Key results:

- net profit for 9 months 2014 amounted to RUB 281 million

- the Bank’s total assets increased by RUB 3,878 million YTD to RUB 122,434 million

- the Bank’s equity increased by 4.8% YTD to RUB 15,324 million as of the reporting date

Net interest income as for the 9 months 2014 grew by 16.3% YoY to RUB 7 140 million, net fee and commission income increased by 13.7% YoY to RUB 2 604 million. Net interest margin amounted to 9.2% compared to 9.9% as for the year of 2013.

Operating income of the Bank as for the 9 months 2014 grew by 11.4% YoY to RUB 10,787 million, operating expenses dropped by 1.7% to RUB 3,889 million due to reduction of personnel expenses and other general administrative expenses. Cost-to-income ratio reduced to 36.1% from 41.6% as of the 9 months 2013.

On the background of deteriorating macroeconomic and geopolitical environment, imposition of sanctions against Russia, contraction within the economy's core sectors and banking asset quality erosion, funding costs and the Bank’s cost of risk have grown as well as the results on operations with securities have reduced, consequently the Bank’s profitability ratios dropped: return on average equity (ROAE) was 2.5% while return on average assets (ROAA) dropped to 0.3% (23.8% and 3.0% as of YE 2013 respectively).

Net profit of the Bank for 9 month 2014 amounted to RUB 281 million compared to RUB 2,276 million as for 9 months 2013. Net profit reduction amid growth of interest and commission income was driven by increase in the provision charge (+126.6% YoY) to RUB 6,563 million as well as low results on operations with securities which amounted to RUB 262 million compared to RUB 873 million in 2013 due to reduction of prices on the Russian debt securities market. The worsening of the Bank’s retail loan portfolio quality and growth of provision charge caused cost of risk ratio to reach 9.8% compared to 6.1% in 2013.

Gross loan portfolio (before provision for loan impairment) grew by 6.9% to RUB 92,222 million compared to the beginning of the year. Portfolio of loans to individuals rose by 9.5% to RUB 64,887 million (70.36% of the loan portfolio) and portfolio of loans to corporate clients and individual entrepreneurs grew by 1.4% to RUB 27,335 million. Share of NPLs (loans overdue more than 90 days) in the loan portfolio grew to 14.1% as of the reporting date compared to 7.5% as of YE 2013. The level of provision coverage of NPLs dropped to 88.4% (89.8% as of YE 2013).

Securities portfolio comprising 16.5% of the total assets increased by 19.3% YTD to RUB 20,169 million. Asian-Pacific Bank adheres to conservative investment policy; major part of the portfolio of securities (90.8%) is government and municipal bonds as well as corporate bonds with rating not lower than BBB-.

Accounts and deposits of customers increased by 3% YTD to RUB 83,849 million mostly due to decline in amount of deposits of retail customers (+13.3% YTD to RUB 57,195 million). Deposits and accounts of corporate customers and individual entrepreneurs amounted to RUB 26 654 million as of 9 months 2014 (RUB 30 890 million as of YE 2013).

In 3Q 2014 the Bank placed 5.5 year Subordinated Eurobonds in the amount of USD 42 million, borrowed funds were included under a subordinated loan into the Bank’s Tier-2 capital in accordance with Regulation No. 395-P.

The Bank’s capital calculated in accordance with the Basel Accord increased by 16.4% YTD and reached RUB 17,964 million. Tier 1 capital adequacy ratio was 13.2% and Total risk weighted capital adequacy ratio was 17.1%.

Ratings

Asian-Pacific Bank’s positions in the Russian and international markets are confirmed by the leading rating agencies:

- long-term foreign and local currency issuer default rating (IDR) B+, short-term foreign currency IDR B by Fitch, stable outlook;

- viability rating b+ and support rating 5 by Fitch;

- long-term foreign and local currency deposit ratings B2 by Moody`s, negative outlook;

- standalone E+ bank financial strength rating (BFSR) and Not Prime short-term bank deposit ratings by Moody`s;

- bank credit rating A+(I) - very high level of solvency, rating sublevel – I (the highest) by Expert RA, stable outlook.

Key financials (RUB million)

Key ratios (%)