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Investment Banking

2015 Priorities

2015 was in general a success for the Investment Banking of the Otkritie Financial Corporation Banking Group. Investment Banking was primarily focused on currency and interest rate derivatives, striving to offer integrated solutions to its clients.

The Bank managed to build a new debt capital markets team with over 20 new fixed income and interest rate traders hired over the course of 2015.

In 2015, Otkritie Financial Corporation Bank arranged a large number of rouble-denominated bond issues of Russian clients (corporations, Russian regions, and financial institutions).

In 2016, the Bank intends to remain among the top 3 bond arrangers and plans to prioritise tailor-made solutions for major clients.

Financial Highlights of 2015 (IFRS)

million roubles

2014

2015

Y-o-y, %

Key balance sheet figures 

Total assets of the segment 

1,467,951

2,135,046

45.4

      including net loans and advances to banks and other financial institutions

30,721

56,172

82.8

      including financial assets at fair value through profit or loss 

291,824

301,977

3.5

      including net loans to clients 

789,317

1,534,215

94.4

Total liabilities of the segment

1,162,573

1,704,009

46.6

     including due to banks

957,297

1,564,500

63.4

Key profit & loss figures 

Net interest income 1

5,194

(8,726)

n.a.

Financial results from trading and FX operations 

(7,290)

30,892

n.a.

Total operating income before impairment losses and provisions for other transactions

(1,520)

16,233

n.a.

Operating expenses

1,680

2,115

25.9

Profit/(loss) before income tax

(3,202)

13,725

n.a.

1 Net interest income before gain from remeasurement of cash flows from assets acquired as a result of business combinations and before allowance for impairment of interest-bearing assets. 
Note: The financial highlights are shown as of December 31, 2015, for the year ended on December 31, 2015; and as of December 31, 2014, for the year ended on December 31, 2014. 

Comments on Financial Highlights (IFRS)

In 2015, growth in investment banking assets was driven by larger volumes of repo transactions. As collateral for reverse repo transactions, Otkritie Financial Corporation Banking Group accepted highly liquid securities included into the Bank of Russia’s Lombard List.

The Group continued investing in low-risk securities in 2015, thus sustaining its liquid assets. Financial assets reported at fair value through profit or loss accounted for 9.0% of the Group’s assets as of December 31, 2015 (11.3% as of December 31, 2014). 

The investment banking segment of the Group posted RUB 13.7 billion profit in 2015, attributable primarily to trading and FX transactions. In 2015, investment banking earned RUB 30.9 billion from trading operations, including RUB 14.9 billion from securities trading, and RUB 16.6 billion from FX transactions. The significant part of trading income from operations with securities was attributable to the positive mark-to-market revaluation of the fixed income securities portfolio in 2015.

Strategic Objectives of Investment Banking for 2016

The key objectives of investment banking for 2016 include:

  • focus on clients’ business segments;
  • focus on fee and commission income growth;
  • focus on the clientele expansion and the efficiency of the client base and customers’ relations management (maximising earnings per client).