Rosbank loan portfolio. Analysis of credit operations of PJSC "Rosbank". Structure and dynamics of balance

30.07.2023

Date of credit report 24.06.2019
Recommendations are valid for 1 year

1. Full name of the issuer

Reg. number: 2272

Main components:

The bank's own rating in a stable situation is A.

Based on the results of the risk assessment, there are no restrictions on placing funds in the Bank’s financial instruments. In the event of a stressful situation, the Bank is highly likely to receive support from the state and the main shareholder

3. SWOT analysis

PJSC ROSBANK is a large Russian bank (12th place by assets and 11th by equity capital as of June 1, 2019), included by the Central Bank of the Russian Federation among 11 systemically important credit institutions in Russia.
The bank has a developed network: 9 branches, 129 additional. offices, 201 operational offices and 45 credit and cash offices and 1 operational. cash register outside the cash register.
The bank meets capital adequacy requirements (N1.0 = 12.127%, N1.1 = 9.024% as of May 1, 2019, with thresholds of 8% and 4.5%, respectively).
The quality of management in ROSBANK is at a good level, taking into account the successful many years of experience of top managers and full control by Societe Generale S.A. over the operational activities of the Bank and the Group operating in Russia as a whole.
A high-quality risk management system, which is characterized by transparency and independence, as well as regular improvement of risk methods, conducting stress tests and assessing the current operating environment.

As of December 31, 2018, under IFRS, funds from banks and international financial organizations included RUB 18,825 million (12% of the Group’s capital) raised from three banks, which represents a significant concentration.
The quality of the retail loan portfolio is already average - balance sheet overdue debt (as of 07/01/18 according to RAS for the retail loan portfolio - 11.88%).

4. Ownership structure

99,95% authorized capital The bank is owned by Societe Generale S.A. (Societe Generale S.A.) - 76.58% of its shares are in public circulation.
0.02% - Own shares acquired (repurchased) by PJSC ROSBANK
0.03% - minority shareholders.

The bank is 99.97% owned by the French Societe Generale S.A. (the parent bank of the international financial group Societe Generale, hereinafter referred to as the SG group).

Reporting of Bank GPB (JSC) as of 05/01/2019 (billion rubles, changes for 4 months) according to RAS (data and interpretations according to IFRS for 2018 and the 1st quarter of 2019 are also used).

Capital - 134,155 billion rubles (+7.057 billion rubles)123 eachform.

Assets 1,106.523 billion rubles. (+169.366 billion rubles.).

70.475 billion rubles. (+35.023 billion rubles.) - cash register and correspondent accounts.

197.775 billion rubles. (+32.516 billion rubles.) - investmentsVvaluablepaper.

291.934 billion rubles. (+49.999 billion rubles.) - interbank loans

317.573 billion rubles.(+40.064 billion rubles)- loans to legal entities and individual entrepreneurs, including balance sheet overdue debt - 12.096 billion rubles. (+4.125 billion rubles) or 3.81% according to RAS.

143.844 billion rubles. loansphysicalpersons. (+10.031 billion rubles), including balance sheet overdue debt - 17.088 billion rubles. (-1.011 billion rubles) or 11.88% according to RAS.

24.394 billion rubles.(+0.454 billion rubles) - fixed assets and capital investments.

Liabilities:

389.775 billion rubles. (+45.631 billion rubles)- legal means persons

292.057 billion rubles. (+38,977 billion rubles) - contributions from individuals. persons

95.366 billion rubles. (+17.804 billion rubles.

58,587 billion rubles

33.594 billion rubles.- formed reserves.

Profit (according to RAS):

For 4 months of 2019 - +1.368 billion rubles. For 2018, net profit amounted to +11.402 billion rubles. For 2017 +7.354 billion rubles.

(July 2018)

The table shows the final rating.

Main components:

The bank's own rating in a stable situation is A.
The bank's stress rating is A.
The expected level of support is high.

3. SWOT analysis

Key positive points:

PJSC ROSBANK is a large Russian bank (13th place by assets and 10th by equity capital as of July 1, 2018), included by the Central Bank of the Russian Federation among 11 systemically important credit institutions in Russia.
The bank has a developed network: 8 branches, 134 additional. offices, 218 operational offices and 2 credit and cash offices and 1 operational. cash register outside the cash register.
Concentration on the 10 largest groups of borrowers (13.5% of the portfolio), high-risk industries (the construction and real estate sector accounts for 7% of fixed capital) and related parties (33% of fixed capital) is low.
An adequate supply of liquid assets is maintained.
The bank meets capital adequacy requirements (N1.0 = 13.609%, N1.1 = 9.617% as of July 1, 2018, with thresholds of 8% and 4.5%, respectively).

Key negative points:

A high share of deposits of individuals in attracted funds of clients - 38.9%, forming a potential threat to liquidity, due to the possibility of early withdrawal provided for by law.
Possible restrictions on investment in the Russian Federation by the EU may negatively affect the ability to provide support from the main shareholder.
The average quality of the retail loan portfolio - balance sheet overdue debt (as of 07/01/18 according to RAS for the retail loan portfolio - 13.32%).

4. Ownership structure

99.95088% of the Bank's authorized capital belongs to Societe Generale S.A. (Societe General S.A.)

0.0492% - minority shareholders.

4.1. Primary ultimate beneficiary

The bank is 99.95% owned by the French Societe Generale S.A. (the parent bank of the international financial group Societe Generale, hereinafter referred to as the SG group) and together with its 100% subsidiaries LLC Rusfinance Bank and JSC CB DeltaCredit forms the ROSBANK group

4.2. Probability of shareholder support in case of crisis

If necessary, the main shareholder is ready to provide financing to the Bank, as well as to inject capital, since the Russian market is strategically important for Societe Generale S.A.

There is also a high probability of administrative support from the state, due to the systemic importance of the Bank in the Russian Federation. banking system.

5. Analysis of key financial indicators

Bank reporting as of July 1, 2018 (billion rubles, changes for 6 months) according to RAS (data and interpretations according to IFRS for 2017 and the 1st quarter of 2018 are also used).

Capital - 129.415 billion. rub. (+11.278 billion rubles)123 eachform.

Assets - 946.230 billion rubles. (-15.678 billion rubles)

50.460 billion rubles. (-10.449 billion rubles.) - cash register and correspondent accounts.

173.755 billion rubles. (+25.568 billion rubles.) - investmentsVvaluablepaper.

213.290 billion rubles. (-43.427 billion rubles.) - interbank loans

282.187 billion rubles.(+11.942 billion rubles)- loans to legal entities and individual entrepreneurs, including balance sheet overdue debt - 9.414 billion rubles. or 3.34% according to RAS.

As at 31 December 2017, under IFRS, the Group provided loans to three groups of borrowers whose individual debt exceeded 10% of the Group's capital. As at 31 December 2016, the Group provided loans to two groups of borrowers whose individual debt exceeded 10% of the Group's capital.

136.684 billion rubles. loansphysicalpersons. (+1.918 billion rubles), including balance sheet overdue debt - 18.205 billion rubles. (-1.536 billion rubles) or 13.32% according to RAS

The share of impaired loans (total for the Group) as of December 31, 2017 under IFRS (overdue and not overdue) is 8.04%.

23.978 billion rubles.(+0.039 billion rubles) - property (fixed assets, capital investments, etc.)

Liabilities:

331.486 billion rubles. (-49.763 billion rub.) - legal means. persons

259.706 billion rubles. (+20.879 billion rubles.) - contributions from individuals. persons

According to IFRS, as of December 31, 2017, deposits accounted for 38.9% of total customer funds.

89.380 billion rubles. (+13.084 billion rubles.) - funds from credit institutions.

As of December 31, 2017 and 2016 funds from banks and international financial organizations included 13,609 million rubles. and 13,610 million rubles. (10% and 11% of the Group's capital) respectively, attracted from three and two banks respectively, which represents a significant concentration.

54.973 billion rubles.- issued debt obligations.

35.316 billion rubles. (-3.764 billion rub.) - formed reserves

Profit/loss (according to RAS):

For 6 months of 2018 - +6.106 billion rubles. For 2017, profit was +7.354 billion rubles. (For 2016 - profit +0.004 billion rubles)

Return on assets at the end of 2017 -0.76%(at the end of 2016 - only 1.23%, 2015 -0%).

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Purchase and sale of foreign currency in cash and non-cash forms

Attracting deposits and placing precious metals

Issuance of bank guarantees

Making money transfers on behalf of individuals without opening bank accounts (except for postal transfers)

Issuance of guarantees for third parties providing for the fulfillment of obligations in cash

Acquiring the right to demand from third parties the fulfillment of obligations in cash

Trust management of funds and other property under agreements with individuals and legal entities

Carrying out transactions with precious metals and precious stones in accordance with the legislation of the Russian Federation

Providing for rent to individuals and legal entities special premises or safes located in them for storing documents and valuables

Leasing operations

Providing consulting and information services

Throughout its history, Rosbank PJSC has paid great attention to the implementation of social projects. PJSC Rosbank is one of the most reliable Russian banks. This makes it attractive to everyone who would like to save and increase their accumulated funds and receive high-quality banking services.

The structure of the entire bank is shown in Figure 2.

Figure 2 - Organizational structure of PJSC Rosbank

The general management of the Bank is carried out by the Board of Directors between general meetings of shareholders. Main executive body is the Management Board, headed by the Chairman of the Management Board. The board consists of heads of departments, which include functionally separated structural units.

Front-line units provide customer service in all areas of activity, and supervision of certain types of activities is carried out by the relevant structural unit of the profile.

If a transaction requires the participation of several structural divisions, then a responsible employee is appointed in one or another structural unit to support these types of transactions. This expresses the elements of the matrix control circuit, and the overall control system can be characterized as linear-functional.

The goal of Rosbank PJSC is to provide consulting services to Russian and Western companies, organize mergers and acquisitions and attract financing in the Russian and international markets in various forms from issuing bonds to using complex structured products.

Strong partnerships with leading investment banks in the USA and Europe allow us to cover not only Russian but also international capital markets.

Let's look at the main performance indicators of Rosbank PJSC in Table 4.

Table 4

Key performance indicators of PJSC Rosbank

Indicator				Deviation
				Abs., million rubles

Profit before tax
Funds and profits
Loans to enterprises (including individual entrepreneurs)
Consumer loans (no overdue ones)
Overdue consumer loans
Securities
Bonds

Bank bills
Non-bank bills
Property
Current accounts
Resident deposits
Non-resident deposits
Deposits of individuals
ATM turnover

The table shows that assets in 2016 amounted to 915,737 million rubles. (which is 123.34%). This growth was driven by growth in the securities portfolio and an increase in customer lending.

Profit before tax for the analyzed period decreased by 10,272 million rubles. or by 25.56%, since in 2016 the profit was at a loss and amounted to 2091 million rubles. The reasons for this loss are excessive “jumps” in exchange rates, as well as the introduction of sanctions against Russia.

Funds and profits in 2016 increased by 8,041 and amounted to 107.67%, which is primarily due to an increase in the average interest rate on loans provided.

Loans to enterprises (including IP) during the analyzed period increased by 63,348 million rubles. And amounted to 132.87%. Consumer loans (without arrears) showed a decrease of 61,978 million rubles. And it amounted to 72.13%. Consumption of consumer loans increased by 9.176 million rubles. and amounted to 173.30%.

Securities in 2016 amounted to 114,370 million rubles, the total growth for the analyzed period was 141.50%. Bonds during the analyzed period increased by 47,090 million rubles. and amounted to 173.28%.

Bank bills showed a decrease of -13,266 million rubles. and amounted to 18.51%. As a result of a decrease in investments in bank bills, their share in securities portfolios decreased.

Non-bank accounts also showed a decrease of 284 million rubles. During the period under study, the volume of property increased by 12.772 million rubles. And amounted to 165.38%. Current accounts showed an increase of 43,877 million rubles. and amounted to 145.88%. Residents' deposits increased by 70,468 million rubles. and amounted to 181.52%. Non-resident deposits decreased by 16,010 million rubles, or 10.75%.

The volume of deposits of individuals in 2016 amounted to 192,416 million rubles, for the analyzed period - 36,963 million rubles. Or by 123.78%.

ATM turnover amounted to 51.309 million rubles, for the analyzed period - by 8,297 million rubles. or by 86.08%.

Thus, at the moment, according to the cost approach, the bank has high potential due to the improvement of the loan portfolio, which has affected the increase in the value of net assets.

One of the main principles of the activities of Rosbank PJSC is information openness. This is primarily due to the financial performance of the bank. In addition to the mandatory quarterly and annual reports According to Russian standards, Rosbank OJSC traditionally prepares financial statements in accordance with international standards.

The main task of Rosbank PJSC in the field of corporate finance is to provide consulting services to Russian and Western companies, organize mergers and acquisitions, carry out activities to attract financing for potential companies in the Russian and international markets in various forms from issuing shares and bonds to the use of complex structured products .

Extensive experience and excellent understanding of all areas of investment banking allow us to offer clients comprehensive solutions to problems of any volume and level of complexity.

PJSC Rosbank offers its VIP clients first-class banking services, the main principles of which are complexity, strict confidentiality and an individual approach that takes into account the client’s wishes.

A personal manager assigned to a VIP client develops individual service plans. At any time convenient for the VIP client, the personal manager provides consultations on banking issues, legal issues, as well as taxation of the client’s personal income and property.

The accumulated experience in the field of private lending allows the bank to pursue a balanced credit policy that takes into account the interests of both the loan recipient and the bank.

Separate regulatory documents The Bank has identified and structured a mechanism for making decisions on credit transactions. The vertical structure was formed from credit committees different levels, differentiated in accordance with assumptions for making decisions on confirming credit transactions for various amounts.

The competence of the Credit Committee of the highest level (Chairman of the Committee - Chairman of the Board of the Bank) includes transactions that constitute a significant part of the Bank's capital. For all subsequent subordinate credit committees, decision-making limits are determined in proportion to the position of credit committee members in descending order.

Due to the fact that one of the main profiles of the Bank is consumer lending, and also taking into account the fact that decisions on issuing loans of this type cannot be carried out in accordance with the established scheme (agreement with the Credit Committee), the Bank has developed a separate decision-making mechanism for this type loans.

This mechanism is a method whose principle is based on comparing various data about the borrower, which he provides to the Bank (some data is checked by the Bank's Security Service), as well as individual data about the potential borrower, which the Bank is able to collect independently.

Based on this data, a decision is made to provide or not provide a loan. This methodology is a priori flawed, and loans provided based on it have a high rate of non-repayment and/or inadequate debt servicing (late and incomplete).

This high risk for consumer loans is initially built into the interest rate on the loan.

2.2 Analysis of the bank’s financial indicators

PJSC Rosbank is the largest Russian bank and among them ranks 14th in terms of net assets.

We will analyze the economic activities of PJSC Rosbank based on financial statements.

PJSC "Rosbank" is on the pawnshop list, and the Bank of Russia accepts bonds of the credit institution in question as collateral; it has the right to work with the Pension Fund of the Russian Federation and can attract its funds for trust management, in deposits and savings for housing provision military personnel; has the right to work with non-state pension funds, carrying out mandatory pension insurance, and can attract pension savings and savings for housing provision for military personnel; has the right to open accounts and deposits in accordance with Law 213-FZ of July 21, 2014, i.e. organizations of strategic importance for the military-industrial complex and security of the Russian Federation; Authorized representatives of the Bank of Russia have been appointed to the credit institution (Table 5).

bank creditworthiness credit

The balance sheet shows the financial position of a company as of a specific date. One section of the balance sheet reflects the bank's assets, while

as the other part shows liabilities and equity.

Assets include cash, precious metals and stones, loans provided, investments in securities, bank property, accounts receivable, i.e. placement of funds is reflected. Liabilities are intended to account for the authorized capital and funds, funds raised, interbank loans received, bank profits, accounts payable and other liabilities that are the bank’s resources.

A bank's liquid assets are those bank funds that can be quickly converted into cash to be returned to their depositor clients.

We present the structure of highly liquid assets in the form of a table6.

Table 6

Structure of highly liquid assets of PJSC Rosbank

Indicator name				Abs., million rubles

funds in the cash register
funds in accounts with the Bank of Russia
NOSTRO correspondent accounts in banks (net)
interbank loans placed for up to 30 days
highly liquid securities of the Russian Federation
highly liquid securities of banks and states
highly liquid assets taking into account discounts and adjustments

The table shows that a strong liquidity position is due to a high volume of liquid and highly liquid assets, which is expressed in sufficient coverage of potential outflows with highly liquid assets. The amount of funds in the cash desk decreased by 14,507 million rubles. and amounted to 53.15% for the analyzed period.

The amount of funds in accounts with the Bank of Russia increased by 1003 million rubles. or by 798.75%.

The amount of NOSTRO correspondent accounts with banks for the analyzed period showed a decrease of 12,082 million rubles. and amounted to 54.97%.

The volume of interbank loans placed for up to 30 days in 2016 amounted to 57,185 million rubles. or 52.87%. The amount of highly liquid securities of the Russian Federation increased by 796 million rubles. or by 113.41%.

The amount of highly liquid securities of banks and states in 2016 amounted to 1842 million rubles, during the analyzed period it increased by 796 million rubles. and amounted to 176.10%. The amount of highly liquid assets, taking into account discounts and adjustments, decreased by 15,026 million rubles. and amounted to 87.80%. The bank maintains its liquidity through stable income by investing in securities.

As of the reporting date (April 1, 2017), the net assets of ROSBANK Bank amounted to 782.91 billion rubles. Over the year, assets decreased by -5.95%. The decline in net assets had a positive impact on the return on assets ROI: over the year, return on net assets increased from 0.84% to 1.40%.

In order to maintain liquidity, the bank must strive to minimize costs when selling assets and attracting

liabilities, which is a prerequisite for maintaining its sustainability financial condition.

In terms of services provided, the bank mainly attracts client money, and these funds are quite diversified (between legal entities and individuals), and invests funds mainly in loans.

The current liabilities of Rosbank PJSC include:

Liabilities to banks

Liabilities to clients and savings deposits (deposits),

Obligations of the clientele under acceptances issued for them,

Unpaid taxes, etc.

The structure of current liabilities is shown in table7.

Table 7

Structure of current liabilities of PJSC Rosbank

Indicator name				Abs., million rubles

deposits of individuals with a maturity of over a year
other deposits of individuals (including individual entrepreneurs) (for a period of up to 1 year)
deposits and other funds of legal entities (for a period of up to 1 year)
correspondent accounts of LORO banks
interbank loans received for a period of up to 30 days
own securities
obligations to pay interest, arrears, accounts payable and other debts
expected cash outflow
current liabilities

The table shows that the amount of deposits of individuals with a term of over a year increased by 3888 million rubles. and amounted to 104.98%.

The amount of other deposits of individuals (including individual entrepreneurs) (for a period of up to 1 year) during the analyzed period increased by 35,871 million rubles. or by 139.05%. The amount of deposits and other funds of legal entities (up to 1 year) decreased during the analyzed period by 33,124 million rubles, and amounted to 83.84%. The amount of correspondent accounts of LORO banks showed a decrease of 7,493 million rubles. and amounted to 78.80%. The amount of interbank loans received for a period of up to 30 days is also in a negative position and amounts to 65.86%. The amount of own securities decreased by 1665 million rubles. and amounted to 21.61%.

The amount of interest payment obligations increased during the analyzed period by 1359 million rubles. and amounted to 109.22%. The reason for this is the growth of income through the profitable placement of available resources. A commercial bank's resources represent the bank's liabilities and sources of its own funds.

The expected cash outflow decreased by RUB 25,107 million. or by 85.14%. The amount of current liabilities decreased by 9004 million rubles and amounted to 97.99% for the analyzed period.

The structure of income-generating assets is shown in table8.

Table 8

Indicator name				Abs., million rubles

Interbank loans
Loans to legal entities
Loans to individuals

Investments in leasing operations and acquired rights of claim
Investments in securities
Other income loans
Income assets

The table shows that interbank loans increased by 36,943 million rubles. and amounted to 142.65%.

Loans to legal entities during the analyzed period amounted to 101.73%, showing an increase of 4,117 million rubles. The increase in the share of loans to legal entities and the decrease in the share of loans to individuals is primarily due to a change in the approach to collateral.

During 2016, organizations were actively receiving loans due to the fact that each product was accompanied by collateral in the form of real estate, when the analysis procedure only became more stringent in relation to the procedure for lending to individuals credit history and other factors

Loans individuals decreased by 99,690 million rubles. and amounted to 58.78%. Bills decreased by 597 million rubles. and amounted to 92.74%. Investments in leasing operations and acquired rights of claim in 2016 amounted to 7526 million rubles, during the analyzed period they increased by 269.07%. Investments in securities increased by 15399 million rubles. and amounted to 111.53%. Other profitable loans amounted to 4009 million rubles. or 0.56%, during the analyzed period increased by 65 million rubles. or by 101.65%. Income assets decreased during the analyzed period by 142,596 million rubles. or by 83.28%. During the analyzed period, there was a significant change in the total value of the bank's assets and its component items. This change is primarily due to changes in the volume of loans to individuals (58.78%) and the volume of bills (92.74%).

Analytics on the degree of security of issued loans, as well as their structure, is presented in table. 9

Table 9

Analytics on the degree of security of loans issued by Rosbank PJSC

Indicator name				Abs., million rubles

Securities accepted as collateral for loans issued
Property accepted as security
Loan portfolio amount

The table shows that securities accepted as collateral for issued loans decreased during the analyzed period by 20,553 million rubles. and amounted to 82.64%. Property accepted as collateral increased by 656,759 million rubles. or by 345.20%.

The loan portfolio in 2016 amounted to 620,143 million rubles, specific gravity which amounted to 121.64%. During the analyzed period there was a decrease of 31,618 million rubles. or by 95.15%. The bank focuses on diversified lending, the form of which is guarantees and sureties. The overall level of loan collateral is quite high, and possible non-repayment of loans will most likely be compensated by the volume of collateral.

The bank pays special attention to the conditions for receiving contractual funds from interest payments and repayment of the credit authority. If the bank expects to collect all interest and principal on the loan in full, but it is now probable that these funds will be received later than the date agreed upon in the contract, an estimate of depreciation is made. The Bank analyzes depreciation in two main areas: the creation of an impairment reserve on an individual basis and on a collective basis. The Bank determines the reserves that need to be created for each individual significant loan, on an individual basis.

Another important risk faced by a bank during its operations is liquidity risk, which is the risk that the Bank will not be able to meet its payment obligations on the maturity date in the normal course of business and in times of stress.

Currency risk is the risk associated with the impact of exchange rate fluctuations on the value of financial instruments. The management of Rosbank PJSC set limits on the level of risk for positions in different currencies in accordance with the requirements Central Bank. Positions are monitored daily.

Another risk that is important to a bank is operational risk, the risk of loss due to system failure, human error, fraud or external events. The Bank cannot expect to eliminate all operational risks, but manages these risks by applying a system of controls, monitoring potential risks and responding accordingly. The control system ensures effective distribution of responsibilities, procedures for access, authorization and coordination, training of personnel and procedures for conducting assessments, including internal audit.

The risk management system of Rosbank PJSC is the interrelation of methods, methods, methods of work of personnel, and management bodies of the Bank.

Analysis of financial activities and statistics for 2014-2016. OJSC Rosbank indicates the absence of negative trends that could affect the financial stability of the bank in the future.

2.3 Analysis of credit operations of Rosbank PJSC

For this purpose, we will study the state of the loan portfolio of PJSC Rosbank (Table 10).

Table 10

Composition and structure of the loan portfolio of PJSC Rosbank for 2014-2016.

Indicator				Abs., million rubles

Legal entities
including, overdue
physical
including, overdue
Loan portfolio
including, overdue

As can be seen from the table data, the loan portfolio of Rosbank PJSC consists of loans provided to legal entities and individuals. In 2014, the majority of loans (50.75%) were provided to legal entities. In subsequent years, the bank changed direction and already in 2015, the share of loans issued to individuals decreased to 37.31%. Accordingly, the share of loans issued to legal entities increased.

The size of the loan portfolio during the analyzed period increased by 1.32%, with an increase in loans provided to legal entities by 35.71% and a decrease in the volume of loans provided to individuals by 28.94%.

Despite the increase in the volume of lending to legal entities, the share of overdue debt tended to decrease - 4.23%. The level of overdue debts of legal entities turned out to be half as much as the share of overdue debts of the population, which increased by 8.88% over the analyzed time interval. The share of total overdue debt in the loan portfolio increased from 8.7% to 10.32%, which required an increase in contributions to reserves for possible losses.

Let us reflect the indicators of overdue debt on loans issued to individuals in Table 11.

Table 11

Overdue debt on loans issued to individuals by Rosbank PJSC for 2014-2016.

The table shows that the volume of loans provided to individuals increased by 42,815 million rubles. and amounted to 132.35%.

The volume of overdue debts of individuals also showed an increase and amounted to 23,718 million rubles, the share of the increase is 187.98%.

Despite the increase in the share of overdue debt by 8 million rubles. In its overall loan portfolio, the Bank adheres to a conservative approach to assessing credit risk and pays special attention to the adequacy of the formation of reserves for accepted credit risks.

The result of credit risk management is the qualification of assets into the appropriate quality categories (Table 12).

Table 12

Share of debt classified by quality categories for 2014-2016.

As can be seen from the data presented, in 2016, the majority of the loan portfolio was made up of loans and equivalent debt of the 1st and 2nd quality categories, which indicates the proper quality of the loan portfolio. Compared to 2014, the share of loans of the 1st and 2nd quality categories increased by 5.3 percentage points. The share of the fourth quality category decreased by 0.8 percentage points, and the share of the fifth category increased slightly, by only 0.4 p.p.

These successes were achieved thanks to the credit risk management system created at Rosbank OJSC.

In particular, minimizing credit risk for a corporate loan portfolio includes the following activities:

Maintaining a diversified portfolio structure by industry, regional, currency, loan repayment terms, type of collateral, types credit products;

Establishing risk limits for individual borrowers or groups of related borrowers;

Application of a differentiated, multi-level, integrated approach to assessing client loan applications.

In the field of retail lending, the most important aspect of the bank’s activities is maintaining an optimal balance between the profitability of the retail loan portfolio and existing credit risks, taking into account the possible trend of their further growth. The main tools for managing credit risks are:

Improving the restriction policy, according to which decisions on the provision of loans are made either by counting clients or jointly by representatives of business units and divisions;

Implementation of a methodology for risk segmentation of the client base;

Constant monitoring of the effectiveness of scoring models, constant expansion of the coverage of scoring cards of credit products and client segments;

A quick response to credit risk growth factors - tightening conditions and/or limiting credit to potential borrowers, credit risk which are assessed as “high” by changing and adapting assessment models, credit rules and conditions;

Using pricing to differentiate interest rates depending on the risk segment of the borrower, which makes it possible to attract high-quality borrowers by offering them more attractive rates due to the low risk for such borrowers.

The structure of the consumer lending portfolio by type of lending is presented in Figure 3.

Figure 3 - Structure of the loan portfolio of PJSC Rosbank

Based on the data in Figure 3, we can say that the bulk of the loan portfolio of Rosbank PJSC is occupied by mortgage lending, which amounted to 188,338.4 thousand rubles. at the beginning of 2015.

Approximately the same volume in the structure of the loan portfolio is car loans - 146,623.57 thousand rubles. And consumer loans- 114558.3 thousand rubles. The smallest volume was occupied by loans provided to VIP clients and employees - 4343.95 thousand rubles.

According to the all-Russian rating, Rosbank PJSC took 2nd place in Russia in terms of the volume of consumer loans provided due to mortgage lending and lending to small businesses and 7th place among all Russian banks in Russia in terms of the volume of loans provided to individuals.

Every month, the bank submits a report to the Central Bank of the Russian Federation and conducts an analysis of lending to Rosbank PJSC, which makes it possible to identify the results of activities of each of the additional. lending offices, and in general the results of the bank’s lending activities, as well as identify positive and negative trends in the areas of the bank’s lending activities.

Lending analysis includes data on changes in the size of the loan portfolio in absolute terms, in quantitative terms, the issuance and repayment of loans by type, the interest income received on credit operations is indicated, and the loan portfolio is classified by risk groups.

We will analyze the lending operations of Rosbank PJSC.

In 2016, the volume of loan investments amounted to 988 loan agreements for a total amount in ruble equivalent of 119,992 thousand rubles.

The characteristics of credit operations by type of lending are as follows (Table 13):

Table 13

Characteristics of lending operations of Rosbank PJSC in 2016

The table shows that in 2016, 988 credit transactions were carried out, of which 74 were commercial, 914 were consumer.

The actual debt from commercial loans is 112,507 million rubles. (105,022 million rubles more than from consumer ones).

Overdue debt from commercial loans amounts to 474 million rubles. (471 million rubles more than from consumer ones).

Let's imagine the structure of credit operations in Fig. 4.

Figure 4 - Structure of credit operations

The figure shows that consumer loans account for 89%. Commercial loans 78% less and amount to 11%.

Of greatest interest to the bank's clients is the program of lending to the population for any purpose.

Thus, the analysis of lending by PJSC Rosbank shows positive trends in the lending activities of this bank, as well as the demand for the products offered in the field of lending on the market banking services.

These indicators reflect the qualified approach of bank personnel when conducting credit operations, which allows us to say that each credit transaction goes through the successive and necessary stages when issuing a loan.

2.4 Measures to improve the bank’s credit operations using the example of Rosbank PJSC

An analysis of the management of credit operations of Rosbank PJSC revealed the problems that the bank has to face in the process of credit operations.

Two points can be highlighted here:

Organization of work with problem loans;

Aimed at reducing the processing time of a loan application.

Firstly, the key type of risk for the Bank is the risk of non-repayment or untimely repayment by borrowers of loans received from the bank. Despite the fact that the share of overdue debt is small (0.16%), there are individual loans issued to large clients, the debt on which at the beginning of the reporting period in 2015 amounted to 13-18% of the bank’s equity capital.

In its activities to solve this problem, Rosbank PJSC creates sufficient reserves for possible loan losses, also maintains the structure of the loan portfolio in accordance with the standards of the Central Bank of the Russian Federation and follows the accepted course for diversification (risk distribution).

Secondly, in the modern world of super competition and the offer of various credit services, Rosbank PJSC may lose its position due to the lengthy processing of the loan application (a large package of documents, a long time to check the borrower’s creditworthiness, etc.) (Fig. 5) .

Figure 5 - Problems of Rosbank PJSC in the process of lending operations

Let us consider in more detail possible ways to improve lending at PJSC Rosbank.

Dealing with problem loans should include elements of insurance that banks include in their lending programs; some loans inevitably become problematic. This usually means that the borrower has not made one or more payments on time or that the collateral value of the loan has decreased significantly. Despite the fact that each problem loan has its own characteristics, they all have some common features who tell the banker that there are certain difficulties:

Unusual or unexplained reasons for delay financial statements, making payments or ceasing contact with bank employees.

Any unexpected change in a borrower's methods for calculating depreciation, contributions to retirement plans, valuing inventory, calculating taxes, or calculating earnings.

Debt restructuring or refusal to pay dividends, change credit rating borrower.

Adverse changes in the price of the borrower's shares.

The presence of net losses for one or more years, measured using returns on assets, return on equity, or earnings before interest and taxes.

In the event of problems with a loan, the following basic steps can be proposed, which foreign experts describe in relation to the development of loan repayment plans - the process of reimbursing the bank's funds in the event of a problem situation:

Always keep in mind the purpose of developing such plans - to maximize the bank's chances of receiving a full refund of its funds.

It is critical to quickly identify and report any credit-related problems.

Separate the responsibility for developing such plans from the lending function to avoid potential conflicts of interest with a particular loan officer.

Loan officers should discuss as soon as possible possible problems with a problem borrower, especially in relation to reducing costs, increasing cash flows and management improvements.

Naturally, the most acceptable option is always to renegotiate the terms of the loan agreement, which gives the bank and its client the opportunity to resume normal activities. Even if there are serious problems with the loan agreement, the bank may have such problems with the client.

Insurance and the attraction of sufficient security allow you to repay loans and compensate for losses in the bank on interest on the loan through insurance compensation from the insurance company or the implementation of collateral. However, in the context of a complex and complex procedure for implementing collateral, credit insurance in a reliable insurance company looks more preferable, since in this situation insurance company, and not the bank, deal with the problems of collateral, its availability, Security, saving the bank money and the hours of work of employees of credit departments and security services.

In order to reduce financial losses due to borrowers’ failure to fulfill their obligations, the bank is taking the following active steps:

Settlement of problem (overdue) debts through restructuring in cases where economic efficiency is determined by the financial feasibility and business plans for the development of the borrowers’ activities;

Working with problem (overdue) credit debts at all stages of collection of overdue debt using developed and improved strategies, including the involvement of external counterparties;

Collection of problem debts in court, including participation in bankruptcy procedures and financial recovery of borrowers.

Thanks to the implementation of the above measures, the bank can control the quality of the loan portfolio, predict and minimize the amount of created reserves and final losses for the Bank. The main directions for improving credit operations at Rosbank OJSC are presented in Figure 6.

Let's take a closer look at each direction.

1. Quality improvement loan portfolios.

In order to build an effective system for managing the quality of the loan portfolio, it can be recommended that a credit organization implement a set of measures, in particular:

Formation of a loan portfolio in accordance with the chosen lending strategy, periodically adjusted to the market situation, as well as meeting the optimal indicators of credit risk, liquidity and profitability;

Conducting the selection of qualified personnel who will perform their functions under the guidance of experienced managers with a clear motivation for work;

Development of a clear mechanism for market research, sales management, personnel training, identification of potential clients and analysis of their lending prospects;

Carrying out constant monitoring of credit assets, taking into account the relative instability of the loan portfolio, first of all, with a view to identifying deteriorating loans and rejecting them (a loan causing concern must be identified before it becomes problematic in order to make a timely decision on maintaining or terminating the credit relationship);

Achieving sustainable profitability by regulating the concentration of loans and determining target lending indicators, such as, for example, the maximum level of the volume of problem loans from the total volume of current loans;

Regular analysis of retrospective and current state loan portfolio to timely inform bank management about deviations from the lending strategy and generate objective management information.

When considering the problem of improving the quality of the loan portfolios of the analyzed bank, it is important to understand that the quality of lending activities largely depends on the quality of credit risk management.

2. Expansion of credit and financial transactions with all groups of clients.

The expansion of activities is carried out by the bank by searching for the most profitable existing and future markets for banking products and services, taking into account the real needs of clients. Based on this, one of the main goals of banking marketing is to attract new customers, both depositors and borrowers. To achieve this, the bank develops and offers new services and improves the quality of existing ones.

The marketing organization is based on the following principles: the determination of the bank’s structure and its employees to achieve certain marketing goals, the implementation of the bank’s marketing policy; comprehensive organization of marketing in the bank, including analysis, forecasting and planning, stimulation of the marketing service in its development; improving the skills of employees in the field of marketing, ensuring control over marketing decisions.

3. Improving the quality of service and reducing queues at Bank offices

The main thing in the area of improving the quality of service should be a thorough study of customer opinions coming through various communication channels, as well as improving the bank’s processes in accordance with customer expectations.

The bank must implement a unified system for handling requests. The technological process involves consideration of customer requests by specialized specialists. The reasons for requests are carefully analyzed, including in terms of the channels of their receipt. The findings are regularly brought to the attention of the bank’s management, and decisions are made to change technological processes.

An important step in organizing work with customer requests should be the creation of a Customer Care Service. Its tasks include identifying customer requests on the Internet, interacting with clients and analyzing the problems that led to the appearance of requests. Based on analytical data, the service identifies shortcomings in the bank’s business processes and formulates proposals for eliminating them, thereby improving the quality of customer service.

4. Improving the credit risk management system

The method of optimization analysis consists in the redistribution of funds on balance sheet accounts, which, subject to given restrictions, for example, establishing the required level of liquidity, ensures the maximization of the indicator under consideration, for example, determining the minimum required amount of funds that should be in the cash register.

Balance sheet optimization is characterized by a high level of analysis and is one of the main elements of financial management in a commercial bank. At the beginning of the analysis, the indicator to be optimized, the type of optimization are selected, restrictions are introduced, that is, acceptable values of control parameters are established, which must be linear functions or the quotient of linear by linear. Next, the accounts are determined, at the expense of funds on which optimization is carried out and the range of their changes, after which a step-by-step calculation of the optimized indicator is carried out.

5. Modernization of the branch network

When choosing a strategy for the development of a regional network, the bank must proceed from the fact that this strategy is functional, and its specific goals and objectives are formulated in accordance with the corporate strategy, taking into account the bank’s resource capabilities, the quality of internal technologies, competitive position, priority areas of activity, as well as features functioning and effectiveness of the existing network. The bank must clearly define which goals will be key when developing a regional network: capturing a certain market share or increasing profitability, increasing the resource base or searching additional features placement of funds. Based on the target direction of network development, the bank must determine the type of regional network development strategy.

In efforts to reduce the time it takes to consider applications at Rosbank PJSC, it is recommended to take measures to eliminate the reasons causing this problem:

A large package of lending documents.

In order to attract more clients, it is necessary to review and reduce the number of documents required to obtain a loan.

Errors of specialists (defects in documents).

This requires targeted work with staff.

These are the main steps to improve the management of credit operations of Rosbank PJSC. I would like to emphasize that the main idea in studying this issue in the work is a systematic approach, the need for which is obvious when we're talking about about such complex problems as credit issues.

As a result, we can say that Rosbank PJSC, as a modern commercial bank, “keeps up with the times”, pursuing a flexible credit policy that meets the latest requirements of the domestic credit market. However, the problems identified during the analysis (the risk of non-repayment or untimely repayment by borrowers of loans, lengthy processing of loan applications) make us think about the future of the bank’s credit policy, which is far from rosy.

Conclusion

Having studied the bank’s credit operations and their organization, we can conclude that in modern conditions the lending process acts as a pillar of the modern economy and is used by banks to generate income.

Credit transactions are carried out subject to the availability of available funds. The loaned value is sold on the terms of payment, repayment and urgency. The main features of credit relationships are repayment, urgency and payment, that is, funds are provided for a certain period, must be returned, and for their use the borrower pays a certain amount to the lender.

A commercial bank is an organization whose main function is to mobilize free funds of economic entities and place them in the economy. The implementation of this function affects the formation and use of credit potential funds. Lending is the most profitable and riskiest active operation of a commercial bank. Therefore, if the bank's goal is to obtain maximum profit, then it must pay great attention to credit operations. To achieve this goal, the bank must manage the process of forming its resource base and use it effectively.

Currently, the issue of efficient use of the resources of commercial banks is an important task in banking practice.

Effective management of commercial bank resources is a rather complex topic in Russian banking theory. Now each bank organizes its work on resource management in its own way. This is due to the different market segments in which a particular bank operates, and the lack of a generally accepted methodology for resource management. Therefore, each market participant must develop this problem, taking into account the peculiarities of the functioning and position of the bank in the banking services market.

The purpose of the loan is to generate income. Without pursuing this goal, the debtor does not take, and the creditor does not provide a loan. The lender hopes to earn interest on the capital, taking into account the degree of risk. The borrower hopes that by using borrowed funds he will be able to generate income that will be sufficient to pay interest to the lender.

Through the process of short-term and long-term lending, the function of redistributing funds to financial system countries.

The main forms of collateral for loans and credit operations are: collateral, guarantee and collateral. bank guarantee. In Russian practice, the use of various forms of security has been widely developed.

Carrying out credit operations is directly related to risk. Particular attention is paid to credit risk, since in recent years the degree of influence of credit risk on the activities of credit operations, as well as on the activities of Russian banks in general, has clearly emerged. Therefore, to reduce risk, not only its nature, but also its management was considered.

Speaking about PJSC Rosbank, it should be noted that in its development the bank relies on extensive experience in working with enterprises and organizations of various industries and forms of ownership.

The issue of resource management in modern conditions is particularly acute, since the main financial indicator of the bank's activities - profit - depends on how effectively the bank's resources are used. Both the volume and dynamics of profit growth depend on the correct use of resources.

An analysis of the management of credit operations of Rosbank PJSC revealed problems that the bank has to face in the process of credit operations.

These problems of credit operations provide the basis for the development of proposals for improving the management of credit operations at PJSC Rosbank.

In order to reduce financial losses due to borrowers’ failure to fulfill their obligations, the bank is taking the following active actions:

Settlement of problem (overdue) debt through restructuring in cases where economic efficiency is determined by the financial solvency and business plans for the development of the borrowers' activities;

Working with problem (overdue) loan debt at all stages of collection of overdue debt using developed and improved strategies, including with the involvement of external counterparties;

Collection of problem (overdue) debts in court, including participation in bankruptcy procedures and financial recovery borrowers.

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Analysis of the structure of the loan portfolio of OJSC JSCB "ROSBANK"

According to experts, 2013 became quite difficult for the Russian economy. The decline in economic growth that began in 2012 intensified and turned into stagnation. According to Rosstat, the increase Russia's GDP in 2013 amounted to only 1.3% versus 3.4% in 2012. The growth of gross value added slowed down in all sectors of the Russian economy. At the same time, the greatest growth in 2013 was recorded in the field of financial activities and amounted to 12.0% (19.6% in 2012). The growth of value added in trade in 2013 slowed to 1.1% from 3.8% in 2012, in mining - to 0.9% to 1.6%, in transport and communications - 0.9% from 3.8%, in manufacturing industries - 0.8% from 2.7%.

The share of final consumption expenditures in the structure of GDP at the end of 2013 increased and amounted to 71.1% (for comparison - 68.3% in 2012). The share of net exports decreased in 2013 to 5.7% from 7.4% in 2012.

The only source of growth in 2013 remained private consumption, which supported the growth of consumer lending and an increase in wages for budget employees. However, the growth rate of retail lending, which was the main driver of the banking market in 2010 - 2012, slowed down to 30%. In the future, this trend may continue due to the introduction of additional restrictions by the Central Bank of the Russian Federation in order to streamline the consumer lending market, the adoption of which is caused by the high level of debt among the population and the growth rate of overdue debt, which in 2013 for the first time exceeded the growth rate of the loan portfolio.

Also, 2013 was characterized by a significant decline in investment in the Russian economy and capital outflow from the country, the main reason for which can be attributed to the completion of a number of large-scale government infrastructure projects.

At the end of 2013, banking sector assets grew by 16% against 19% in 2012. The stagnation of the Russian economy had a negative impact, first of all, on the growth rate of lending to large businesses (10% in 2013 versus 12% in 2012) . The segment that managed to maintain the same growth rate (17 - 18% per year) is lending to small and medium-sized businesses.

However, corporate business remains an important area of activity and plays a significant role in the formation of the Bank's loan portfolio and income. The Bank has a widely diversified client base to which it can provide a wide range of banking services.

According to the segmentation of the client base, the corporate block includes clients with annual revenues of 4.0 billion rubles.

For OJSC JSCB ROSBANK, servicing corporate clients remains one of the priority areas of activity, and, developing all areas of this business, the Bank offers a full range of banking services.

The Bank has formed a diversified corporate loan portfolio, a significant share of which consists of funds provided to enterprises in the electric power industry, petrochemical and oil and gas industry, ferrous and non-ferrous metallurgy, mechanical engineering, military-industrial complex, wholesale and retail trade, food industry.

In 2013, the Bank maintained its interest in servicing small and medium-sized businesses (hereinafter referred to as SMEs). The presence of a branch network (SME products are provided in 97 branches of the Bank) ensures that small and medium-sized businesses can receive any banking service in a place as close as possible to the place of doing business.

At the end of 2013, over 1,408 clients of small and medium-sized businesses (including individual entrepreneurs) from various sectors of the economy (trade, industry, construction, exploration and mining, metallurgy, agriculture and agro-industrial complex, mechanical engineering) were issued loans in an amount exceeding 10 billion rubles.

The loan portfolio of OJSC JSCB ROSBANK as of 01/01/2013 and 01/01/2014 is presented in table B.1.

Thus, the volume of net loan debt as of January 1, 2014 amounted to 479,159,870 thousand rubles, which is 9,327,732 thousand rubles. more compared to the figure as of 01/01/2013. The volume of other funds placed with the Bank of Russia as of 01/01/2014 amounted to 3,569,213 thousand rubles. while as of January 1, 2013, their number was zero. The amount of interbank loans and deposits decreased during the reporting year by 9,781,402 thousand rubles. The volume of loan debt of legal entities and individuals during the reporting year increased by 1,847,446 thousand rubles. and 17,029,539 thousand rubles. accordingly, the growth rate of the amount of loan debt of individuals is ahead of the growth rate of the amount of loan debt of legal entities by 6.87%. The growth in the volume of lending to individuals can be explained by the all-Russian trend towards an increase in retail business.

The amount of reserves for possible losses on loans to legal entities decreased during the reporting year by 690,752 thousand rubles. and amounted to 01/01/2014 27819668 thousand rubles. The same figure for loans to individuals, on the contrary, increased by 2,511,211 thousand rubles. and according to data as of January 1, 2014, it amounts to 22,587,290 thousand rubles.

Geography of the loan portfolio of OJSC JSCB ROSBANK according to information as of 01/01/2014 and 2013. presented by the data in Table B.2, you can clearly see it in Figure 1.

Thus, according to data as of 01/01/2014, as well as as of 01/01/2013, a significant portion of loans (97.19% and 93.57%, respectively) were provided to companies operating in the Russian Federation, which represents a significant geographic concentration in one region.

The largest share of loans invariably goes to clients in the Central Federal District (including Moscow and the Moscow region). In addition, there is a trend towards a reduction in the issuance of loans to clients in foreign countries - the CIS, Europe, the USA and others.

Figure 1 - Geography of the loan portfolio

OJSC JSCB "ROSBANK" as of 01/01/2014

The structure of the retail loan portfolio of OJSC JSCB ROSBANK is shown in Table 5.

Table 5 - Structure of the retail loan portfolio of OJSC JSCB ROSBANK

Indicator	As of 01/01/2014	As of 01/01/2013	Change
		absolute value (contract value), thousand rubles	share in the total amount of loans, %	absolute change, thousand rubles	growth rate, %
Loans to individuals, including:
Housing loans
Mortgage loans
Car loans
Consumer loans

The structure of the retail loan portfolio in 2013 changed slightly due to a reduction in the share of auto loans - 27.37% as of 01/01/2014 compared to 32.92% as of 01/01/2013 (the growth of this area of lending in the reporting year lagged behind other areas of retail lending). Share of others consumer loans increased to 49.03%, and the share mortgage loans increased to 22.11% (by 18,446,168 thousand rubles and 7,099,362 thousand rubles, respectively). The growth in sales of credit cards and overdrafts as part of consumer loans in 2013 was facilitated by a continuous increase in demand from the population and measures to improve the credit products provided by the Bank taking into account changing market conditions.

The structure of loans to legal entities at OJSC JSCB ROSBANK is clearly presented in Figure 2.

Figure 2 - Structure of loans to legal entities of OJSC JSCB ROSBANK as of 01/01/2014, thousand rubles

Data from reporting form 0409302 “Information on placed and attracted funds” allow you to obtain detailed information about the enlarged industry structure of the Bank’s corporate loan portfolio, which is presented in Table B.3.

The diagram confirms the presence of a diversified corporate loan portfolio in the Bank. The Bank's clients are mining industry enterprises, companies producing and distributing water, gas and electricity, manufacturing industries, mechanical engineering enterprises, military-industrial complex, wholesale and retail trade, food industry, transport companies.

The total volume of loans to legal entities during the reporting period increased by 12367447 thousand rubles, i.e. by 6.62%. Wholesale and retail trade lending has the largest share in the total volume of the corporate loan portfolio - 26.21%; as of 01/01/2014, this figure increased by 27.97% compared to the data as of 01/01/2013 or by 11,415,104 thousand. r. the share of loans granted to enterprises in the mining industry and companies conducting real estate transactions decreased by 9,005,137 thousand rubles. and 619,358 thousand rubles. respectively.

Table B.4 presents the loan portfolio of OJSC JSCB ROSBANK in terms of the time remaining until full repayment of the debt.

Depending on the terms of lending, long-term, medium-term and short-term loans. The shorter the loan term, the more liquid it is. As maturities lengthen, liquidity decreases and credit risk increases. Table B.4 shows that the largest share in the structure of the loan portfolio is made up of loan investments over 1 year.

The total volume of loans issued for a period of more than a year amounted to 251.39 billion rubles as of 01/01/2014, which is an increase of 4.19 billion rubles. more compared to the data as of 01/01/2013. Loans issued by OJSC JSCB ROSBANK to legal entities for a period of over 1 year amounted to: 71.56 billion rubles. as of 01/01/2013, 72.56 billion rubles. as of January 1, 2014, OJSC JSCB ROSBANK gives priority to issuing medium-term and long-term loans.

OJSC JSCB "ROSBANK" is a modern credit organization that takes an active position in all types of financial services. The bank is distinguished by flexibility in decision-making and an individual approach to each client. Stable position on Russian market, the reputation of a reliable and trusted Bank, as well as highly professional management, allowed the Bank to make a profit of 858 million rubles.

The net profit of the Societe Generale banking group in Russia amounted to 3.1 billion rubles. for 2016 according to IFRS

During 2016 banking group Societe Generale in Russia Rosbank, DeltaCredit, Rusfinance Bank and their subsidiaries (hereinafter referred to as the Group) significantly improved their financial results, earning a net profit of RUB 3.1 billion. compared to a loss of 9.2 billion rubles. in 2015. Already in the second half of 2016, the Group’s results moved into the positive zone and in the 4th quarter alone amounted to RUB 2.8 billion.

Despite the difficult economic environment, the Group's activity on the Russian market has recovered to a significant extent. In particular, the growth of the active client base has resumed, the volume of loans issued to individuals is returning to the pre-crisis level, and to legal entities - exceeding them, which allows the Group to maintain its market position in the retail business and increase its market share in the corporate business.

Major achievements in retail business

The volume of retail loans issued by the Group in 2016 increased by 35% compared to 2015, although it still remains below the level of 2014 (-22%). As a result, the Group continues to maintain its leading position in the retail lending market, increasing its market share in issuing loans from 3.4% to 3.6%, while in the consumer lending segment the market share increased from 2.2% to 2.6%.

At the same time, the Group maintains its leadership in mortgages and car loans thanks to the high performance of its specialized subsidiary banks DeltaCredit and Rusfinance Bank.

DeltaCredit is in the top 5 in terms of mortgage loan issuance volumes (according to the Rusipoteka analytical center) with a market share of 3.1%. The total volume of mortgage loans issued in 2016 was 44% higher than in 2015, while the quality of the ruble mortgage portfolio was much higher than the market average. As of December 31, 2016, the 90+ overdue period in DeltaCredit’s ruble mortgage portfolio was 1.21%, compared to the market indicator of 2.65%.

Rusfinance Bank is consistently among the TOP 3 banks in the car lending market with a share of 13.5%. The total volume of car loans issued in 2016 is 28% higher than in 2015. The Bank continues to participate in state program preferential car loans, within which it ranks 2nd in terms of issuance volume (according to the Ministry of Industry and Trade).

In 2016, Rosbank continued to successfully expand its client base: the number of new clients attracted in 2016 was 33% higher than in 2015, the portfolio of active clients increased by 1%. This became possible thanks to innovations in the field of daily banking services, as well as effective synergy with corporate business. Thus, in the 4th quarter of 2016, Rosbank, together with the international payment Mastercard system and O'KEY Group of Companies launched the ROSBANK O'KEY Mastercard debit card. Rosbank's Visa Platinum Supercard+ card is recognized as the most attractive for clients with an above-average income - about 130 thousand rubles per month, according to RBC.

Major achievements in corporate business

As part of the international group Societe Generale, Rosbank continues to increase its share in the banking services market for the largest Russian and international companies; the volume of loans issued in 2016 is 29% higher than in 2015 (excluding currency revaluation).

Societe Generale/Rosbank are leaders in the Russian syndicated lending market with a share of 23.5% (according to the Bloomberg news agency). Major transactions with major clients during 2016, organized jointly with Societe Generale:

Uralkali loan agreement in the amount of US$1.2 billion, acting as one of the coordinating authorized lead arrangers and bookrunners with 16 international banks;
PhosAgro's debut pre-export financing totaling US$250 million with a four-year maturity, serving as one of the coordinating authorized lead arrangers and passport bank;
pre-export loan to the EuroChem group in the amount of US$800 million for a period of five years, as a participant in a pool of international banks;
club deal to finance prepayment under an agreement for the supply of oil and petroleum products for PJSOC Bashneft for a total amount of USD 500 million for 5 years, acting as the initial authorized lead arranger, bookrunner, coordinating bank and documentation bank;
syndicated pre-export loan for one of the leading copper producers in Russia - CJSC Russian Copper Company (RMK), as the authorized lead arranger. The loan was provided for a total amount of $300 million for a period of 5 years.

Rosbank is actively expanding its trade finance business. Thus, according to the results of 2016, Rosbank ranks 7th in the market in terms of the volume of its trade finance portfolio, showing an increase of 25% compared to last year.

Development continues investment services. In 2016, Rosbank placed 23 market issues of 16 issuers with a total volume of 88.4 billion rubles, taking fifth place in the ranking of leading organizers of market placements of Russian bonds according to Cbonds. Rosbank's share in market issues amounted to 7.95%. The bank also ranks fifth among organizers of corporate issues with a market share of 5.73% and third place among organizers of mortgage bonds with a market share of 14.55%.

Rosbank Factoring occupies a prominent position in the factoring services market. Based on the results of 2016, the company took 8th place in the overall rating published by the Association of Factoring Companies of Russia, continues to increase its client portfolio (+56% compared to 2015) and the turnover of assigned receivables (+42% compared to 2015) .

Rosbank Leasing shows high dynamics - the portfolio of concluded transactions increased by 13% in 2016. Rosbank Leasing became a laureate of the annual award “Financial Elite of Russia - 2016” in the category “Dynamics of Development”, subgroup “Leasing”.

Loan portfolio

The Group's banks are aimed at cooperating with the most reliable borrowers, carefully assess the solvency of clients in the new economic conditions and give priority to the quality of the loan portfolio.

Guided by these principles, during 2015 and the first half of 2016 the Group pursued a policy of significantly more cautious resumption of retail lending than the market as a whole. The issuance of retail loans acquired its main dynamics only in the second half of 2016, as a result of which the group’s retail loan portfolio decreased by 8% since the beginning of 2016 (excluding currency revaluation).

At the same time, the corporate loan portfolio continued to grow, increasing by 2% since the beginning of 2016 (excluding currency revaluation) against the backdrop of negative market dynamics during the year (-3.6%). At the same time, it is necessary to note the change in the structure of the corporate loan portfolio by currency over the past 12 months: the share of loans in foreign currency decreased by 15%; while the share of corporate loans in rubles increased by 17%. Such changes had a positive impact on the Group's interest margin.

As a result of such mutual dynamics of the retail and corporate portfolios and despite the dynamic growth of loans, the Group’s total loan portfolio in 2016 decreased by 4% (excluding currency revaluation).

Deposits and current accounts

During 2016, the Group's portfolio of client liabilities decreased by 4% (excluding currency revaluation). The driver of the decline was funds from legal entities, the volume of which was systematically reduced in 2016 by 15% (excluding currency revaluation), compared to the market (-4%). On the one hand, the dynamics are explained by the need to bring the volume of liabilities in line with the dynamics of the loan portfolio, on the other hand, to replace them with cheaper funds of individuals.

The volume of retail funds increased in 2016 by 13% (excluding currency revaluation), which exceeds the indicators of the banking system (+9.2%). It is especially worth noting the 50% increase in the volume of demand funds of individuals (excluding currency revaluation). The market share in this segment increased from 1% to 1.43% during the year, which is fully consistent with the Group's goal to develop its transaction business.

Financial result

The Group's net interest income in 2016 amounted to RUB 38.9 billion, an increase of 4% compared to the same period last year. The positive performance is mainly due to the improvement in interest margins as a result of lower funding costs due to consistent measures to optimize the balance sheet structure.

Net commission income in 2016 amounted to RUB 8 billion, an increase of 7% compared to 2015. On the one hand, the dynamics of commissions is due to the intensification of retail lending and, as a result, an increase in commissions from insurance companies (commission income from the retail business increased by 29%). On the other hand, commission income from corporate business increased due to the development of cash settlement services (+16%) and trade finance (+23%).

The Group's operating expenses in 2016 amounted to RUB 32.9 billion, remaining at the 2015 level, despite inflation, which amounted to 5.4% in 2016. Containment of growth became possible as a result of cost optimization measures on the part of Rosbank: further reorganization of the retail network, as well as staff reduction by 8.7% compared to 2015.

Deductions to reserves in 2016 amounted to 12.7 billion rubles, having decreased by 42% compared to the previous year. The effect of reducing reserves was achieved mainly through restoring the quality of the retail portfolio, as well as improving debt collection processes. The quality of the corporate portfolio remains at a high level. However, these results include costs incurred to refinance the foreign currency mortgage portfolio. Based on the results of the work done, we do not expect any further material negative impact of this activity on the Group’s results.

“The Societe Generale banking group in Russia continues to improve its performance in all areas of business. During 2016, we increased our market share in both retail and corporate business. Increased operational efficiency was made possible through the improvement of all business processes of the Group along with the formation of a corporate culture aimed at change. Thus, Rosbank is introducing lean management in order to increase staff involvement in improving internal bank processes, as well as an agile approach to change management. A new credit conveyor for retail loans was also deployed, and a CRM platform was launched to increase automation banking, centralization of support functionality was carried out in two cities— Nizhny Novgorod and Krasnoyarsk. Thanks to the efforts of the team in 2016, the Group became more resistant to external influences, and also better prepared for further sustainable and effective business growth in the future,” summarized Dmitry Olyunin, Chairman of the Board of Rosbank.

Rosbank and its subsidiaries maintain strong positions in terms of liquidity and capital adequacy ratios, which significantly exceed the mandatory standards established by the regulator. International rating agencies Fitch Ratings and Moody’s Investors Service confirmed the ratings of Rosbank, Rusfinance Bank and DeltaCredit in 2016 at the level of the country’s sovereign rating.

* Rosbank, DeltaCredit, Rusfinance Bank and their subsidiaries

Activities of banks in market economy subject to the influence of various external and internal factors. In the context of the ongoing recession in Russian economy The most important problems for commercial banks are the assessment and analysis of risks when providing loans to borrowers.

A loan portfolio in banking practice contains a set of loans from a particular bank or a set of bank loans ranked by risk level. Banks issue loans by segment: legal entities and individuals, financial organizations, large, medium and small businesses, bona fide and dishonest clients, etc.

Any credit institution is concerned not only with the quantitative indicators of lending, but also with the quality. The quality of a loan portfolio is understood as a property of its structure that has the ability to provide the maximum level of profitability at acceptable level credit risk and balance sheet liquidity.

Credit risk is the risk of the borrower’s failure to fully and completely established deadlines their financial obligations stipulated by the contract. In conditions of unstable economic situation in the country, banks are forced to take on increased risks, and in connection with this, the problem of reducing banking risks has increased sharply. The total risk of a credit institution depends on the degree of credit risk of individual segments of the portfolio, as well as on the diversification of the structure of the loan portfolio and its individual segments.

One of the methods for reducing and preventing credit risks used in daily banking practice is the formation of reserves for possible loan losses. If the bank pursues an effective policy in the field of reserve formation, then this policy will not only contribute to increasing the stability of the financial activity of the credit institution, but will also allow it to avoid fluctuations in the amount of profit associated with the write-off of loan losses.

Guided by regulations Bank of Russia, credit organizations to determine the estimated reserve use the distribution of loans into five quality categories: 1) standard; 2) non-standard; 3) doubtful; 4) problematic; 5) hopeless. Each of these categories is characterized by a certain interval of its depreciation: 0.1-20%; 21-50%; 51-100%; 100%. It should be noted that this classification of categories of loans issued is entirely focused on a qualitative analysis of the borrower’s financial condition. When determining the likelihood of loan depreciation, banks evaluate the client based on characteristics such as the borrower’s financial stability, financial capabilities, and his ability to secure a loan.

For the purpose of calculating the reserve, loans granted to individuals are formed into separate portfolios for various groups of credit products that have the same risk characteristics. The bank analyzes each portfolio based on the length of time the loans remain in arrears accounts. A loan is considered completely impaired when the amount of payment of principal and interest on it is overdue for more than 180 days.

Against the backdrop of a slowdown in economic growth in Russia over the past two years, it is advisable to systematically monitor credit operations in the context of borrower clients in order to take timely measures. For this purpose, we will study the state of the loan portfolio of PJSC ROSBANK (Table 1).

Table 1.

Composition and structure of the loan portfolio of PJSC ROSBANK for 2013-2015.

Indicator							Change for 2013-2015
Indicator
legal
including, overdue
physical
including, overdue
Credit briefcase
including, overdue

As can be seen from the table data, the loan portfolio of PJSC ROSBANK consists of loans provided to legal entities and individuals. In 2013, the majority of loans (53.2%) were provided to individuals. In subsequent years, the bank changed direction and already in 2015, the share of loans issued to individuals decreased to 37.31%. Accordingly, the share of loans issued to legal entities increased.

Despite the increase in the volume of lending to legal entities, the share of overdue debt tended to decrease – 4.23 percentage points. The level of overdue debt of legal entities turned out to be half as much as the share of overdue debt of the population, which increased by 8.88 percentage points over the analyzed time interval. The share of total overdue debt in the loan portfolio increased from 8.7% to 10.32%, which required an increase in contributions to reserves for possible losses.

The trend towards a decrease in lending volumes and an increase in overdue debt continued in the first months of the current 2016. The volume of loans provided to individuals decreased as of 01.03. 2016 amounted to 175.2 billion rubles. (Table 2) .

Table 2.

Overdue debt on loans issued to individuals by PJSC ROSBANK as of 01.03. 2015-2016

The decrease compared to 03/01/2015 reached 24.61%. However, the volume of overdue debt in the analyzed Bank during the same period increased by 42.31%, which is a negative point, and was 2 times higher than the growth achieved in the lending market in the banking system. The share of overdue loans increased from 7.17% to 13.54%.

Despite the increase in the share of overdue debt in the total loan portfolio, the Bank adheres to a conservative approach to assessing credit risk and pays special attention to the adequacy of the formation of reserves for accepted credit risks. The result of credit risk management is the qualification of assets into the appropriate quality categories (Table 3).

Table 3.

Share of debt classified by quality category

Indicator		Share of debt qualified in the following
Indicator
Loan and equivalent debt to her, total

As can be seen from the data presented, as of January 1, 2015, the majority of the loan portfolio (88.5%) consists of loans and equivalent debt of the 1st and 2nd quality categories, which indicates the proper quality of the loan portfolio. Compared to 01/01/2013, the share of loans of the 1st and 2nd quality categories increased by 5.3 percentage points. The share of the fourth quality category decreased by 0.8 percentage points, and the share of the fifth category increased slightly, by only 0 ,4 p.p.

These successes were achieved thanks to the credit risk management system established at PJSC ROSBANK.

In particular, minimizing credit risk in the corporate loan portfolio includes the following measures:

Maintaining a diversified portfolio structure by industry, regional, currency, terms of loans issued, type of collateral, and types of loan products;

Establishing risk limits for individual borrowers or groups of related borrowers;

Application of a differentiated, multi-level, integrated approach to assessing customer loan applications.

In the field of retail lending, the most important aspect of the Bank’s activities is maintaining an optimal balance between the profitability of the retail loan portfolio and existing credit risks, taking into account the possible trend of their further growth. The main tools for controlling credit risks are:

Improving the limiting policy, according to which decisions on issuing loans are made either according to customer scoring, or jointly by representatives of business units and divisions responsible for monitoring retail credit risks, depending on the amounts, types of loan products, and lending conditions;

Implementation of a methodology for risk segmentation of the client base;

Carrying out continuous monitoring of the effectiveness of scoring models developed according to the unified methodology of the Societe Generale Group, their improvement, constant expansion of coverage of credit products and client segments with scoring cards;

Prompt response to credit risk growth factors – tightening conditions and/or limiting lending to potential borrowers whose credit risk is assessed as “high”, by modifying and adapting scoring models, rules and lending conditions;

Application of a pricing policy of differentiating interest rates depending on the risk segment of the borrower, which makes it possible to attract high-quality borrowers by offering them more attractive rates due to the low risk profile of such borrowers.

In order to reduce financial losses due to borrowers’ failure to fulfill their obligations, the Bank is taking the following active actions:

Working with problem (overdue) loan debt at all stages of collection of overdue debt using developed and improved strategies, including with the involvement of external counterparties;

Collection of problem (overdue) debts in court, including participation in bankruptcy procedures and financial recovery of borrowers.

By implementing the above measures, the Bank can control the quality of the loan portfolio, predict and minimize the size of generated reserves and final losses for the Bank.

References:

Annual report of PJSC ROSBANK for 2014. [ electronic resource] - Access mode. - URL: https://www.rosbank.ru (date of access: 03/12/2016)
Kazakova K. A. Modeling bank reserve to cover credit losses: a panel data aspect. // Finance and credit. – 2015. - No. 21. – pp. 44-49.
Regulations of the Bank of Russia dated March 26, 2004 No. 254-P “On the procedure for forming credit organizations reserves for possible losses on loans, on loan and equivalent debt" [electronic resource] - Access mode. - URL: http://base.garant.ru/584458/ (access date: March 12, 2016)
Rating of banks as of 03/01/2016 according to the indicator “Overdue debt on loans issued to individuals.” persons" [electronic resource] - Access mode. - URL: http://mir-procentov.ru/banks/ratings/credits-delay-part-fl.html (date of access: March 12, 2016)