16 Oct 2009 19:05

MDM Bank had 4.3 bln rubles losses to IFRS in H1

MOSCOW. Oct 16 (Interfax) - MDM Bank closed the first half of 2009 with net losses of 4.3 billion rubles to International Financial Reporting Standards (IFRS), the bank's first deputy general director, Vladislav Khokhlov, said during a conference call.

This is the bank's first financial report to IFRS since it completed a merger with URSA Bank in August.

MDM-Bank had net profit of 2.224 billion rubles to IFRS in the first half of 2008.

Non-performing loans (NPL) accounted for 14.2% of the portfolio.

The bank created 11.5 billion rubles in provisions for loan impairment in H1 2009, up 8.4-fold from 1.38 billion rubles as year previously. The bank had full NPL coverage, with a ratio of 14.2%.

Overall provisions stood at 45.8 billion rubles, or 14.3% of the loan book, as of July 1, the earnings report says.

The bank expects bad debt to range from 15% to 17% of the portfolio by the end of 2009, Khokhlov said. However for the time being growth in bad debt has slowed, "and even come to a halt," he said.

Capital adequacy was 17.3% as of July 1, 2009 and the bank has enough capital to provision for impairment to 24% of the loan portfolio by the end of 2009, Khokhlov said.

MDM Bank's loan portfolio stood at 321 billion rubles on July 1, 2009. Loans minus provisions were 275.2 billion rubles, the earnings report says.

Khokhlov said the bank could close 2009 with net profit of 500 million rubles, partly due to increased lending. "The bank and management have reached a decision to embark on an active phase of growth," he said.

Khokhlov declined to say how much the loan book might grow this year. But he said the bank had been lending actively to retail clients since the early summer. "We expect to lend 10 billion rubles to retail clients alone by the end of the year," he said.

The bank does not intend to bolster its corporate loan book. "Monthly repayments are approximately 5 billion rubles," Khokhlov said.

MDM Bank was Russia's 13th largest by assets, according to the Interfax-100 ranking at the end of the first half of 2009, and URSA was the 25th largest.