30 Segment Analysis

For the purposes of management the Group is divided into operating segments of activity - central head office,17 regional head offices and subsidiaries - which are defined on the basis of organizational structure of the Group and geographical areas. The principal activity of all operating segments is banking operations. For the purposes of presentation in these consolidated financial statements the operating segments are aggregated in the following reportable segments:

Moscow
this segment includes the following:

  • Central head office of the Group,
  • Regional head office of Moscow,
  • Subsidiaries of the Group located in the region.

Central and Northern regions of European part of Russia
this segment includes the following: Regional head offices:

  • Severny -Yaroslavl,
  • Severo-Zapadny - Saint-Petersburg,
  • Tsentralno-Chernozemny - Voronezh,
  • Srednerussky - Moscow;
  • Subsidiaries of the Group located in the region.

Volga region and South of European part of Russia
this segment includes the following: Regional head offices:

  • Volgo-Vyatsky - Nizhniy Novgorod,
  • Povolzhsky - Samara,
  • Severo-Kavkazsky - Stavropol,
  • Yugo-Zapadny - Rostov-on-Don, Subsidiaries of the Group located in the region.

Ural, Siberia and Far East of Russia
this segment includes the following:
Regional head offices:

  • Zapadno-Uralsky -Perm,
  • Uralsky - Ekaterinburg,
  • Sibirsky - Novosibirsk,
  • Zapadno-Sibirsky -Tumen,
  • Severo-Vostochny - Magadan,
  • Dalnevostochny - Khabarovsk,
  • Vostochno-Sibirsky - Krasnoyarsk,
  • Baikalsky -Irkutsk,

Subsidiaries of the Group located in the region.

Other countries
this segment includes the following:

  • Subsidiaries located in Ukraine,
  • Subsidiaries located in Kazakhstan,
  • Subsidiaries located in Belarus,
  • A branch office in India.

The Management of the Group analyses operating results of every segment of activity for the purposes of making decision about allocation of resources and assessment of segments' business results. The segments' reporting and operating results which are provided to the Management of the Group for analysis are prepared under Russian accounting standards,except the segments' reporting of the subsidiaries which is prepared under International Financial Reporting Standards.

Intersegment operations are performed on the basis of internal transfer pricing rates which are established, approved and regularly revised by the Management of the Group.

The subsidiaries' activity is controlled by the Group integrally.

Segment reporting of the Group's assets and liabilities as at 31 December 2010 is as follows:

enlarge

In millions of Russian Roubles Moscow Central and Northern regions of European part of Russia Volga region and South of European part of Russia Ural, Siberia and Far East of Russia Other countries Total
TOTAL ASSETS 4,318,256 1,445,164 1,163,282 1,548,746 185,817 8,661,265
TOTAL LIABILITIES 2,885,376 1,776,676 1,270,092 1,549,502 146,145 7,627,791
In millions of Russian Roubles Moscow Central and Northern regions of European part of Russia Volga region and South of European part of Russia Ural, Siberia and Far East of Russia Other countries Total
TOTAL ASSETS 4,318,256 1,445,164 1,163,282 1,548,746 185,817 8,661,265
TOTAL LIABILITIES 2,885,376 1,776,676 1,270,092 1,549,502 146,145 7,627,791

Segment reporting of the Group's assets and liabilities as at 31 December 2009 is as follows:

enlarge

In millions of Russian Roubles Moscow Central and Northern regions of European part of Russia Volga region and South of European part of Russia Ural, Siberia and Far East of Russia Other countries Total
TOTAL ASSETS 3,339,279 1,269,638 1,037,696 1,438,970 110,590 7,196,173
TOTAL LIABILITIES 2,497,326 1,455,172 1,024,070 1,276,215 85,934 6,338,717
In millions of Russian Roubles Moscow Central and Northern regions of European part of Russia Volga region and South of European part of Russia Ural, Siberia and Far East of Russia Other countries Total
TOTAL ASSETS 3,339,279 1,269,638 1,037,696 1,438,970 110,590 7,196,173
TOTAL LIABILITIES 2,497,326 1,455,172 1,024,070 1,276,215 85,934 6,338,717

Reconciliation of assets and liabilities as per the reportable segments with the Group's assets and liabilities under IFRS as of 31 December 2010 and 31 December 2009 is as follows:

enlarge

  Total assets Total liabilities
In millions of Russian Roubles 2010 2009 2010 2009
Total amount per segment information 8,661,265 7,196,173 7,627,791 6,338,717
Adjustment of provisions 55,642 23,660 (19,765) (25,441)
Additional interest accrued on loans 1,889 6,510 (924) -
Deferred commission income on loans (28,753) (30,696) 388 -
Deferred commission income on guarantees - - 1,135 796
Accounting for derivatives at fair value 4,749 619 3,867 10,576
Adjustment of depreciation and cost or revalued amount of premises and equipment including effect of deferred tax (68,145) (64,013) (952)  
Staff expenses accrued for the year (bonuses, annual leave, pension liabilities) 184 155 14,831 12,383
Adjustment of amortised cost and partial repurchase of other borrowed funds and subordinated debt (115) (24,324) (292) (24,866)
Adjustment of income tax - (668) 7,018 12,924
Other adjustments 1,811 (2,350) 8,263 1,041
The Group's total amount under IFRS 8,628,527 7,105,066 7,641,360 6,326,130
  Total assets Total liabilities
In millions of Russian Roubles 2010 2009 2010 2009
Total amount per segment information 8,661,265 7,196,173 7,627,791 6,338,717
Adjustment of provisions 55,642 23,660 (19,765) (25,441)
Additional interest accrued on loans 1,889 6,510 (924) -
Deferred commission income on loans (28,753) (30,696) 388 -
Deferred commission income on guarantees - - 1,135 796
Accounting for derivatives at fair value 4,749 619 3,867 10,576
Adjustment of depreciation and cost or revalued amount of premises and equipment including effect of deferred tax (68,145) (64,013) (952)  
Staff expenses accrued for the year (bonuses, annual leave, pension liabilities) 184 155 14,831 12,383
Adjustment of amortised cost and partial repurchase of other borrowed funds and subordinated debt (115) (24,324) (292) (24,866)
Adjustment of income tax - (668) 7,018 12,924
Other adjustments 1,811 (2,350) 8,263 1,041
The Group's total amount under IFRS 8,628,527 7,105,066 7,641,360 6,326,130

Segment reporting of the Group's income and expenses for the year ended 31 December 2010 is as follows:

enlarge

In millions of Russian Roubles Moscow Central and Northern regions of European part of Russia Volga region and South of European part of Russia Ural, Siberia and Far East of Russia Other countries Total
Interest income 296,580 153,262 132,496 179,334 14,935 776,607
Interest expense (117,168) (69,627) (48,327) (58,576) (6,706) (300,404)
Inter-segment (expense)/income (46,536) 31,180 9,875 5,481 - -
Fee and commission income 23,975 35,992 27,727 38,840 3,927 130,461
Fee and commission expense (2,584) (1,404) (1,027) (2,160) (680) (7,855)
Net gains arising from securities 21,553 6     84 21,643
Net (losses)/gains arising from trading in foreign currencies, operations with foreign currency derivatives and foreign exchange translation gains/(losses) (780) 3,237 1,858 2,464 1,847 8,626
Net (losses)/gains arising from operations with precious metals (1,767) 624 524 901 (314) (32)
Other net operating (losses)/gains 6,162 256 (7,551) (1,604) 282 (2,455)
Operating income before provision charge for loan impairment 179,435 153,526 115,575 164,680 13,375 626,591
Net provision charge for loan impairment (36,570) (43,466) (42,907) (32,413) (3,709) (159,065)
Operating income 142,865 110,060 72,668 132,267 9,666 467,526
Operating expenses (63,996) (64,780) (56,640) (78,154) (6,596) (270,166)
Profit before tax (Segment result) 78,869 45,280 16,028 54,113 3,070 197,360
Other disclosures            
Capital expenditure incurred (additions of fixed assets) 9,884 17,133 11,010 14,970 1,588 54,585
Depreciation of premises and equipment (3,809) (6,384) (4,944) (7,234) (474) (22,845)
In millions of Russian Roubles Moscow Central and Northern regions of European part of Russia Volga region and South of European part of Russia Ural, Siberia and Far East of Russia Other countries Total
Interest income 296,580 153,262 132,496 179,334 14,935 776,607
Interest expense (117,168) (69,627) (48,327) (58,576) (6,706) (300,404)
Inter-segment (expense)/income (46,536) 31,180 9,875 5,481 - -
Fee and commission income 23,975 35,992 27,727 38,840 3,927 130,461
Fee and commission expense (2,584) (1,404) (1,027) (2,160) (680) (7,855)
Net gains arising from securities 21,553 6     84 21,643
Net (losses)/gains arising from trading in foreign currencies, operations with foreign currency derivatives and foreign exchange translation gains/(losses) (780) 3,237 1,858 2,464 1,847 8,626
Net (losses)/gains arising from operations with precious metals (1,767) 624 524 901 (314) (32)
Other net operating (losses)/gains 6,162 256 (7,551) (1,604) 282 (2,455)
Operating income before provision charge for loan impairment 179,435 153,526 115,575 164,680 13,375 626,591
Net provision charge for loan impairment (36,570) (43,466) (42,907) (32,413) (3,709) (159,065)
Operating income 142,865 110,060 72,668 132,267 9,666 467,526
Operating expenses (63,996) (64,780) (56,640) (78,154) (6,596) (270,166)
Profit before tax (Segment result) 78,869 45,280 16,028 54,113 3,070 197,360
Other disclosures            
Capital expenditure incurred (additions of fixed assets) 9,884 17,133 11,010 14,970 1,588 54,585
Depreciation of premises and equipment (3,809) (6,384) (4,944) (7,234) (474) (22,845)

Segment reporting of the Group's income and expenses for the year ended 31 December 2009is as follows:

enlarge

In millions of Russian Roubles Moscow Central and Northern regions of European part of Russia Volga region and South of European part of Russia Ural, Siberia and Far East of Russia Other countries Total
Interest income 283,307 158,189 136,779 193,338 4,906 776,519
Interest expense (147,947) (62,517) (44,436) (56,394) (1,925) (313,219)
Inter-segment income/(expense) 19,159 13,491 (9,411) (23,239) - -
Fee and commission income 35,219 37,867 31,121 42,990 1,118 148,315
Fee and commission expense (3,377) (196) (341) (371) (164) (4,449)
Net gains arising from securities 17,389       6 17,395
Net gains arising from trading in foreign currencies, operations with foreign currency derivatives and foreign exchange translation gains 13,313 4,278 3,342 2,580 726 24,239
Net (losses)/gains arising from operations with precious metals (535) 847 691 1,223 - 2,226
Impairment of assets (3,062) - - - - (3,062)
Other net operating (losses)/gains (13,803) (506) (501) (306) 947 (14,169)
Operating income before provision charge for loan impairment 199,663 151,453 117,244 159,821 5,614 633,795
Net provision charge for loan impairment (129,957) (65,653) (70,918) (93,263) (6,798) (366,589)
Operating income/(expense) 69,706 85,800 46,326 66,558 (1,184) 267,206
Operating expenses (61,458) (50,932) (47,242) (64,170) (2,123) (225,925)
Profit/(loss) before tax (Segment result) 8,248 34,868 (916) 2,388 (3,307) 41,281
Other disclosures            
Capital expenditure incurred (additions of fixed assets) 9,403 10,623 9,551 12,483 1,325 43,385
Depreciation of premises and equipment (3,494) (4,775) (4,283) (6,742) (466) (19,760)
In millions of Russian Roubles Moscow Central and Northern regions of European part of Russia Volga region and South of European part of Russia Ural, Siberia and Far East of Russia Other countries Total
Interest income 283,307 158,189 136,779 193,338 4,906 776,519
Interest expense (147,947) (62,517) (44,436) (56,394) (1,925) (313,219)
Inter-segment income/(expense) 19,159 13,491 (9,411) (23,239) - -
Fee and commission income 35,219 37,867 31,121 42,990 1,118 148,315
Fee and commission expense (3,377) (196) (341) (371) (164) (4,449)
Net gains arising from securities 17,389       6 17,395
Net gains arising from trading in foreign currencies, operations with foreign currency derivatives and foreign exchange translation gains 13,313 4,278 3,342 2,580 726 24,239
Net (losses)/gains arising from operations with precious metals (535) 847 691 1,223 - 2,226
Impairment of assets (3,062) - - - - (3,062)
Other net operating (losses)/gains (13,803) (506) (501) (306) 947 (14,169)
Operating income before provision charge for loan impairment 199,663 151,453 117,244 159,821 5,614 633,795
Net provision charge for loan impairment (129,957) (65,653) (70,918) (93,263) (6,798) (366,589)
Operating income/(expense) 69,706 85,800 46,326 66,558 (1,184) 267,206
Operating expenses (61,458) (50,932) (47,242) (64,170) (2,123) (225,925)
Profit/(loss) before tax (Segment result) 8,248 34,868 (916) 2,388 (3,307) 41,281
Other disclosures            
Capital expenditure incurred (additions of fixed assets) 9,403 10,623 9,551 12,483 1,325 43,385
Depreciation of premises and equipment (3,494) (4,775) (4,283) (6,742) (466) (19,760)

Reconciliation of profit before tax, interest income and expense, fee and commission income, gains from operations with securities and gains from operations with foreign currencies for the reportable segments with the Group's income statement items under IFRS for the year ended 31 December 2010 as follows:

enlarge

In millions of Russian Roubles Profit before tax Interest income Interest expense Fee and commission income Net gains/ (losses) arising from operations with securities Net gains arising from trading in foreign currencies, operations with foreign currency derivatives and foreign exchange translation gains
Total amount per reportable segment 197,360 776,607 (300,404) 130,461 21,643 8,626
Adjustment of provisions 28,789 - - - - -
Staff expenses accrued for the year (bonuses, annual leave, pension liabilities) (3,024) - - - - -
Differences arising on reporting of fee and commission income and expense 1,516 17,589 - 347 - (5,536)
Differencies arising on securities classification 3,413 1,202 - - 2,176 35
Accounting for derivatives at fair value 13,549 - - - - 11,224
Additional interest accrued on loans (4,620) 1,094 - - - -
Adjustment of depreciation and cost or revalued amount of premises and equipment (4,434) - - - - -
Adjustment of amortised cost and partial repurchase of other borrowed funds (456) (675) 482 (378) 218 49
Other adjustments (1,958) (171) 97 519 (67) (326)
The Group's total amount under IFRS 230,135 795,646 (299,825) 130,949 23,970 14,072
In millions of Russian Roubles Profit before tax Interest income Interest expense Fee and commission income Net gains/ (losses) arising from operations with securities Net gains arising from trading in foreign currencies, operations with foreign currency derivatives and foreign exchange translation gains
Total amount per reportable segment 197,360 776,607 (300,404) 130,461 21,643 8,626
Adjustment of provisions 28,789 - - - - -
Staff expenses accrued for the year (bonuses, annual leave, pension liabilities) (3,024) - - - - -
Differences arising on reporting of fee and commission income and expense 1,516 17,589 - 347 - (5,536)
Differencies arising on securities classification 3,413 1,202 - - 2,176 35
Accounting for derivatives at fair value 13,549 - - - - 11,224
Additional interest accrued on loans (4,620) 1,094 - - - -
Adjustment of depreciation and cost or revalued amount of premises and equipment (4,434) - - - - -
Adjustment of amortised cost and partial repurchase of other borrowed funds (456) (675) 482 (378) 218 49
Other adjustments (1,958) (171) 97 519 (67) (326)
The Group's total amount under IFRS 230,135 795,646 (299,825) 130,949 23,970 14,072

Reconciliation of profit before tax, interest income and expense, fee and commission income, gains from operations with securities and gains from operations with foreign currencies for the reportable segments with the Group's income statement items under IFRS for the year ended 31 December 2009 as follows:

enlarge

In millions of Russian Roubles Profit before tax Interest income Interest expense Fee and commission income Net gains/ (losses) arising from operations with securities Net gains arising from trading in foreign currencies, operations with foreign currency derivatives and foreign exchange translation gains
Total amount per reportable segment 41,281 776,519 (313,219) 148,315 17,395 24,239
Adjustment of provisions 1,274 - - - - -
Staff expenses accrued for the year (bonuses, annual leave, pension liabilities) (1,407) - - - - -
Differencies arising on securities' classification 18,946 351 - - 19,011 (585)
Accounting for derivatives at fair value (8,376) - - - - (7,294)
Additional interest accrued on loans (394) (394) - - - -
Differences arising on reporting of fee and commission income and expense (2,584) 39,726 - (42,310) - -
Adjustment of depreciation and cost or revalued amount of premises and equipment (17,485) - - - -  
Adjustment of amortised cost and partial repurchase of other borrowed funds and subordinated debt 697 (1,595) 720 - - (118)
Other adjustments (2,088) 355 254 (282) 57 (14)
The Group's total amount under IFRS 29,864 814,962 (312,245) 105,723 36,463 16,228
In millions of Russian Roubles Profit before tax Interest income Interest expense Fee and commission income Net gains/ (losses) arising from operations with securities Net gains arising from trading in foreign currencies, operations with foreign currency derivatives and foreign exchange translation gains
Total amount per reportable segment 41,281 776,519 (313,219) 148,315 17,395 24,239
Adjustment of provisions 1,274 - - - - -
Staff expenses accrued for the year (bonuses, annual leave, pension liabilities) (1,407) - - - - -
Differencies arising on securities' classification 18,946 351 - - 19,011 (585)
Accounting for derivatives at fair value (8,376) - - - - (7,294)
Additional interest accrued on loans (394) (394) - - - -
Differences arising on reporting of fee and commission income and expense (2,584) 39,726 - (42,310) - -
Adjustment of depreciation and cost or revalued amount of premises and equipment (17,485) - - - -  
Adjustment of amortised cost and partial repurchase of other borrowed funds and subordinated debt 697 (1,595) 720 - - (118)
Other adjustments (2,088) 355 254 (282) 57 (14)
The Group's total amount under IFRS 29,864 814,962 (312,245) 105,723 36,463 16,228

The differences shown above arise from classification variances as well as different accounting policies.

Adjustment of provisions is related to the difference between estimation methodology applied in statutory accounting records used as a basis for management reporting and estimation methodology according to IFRS.

Differences arising on securities' classification relate to gains/(losses) on revaluation of securities designated at fair value through profit or loss in IFRS reporting but classified as available for sale in statutory accounting records used as a basis for management reporting.

For the year ended 31 December 2010 the Group's revenues from customers in the Russian Federation amounted to RR 960 441 million (for the year ended 31 December 2009: RR 979 859million). Revenues from customers in all foreign countries from which the Group derives revenues amounted to RR 20 954 million (for the year ended 31 December 2009: RR 7 703 million).

As at 31 December 2010 the carrying value of premises and equipment located in the Russian Federation amounted to RR 276 827 million (2009: RR 243 752 million). Carrying value of premises and equipment of the Group located in foreign countries amounted to RR 6 929 million (2009: RR 6 129 million).

No revenue from transactions with a single external customer or counterparty amounted to 10% or more of the Group's total revenue in 2010 or 2009.

History

My Annual Report

Tools