Key results:

• the Bank’s total assets grew by 28.6% to RUB 118,556 mln compared to the beginning of the year
• net profit for full year 2013 slightly decreased by 4.5% to RUB 3,113 mln compared to 2012
• return on average equity (ROAE) was 23.8% as of 2013, return on average assets (ROAA) was 3.0%, cost-to-income ratio was 41.3%
• current accounts and deposits from customers increased by 24.9% ytd to RUB 81,370 mln
• the Bank’s equity increased by 26.6% ytd and reached RUB 14,590 mln as of the reporting date

Net profit of the Bank for the full year 2013 dropped by 4.5% yoy to RUB 3,113 mln. Net interest income grew by 37.1% yoy to RUB 8,928 mln supported by the loan portfolio growth. Net fee and commission income increased by 64.1% in the year 2013 to RUB 3,273 mln. Growth of the net fee and commission income was driven by increase in insurance agent commissions by 122.7% to RUB 1,800 mln and settlement operations fees by 15.6% to RUB 1,332 mln. Impairment losses for the year 2013 reached RUB 4,478 mln, which is more than 2.5 times higher than in 2012, which is the reason for the net profit growth to be significantly lower than the net interest and commission income growth.

Due to the growth of impairment losses during the year 2013 cost of risk reached 6.0% compared to 3.4% in 2012, which resulted in a reduction of the Bank’s profitability ratios (which are still higher than market averages): return on average equity (ROAE) was 23.8% while return on average assets (ROAA) was 3.0% (32.2% and 4.3% as of YE 2012 respectively). Level of the net interest margin was 11.4% (compared to 11.7% as of YE 2012).

Operating income of the Bank as for the full year 2013 grew by 40.6% yoy to RUB 14,207 mln, operating expenses grew by 33.5% to 5,863 mln. The main drivers of the increased operating costs are growth of administrative expenses, including new offices opening (+44 during 2013) as well as growth of personnel expenses by 30.0% to RUB 3,897 mln. Cost-to-income ratio reduced to 41.3% from 43.4% as of the year-end 2012.

Gross loan portfolio (before provision for loan impairment) grew by 40.5% to RUB 86,236 mln compared to the beginning of the year. Portfolio of loans to individuals rose by 37.0% to RUB 59,267 mln (68.7% of the loan portfolio) and portfolio of loans to corporate clients and individual entrepreneurs grew by 48.8% to RUB 26,969 mln. Share of NPLs (loans overdue more than 90 days) in the loan portfolio grew to 7.5% as of the reporting date compared to 5.8% as of YE 2012; the level of corporate loan portfolio NPLs is 2.8% and the level of retail loan portfolio NPLs is 9.7%. The level of provision coverage of NPLs increased to 89.8% compared to 81.7% as of YE 2012.

Securities portfolio comprising 14.3% of the total assets, grew by 6.9% compared to the beginning of the year to RUB 16,900 mln. Asian-Pacific Bank adheres to conservative investment policy; major part of the portfolio of securities is government and municipal bonds as well as investment grade corporate bonds (92.1% of the bond portfolio).

Loan to deposit ratio was 98.8% as of December 31, 2013. Growth of the loan portfolio was supported by increase in accounts and deposits of customers which grew by 24.9% ytd to RUB 81,370 mln. In particular, demand accounts of corporate customers grew by 50.1% ytd to RUB 17,989 mln and term deposits of retail customers grew by 15.9% to RUB 45,508 mln.

Total amount due to banks and amounts payable under repurchase agreements increased by 49.3% for the year and totaled RUB 13,805 mln. During the year Asian-Pacific Bank actively developed its cooperation with credit and development institutions: in February, APB and European Bank for Reconstruction and Development signed a loan facility agreement for the total amount of RUB 1,050.0 mln for financing of SMEs and energy efficiency projects; in the course of 2013 APB signed several agreements with SME Bank for the latter to provide financing for the total amount of RUB 1,525.0 mln for the projects on SME financing.

In addition to the bonds series 01 for the total amount of RUB 1.5 bln in February 2013 APB placed its 3-year RUB 3 bln exchange-traded bonds series BO-01 with a coupon rate of 10.4% per annum. The total amount of debt securities issued increased by 45.9% during 2013 and reached RUB 6,104 mln.

The Bank’s equity calculated in accordance with the Basel Accord reached RUB 15,432 mln (24.0% ytd growth). Tier 1 capital adequacy ratio was 12.9% and Total capital adequacy ratio was 15.3%.

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
• viability rating b+ and support rating 5 by Fitch
• long-term foreign and local currency deposit ratings B2 by Moody`s
• 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.

The outlook on all of the ratings is stable

Key financials (RUB mln)

Key ratios (%)

^1 Calculated as a ratio of impairment losses on loans to customers for a period to average gross loan portfolio.