VEB reports consolidated financial statements of the VEB Group for the nine-month period as prepared in compliance with IFRS
VEB published interim condensed consolidated financial statements of the VEB Group as at and for the nine-month period ended September 30, 2018, as prepared in accordance with IFRS.
“Today we have released the IFRS financial statements of the VEB Group for the nine months 2018 and we favourably view the results. We recognized a profit of RUB 6.0 bn in Q3 2018. In these nine months there was a reversal of provisions for expected loss in the amount of RUB 1.2 bn, which was also stipulated by the fact that VEB, having accomplished its function as a development institution, exited the projects upon investment stage completion.
Currently the VEB team together with the Russian government is elaborating necessary conditions for the implementation of the VEB’s new unique role of a coordinator of development institutions activities. VEB’s financial model is being improved now, various financing and guarantee support mechanisms of other development institutions are enabled.
With regard to its lending activity, VEB aims to more actively cooperate with commercial financial institutions, providing beneficial environment for co-financing. This will help boost financing of projects, crucial for the Russian economy, and create a multiplier effect for the funds invested by VEB.
The rendered state support, including callable capital mechanism will allow to realize the potential of a development institution and efficiently use the available resources, said Mikhail Poluboyarinov, First Deputy Chairman and Member of the Management Board.
The VEB Group’s key performance indicators are as follows:
- The VEB’s Group assets as at September 30, 2018 amounted to RUB 3,385.2 bn. The amount and structure of the assets remained largely unchanged as compared to 2017 year end (+0.3%).
- Loans to customers account for 52.2% of the Group’s total assets. As compared to 2017 year end loan portfolio after allowance for expected credit loss decreased slightly by RUB 16.9 bn (-0.9%) reaching RUB 1,767.1 bn. Major contributing factors were assignment of certain loans to other lenders due to VEB’s fulfilment of its task of a development institution, as well as negative revaluation of loans to customers at fair value.
- The amount of loans granted by VEB in the nine-month period 2018 reached RUB 62.2 bn.
- In the reporting period net investment in leases went up by 14.2% to reach RUB 197.6 bn.
- Total liabilities of the Group as at September 30, 2018 increased by 1.9% (RUB +55.5 bn) as compared to 2017 year end, reaching RUB 3,035.8 bn. Liabilities structure remained unchanged.
- The amount of debt securities issued went down in the nine-month period 2018 by RUB 39.1 bn (-3.6%) due to the redemption in February 2018 of Eurobond issue for the nominal value of EUR 1.0 bn. Also in November 2018 VEB timely redeemed its Eurobond issue for the nominal value of USD 850.0 mn, which is reported in the statements as a subsequent event.
- There is a positive dynamics of the financial result. In Q3 2018 the Group recognized a profit of RUB 6 bn, as compared to the negative financial result of RUB 61.9 bn in Q3 2017. At 9M end a loss shrank by 36.4% as compared to the corresponding period of 2017 and amounted to RUB 69,6 bn. The major factor contributing to the negative result was a recognition of non-interest expense from NWF foreign currency-denominated deposits conversion to rubles, as well as revaluation of loans to customers at fair value at transition to IFRS 9.
- The Group’s equity in the nine months 2018 decreased by RUB 46.3 bn (-11.7%) to reach RUB 349.4 bn as at September 30, 2018. It was negatively affected by the 9M 2018 financial result and IFRS 9 introduction (RUB -31.2bn).
- The said impact was partly offset by the state support measures. In the reporting period VEB received two federal budget subsidies in the amount of RUB 100.0 bn, as a compensation of costs related to servicing foreign capital market borrowings.
- VEB’s capital adequacy ratio as at September 30, 2018 was 12.1% (RAS).
Vladimir Putin Signs Legislation on VEB.RF’s New Functions and New Name, on Callable Capital
Russian President Vladimir Putin signed legislation to change the name of Vnesheconombank to State Development Corporation VEB.RF, clarify its functions and provide it with callable capital. The new name reflects the role of VEB in carrying out the tasks assigned by the Russian President and the Russian Government.
An article was introduced into the law on the development bank to assign new functions to VEB.RF to organise and coordinate development institutions’ activities ensuring Russia’s long-term socio-economic development. The federal law mandates VEB.RF to provide specific development institutions with financing and guarantees and use other methods to guarantee the performance of their obligations, including paying indemnities or insured amounts.
The amendments to the Budget Code allow the Government to allocate public budget funds to VEB.RF, Federal Corporation for the Development of Small and Medium Enterprises (SME Corporation) and Russian Export Center for their callable capital.
Additionally, the legislation clarifies a mechanism for issuing the authorised capital of VEB.RF, Russian Export Center and SME Corporation.
A session of the Federation Council passed legislation to change the name of State Corporation Vnesheconombank to VEB.RF, introducing several new functions, such as its role as a development institution coordinator.
The amendments are to be made to the Federal Law On the Bank for Development and certain legislative acts of the Russian Federation.
The law changes the name of State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” to State Development Corporation VEB.RF.
The law also assigns new functions to VEB.RF to coordinate the development institutions’ activities as resolved by the Russian Government.
Another law amends the Budget Code. The Government will approve resolutions concerning the authorised capital of VEB.RF in the form of paid-in capital and the amount of its authorised capital that should subsequently additionally be contributed by the Russian Government (callable capital).
Vnesheconombank issued short-term bonds in an additional placement to companies and corporations on 22 November 2018.
The Bank raised 20 billion roubles from bonds with a maturity of 21 days and a coupon of 7.24% p.a.
The par value of one bond is 1,000 roubles. The bonds were sold at 100% of their par value. The coupon is payable at maturity.
The arrangers of the bond issue are Gazprombank and Svyaz-Bank.
The bonds are on the Moscow Exchange’s Quotation List Level 1. The depository is National Settlement Depository.
VEB-Leasing and Ulyanovsk Region Government Sign Cooperation Agreement
VEB-Leasing and the Ulyanovsk Region Government signed a cooperation agreement during Transport Week 2018.
The parties intend to implement joint projects of regional and interregional significance and lay the groundwork for investment and competition in the region.
“VEB-Leasing and VEB as a development institution give priority to infrastructure development in Russian regions and municipalities, state-of-the-art technology, and a wide range of financial instruments to support the most important projects affecting regional economic growth,” said Artem Dovlatov, Director General of VEB-Leasing.