Vnesheconombank published consolidated financial statements of the VEB Group for the nine-month period of 2016 as prepared in compliance with IFRS
The VEB Group’s key performance indicators are as follows:
In the nine-month period of 2016 the VEB’s Group equity increased by RUB 68.8 billion (+14,3%) to reach RUB 549.6 billion as at 30.09.2016. Alongside with the subsidies from the federal budget provided in the nine-month period in the amount of RUB 150 billion as compensation of costs related to servicing foreign capital markets borrowings, and the recognition as additional paid-in capital of a subsidy of RUB 1.6 billion for the implementation of priority investment projects in the Far East and Baikal region, positive balance of an unrealized revaluation of securities had a positive effect on the VEB’s equity. VEB’s capital adequacy ratio (RAS) as at 30.09.2016 amounted to 12.7%.
In the nine months of 2016 net interest income went up by 40,6% reaching RUB 69,6 billion as compared with the same period in 2015 against RUB 49,5 billion. The rise is accounted for by an increase in interest income, as well as decrease in interest expense.
Throughout 2016 the Group’s financial results have demonstrated positive dynamics:
- in Q3 2016 the Group improved its financial result almost 18 times compared to the result in the corresponding period of 2015, decreasing a loss of RUB 59,5 billion to RUB 3,4 billion.
- In Q3 2016 the loss decreased more than 7 times as compared to the result of Q2 2016 (from RUB 24.5 billion to RUB 3.4 billion correspondingly).
- The financial result of nine months of 2016 also significantly improved as compared to the respective period of 2015: a loss of RUB 86,2 billion (largely attributable to the considerable provisioning in Q1 2016) versus the loss of RUB 133 billion correspondingly.
- Allowance for impairment of loans to customers for Q3 2016 decreased almost nine times versus provisioning in Q1 2016: RUB19.2 billion in Q3 against RUB 172.3 billion in Q1.
The major drivers for the Group’s changing assets (-13.3%) and liabilities (-16.7%) in the nine-month period of 2016 were the following: a decline in the currency rates against the ruble, creation of allowance for impairment of assets and a timely repayment of the maturing debt to the Group’s lenders and investors. Thus, the Group’s assets decreased by RUB 584.7 billion to RUB 3 797.7 billion as at 30.09.2016. Total liabilities went down by RUB 653.5 billion to RUB 3 248.1 billion as at 30.09.2016.
In the nine-month period of 2016 the Group followed a conservative lending policy, primarily focusing on the “ “Last mile” projects - projects already financed up to 80-85%, that could be commissioned in the next two years. The projects include those in power generation, metallurgy, machine building, agribusiness, pharmaceuticals, and chemicals.projects , with the pace of loan repayments slightly exceeding the pace of new lending. Alongside with the Group concentrating on the “last mile” projects, the nine-month period of 2016 saw the commissioning of the following facilities: CSKA football stadium in Moscow, household gas stoves production in Orsk, a wood processing complex in Krasnoyarsk region, etc. The Group is also actively widening the export global coverage, expanding the geography of Sukhoi Superjet 100 civil aircraft deliveries from Latin America and South-East Asia to Europe. For instance, VEB financed a delivery of SSJ 100 to an Irish carrier CityJet, which brought a national Irish football team to the EURO 2016 competition. *”
Vnesheconombank’s Expert Council discusses outlook for VEB Group foreign economic operations
At its regular meeting, Vnesheconombank’s Expert Council discussed global economic trends and the outlook for VEB Group foreign economic operations. The meeting was attended by representatives from the VEB Group, academia and NGOs.
Focusing on major and unique projects, guarantee support and trade finance transactions, Vnesheconombank has an important role to play in the government system of export promotion. As of 1 December 2016, the Bank for Development’s portfolio of export credits and guarantees (excluding the portfolio of the Russian Export Center) exceeded RUB 456bn with more than RUB 270bn accounting for the new transactions effected over the year.
Among the speakers at the meeting were Member of the Russian Academy of Sciences Andrey Kokoshin, Director of the Institute of World Economy and International Relations of the Russian Academy of Sciences and Member of the Russian Academy of Sciences Alexander Dynkin, Associate Member of the Russian Academy of Sciences Andrey Spartak, Director General of the Russian Export Center Petr Fradkov, and Vnesheconombank’s Senior Vice President for Exports and Trade Finance Daniil Algulyan.
According to Andrey Spartak, ‘for Russia, the broader diversification of exports drawing on our natural competitive advantages is of paramount importance, as well as a flexible focus on the actual external demand’.
Petr Fradkov stressed the significance of the marketing support for Russian brands and the fostering an export culture: “The national export promotion system must primarily aim to increase the number of the Russian companies engaged in export business”.
Vnesheconombank views export promotion as one of its business priorities. In the near future, the Bank is gearing up to act as an anchor in transactions thus enabling commercial banks, in particular foreign ones, to enter the export finance market.
In his report, Daniil Algulyan revealed VEB’s insights as to the financing of high-technology product exports, in particular with the help of various government support instruments (interest rate subsidies), and new financial products. Furthermore, Mr Algulyan outlined the prospects for financing the export of new technology and IT solution-based services: “Lacking in flexibility and agility, the classical model of export finance is losing its efficiency. It won’t be long now that the leading role will be played by the business platforms to serve as the basis for active interaction between investors and customers (exporters and importers) and the use of government support instruments”.