20 Apr 2010 16:17

Promsvyazbank forecasts drop in net interest margin by 100-150 basis points in 2010

MOSCOW. April 20 (Interfax) - Promsvyazbank forecasts a decrease in its net interest margin of 100-150 basis points in 2010, the bank's senior vice-president and head of its Finances and Risks division, Alexandra Volchenko, told journalists on Tuesday.

"We expect a decrease in the net interest margin of up to 5%-5.5% in 2010," she said. According to the bank's IFRS results, net interest margin for last year came to 6.5% against 6.6% in 2008.

The bank forecasts that the peak in reserve formation would be posted at the end of the second quarter of 2010, Volchenko said. According to the bank's IFRS results, the reserves for loan coverage for the loan portfolio went up to 12.7% against the end of 2009. According to the bank's estimates, the reserves could reach up 15% in 2010. "We do not plan to discharge reserves in 2010. For the majority of banks, the issue of reserve restoration will take place in 2011 according to our estimates, it is likely likely, in the second half of that year," she said.

Promsvyazbank did not expect an increase in its assets for 2010 but plans to boost its loan portfolio by around 20%. "We forecast the loan portfolio to increased by 20% in 2010. We will generally boost the loan portfolio for small and medium-sized business, as well as factoring. Retail loans will increase a slightly slower pace," Volchenko said.

The bank plans to renew retail lending in the second half of 2010. The bank halted most of its individual lending program in 2009. Loans to individuals shrank by 18% to 40.7 billion rubles for 2009.

The bank still only plans to renew standard consumer lending. Promsvyazbank has no plans to increase car and home loans.