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”.
Vnesheconombank assigned top National Public Procurement Transparency Rating
According to the National Public Procurement Transparency Rating of Government Agencies and Commercial Companies 2016, State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” has been assigned the Guaranteed Transparency Category. Thus, Vnesheconombank has once again proved its status of a top rated state corporation.
A commemorative token has been given to Evgeniy Knyazev, Director of Vnesheconombank’s Procurement Department, during an official ceremony hosted by the Russian Chamber of Trade and Commerce.
The National Public Procurement Transparency Rating is an independent research centre specialising in economic and legal analysis of the Russian market for public, municipal, corporate and private commercial procurement.
The procurers rated comprised public and municipal entities including 70 major federal government agencies, 85 major municipalities and 71 procurers whose activities are subject to Federal Law No. 222-FZ dated 18 July 2011, as well as 117 commercial buyers acting in compliance with their internal regulations. Overall, 426 procurers participate in the rating scheme.
In Minsk, Vnesheconombank, Development Bank of the Republic of Belarus (DBRB), Belvnesheconombank (BelVEB, VEB Group) and Ulyanovsk Automobile Plant (UAZ) signed a cooperation agreement to promote deliveries of Russian motor vehicles to the Republic of Belarus.
For Vnesheconombank, the Agreement was signed by the Senior Vice President for Export Finance and Documentary OperationsDaniilAlgulyan, for DBRB – the First Deputy Chairman of the management Board Tatiana Sosnovskaya, for Belvnesheconombank – by the Deputy Chairman of the Management Board Oleg Korobyin, and for UAZ – by the Director for Exports Andrey Dorofeev.
The parties to the Agreement consider various methods to arrange financing and/or co-financing for deliveries of UAZ vehicles to the Republic of Belarus, in particular, credit and leasing facilities.
The Agreement is designed to encourage and promote bilateral trade and economic cooperation between Russia and Belarus and expand exports of the Russian carmaker.
To quote DaniilAlgulyan: “In recent years, the export potential of Russian manufacturers has significantly increased. Russian exporters tap into new product ranges and acquire experience of operating abroad. Decline in the ruble has also contributed to the competitive price advantage of domestic products. Our objective is to support Russian exporters and facilitate foreign market access for Russian goods”.
The Government of the Republic of Belarus, Development Bank of the Republic of Belarus, Vnesheconombank, Belvnesheconombank (Bank BelVEB, the VEB Group) and ROSEXIMBANK entered into a Memorandum of Intent to create an Integration Development Platform.
The document was signed by First Deputy Prime Minister of the Republic of Belarus Vasily Matyushevsky, Belarus Development Bank's First Deputy Chairman of the Board Tatyana Sosnovskaya, Vnesheconombank's Chairman Sergey Gorkov, Bank BelVEB's Chairman of the Board Nikolay Luzgin and ROSEXIMBANK's Chairman of the Board Andrey Polyakov.
The parties agreed to establish a joint platform on the basis of national development institutions of Russia and Belarus. The launch of the platform will allow to create a financial infrastructure for the implementation of export projects and projects with a high integration potential.
The first stage is expected to involve making a list of joint Russian-Belarusian projects with a high integration potential implemented both in Russia and Belarus.
The parties are planning to elaborate on the possibility of financing joint projects, including the use of state support instruments and opportunities of the Union state.
Vnesheconombank is prepared to participate in the development of programmes for financing exports of jointly manufactured goods to third country markets, inter alia, by working on the possibility to provide support both to buyers and sellers of finished products.
Sergey Gorkov commented as follows: “Russia and Belarus have deep integration relations both in the financial domain and in manufacturing industries. Joint projects implemented on the basis of a new integration development platform with support from the Union state and financial institutions of the two countries will help boost trade between Russia and Belarus and bring goods manufactured by Russian-Belarusian joint ventures to third country markets.”
The cooperation under the Memorandum will facilitate sustainable economic development of the countries, increase mutual trade turnover and diversify trade and investment activities. Particular areas of focus are expected to include the development and strengthening of the export potential of the two countries, creating synergy to promote Russia- and Belorus-manufactured goods to third country markets.
Further to the above arrangements, Vnesheconombank, Development Bank of the Republic of Belarus and Bank BelVEB, on the one hand, and OJSC UAZ, on the other hand, signed a Memorandum of Cooperation to promote Russian car supplies to the Republic of Belarus.
Moreover, Vnesheconombank and Bank BelVEB signed a Memorandum of Cooperation with BelAZ, identifying the priority areas for the parties in the implementation of export projects.