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Small Business Banking

2014 Priorities

In 2014, the small business banking of the Group focused on expanding transaction banking and commission-based businesses with small companies and individual entrepreneurs with a view to winning new clients and cross-selling to existing ones.

During 2014 Otkritie FC Bank continued to transfer the small business from Otkritie FC Bank to Khanty-Mansiysk Otkritie Bank as part of the Group reorganisation and consolidation strategy. The key objective to retain clients was successfully achieved. The total number of small business clients totalled 139,126, demonstrating only a slight decline from 141,500 in 2013.

Throughout 2014, the Group remained focused on sustaining its portfolio’s quality and keeping its risks under control.

In line with its conservative risk management approach, in 2014, the Group increased its allocations to loss provisions in the small business segment to RUB 3.8 billion (up from RUB 2.7 billion in 2013), which pushed down the segment’s profit to RUB 0.8 billion as at the end of 2014.

The Group continues its cooperation with governmental and pubic organisations supporting small businesses, including foundations that support small business financing by issuing guarantees if collateral is not sufficient. As at the end of 2014, such guarantees for loans issued by the Bank to small businesses totalled RUB 1.8 billion (compared with RUB 2.5 billion in 2013).

20142013
million
roubles
%million
roubles
%

Retail trade

10,906

24.5

11,432

22.4

Services

7,860

17.7

8,013

15.7

Wholesale trade

7,254

16.3 

10,390

20.4

Transport and communication

3,926

8.8 

4,086

8.0

Industrial manufacturing

3,621

8.1 

5,207

10.2

Operations with real estate

3,501

7.9

4,205

8.2

Construction of industrial and commercial real estate

1,807

4.1 

2,544

5.0

Leasing

580

1.3 

400

0.8

Agriculture

494

1.1 

809

1.6

Housing construction

251

0.6 

673

1.3

Mining890.2 

86

0.2

Other

4,152

9.4 

3,195

6.2

Gross small business loans

44,441

100.0 

51,040

100.0

 

Financial Highlights of 2014

In millions of Roubles

2014

2013

Y-o-y, %

Selected financial position data:

Total segment assets

48,929

54,358

-10.0

     of which, net loans to clients

40,637

48,309

-15.9

Total segment liabilities

44,135

54,455

-19.0

     of which,client accounts

43,185

49,358

-12.5

Key profit & loss figures1:

Net interest income 2

4,550

4,233

7.7

Net fee and comission income

2,310

1,312

76.1

Operating income before provision for impairment

5,113

4,819

6.1

Operating expenses

4,198

2,999

40.0

Profit before taxation

833

1,768

-52.9

As at the year end.. 
The amounts relating to Treasury, Asset and Liability management units and Unallocated balances are excluded from the calculation.
Note: The financial highlights are shown as of December 31, 2014, for the year ended on December 31, 2014; and as of December 31, 2013, for the year ended on December 31, 2013.

Comment on Financial Highlights (IFRS)

The integration process of the Group and the overall market turbulence stimulated the main developments in the small business banking in 2014.

As a part of the Group’s reorganisation program some of the small business clients, which are more close to the corporate clients according to their business profiles, were reclassified to corporate business clients. This reclassification resulted in a technical reduction of the number of small business clients and the reduction of the loan and deposit portfolios of the small business banking as at the end of 2014.

The customer accounts of the small business segment totalled RUB 43.2 billion, a 12.5 % increase year-on-year.

Operating income of the small business banking segment increased in 2014 in line with the rising net interest income and net fees and commission income due to higher volumes of cash and settlements transactions in the segment during 2014.

 

 

Strategic Objectives in Small Business Banking for 2015

  • enhancing efficiency and reducing the costs of the loan factory;
  • increasing debt collection performance;
  • reducing risk appetite with focus on secured lending;
  • sustaining business volumes
  • integrating the small business banking of Petrocommerce Bank with that of Khanty- Mansiysk Otkritie Bank.