Information Message on the Results of Investing Funds of the Reserve Fund and the National Wealth Fund
Russia’s Finance Ministry hereby informs about the results of investing funds of the Reserve Fund and the National Wealth Fund from January 1 to December 31, 2015.
The Reserve Fund
In December of 2015, in accordance with the Federal Law dated December 1, 2014 № 384-FZ “On the Federal Budget for 2015 and for a planned period of 2016 and 2017” and in accordance with Executive Order of the Russian Finance Ministry dated December 10, 2015 № 492 “On Using Financial Resources of the Reserve Fund in Foreign Currency to Fund the Federal Budget Deficit in 2015,” a part of the financial resources of the Fund in foreign currency from the Bank of Russia’s accounts in the amount of 4.52 billion US dollars, 4.14 billion euros and 0.67 billion pounds sterlings were sold for 710.67.00 billion rubles and the funds received were transferred to the unified account of the federal budget to cover its deficit.
As of January 1, 2016, the aggregate amount of the Reserve Fund was 3 640.57 billion rubles which is equivalent to 49.95 billion US dollars. The amounts of balances in separate accounts to record funds of the Reserve Fund were:
- 22.71 billion US dollars;
- 20.26 billion euros;
- 3.44 billion pounds sterlings.
The aggregate calculated income from placing funds of the Reserve Fund in foreign currency accounts of the Bank of Russia recalculated in dollars for a period from January 15 to December 31, 2015 was 0.11 billion US dollars, which is equivalent to 7.67 billion rubles. The exchange rate difference from recalculating balances of funds in the said accounts for a period from January 1 to December 31, 2015 was 915.74 billion rubles.
The National Wealth Fund
In December of 2015, in accordance with Resolutions of the Russian Government dated January 19, 2008, № 18 and dated November 5, 2013, № 990, financial resources of the National Wealth Fund in the amount of 118.60 billion rubles were placed in the bonds of LLC in quantity of 1 750 000 bonds, with par value of one bond being 1000 dollars in order to fund an infrastructure project «Construction of Integrated Petrochemical Facility -West-Siberian Petrochemical Integrated Works, which was provided for by para 12 of the List of infrastructure projects to be implemented by legal entities in financial assets of which financial resources of the National Wealth Fund and (or) pension savings under the trust management of a state managing company are placed on a redeemable basis. The List was approved by Executive Order of the Russian Government dated November 2013, № 2044-r.
In accordance with Resolution of the Russian Government dated December 30, 2015 № 1491 and Executive Order of the Russian Government dated December 30, 2015 № 2750-r in order to provide Vnesheconombank with the state’s support, the period of returning foreign exchange deposits placed in 2014 in the total amount of 6.25 billion US dollars was extended from 5-15 to 20 years, an interest rate on them was reduced from a level exceeding the 6-month US dollar LIBOR rate by 2.75-3.80 percentage points to a level of 0.25% per annum and an interest payment grace period was set from December 2015 to September of 2018 (during this period interest is charged, it is not capitalized and paid on the last day of the period).
In December of 2015, Ukraine failed to make a payment in the total amount of 3.075 billion US dollars to repay and service the bonds of foreign government loans that were purchased by the Russian Finance Ministry using financial resources of the National Wealth Fund. Ukraine is in default on these bonds. The Russian Finance Ministry appealed to a company that acts as a trustee of the creditor and initiated procedures needed to immediately start legal proceedings against Ukraine for it to pay back financial resources of the National Wealth Fund invested in the above-mentioned instruments.
As of January 1, 2016, the aggregate amount of the National Wealth Fund was 5 227.18 billion rubles which is equivalent to 71.72 billion US dollars including:
1) In separate accounts to record funds of the National Wealth Fund with the Bank of Russia:
- 19.67 billion US dollars;
- 20.76 billion euros;
- 3.83 billion pounds sterlings;
2) 195.03 billion rubles and 6.25 billion US dollars were deposited with Vnesheconombank;
3) under an individual decision by the Russian Government 3.00 billion US dollars were placed in debt instruments of foreign states without placing demands on long-term credit ratings;
4) in bonds of Russian issuers related to implementing infrastructure projects, a list of which is approved by the Russian Government – 112.63billion rubles and 4.11 billion US dollars;
5) in preferred shares of credit institutions – 278.99 billion rubles;
6) on deposits of OJSC Bank VTB and Bank GPB (JSC) in order to fund infrastructure projects a list of which is approved by the Russian Government - 164.43 billion rubles.
The aggregate calculated income from placing funds of the National Wealth Fund in foreign currency accounts of the Bank of Russia recalculated in dollars for a period from January 15 to December 31, 2015, was 0.07 billion US dollars, which is equivalent to 5.32 billion rubles. The exchange rate difference from recalculating monetary resources of the Fund from January 1 to December 31, 2015 was 848.53 billion rubles including:
- balances in foreign exchange accounts with the Bank of Russia – 663.49 billion rubles;
- funds deposited with Vnesheconombank in US dollars – 103.97 billion rubles;
- unds placed in debt instruments of foreign states without placing demands on long-term credit ratings –49.87 billion rubles;
- foreign-currency denominated bonds of Russian issuers related to implementing infrastructure projects, a list of which is approved by the Russian Government – 31.20 billion rubles.
In December of 2015, incomes from investing financial resources of the National Wealth Fund were transferred to the federal budget:
a) on Vnesheconombank’s deposits in the amount 1.57 billion rubles which is equivalent to 0.02 billion US dollars;
b) in bonds of Russian issuers related to implementing infrastructure projects, a list of which is approved by the Russian Government in the amount of 0.32 billion rubles which is equivalent to 0.004 billion US dollars;
c) on deposits of OJSC Bank VTB in the amount of 1.05 billion rubles which is equivalent to 0.01 billion US dollars.
The aggregate income from placing financial resources of the Fund on authorized financial assets with the exception of accounts with the Bank of Russia from January to December of 2015 amounted to 47.26 billion rubles which is equivalent to 0.76 billion US dollars.
Indicators of the aggregate amount of the Reserve Fund and the National Wealth Fund as well as of calculated incomes (losses) from placing funds of the Reserve Fund and the National Wealth Fund were calculated on the basis of official exchange rates of foreign currencies set by the Bank of Russia as of the date prior to the reporting date and of cross rates calculated on the basis of the said exchange rates.
Detailed statistics on transactions with funds of the Reserve Fund and the National Wealth Fund is posted on the Internet site of the Russian Finance Ministry in the following sections: “The Reserve Fund” and “The National Wealth Fund” in appropriate subsections in Russian and English, the statistics is updated on a regular basis.
Origin: Press Service of Russia’s Finance Ministry
Commentaries to Consolidated Financial Statements Vnesheconombank and its Subsidiaries for 9 months of 2015
Dynamics of main components of assets and liabilities
(Analysis on the basis of comparing balance indicators as of 30.09.2015 and 31.12.2014)
As of the end of the third quarterof 2015, the amount of Vnesheconombank’s assets increased from early 2015 by 428.7 billion rubles (+11.0%) and was 4 314.5 billion rubles.
The portfolio of loans extended to customers and the portfolio of net investments in leasing increased for 9 months of 2015 by 260.4 billion rubles (+9.9%%) and amounted to 2892.4 billion rubles. The total proportion of credits to customers and net investments in leasing in the assets of Vnesheconombank Group as compared to the start of 2015 decreased slightly from 68% to 67%.
Pursuant to Decree of the Russian President dated June 5 2015 № 287 and Federal Law dated June 29, 2015, № 156-FZ “On Introducing Changes to Individual Statutes of the Russian Federation on the Issues of Developing Small and Medium-Sized Enterprises”, Vnesheconombank is to transfer shares JSC SME Bank it owns to pay for additional shares of JSC the Federal Corporation for the Development of Small and Medium-Sized Enterprises. To that end, assets of JSC SME Bank recognized in the consolidated financial statements were classified as of September 30, 2015 as assets disposal group, the amount of assets specified as “Assets of Disposal Groups Designed for Sale” increased by 126.0 billion rubles to 130.3 billion rubles.
The amount of investment financial assets available for sale and held to maturity increased for nine months by 110.4 billion rubles (+28.3%) to 500.6 billion rubles. At the same time, the amount of financial assets transferred under loan agreements and made available as collateral under repo agreements and this is related for the most part withthe maturity of the second part of direct REPO transactions.
The following changes occurred in the resource base.
The amount of liabilities for 9 months of 2015 increased by 479.9 billion rubles (+13.7%) to 3987.1 billion rubles.
The amount of issued debt securities increased for the accounting period by 134.3 billion rubles (+13.7%) to 1 117.4 billion rubles. The mentioned change is related both to reduction in the ruble exchange rate against foreign currencies which brought about increased ruble equivalent under bonds denominated in foreign currencies and to issuing bonds by the Group on the domestic market.
The debt to the Russian Governmentand the Bank of Russia increased by 100.1 billion rubles (+17.9%) to 659.3 billion rubles. The main changes in the structure of the stated debt were caused by increased debt to the Bank of Russia under interest-bearing credits and deposits and the reduction in the amount of raised funds under REPO agreements with the Bank of Russia.
The amount of customers’ funds increased by 94.4 billion rubles (+18.6%) and amounted to 603.2 billion rubles for the first half-year of 2015. The increase was mainly caused by the growth in the amount of balancesin customers’ time deposits with subsidiary institutions incorporated in Vnesheconombank Group.
Due to the fact JSC SME Bank was classified as of September 30, 2015 as a disposal group, the amount of liabilities specified as “Liabilities of Disposal Groups designed for Sale” increased by 65.3 billion rubles.
The rise of the dollar against the ruble during 9 months of 2015 increased the ruble equivalent of subordinated deposits placed with Vnesheconombank through using financial resources of the National Wealth Fund to additionally capitalize Vnesheconombank by 55.8 billion rubles (+18.4%) to 358.8 billion rubles.
In 9 months of 2015, Vnesheconombank’s capital decreased by 51.2 billion rubles (-13.5%) to 327.4 billion rubles. The capital decreased due to the loss in the amount 133.0 billion rubles for nine months of 2015. At the same time, Vnesheconombank’s authorized capital increased by 27.5 billion rubles (+6.6%) in accordance with Federal Law dated 02.05.2015 № 109-FZ “On the Specifics of Transferring Profits in 2015 generated by the Central Bank of the Russian Federation in 2014. Additional capital increased by 12.3 billion rubles (+8.9%) due to subsidies in the form of monetary contributions in the amount of 10 billion rubles purchase shares of JSC EXIARto further increase JSC Roseximbank’s authorized capital and a contribution worth 2.3 billion rubles to purchase additional units of the closed share investment fund of the Russian Direct Investment Fund. The unrealized revaluation of investment financial assets available for sale was a positive value of 29.9 billion rubles. The change in the unrealized revaluation of financial investment assets by 43.8 billion rubles from (-)13.9 billion rubles in 2014 to 29.8 billion rubles as of 30.09.2015 was caused to a large extent by reclassification of the shares and bonds depreciation amounts of (29.9 billion rubles) as expenses.
Dynamics of main profit and loss components
(Analysis on the basis of comparing data for the first 9 months of 2015 and the first nine months of 2014)
For a period of 9 months of 2015, Vnesheconombank Group recognized a loss of 133.0 billion rubles as compared to a loss of 86.3 billion for a period of nine months of 2014.
Net interest income amounted to 49.5 billion rubles, a decrease of 23.5 billion rubles, (-32.2%) from the same period in the previous year (73.0 billion rubles).
Interest incomes increased by 32.0 billion rubles (+15.8%) fromthe nine months of 2014 to 233.9 billion rubles, for the most part as a result of the growth of 37.3 (+29.5%) billion rubles in interest incomes to 163.7 billion rubles under credits to customers caused but the increased portfolio of such creditsas compared to the same period of 2014.
Interest expenses increased by 55.5 billion rubles (+43.1%) to 184.4 billion rubles. The growth was caused for the most part, by the increase in interest expenses on funds raised from banks and the Bank of Russia 23.1 billion rubles (+50.3%) and on issued debt securities - by 22.5 billion rubles (+70.1%)on funds raised from customers and the Russian Government – by 9.6 billion rubles. These changes ware also caused by the growth in the volumes andof the raised funds and the growth of the ruble equivalent of interest expenses on issued debt securities denominated in foreign currencies.
In nine months of 2015, expenses on transactions with investment financial assets available for sale was 24.5 billion rubles. They increased by 19.8 billion rubles The main reason for it was the fact that unrealized negative revaluation of bonds recognized earlier in the Bank’ capitalwasbooked to expenses.
In nine months of 2015, net incomes from the original recognition of financial instruments, changes in contractual terms and conditions and early repayment amounted to 7 billion rubles. The recognition of income worth 14.5 billion rubles in nine months of 2015 was caused for the most part by the recognition of income from rolling over the deposit of the Federal Treasuryfor a period of 10 years at a below market rate to fund through VEB’s subsidiary – JSC SME Bank banks and legal entities involved in supporting small and medium-sized enterprises.
Non-interest expenses (except for expenses on forming other reserves and reserves against depreciation of other assets) decreased by 1.1 billion rubles to 46.3 billion rubles in the accounting periodfrom nine months of 2014.
Expenses on forming reserves against depreciation of assets and other reserves amounted to 139.0 billion rubles in nine months of 2015 against 186.8 billion rubles in the same period of 2014.