buy UBRD’s 9 month-risk after placement of 6-month ECP in the amount of USD 35.8 mln earlier in October 2013, said Sergei Sisoshvili, Head of International Business Department.
In 2013 UBRD issued Euro-commercial papers for more than USD 100 mln. In August the Bank repaid debut issue of USD 50 mln placed in February 2013. Outstanding ECP amount to USD 50.8 mln. UBRD plans, given favorable market conditions, to enhance its position in the international debt and capital markets. In addition to the ECP Programme of USD 200 mln Bank also considers the possibility of arranging syndicate and Eurobonds issue in future.
Entrance to international markets contributes to both broadening base of foreign creditors and diversification of liabilities, adds Sergey Sisoshvili . In 2013 the total amount of transactions in the international market was approximately USD 600 mln, including long-term financing with international export credit agencies, trade finance deals with largest foreign banks in Europe and the United States, placement of short-term and subordinated bonds among different European and U.S. investors.
In late October, the Bank of Russia (“CBR”) has included into Lombard List UBRD’s bond issue of BO-08 Series. Earlier CBR has added to the List bonds of series UBRD-02, BO-1, and BO-05. Thus, at present in Lombard List includes all RUB bond issues of UBRD.
Bondholders of the Lombard List may use securities as collateral under repurchase agreements or loans granted by CBR. For potential investors this is a confirmation of high reliability of bank’s bonds.
Ural Bank for Reconstruction and Development has completed a transaction in the international market. The issue of Euro Commercial Papers of USD 35.8 mln for 6 months took place on October 25.
Sergei Sisoshvili, International Business Department, said about 20 investors participated in the deal. “The interest in our deal confirms reputation of UBRD as a reliable bank. Investors are willing to buy our risks“, he commented. Herewith Mr. Sisoshvili said that for UBRD ECP is a quick way to access Western capital markets.
There is also ECP of USD 7.5 mln outstanding. In August UBRD repaid debut ECP issue of USD 50 mln placed in February 2013.
Nine months results demonstrate that UBRD fulfills its plan set at the beginning of the year. By October 1, 2013 the Bank's net profit nearly doubled and amounted to RUB 1.4 bln.
Since the beginning of retail loan portfolio increased by RUB 18.3 bln reaching RUB 54.9 bln. The loan portfolio of SMEs increased by RUB 2.5 billion to RUB 7 bln. Thus, the structure of the loan portfolio became more balanced. Total loan portfolio increased by RUB 29 bln (+ 34.1%) compared to January 1, 2013 and reached RUB 113.6 bln.
As of October 1, 2013 assets totaled to RUB 189.2 bln; the increase compared with the beginning of the year – RUB 47 bln (+ 32.8%), and compared with the same period last year – RUB 62.3 bln (+ 49%).
UBRD’s funding base increased substantially as well by RUB 46 bln (+ 34.9%) and reached RUB 177.6 bln. As of October 1, 2013, retail deposits reached RUB 73.7 bln, which is RUB 13.6 bln more than in the beginning of the year. Since the beginning of the year corporate deposits increased as well by RUB 4.9 bln (or 29.8%) to RUB 21.3 bln. Other funding sources in the reporting period were exchange traded bonds for RUB 5 bln, Euro Commercial Papers issuance for US 50 mln and debut issue of subordinated Eurobonds for USD 68 mln.
Since the beginning of 2013 Bank’s equity increased from RUB 12.9 bln to RUB 16.8 bln (or 30.2%) due to operating income and issue of subordinated Eurobonds. Thus, in July, 2013 UBRD became the largest bank in Sverdlovsk region by equity. The growth of equity will allow the bank to further develop its “3-2-3” business strategy. The increase of shareholders' equity and the creation of additional reserves of the bank provides a stable position in the market.
As of January 1, 2013 UBRD had about 689 thsd active clients, while as of October 1, 2013 the number of active customers has exceeded 792 thsd (+15%). Particularly, during this period the Bank attracted 3.9 thsd clients-entrepreneurs and about 99.4 thsd individuals.
UBRD expands its office network as well; as of October 1, 2013 the Bank had 466 offices registered by the Central Bank of Russia. Only during last three months 54 new points of sale and other service offices were opened in 33 regions of Russia and now the Bank operates in 64 regions of Russia. According to RBC, UBRD has entered Top 10 of the largest banks in Russia by branch network, and by October 1, 2013 UBRD’s ATM network includes 1,090 units.
“In the first nine months UBRD has excellent results: first of all, the Bank continues showing positive profit trend; secondly, significant increase of Bank’s equity. We implement our strategy according to our plan and develop the business, ensuring sustainable growth. Consistently high results, balanced approach to risk and process optimization give us a solid degree of safety and allow to be prepared for any possible changes and stress. So, we continue look forward with confidence”, said President of UBRD, Anton Solovyev.
On September 30, 2013 at UBRD’s General Shareholder Meeting it was decided to pay (declare) dividends on ordinary shares of Ural Bank of Reconstruction and Development based on results of first six months of 2013 in the amount of RUB 0.30 per one ordinary registered share for total amount of RUB 300,436,300.20.
Ural Bank for Reconstruction and Development has closed the bid book for bond placement of Series BO-08 on September 17, 2013.
The placement of the bonds with total par value of RUB 3 bln took place at MICEX on September 19, 2013.
As a result of significant excess demand (RUB 9 bln bids from over 70 investors) coupon rate was lowered from intial 11.25%-10.75% p.a. to the lowest range border. The Bank has decided to set the rate of both coupons at 10.75% p.a., which is in line with effective yield of offer in one year of 11.04% p.a.
Note that this is the first placement of UBRD’s bond for the amount of RUB 3 bln. High interest for this issue marks positive attitude of investors to the strategy and development dynamics of the Bank, and allows to count on good liquidity of the issue on the secondary market. At present UBRD has three outstanding issues for total par value of RUB 6 bln. The new bond issue complies with all criteria for inclusion into Lombard List of the Bank of Russia.
Arrangers of Series BO-08 placement were Promsvyazbank OJSC, UniCredit Bank ZAO, and BK Region OOO.
National Rating Agency ( NRA) has raised the credit rating of the Ural Bank for Reconstruction and Development from “AA-“ to “AA” (very high credit quality, second level) on a national scale, thus confirming a “positive” outlook assigned to the Bank’s rating in March 2013.
According to NRA the Bank effectively implements the strategy aimed at growing its market share , expanding its presence at the federal level, building a universal bank with a strong presence in retail. The Bank manages to maintain high growth rate of business, maintaining adequate capital, stable asset quality, positive return on investment. Consistency and effectiveness in implementation of the Bank’s strategy, expanding its positions exclusively through market transactions, maintaining high quality and liquidity of assets - all contributed to the rating upgrade.
Today UBRD successfully implements its medium-term development strategy “3-2-3”, which implies within the period of 2012-2014 the growth of the number of offices three times (up to 550) , customers – twice (up to 1 million), and gross income – three times (up to RUB 45 bln). During the first half of 2013 financial performance of the Bank, and throughout the year since August 2012, grew at a rate much higher than the market average. Asset quality is stable and improving, loan portfolio diversification by borrower and industry increases, and interest margin increases as well.
As per financial statements UBRD’s profit before tax for the first half of 2013 reached RUB 1.1 bln (+ 635.8% compared to the same period last year). High growth rate of profit has resulted from not only significant increase in operating income, which was doubled to RUB 6.8 bln by July 1, 2013 from RUB 2.9 bln last year, but also low growth rate of its expenses.
Overall, the Bank’s assets increased by 43.5% compared to the same period last year. Changes in the structure of assets had a great impact on both net profit growth, and improvement efficiency indicators: share of loans has increased to 60.7% (1H 2012: 54.6%), while the share of securities has declined from 32.4% to 28.4%. In the loan portfolio the share of retail loans rose to 49.3% (1H 2012: 42.2%). In absolute terms, the volume of loans increased by RUB 38.6 bln (+ 67.5%), retail loan portfolio grew almost twice – by RUB 23.1 bln reaching RUB 47.3 bln.
The quality of the loan portfolio is also improving along with its growth: overdue loans to individuals over 30 days (NPLs 30+) in 2012 decreased to 13.2% (1H 2012: 18.6%), and the total amount of loans overdue over 30 days has also declined from 9.9% to 8.3%.
In the first half of the year there have been changes in the structure of liabilities: the share of retail accounts decreased from 51.5% to 47.8%, while the share of corporate clients and securities issued has increased. In absolute terms, retail accounts increased to RUB 76 bln (+ 35.1%), corporate customers – RUB 33.9 bln (+85%), and debt securities issued – RUB 15.5 bln (200.1%).
Also performance indicators have significantly increased compared to the same period last year: ROE – up to 20,9% (1H 2012: 6%), ROA – to 1,3% (1H 2012: 0,4%), operating income / assets increased 1.6 times from 5.3% to 8.7%.
During the first half of 2013 the Ural Bank for Reconstruction and Development has shown steady growth of the main financial indicators. The Bank strengthened its position among the leaders of Russian banking sector in terms of all key areas. Particularly, the growth was recorded in Retail and SME segments. As a result, the Bank’s profit increased by almost 60% over the year.
Since the beginning of 2013 retail loan portfolio increased by RUB 9 bln reaching RUB 45.5 bln. For the first time in the history of the Bank Retail loan portfolio gained corporate loan portfolio, which is RUB 45.3 bln as of July 1, 2013. Thus, the share of Retail loans was 44.5% and Corporates – 44.3% of the Bank’s total loan portfolio as of H1 2013, compared to 43.1% and 46.7% respectively as of January 1, 2013. High growth rate of retail loans is a result of both development of Internet sales and implementation of loyalty programs for the borrowers.
As of H1 2013 SME Loan portfolio increased by RUB 1.3 bln, or 29.7%, and amounted to RUB 5.9 bln due to effective sales scheme.
Total loan portfolio increased by RUB 17.5 bln (+20.6%) and exceeded RUB 102 bln since January 1, 2013. Assets amounted to RUB 168.4 bln increasing by RUB 26 bln (+18%) since the beginning of this year.
As a result of growth of retail deposits during the first half of 2013 funding base of UBRD has increased by RUB 25.9 bln (+19.7%) reaching RUB 157.4 bln. As of July 1, 2013 the volume of retail deposits amounted to RUB 70 bln, growing by RUB 10 bln (+16%) compared to the beginning of 2013. The volume of corporate deposits increased by RUB 7.2 bln (+43.8%) and reached RUB 23.6 bln. Funding base was diversified through the issuance of exchange bonds of RUB 2 bln, Euro-commercial papers of USD 50 mln, and debut issue of subordinated Eurobonds of USD 68 mln, which allowed UBRD to increase both the funding base and the capital.
High growth rates of H1 2013 were provided as well by substantial inflow of customers. Customer base of UBRD was about 689 thsd active clients as of January 1, 2013, while as of July 1, 2013 the Bank had more than 765 thsd active clients. In particular, the number of customers-entrepreneurs increased by 2.7 thsd, and the number of individuals increased by 73.4 thsd. During the year the total number of clients increased 164.3 thsd (+27%).
As a result of the growth of the bank’s main indicators pre-tax profit increasedby 58.2% and totaled RUB 744.5 mln in H1 2013.
The bank’s equity increased from RUB 12.9 bln up to RUB 15.7 bln (+21.7%) mainly due to operating income and subordinated Eurobond issue. As a result, according to the rating of Banki.ru, UBRD enters Top-50 Russian banks in terms of equity and keeps leading position among the banks in Sverdlovsk region. Equity growth provides UBRD a safety margin for the further development of the business within its strategy “3-2-3”, which assumes the growth of network by three times, number of clients by two times and the Bank’s income – three times up to 2015.
Network of UBRD has grown substantially. As of July 1, 2013, the Central Bank of the Russian Federation has registered 416 bank’s branches. During only last three months the bank opened 59 new points of sale of various formats in 39 regions of Russia. Today UBRD has offices in 62 regions of Russia. The bank’s ATM network exceeded 1,000 units and has 1,019 units as of July 1, 2013.
“UBRD shows positive trend in all key indicators for the past two years. UBRD will continue to concentrate its efforts in the mass segment providing services for retail and SME customers. We expect assets to reach RUB 190 bln by the end of the year mainly due to increase in retail loan portfolio, which as we plan to exceed RUB 60 bln by the end of this year. The basis of the funding base will continue to be retail deposits. Intensive development of retail business confirms high penetration of banking services; more often we notice that one customer uses several products. Although the competition in retail sector is growing, we understand the perspective sources and channels for growth, and thus, we are confident in the potential development of the financial sector over the next few years,” – said Anton Solovyev, President of UBRD.
On June 27, 2013 Ural Bank for Reconstraction and Development has placed it’s debut subbordinated 5.5-year Eurobonds in the amount of USD 68 mln. Raised funds are directed to the Bank’s capital.
“Today, our growth is outpacing the growth of the banking system, so additional funds are crucial for the smooth development, - says Anton Solovyov, President of UBRD. - The placement contributes to a level of capital adequate to support further growth.”
“We have completed another successful transaction in the international market, and of course we will continue strengthening our presence in the capital markets”, - said Sergei Sisoshvili, Vice-President, International Business of UBRD.
Eurobond placement was made through UBRD Capital Ltd. (Ireland). The Joint Lead Managers of the transaction were BCP Securities, BNP Paribas and Sberbank CIB.