Financial Statements

Annual report 2010

# Financial Statements

# Independent Auditor’s Report

To the Shareholders and Board of Directors of Bank Vozrozhdenie:

The accompanying summarised financial statements have been derived from the financial statements of Bank Vozrozhdenie (hereinafter - “the Bank”) for the year ended 31 December 2010, prepared in accordance with international financial reporting standards.

### Management’s Responsibility for the Summarised Financial Statements

These summarised financial statements are the responsibility of the Bank’s management.

### Auditor’s Responsibility

Our responsibility is to express an opinion on whether these summarised financial statements are consistent, in all material respects, with the financial statements from which they were derived.

We have audited the financial statements of the Bank for the year ended 31 December 2010, from which these summarised financial statements were derived, in accordance with International Standards on Auditing. In our report dated 28 March 2011 we expressed an unqualified opinion on the financial statements from which the summarised financial statements were derived.

### Opinion

In our opinion, the accompanying summarised financial statements are consistent, in all material respects, with the financial statements from which they were derived.

For a better understanding of the Bank’s financial position and the results of its operations for the period and of the scope of our audit, the summarised financial statements should be read in conjunction with the financial statements from which the summarised financial statements were derived and our audit report thereon.

28 March 2011
Moscow, Russian Federation

# FINANCIAL STATEMENTS

##### Summarised International Financial Reporting Standards Financial Statements Derived from the Audited International Financial Reporting Standards Financial Statements

#### STATEMENT OF FINANCIAL POSITION

In millions of Russian Roubles | 31 December 2010 | 31 December 2009
--- | --- | ---
ASSETS
Cash and cash equivalents | 32,151 | 34,101
Mandatory cash balances with the CBRF | 1,072 | 868
Trading securities | 12,182 | 9,756
Due from other banks | 5,860 | 6,363
Loans and advances to customers | 104,046 | 85,205
Investment securities available for sale | 2,043 | 1,312
Premises, equipment and intangible assets | 3,132 | 3,102
Other financial assets | 1,644 | 1,236
Other assets | 4,028 | 3,660
TOTAL ASSETS | 166,158 | 145,603
LIABILITIES
Due to other banks | 7,772 | 4,368
Customer accounts | 130,334 | 113,129
Debt securities in issue | 5,794 | 6,364
Subordinated loans | 4,293 | 4,578
Other financial liabilities | 611 | 576
Other liabilities | 494 | 302
TOTAL LIABILITIES | 149,298 | 129,317
EQUITY
Share capital | 250 | 250
Share premium | 7,306 | 7,306
Retained earnings | 9,227 | 8,660
Other reserves | 77 | 70
TOTAL EQUITY | 16,860 | 16,286
TOTAL LIABILITIES AND EQUITY | 166,158 | 145,603

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#### STATEMENT OF COMPREHENSIVE INCOME

In millions of Russian Roubles | 2010 | 2009
--- | --- | ---
Interest income | 13,600 | 16,954
Interest expense | (8,109) | (8,628)
Net interest income | 5,491 | 8,326
Provision for loan impairment | (1,872) | (4,752)
Net interest income after provision for loan impairment | 3,619 | 3,574
Fee and commission income | 4,295 | 4,027
Fee and commission expense | (360) | (298)
Losses less gains/Gains less losses from trading securities | (90) | 204
Gains from trading in foreign currencies | 3,139 | 3,513
Foreign exchange translation losses | (2,794) | (2,939)
Foreign exchange translation losses less gains | (24) | (3)
Gains less losses from disposals of investment securities available for sale | 15 | 18
Dividend income | 2 | 1
Other operating income | 225 | 147
Administrative and other operating expenses | (7,180) | (6,325)
Provision for impairment of other assets | (121) | -
Profit before tax | 726 | 1,919
Income tax expense | (145) | (702)
PROFIT FOR THE YEAR | 581 | 1,217
Other comprehensive income:
Available-for-sale investments:
Gains less losses/(Losses less gains) arising during the year | (5) | 26
Income tax credit/(expense) recorded directly in other comprehensive income | 12 | (8)
Other comprehensive income for the year | 7 | 18
TOTAL COMPREHENSIVE INCOME FOR THE YEAR | 588 | 1,235
Earnings per share for profit attributable to the equity holders of the Bank, basic and diluted (expressed in RR per share)
Ordinary shares | 23 | 49
Preference shares with determined dividend amount | 25 | 50

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#### STATEMENT OF CHANGES IN EQUITY

In millions of Russian Roubles | Share capital | Share premium | Other reserves | Retained earnings | Total equity
--- | --- | --- | --- | --- | ---
Balance at 31 December 2008 | 250 | 7,306 | 52 | 7,457 | 15,065
Total comprehensive income for 2009 | — | — | 18 | 1,217 | 1,235
Dividends declared | — | — | — | (14) | (14)
Balance at 31 December 2009 | 250 | 7,306 | 70 | 8,660 | 16,286
Total comprehensive income for 2010 | — | — | 7 | 581 | 588
Dividends declared | — | — | — | (14) | (14)
Balance at 31 December 2010 | 250 | 7,306 | 77 | 9,227 | 16,860

#### STATEMENT OF CASH FLOWS

In millions of Russian Roubles | 2010 | 2009
--- | --- | ---
Cash flows from operating activities
Interest received | 13,199 | 16,244
Interest paid | (8,448) | (7,978)
Fees and commissions received | 4,267 | 4,014
Fees and commissions paid | (360) | (298)
Net income received from trading in trading securities | 19 | 47
Net income received from trading in foreign currencies | 345 | 613
Other operating income received | 217 | 160
Administrative and other operating expenses paid | (6,575) | (5,840)
Income tax paid | (633) | (580)
Cash flows from operating activities before changes in operating assets and liabilities | 2,031 | 6,382
Changes in operating assets and liabilities
Net increase in mandatory cash balances with the Central Bank of the Russian Federation | (204) | (713)
Net increase in trading securities | (2,541) | (484)
Net decrease/(increase) in due from other banks | 506 | (4,338)
Net (increase)/decrease in loans and advances to customers | (20,568) | 2,114
Net increase in other financial assets | (425) | (340)
Net decrease in other assets | 148 | 209
Net increase/(decrease) in due to other banks | 3,126 | (17,679)
Net increase in customer accounts | 17,978 | 21,062
Net (decrease)/increase in debt securities in issue | (333) | 416
Net increase in other financial liabilities | 26 | 95
Net increase in other liabilities | 41 | 10
Net cash (used in)/from operating activities | (215) | 6,734
Cash flows from investing activities
Acquisition of investment securities available for sale | (1,589) | (786)
Proceeds from disposal of investment securities available for sale | 876 | 1,916
Acquisition of premises, equipment and intangible assets | (511) | (382)
Proceeds from disposal of premises, equipment and intangible assets | 8 | 4
Income from disposal of non-current assets available for sale | 63 | —
Proceeds from disposal of investment properties | 7 | —
Dividend income received | 2 | 1
Net cash (used in)/from investing activities | (1,144) | 753
Cash flows from financing activities
Receipt of funding from international financial institutions | 407 | 766
Repayment of subordinated loans | (395) | —
Receipt of subordinated loans | 91 | —
Repayment of syndicated loans | — | (3,307)
Dividends paid | (14) | (14)
Net cash from/(used in) financing activities | 89 | (2,555)
Effect of exchange rate changes on cash and cash equivalents | (680) | 679
Net (decrease)/increase in cash and cash equivalents | (1,950) | 5,611
Cash and cash equivalents at the beginning of the year | 34,101 | 28,490
Cash and cash equivalents at the end of the year | 32,151 | 34,101

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For a better understanding of the Bank’s financial position and the results of its operations for the year, and of the scope of our audit, these summarised financial statements should be read in conjunction with the financial statements, from which these summarised financial statements have been derived, and audit report thereon. Copies of audited financial statements can be obtained from Bank Vozrozhdenie.

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