The Alfa Banking Group, which includes ABH Financial, AO «Alfa-Bank» and its subsidiaries, reported the IFRS financial results for the first half of 2017. Over this period, Group’s key financial indicators showed positive dynamics, thus strengthening its position on the market, and further proving sustainability of its business model.
Net profit of the Alfa Banking Group grew by 2,7 times in comparison with the first half of 2016 year and amounted to USD 436 million (against USD 161 million for the first half of 2016 year).
«The first half of 2017 has been for us a period of new opportunities. In the environment of gradual recovery of the Russian economy, well-coordinated and highly efficient work of our teams resulted in growing number of customers, increasing market share in priority areas and expanding loan portfolio all along with improving its risk quality. Another achievement is the growth in the share of risk-free income in total income of the group. On behalf of the whole Bank I would like to thank the clients for their trust and choice of our Bank,» said Alexei Tchoukhlov, Deputy Chairman of the Executive Board and Chief Financial Officer of Alfa-Bank.
In the first half of 2017 net interest income increased by 18.6% to USD 783 million due to growth of interest income along with decrease in interest rates. Net interest margin ratio amounted to 4.4%.
During the first half of 2017 there was a considerable improvement in loan portfolio quality. The share of overdue loans (90 days+) decreased from 4.2% to 2.8% by the end of 1H2017. The coverage of overdue loans (90+ days) by the provisions is conservatively high and amounts to 107.2%. Provisioning rate as of the end of the first half of 2017 was 3.0%.
Thanks to continued growth of the customer base, net fee and commission income grew by 43.0% in comparison with the first half of 2016 and amounted to USD 396 million. The share of net fee and commission income in operating profit before provisioning reached a record high level of 35.7% as of the end of the first half of 2017, which reflects the bank’s strategy aimed at increasing its stable risk-free income and strengthening the role of the transaction business.
Total assets of the Alfa Banking Group grew by 9.3% against the end of 2016 and amounted to USD 41 804 million as of June 30, 2017.
Loan portfolio before provisions grew by 8.6% to USD 25 957 million against USD 23 901 million as of the end of 2016. Corporate loan portfolio increased by 7.6% to USD 22 531 million, retail loan portfolio increased by 16.0% and amounted to 3 426 million as of 30 June 2017.
Liabilities of the Alfa Banking Group amounted to USD 35 805 million as of June 30, 2017. Customer accounts increased by 21.6% to USD 26 408 million. At the same time, the volume of current accounts grew by 11.9%, and their share in clients’ funds amounted to 46.7%, which testifies to the high confidence of customers in the Banking Group as one of the most reliable financial institutions in Russia.
Equity of the Alfa Banking Group in the reporting period grew by 4.6% to USD 5 999 million from USD 5 734 million in late 2016. Capital adequacy ratios under Basel I are maintained at a high level: the total capital and Tier 1 capital adequacy ratios were 20.5% and 15.8%, respectively, which guarantees stability and sustainability of the Banking Group.
By the end of July, 2017, Alfa-Banking Group became the largest private bank in Russia in terms of total assets, total equity, deposit and loan portfolios. In 1H2017 the Banking Group considerably strengthened its positions on the market in all priority segments:
— average market share of retail demand deposits increased to the historically record level of 9.26% from 8.98% as of the beginning of the year;
— average market share of corporate lending grew to 3.53% against 3.30% as of the beginning of the year;
— number of clients in the mass corporate segment increased by 16.5% to 335 000 clients.
The high level of creditworthiness of the Alfa Banking Group is confirmed by high credit ratings.
In May 2017, S&P Global Ratings international rating agency revised the outlook on Alfa-Bank from «stable» to «positive» and affirmed the Bank’s BB long-term rating. According to the agency, despite the difficult economic situation, the Alfa Banking Group has maintained a high credit quality of assets over the past few years. It also noted the Bank’s capitalization growth. Also on February 21, 2017, the rating agency Moody’s revised the outlook on the Alfa Banking Group ratings from «negative» to «stable». Then, in May 2017, Moody’s upgrades Alfa-Bank’s BCA (baseline credit assessment) from ba3 to ba2. In March 2017, FitchRatings revised the outlook on Alfa-Bank from «negative» to «stable».
The Alfa Banking Group’s 2016 IFRS figures have been reviewed by PricewaterhouseCoopers.