6M 2013 IFRS Results Reporting

BANK VOZROZHDENIE
International Financial Reporting Standards
Interim Condensed Consolidated Financial
Statements
(unaudited)
June 30, 2013

Bank Vozrozhdenie

CONTENTS

Interim Condensed Consolidated Statement of Financial Position................................................................................. 2
Interim Condensed Consolidated Statement of Comprehensive Income ....................................................................... 3
Interim Condensed Consolidated Statement of Changes in Equity................................................................................ 4
Interim Condensed Consolidated Statement of Cash Flows .......................................................................................... 5

Notes to the Interim Condensed Consolidated Financial Statements
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

Introduction ......................................................................................................................................................... 5
Principles of Accounting Policies, Critical Accounting Estimates and Judgments .............................................. 5
Cash and Cash Equivalents ............................................................................................................................... 5
Trading Securities ............................................................................................................................................... 6
Due from Other Banks ........................................................................................................................................ 6
Loans and Advances to Customers .................................................................................................................... 6
Investment Securities Available for Sale........................................................................................................... 11
Other Assets ..................................................................................................................................................... 11
Due to Other Banks .......................................................................................................................................... 11
Customer Accounts .......................................................................................................................................... 11
Debt Securities in Issue .................................................................................................................................... 12
Subordinated Loans.......................................................................................................................................... 13
Interest Income and Expense ........................................................................................................................... 14
Fee and Commission Income and Expense ..................................................................................................... 14
Administrative and Other Operating Expenses ................................................................................................. 15
Segment Analysis ............................................................................................................................................. 15
Financial Risk Management ............................................................................................................................. 22
Contingencies and Commitments ..................................................................................................................... 26
Fair value of financial instruments… ................................................................................................................. 26

Bank Vozrozhdenie
Interim Condensed Consolidated Statement of financial position as at June 30, 2013

Note

June 30,
2013 (unaudited)

December 31,
2012

39 829

40 885

2 381
7 956
1 412
150 019
3 850
3 002
947
684
1 332
4 756

2 097
5 884
5 794
141 662
2 476
3 064
1 103
898
1 222
3 977

216 168

209 062

8 374
169 310
9 136
235
756
7 006

7 647
163 876
7 032
2 803
350
496
6 051

194 817

188 255

EQUITY
Share capital
Share premium
Retained earnings
Revaluation reserve for investment securities available for sale

250
7 306
13 631
164

250
7 306
13 124
127

TOTAL EQUITY

21 351

20 807

216 168

209 062

In millions of Russian Roubles
ASSETS
Cash and cash equivalents
Mandatory cash balances with the Central Bank of the Russian
Federation
Trading securities
Due from other banks
Loans and advances to customers
Investment securities available for sale
Premises and equipment
Other financial assets
Non-current assets classified as held for sale
Differed tax asset
Other assets

3

4
5
6
7

8
8

TOTAL ASSETS
LIABILITIES
Due to other banks
Customer accounts
Debt securities in issue
Other borrowed funds
Other financial liabilities
Other liabilities
Subordinated loans
TOTAL LIABILITIES

TOTAL LIABILITIES AND EQUITY

9
10
11
11

12

Approved and signed on August 26, 2013

Mr Alexander V. Dolgopolov
Chairman of the Management Board

Ms Alla A. Novikova
Chief Accountant

1

Bank Vozrozhdenie
Interim Condensed Consolidated Statement of Comprehensive Income as at June 30, 2013

Note

Interest income
Interest expense
Net interest income
Provision for loan impairment

13
13

9 097
(4 680)

7 887
(3 476)

4 646
(2 409)

4 118
(1 856)

6

4 417
(2 275)

4 411
(1 188)

2 237
(1 290)

2 262
(830)

2 142

3 223

947

1 432

2 587
(265)
(6)

2 605
(188)
(9)

1 365
(150)
(11)

1 387
(96)
(1)

(155)

252

(114)

140

465

(72)

286

(44)

114
(4 226)
2

3
173
(4 180)
(314)

54
(2 135)
(19)

(1)
126
(2 138)
(1)

658
(137)

1 493
(289)

223
(35)

804
(126)

521

1 204

188

678

52

25

22

17

(15)

(39)

(7)

(46)

37

(14)

15

(29)

558

1 190

203

649

21

48

7

27

Net interest income after provision for loan
impairment
Fee and commission income
Fee and commission expense
Losses less gains from trading securities
Losses less gains /Gains less losses from trading in
foreign currencies
Foreign exchange translation gains less losses
/(Losses less gains)
Gains less losses /(Losses less gains) on disposed
investment securities available for sale
Other operating income
Administrative and other operating expenses
Provision for impairment of other assets

Profit before tax
Income tax expense

PROFIT FOR THE REPORTING PERIOD

6M ended
6M ended
3M ended
3M ended
June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
(unaudited)
(unaudited)
(unaudited)
(unaudited)

14
14

15

Other comprehensive income:
Investment securities available for sale:
Gains less losses during the year
Income tax expense recorded directly in other
comprehensive income

Other comprehensive income for the reporting
period

TOTAL COMPREHENSIVE INCOME FOR THE
REPORTING PERIOD

Earnings per share for profit attributable to the
equity holders of the Bank, basic and diluted
(expressed in RR per share)
Ordinary shares

2

Bank Vozrozhdenie
Interim Condensed Consolidated Statement of Changes in Equity as at June 30, 2013

Share
capital

Share
premium

Revaluation reserve
for investment
securities available
for sale

Retained
earnings

Total

250

7 306

127

13 124

20 807

Profit for the six months ended
June 30, 2013
Other comprehensive income

-

-

37

521
-

521
37

Total comprehensive income
for six months 2013

-

-

37

521

558

Dividends declared

-

-

-

(14)

(14)

250

7 306

164

13 631

21 351

Share
capital

Share
premium

Revaluation reserve
for investment
securities available
for sale

Retained
earnings

Total

250

7 306

99

10 807

18 462

Profit for the six months ended
June 30, 2012
Other comprehensive income

-

-

(14)

1 204
-

1 204
(14)

Total comprehensive income
for six months 2012

-

-

(14)

1 204

1 190

Dividends declared

-

-

-

(14)

(14)

250

7 306

85

Balance at January 1, 2012

Balance at June 30, 2013

Balance at December 31,
2011

Balance at June 30, 2012

11 997

19 638

3

Bank Vozrozhdenie
Interim Condensed Consolidated Statement of Cash Flows as at June 30, 2013

Cash flows from operating activities
Interest received
Interest paid
Fees and commissions received
Fees and commissions paid
Net losses paid /(income received) from trading in trading securities
Net (losses paid) /income received from trading in foreign currencies
Other operating income received
Administrative and other operating expenses paid
Income tax paid

6M ended
June 30, 2013
(unaudited)

6M ended
June 30, 2012
(unaudited)

9 111
(4 157)
2 588
(265)
(5)
(155)
96
(3 764)
(246)

7 642
(3 208)
2 578
(188)
(7)
252
153
(3 831)
(472)

3 203

2 919

(284)
(1 823)
4 420
(10 205)
188
14
636
2 812
2 083
(117)
(23)
(2 803)

(107)
(664)
559
(14 931)
133
149
(641)
6 237
1 452
1 140
(111)
-

Net cash used in operating activities

(1 899)

(3 865)

Cash flows from investing activities
Acquisition of investment securities available for sale
Proceeds from disposal of investment securities available for sale
Acquisition of premises and equipment
Proceeds from disposal of non-current assets held for sale
Proceeds from disposal of premises and equipment
Proceeds from disposal of investment properties

(2 981)
1 674
(123)
89
7
4

(2 052)
61
(277)
47
16
21

Net cash used in investing activities

(1 330)

(2 184)

1 000
(321)
(151)
(14)

(235)
(14)

514

(249)

1 659

90

Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year

(1 056)
40 885

(6 208)
37 755

Cash and cash equivalents at the end of the reporting period

39 829

31 547

Cash flows from operating activities before changes in operating assets
and liabilities
Changes in operating assets and liabilities
Net increase in mandatory cash balances with the Central Bank of the Russian
Federation
Net increase in trading securities
Net decrease in due from other banks
Net increase in loans and advances to customers
Net decrease in other financial assets
Net decrease in other assets
Net increase/(decrease) in due to other banks
Net increase in customer accounts
Net increase in debt securities in issue
Net (decrease)/increase in other financial liabilities
Net decrease in other liabilities
Net decrease in other borrowed funds

Cash flows from financing activities
Receipt of subordinated loans
Repayment of subordinated loans
Repayment of funding from an international financial institute
Dividends paid
Net cash from / (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents

4

Bank Vozrozhdenie
Notes to the Interim Condensed Consolidated Financial Statements – June 30, 2013
1

Introduction

These interim condensed consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IAS) 34 “Interim Financial Reporting” (“IFRS (IAS) 34”) for
the six months ended on June 30, 2013 for Bank Vozrozhdenie (the “Bank”) and its special-purpose
entities, Closed joint stock company “Mortgage agent Vozrozhdenie 1” and Closed joint stock company
“Mortgage agent Vozrozhdenie 2” (together referred to as the “Group”).
Presentation currency. These interim condensed consolidated financial statements are presented in
millions of Russian Roubles (“RR millions”).
CBRF principal rates of exchange used for translating foreign currency balances were USD 1 = RR
32.8766 as at June 28, 2013, USD 1 = RR 30.3727 as at December 31, 2012, USD 1 = RR 32.9412 as at
June 29, 2012 and EUR 1 = RR 42.8349, 40.2286 and 41.1963 respectively.

2

Critical Accounting Estimates and Judgements in Applying Accounting Policies

These interim condensed consolidated financial statements are to be considered along with the Group’s
annual financial statements for the year ended December 31, 2012.
These interim condensed consolidated financial statements do not contain all notes which are obligatory
to disclosure in a full version of financial statements.
Principles and methods of accounting policy applied in these interim condensed consolidated financial
statements comply with the principles and methods applied and described in the Group’s annual Financial
Statements for the year ended December 31, 2012.
Judgments made by the Group’s management while applying accounting policy comply with the
judgments described in the Bank’s annual Financial Statements for 2012. The Group’s Management did
not apply any new estimates and judgments. As a result of applying estimates and judgments described
in the Group’s financial statements for the year ended December 31, 2012, the Group’s assets, revenues
and income for the six months ended June 30, 2013 did not change materially.

3

Cash and Cash Equivalents


June 30, 2013
(unaudited)

December 31,
2012

Cash on hand
Correspondent accounts and overnight placements with banks of
- Russian Federation
- Other countries
Cash balances with the CBRF (other than mandatory cash balances)

6 738

8 616

11 405
15 271
6 415

1 049
16 550
14 670

Total cash and cash equivalents

39 829

40 885

Cash and cash equivalents are not impaired and are not collateralized.

5

Bank Vozrozhdenie
4

Trading Securities
June 30, 2013
(unaudited)

December 31,
2012

Corporate Eurobonds
Corporate bonds
Municipal bonds
Russian Federation Eurobonds
Federal loan bonds (OFZ)

4 139
2 903
563
350
-

1 517
3 636
102
603

Total debt securities

7 955

5 858

1

26

7 956

5 884


Corporate shares
Total trading securities

All the securities included into trading securities portfolio have market quotations.
Trading securities are carried at fair value which also reflects any credit risk related write-downs. As
trading securities are carried at their fair values based on observable market data, the Group does not
analyse or monitor impairment indicators.
Trading securities are used by the Group basically for managing liquidity risk.
The Bank is licensed by the Federal Commission on Securities Markets for trading in securities.
5

Due from Other Banks

Short-term placements with other banks
Insurance deposits with non-resident banks
Total due from other banks

6

June 30, 2013
(unaudited)

December 31,
2012

928
484

5 406
388

1 412

5 794

June 30, 2013
(unaudited)

December 31,
2012

Loans and Advances to Customers

Corporate loans - large
Corporate loans - medium
Corporate loans - small
Mortgage loans
Other loans to individuals

50 801
52 110
27 254
24 867
11 905

44 587
51 849
27 079
22 302
10 548

Total gross loans and advances to customers (before provision for
loan impairment)

166 937

156 365

Less: Provision for loan impairment

(16 918)

(14 703)

Total loans and advances to customers

150 019

141 662

Loans are divided into corporate and retail.
For 2013 and 2012, the corporate portion of borrowers is further divided on the basis of total amount
owed by the customer into the following categories: large – from of RR 750 million and over, medium –
from RR 100 million to RR 750 million, small – less than RR 100 million.
Retail loans are divided into categories by product: mortgage loans and other loans to individuals
including consumer loans, car loans and bank card loans.
Mortgage loans include securitised mortgage loans of RR 6 092 million. As at June 30, 2013, the carrying
value of those mortgage loans equals to their nominal value.

6

Bank Vozrozhdenie
6

Loans and Advances to Customers (Continued)

Movements in the provision for loan impairment during the six months of 2013 are as follows:


Corporate
loans large

Corporate
loans medium

Corporate
loans small

Mortgage
loans

Other
loans to
individuals

Total

5 291

5 426

2 831

611

544

14 703

1 893

112

79

117

74

2 275

-

-

(33)

-

(1)

(34)

-

-

(26)

-

-

(26)

7 184

5 538

728

617

at January 1, 2013
Provision for impairment during
the year
Amounts written off during the
year as uncollectible
Result from disposal of loans
under cession agreements
at June 30, 2013

2 851

16 918

Movements in the provision for loan impairment during 2012 are as follows:


Corporate
loans large

Corporate
loans medium

Corporate
loans small

Mortgage
loans

Other
loans to
individuals

Total

3 514

5 501

2 876

432

642

12 965

1 844

397

292

179

10

2 722

-

-

at January 1, 2012
Provision for impairment during
the year
Amounts written off during the
year as uncollectible
Result from disposal of loans
under cession agreements
at December 31, 2012

(67)

5 291

(472)

5 426

(283)

-

(9)

(292)

(54)

-

(99)

(692)

2 831

611

544

14 703

Economic sector risk concentrations within the customer loan portfolio are as follows:
Manufacturing
Individuals
Trade
Construction
Real estate
Agriculture
Transport and communication
Finance
State and public organisations
Other
Total gross loans and advances to
customers

June 30, 2013 (unaudited)
Amount
%

December 31, 2012
Amount
%

48 631
36 772
36 325
11 852
10 264
8 828
5 433
2 372
949
5 511

29
22
22
7
6
5
3
2
1
3

42 466
32 850
35 602
9 446
8 381
9 310
8 225
1 773
1 670
6 642

28
21
23
6
5
6
5
1
1
4

166 937

100

156 365

100

State and public organisations exclude government owned profit orientated businesses.
As at June 30, 2013, the Group had 36 borrowers with aggregated loan amounts above RR 750 million.
The total aggregate amount of these loans was RR 50 801 million or 30.4% of the gross loan portfolio
before provision for impairment.
As at December 31, 2012, the Group had 33 borrowers with aggregated loan amounts above RR 750
million. The total aggregate amount of these loans was RR 44 587 million or 28.5% of the gross loan
portfolio before provision for impairment.

7

Bank Vozrozhdenie
6


Analysis by credit quality of loans outstanding at June 30, 2013 is as follows:
Corporate Corporate Corporate Mortgage
loans
loans
loans
loans
- large - medium
- small
Neither past due nor impaired
- Borrowers with credit history over two
years
- New large borrowers
- Corporate loans assessed on a portfolio
basis issued in 2013
basis issued before 2013
Loans to individuals assessed on a portfolio
basis:
- Mortgage loans issued in 2013
- Mortgage loans issued before 2013
- consumer loans
- credit cards
- car loans

Other
loans to
individuals

Total

38 225
4 347

-

-

-

-

38 225
4 347

-

23 270

14 900

-

-

38 170

-

23 831

9 424

-

-

33 255

-

-

-

4 736
19 671
-

9 040
1 892
331

4 736
19 671
9 040
1 892
331

42 572

47 101

24 324

24 407

11 263

149 667

Past due but not impaired
- less than 30 days overdue
- 30 to 90 days overdue

-

-

55
-

58
39
19
180

131
8
12
6

244
47
31
186

Total gross past due but not impaired

-

-

55

296

157

508

Loans collectively determined to be impaired
- over 360 days overdue

-

135
398
3 019

145
153
89
239
2 185

-

18
13
18
109

145
306
102
655
5 313

Total gross collectively impaired loans

-

3 552

2 811

-

158

6 521

Loans individually determined to be
impaired

2 785
5 444

1 457

64

3
1
160

34
27
33
233

2 822
27
34
7 358

Total gross individually impaired loans

8 229

1 457

64

164

327

10 241

Less impairment provision

(7 184)

(5 538)

(2 851)

(728)

(617)

(16 918)

less provision for impairment

43 617

46 572

24 403

Total gross neither past due nor impaired

24 139

11 288

150 019

8

Bank Vozrozhdenie
6


Analysis by credit quality of loans outstanding at December 31, 2012 is as follows:
Corporate Corporate Corporate Mortgage
loans
loans
loans
loans
- large - medium
- small
Neither past due nor impaired
- Borrowers with credit history over two
years
- New borrowers
basis issued in 2012
basis issued before 2012
Loans to individuals assessed on a portfolio
basis:
- Mortgage loans issued in 2012
- Mortgage loans issued before 2012
- consumer loans
- credit cards
- car loans

Other
loans to
individuals

Total

30 909
8 233

-

-

-

-

30 909
8 233

-

34 282

20 121

-

-

54 403

-

12 746

4 014

-

-

16 760

-

-

-

12 096
9 816
-

7 756
1 901
389

12 096
9 816
7 756
1 901
389

39 142

47 028

24 135

21 912

10 046

142 263

Past due but not impaired

-

-

141
-

20
20
171
36

60
13
5
5

221
33
176
41

Total gross past due but not impaired

-

-

141

247

83

471

Loans collectively determined to be impaired

-

347
449
2 568

3
43
150
294
2 256

-

12
12
16
102

3
55
509
759
4 926

Total gross collectively impaired loans

-

3 364

2 746

-

142

6 252

Loans individually determined to be
impaired

3 726
960
759

1 457

57

143

22
13
17
225

22
3 739
977
2 641

Total gross individually impaired loans

5 445

1 457

57

143

277

7 379

Less impairment provision

(5 291)

(5 426)

(2 831)

(611)

(544)

(14 703)

less provision for impairment

39 296

46 423

24 248

Total gross neither past due nor impaired

21 691

10 004

141 662

The Group believes that the borrowers with long credit history have a less degree of credit risk. The
primary factors that the Group considers in determining whether a loan is impaired are its overdue status
and realisability of related collateral, if any.

9

Bank Vozrozhdenie
6


The Group applied the portfolio provisioning methodology prescribed by IAS 39 Financial Instruments:
Recognition and Measurement, and set up portfolio provisions for impairment losses that were incurred
but have not been specifically identified with any individual loan by the reporting date.
The Group’s policy is to classify each loan as “neither past due nor impaired” until specific objective
evidence of impairment of the loan is identified. The impairment provisions may exceed the total gross
amount of individually impaired loans as a result of this policy and the portfolio impairment methodology.
Loans collectively determined to be impaired are represented by corporate small and medium loans, and
loans to individuals except for mortgage loans, which have an overdue status as an impairment trigger
event.
Past due but not impaired loans represent collateralised loans where the fair value of collateral together
with consideration of discounting covers the overdue interest and principal repayments. The amount
reported as past due but not impaired is the whole balance of such loans, not only the individual
instalments that are past due.
Information about collateral at June 30, 2013 is as follows:

Unsecured loans
Loans collateralised by:
residential real estate
other real estate
equipment, inventories, motor
vehicles
securities (promissory notes,
shares)
cash deposits
state guarantees and guarantees
of the RF constituents
other guarantees and third parties'
guarantees
other assets (other types of
property, rights)
Total gross loans and advances
to customers (before provision
for impairment)

Corporate
loans large

Corporate
loans medium

Corporate
loans small

Mortgage
loans

Other
loans to
individuals

Total

3 580

2 465

1 759

1 310

8 203

17 317

22 722

23 335

10 545

23 430
45

25
845

23 455
57 492

8 903

12 201

8 128

-

423

29 655

1 611
-

346
-

50
6

23
14

3
27

2 033
47

810

1 438

652

-

-

2 900

10 960

10 674

5 638

45

2 330

29 647

2 215

1 651

476

-

49

4 391

50 801

52 110

27 254

24 867

11 905

166 937

Information about collateral at December 31, 2012 is as follows:

Unsecured loans
Loans collateralised by:
residential real estate
other real estate
equipment, inventories, motor
vehicles
securities (promissory notes,
shares)
cash deposits
state guarantees and guarantees
of the RF constituents
other guarantees and third parties'
guarantees
other assets (other types of
property, rights)
Total gross loans and advances
to customers (before provision
for impairment)

Corporate
loans large

Corporate
loans medium

Corporate
loans small

Mortgage
loans

Other
loans to
individuals

Total

7 371

3 043

1 932

1 151

5 582

19 079

16 833

23 294

11 049

21 010
40

28
918

21 038
52 134

5 766

13 425

8 430

-

490

28 111

-

207
-

40

35
14

8
8

250
62

812

1 142

545

-

-

2 499

10 430

9 099

4 827

52

2 355

26 763

3 375

1 639

256

-

1 159

6 429

44 587

51 849

27 079

22 302

10 548

156 365

10

Bank Vozrozhdenie
7

Investment Securities Available for Sale


June 30, 2013
(unaudited)

December 31,
2012

Corporate bonds
Municipal bonds
Corporate Eurobonds

2 901
430
-

875
573
559

Total debt securities

3 331

2 007

519

469

3 850

2 476

Corporate shares
Total investment securities available for sale

8

Other Assets

Investment properties
Non-current assets classified as held for sale
Inventory
Prepayments
Precious metals
Other
Total other assets (before provision for impairment of other
assets)
Less: Provision for impairment of other assets
Total other assets

9

June 30, 2013
(unaudited)

December 31,
2012

1 301
868
3 500
259
74
167

1 847
905
2 296
202
31
381

6 169
(729)
5 440

5 662
(787)
4 875

Due to Other Banks
June 30, 2013
(unaudited)

December 31,
2012

Placements of other banks
Correspondent accounts of other banks

8 367
7

7 630
17

Total due to other banks

8 374

7 647


10

Customer Accounts

- Current/settlement accounts
- Term deposits

June 30, 2013
(unaudited)

December 31,
2012

138
1 593

84
-

Other legal entities
- Current/settlement accounts
- Term deposits

35 653
24 447

35 982
25 896

Individuals
- Current/demand accounts
- Term deposits

20 105
87 374

20 900
81 014

Total customer accounts

169 310

163 876

State and public organisations exclude government owned profit orientated businesses.

11

Bank Vozrozhdenie
10

Customer Accounts (Continued)

Economic sector concentrations within customer accounts are as follows:


June 30, 2013 (unaudited)
Amount
%

December 31, 2012
Amount

%

Individuals
Trade
Finance
Manufacturing
Construction
Transport and communication
Agriculture
Other

107 479
21 922
11 249
10 219
6 936
5 799
2 829
1 731
1 146

63
13
7
6
4
3
2
1
1

101 914
22 771
10 927
8 405
8 362
8 298
2 314
84
801

62
14
7
5
5
5
2
-

Total customer accounts

169 310

100

163 876

100

11

Debt Securities in Issue
June 30, 2013
(unaudited)

December 31,
2012

Promissory notes
Mortgage backed bonds in issue
Deposit certificates

4 471
4 493
172

4 765
2 082
185

Total debt securities in issue

9 136

7 032


11

Debt Securities in Issue (Continued)

In April, 2013, the Group issued bonds amounting to RR 4 000 mln of total face value on the frame of the
second deal of mortgage securitization. The securities were issued by SPV Closed Joint Stock Company
“Mortgage agent Vozrozhdenie 2” (CJSC “MAV 2”). Class A bonds in the amount of RR 2 960 mln were
placed via public offering on MICEX, and Class B bonds in the amount of RR 1 040 mln were acquired by
Bank Vozrozhdenie and for that reason, were not reflected in these Condensed Consolidated Financial
Statements. Moody’s Investors Service international ratings agency assigned credit rating to Class A
bonds at the level of Baa3. With the balance value of RR 2 960 mln, Сlass A bonds have fixed coupon
rate of 8.50% and shall be fully repaid by August 25, 2045.
As a result of the mortgage bonds placement, the Group refinanced loan in amount of RR 2 803 mln
(interim financing), raised in the frame of the second deal of mortgage loans securitisation in December,
2012.
In December, 2011, in the frame of the second deal of mortgage loans the Group issued bonds for the
total face value of RR 4 071 mln. The securities were issued by SPV Closed Joint Stock Company
“Mortgage agent Vozrozhdenie 1” (CJSC “MAV 1”). Class A bonds in the amount of RR 2 931 mln were
placed via public offering on MICEX, and Class B bonds in the amount of RR 1 140 mln were acquired by
the Group and for that reason, were not reflected in these Condensed Consolidated Financial
Statements. Moody’s Investors Service international ratings agency assigned credit rating to Class A
bonds at the level of Baa2. Сlass A bonds have fixed coupon rate of 8.95% and shall be fully repaid by
August 10, 2044.
As of June 30, 2013, mortgage-backed bonds include bonds issued by Closed Joint Stock Company
“Mortgage agent Vozrozhdenie 2” (CJSC “MAV 2”) with balance value of RR 2 790 mln and bonds issued
by Closed Joint Stock Company “Mortgage agent Vozrozhdenie 1” (CJSC “MAV 1”) with balance value of
RR 1 703 mln, as the funds from prepayment of mortgage loans were channelled to repayment of the rest
of Class A bonds face value, in accordance with the terms of the bonds issue.

12

Bank Vozrozhdenie
12

Subordinated Loans

Subordinated loans represent long-term deposits of the Group’s customers. The subordinated debt ranks
after all other creditors in case of the Group's liquidation. The details of subordinated loans attracted by
the Group are disclosed in the table below:

Start date

Maturity

Currency

Subordinated loan 1
June 2005
June 2013
Subordinated loan 2 December 2005 December 2013
Subordinated loan 3
March 2006
March 2014
Subordinated loan 4
May 2006
May 2014
Subordinated loan 5
June 2006
June 2014
Subordinated loan 6 December 2006 December 2013
Subordinated loan 7
April 2007
April 2014
Subordinated loan 8
July 2008
August 2018
Subordinated loan 9
August 2010
August 2018
Subordinated loan 10
July 2012
July 2020
Subordinated loan 11 December 2012
July 2020
Subordinated loan 12 February 2013
July 2020

USD
USD
USD
USD
USD
RR
RR
USD
USD
RR
RR
RR

June 30, 2013
(unaudited)
ContracValue,
tual
RR
interest
million
rate, %
8.00
6.50
6.50
6.50
8.25
8.25
11.21
8.00
9.25
9.25
9.25

Total subordinated
loans

230
165
99
165
1 041
520
1 687
99
1 000
1 000
1 000

7 006

December 31, 2012
Contractual
interest
rate, %

Value,
RR
million

5.75
8.00
6.50
6.50
6.50
8.25
8.25
9.21
8.00
9.25
9.25
-

304
213
152
91
152
1 000
500
1 548
91
1 000
1 000
-

6 051

The contractual interest rates are regularly revised in accordance with the terms of subordinated loan
agreements No.6 and No.7.
Under the Subordinated loan agreement №8, the Group should follow certain financial norms. As of December
31, 2012, the Group broke two norms.
Subordinated loans No. 2, 9 were received by the Group from a related party.

13

Bank Vozrozhdenie
13

Interest Income and Expense
6M ended
June 30, 2013
(unaudited)

6M ended
June 30, 2012
(unaudited)

Interest income
Loans and advances to customers - legal entities
Loans and advances to customers - individuals
Correspondent accounts and due from other banks
Trading securities

6 134
2 437
256
178
92

5 591
1 860
92
313
31

Total interest income

9 097

7 887

Interest expense
Term deposits of individuals
Term deposits of legal entities
Subordinated loans
Due to other banks
Current/settlement accounts of legal entities

2 728
985
327
301
195
61
83

2 049
744
309
167
188
19

Total interest expense

4 680

3 476

Net interest income

4 417

4 411

6M ended
June 30, 2013
(unaudited)

6M ended
June 30, 2012
(unaudited)

739
674
508
202
152
112
200

715
594
565
241
171
124
195

2 587

2 605

Fee and commission expense
Credit/debit cards and cheques settlements
Settlement operations
Settlements with currency and stock exchanges
Cash transactions
Other

203
37
7
7
11

150
12
7
5
14

Total fee and commission expense

265

188

2 322

2 417


14

Fee and Commission Income and Expense

Fee and commission income
Settlement operations
Credit/debit cards and cheques settlements
Cash transactions
Payroll projects
Guarantees issued
Cash collection
Other
Total fee and commission income

Net fee and commission income

14

Bank Vozrozhdenie
15

Administrative and Other Operating Expenses
6M ended
June 30, 2013
(unaudited)

6M ended
June 30, 2012
(unaudited)

Staff costs
Administrative expenses
Other expenses related to premises and equipment
Contributions to the State Deposit Insurance Agency
Depreciation of premises and equipment
Rent expenses
Taxes other than on income
Repairs of premises and equipment
Advertising and marketing services
Other

2 620
339
226
204
186
161
133
42
55
260

2 518
336
228
180
212
152
137
59
50
308

Total administrative and other operating expenses

4 226

4 180


Included in staff costs are statutory contributions to non-budget funds of RR 543 million (2012: RR 520
million).

16

Segment Analysis

Operating segment is a distinguishable component of the Bank that is engaged in providing products or
services (business segment) with the purpose to generate income, whose operating results are regularly
reviewed by the Bank’s Management Board based on statutory management accounts in terms of each
operating segment. The functions of the chief operating decision maker (CODM) are performed by the
Management Board of the Bank. Operating management and performance of an operating segment are
the responsibility of the Chairman of the Management Board or the Deputy Chairman of the Management
Board of the Bank supervising corresponding business line.
Transactions between the operating segments are on normal commercial terms and conditions. Funds
are ordinarily reallocated between operating segments, resulting in funding cost transfers disclosed in
interest income and expense. Interest rates for these funds are differentiated depending on the attraction
terms and are based on market indicators.
Segment assets and liabilities include operating assets and liabilities representing a major part of the
Bank’s assets and liabilities, as well as funds reallocated between operating segments, but excluding
taxation. Internal charges and transfer pricing adjustments have been reflected in the performance of
each operating segment. Segment performance is based on profitability and cost-effectiveness of
operating assets.
The CODM evaluates performance of each segment based on profit before tax.
The table below represents the segment information of interest-bearing assets and interest-bearing
liabilities per reportable segments for the six months ended June 30, 2013 and for the year ended
December 31, 2012.

15

Bank Vozrozhdenie
16

Segment Analysis (Continued)
Corporate
business

Retail
business

Bank cards
transactions

Total assets of
reportable segments

135 785

30 575

6 979

44 463

-

- 217 803

Total liabilities of
reportable segments

76 513

86 903

20 711

5 458

-

- 189 584

119 486

24 171

2 523

35 742

-

-

181 922

64 314

74 952

18 001

4 766

-

1 555

163 588

(in millions of
Russian Roubles)

Financial Liquidity
business

Other

Total

June 30, 2013

December 31, 2012
Total assets* of
reportable segments
Total liabilities* of
reportable
segments

* For the purpose of preparation of the management accounts the amount of assets and liabilities, as of
December 31, 2012, is calculated as average balances for the respective accounting period.
The table below represents the information of income and expenses per reportable segments for the six
months ended June 30, 2013. The Group’s management considers operating income before provision for
loan impairment as a key measurement of reportable segments results.
(in millions of Russian
Roubles)

Corporate
business

Retail Bank cards
business transactions

Financial
business

Liquidity

Other

Total

June 30, 2013
- Interest income
- Non-interest income
- Transfer income

5 920
1 647
2 275

1 954
464
3 585

193
898
295

520
193
167

947

8
-

8 587
3 210
7 269

Total revenues

9 842

6 003

1 386

880

947

8

19 066

- Interest expense
- Non-interest expense
- Transfer expense

(1 594)
(48)
(5 396)

(2 657)
(5)
(1 429)

(70)
(209)
(78)

(146)
(10)
(301)

-

(4)
(65)

(4 467)
(276)
(7 269)

Total expenses

(7 038)

(4 091)

(357)

(457)

-

(69) (12 012)

2 804

1 912

Operating income
before provision for
loan impairment
Provision for loan
impairment
Operating income
Administrative and other
operating expenses
Depreciation of premises
and equipment
Financial result from
cession
Profit/(loss) before tax
(Segment result)

(2 319)
485

(172)
1 740

1 029

(11)
1 018

423

947

(61)

7 054

-

-

(6)

(2 508)

423

947

(67)

4 546

(1 664)

(1 250)

(675)

(43)

-

(33)

(3 665)

(88)

(60)

(35)

(2)

-

(1)

(186)

(65)

-

-

-

-

-

(65)

(1 332)

430

308

378

947

(101)

630

16

Bank Vozrozhdenie
16


The table below represents segment information on the major reportable business lines of the Group for
the six months ended June 30, 2012:
Roubles)

Corporate
business

Retail Bank cards
business transactions

Financial
business

Other

Liquidity

Total

June 30, 2012
- Interest income
- Non-interest income
- Transfer income

5 369
1 572
1 476

1 410
490
2 876

191
859
159

426
146
135

1 809

(17)
70

7 396
3 050
6 525

Total revenues

8 417

4 776

1 209

707

1 809

53

16 971

- Interest expense
- Non-interest expense
- Transfer expense

(1 123)
(40)
(5 190)

(2 011)
(7)
(1 065)

(38)
(160)
(82)

(99)
(22)
(188)

-

(70)
(4)
-

(3 341)
(233)
(6 525)

Total expenses

(6 353)

(3 083)

(280)

(309)

-

(74) (10 099)

2 064

1 693

929

398

1 809

(21)

6 872

-

-

(9)

(1 608)

1 809

(30)

5 264

Operating income
before provision for
loan impairment
Provision for loan
impairment
Operating income
Administrative and other
operating expenses
Depreciation of premises
and equipment
Financial result from
cession
Profit/(loss) before tax
(Segment result)

(1 557)
507

(37)

(5)

1 656

924

398

(1 637)

(1 188)

(675)

(37)

-

(15)

(3 552)

(86)

(59)

(37)

(2)

-

(1)

(185)

97

-

3

-

-

-

100

(1 119)

409

215

359

1 809

(46)

1 627

17

Bank Vozrozhdenie
16


The reconciliation of assets, liabilities, income and expenses of the Group’s reportable segments for the
six months ended June 30, 2013.
Reconciliation of reportable segment assets
(in millions of Russian Roubles)

June 30, 2013
(unaudited)

Total reportable segment assets
Assets unallocated between operating segments
Differences in fair valuation of securities
Provision for impairment of other assets
Impairment of investment securities available for sale
Recognition of commission income from lending using the effective interest
method
Recognition of financial instruments using the effective interest method
Consolidation

217 803
11 364
212
(16 918)
(729)
(71)

Total assets under IFRS

216 168

(49)
109
4 447

Reconciliation of reportable segment liabilities

June 30, 2013
(unaudited)

Total reportable segment liabilities
Liabilities unallocated between operating segments
Accrued expenses
Recognition of fee and commission income on the time-proportionate basis
Recognition of liabilities at amortised cost
Consolidation

189 584
178
561
138
(11)
4 367

Total liabilities under IFRS

194 817

18

Bank Vozrozhdenie
16


The reconciliation of assets, liabilities, income and expenses of the Group’s reportable segments as of
December 31, 2012.
Reconciliation of reportable segment assets
Total reportable segment assets
Assets unallocated between operating segments
Interest claim
Differences in financial statements format *
Deviation due to recording of reportable segment assets without regard to
the events after the end of the reporting period
Differences in fair valuation of securities
Adjustment of provisions for loan impairment based on the incurred loss
model
Recognition of commission income from lending using the effective interest
method
Recognition of financial instruments using the effective interest method
Impairment of investment securities available for sale
Consolidation

Total assets under IFRS

December 31,
2012
181 922
30 564
920
(8 928)
29
136
(316)
(58)
87
(71)
4 777

209 062

Reconciliation of reportable segment liabilities

December 31,
2012

Total reportable segment liabilities
Liabilities unallocated between operating segments
Liabilities on interest payment
Differences in financial statements format *
Deviation due to recording of reportable segment liabilities without regard
to the events after the end of the reporting period
Recognition of liabilities at amortised cost
Consolidation

163 588
846
1 881
17 225

Total liabilities under IFRS

188 255

(8)
(12)
4 735

* Differences in financial statements format arise from presentation of assets and liabilities of reportable
segments calculated as average balances for the reporting period and reflecting assets of reportable
segments before provision for the purpose of management account preparation.

19

Bank Vozrozhdenie
16


Reconciliation of profit and losses before tax of the reportable segments
The table below represents reconciliation of profit before tax and other material income or expenses for
the reportable segments with the statement on comprehensive income under IFRS for the six months
ended June 30, 2013:
Before
tax
profit

Interest
income

Noninterest
income

Interest
expense

630

8 587

3 210

(4 467)

10

10

-

NonProvision
interest
for loan
income impairment

Roubles)
Total reportable segment
result
Recognition of commission
income from lending using
the effective interest
method
Recognition of other fees
and commissions by
reference to completion of
the specific transaction
Recognition of interest
income/expense using the
effective interest method
Differences in fair valuation
of trading securities
Adjustment of provisions for
loan impairment based on
the incurred loss model
Accrued Bank’s expenses
of reportable period
Recognition of financial
instruments using the
Reclassification of
management accounts
items
Provision for impairment of
other assets
Consolidation
Other
Total under IFRS

Administ
rative and
other
operating
expenses

(276)

(2 573)

(3 851)

-

-

-

-

(28)

-

(28)

-

-

-

-

(1)

-

3

(4)

-

-

-

5

-

5

-

-

-

-

268

(1)

10

-

-

259

-

-

-

-

-

-

22

22

-

-

-

-

-

218

(43)

-

(150)

(17)

(8)

58
38
(3)

263
(2)

9

(209)
-

-

58
-

(16)
(10)

9 097

3 166

(4 680)

(426)

(2 273)

(4 226)

(341)

658

(341)

-

20

Bank Vozrozhdenie
16


The table below represents reconciliation of profit before tax and other material income or expenses for
the reportable segments with the statement on comprehensive income under IFRS for the six months
ended June 30, 2012:
Before
tax
profit

Interest
income

Noninterest
income

Interest
expense

(3 341)

NonProvision
interest
for loan
income impairment

Roubles)
Total reportable segment
result
Recognition of commission
income from lending using
the effective interest
method
Recognition of other fees
and commissions by
reference to completion of
the specific transaction
Recognition of interest
income/expense using the
Differences in fair valuation
of trading securities
Adjustment of provisions for
loan impairment based on
the incurred loss model
Accrued Bank’s expenses
of reportable period
Difference in depreciation
of premises and
equipment
Recognition of financial
instruments using the
Reclassification of
management accounts
items
Provision for impairment of
other assets
Consolidation
Other
Total under IFRS

1 627

7 396

3 050

48

51

(3)

30

-

29

Administ
rative and
other
operating
expenses

(233)

(1 508)

(3 737)

-

-

-

-

30

-

-

-

-

29

-

-

-

-

-

1

-

1

-

-

-

-

358

-

(13)

-

-

371

-

(330)

-

-

-

-

-

(330)

(21)

-

-

-

-

-

(21)

2

-

3

(1)

-

-

-

-

175

88

(134)

(27)

(51)

(51)

236
-

(143)
11

-

-

(314)
-

(24)
(17)

7 887

3 024

(3 476)

(260)

(1 502)

(4 180)

(314)
69
(6)
1 493

21

Bank Vozrozhdenie
17

Financial Risk Management

The risk management function within the Group is carried out in respect of financial risks, operational
risks and legal risks. Financial risk comprises market risk (including currency risk, interest rate risk and
other price risk), credit risk and liquidity risk. The primary objectives of the financial risk management
function are to establish risk limits, and then ensure that exposure to risks stays within these limits. The
operational and legal risk management functions are intended to ensure proper functioning of internal
policies and procedures to minimise operational and legal risks.
Policy and methods of financial risk management accepted by the Bank comply with the policy and
methods described and applied in the Group’s annual financial report for the year ended December 31,
2012.
The tables below summarize the Group’s exposure to currency risk and Bank’s liquidity position taking
into account expected contractual time left before redemption of assets and liabilities.
Currency risk. The Group is exposed to currency risk due to the fact that its assets and liabilities are
denominated in different currencies as well as due to existence of open currency positions resulting from
foreign currency transactions.
The table below summarises the Group’s exposure to foreign currency exchange rate risk at June 30,
2013:
RR

USD

Euro

Other

Total

Monetary financial assets
Mandatory cash balances with
CBRF
Trading securities
Investment securities available for
sale

23 528

10 456

5 821

24

39 829

1 822
3 466
928
133 814

403
3 556
484
11 822

156
933
4 383

-

2 381
7 955
1 412
150 019

3 331
661

279

7

-

3 331
947

Total monetary financial assets

167 550

27 000

11 300

24

205 874

Monetary financial liabilities
Due to other banks
Customer accounts
Subordinated loans

4 540
138 853
9 115
206
4 561

986
21 957
21
23
2 445

2 848
8 480
6
-

20
-

8 374
169 310
9 136
235
7 006

Total monetary financial
liabilities

157 275

25 432

11 334

20

194 061

Net balance sheet position

10 275

1 568

(34)

4

11 813

Credit related commitments

24 582

860

809

-

26 251

The above analysis includes only monetary assets and liabilities. The Group considers that Investments
in equities and non-monetary assets are not considered to give rise to any material currency risk.

22

Bank Vozrozhdenie
17

Financial Risk Management (Continued)

The table below summarises the Group’s exposure to foreign currency exchange rate risk at
December 31, 2012:
RR

USD

Euro

Other

Total

Monetary financial assets
Mandatory cash balances with
CBRF
Trading securities
Investment securities available for
sale

23 421

10 772

6 657

35

40 885

1 531
4 341
5 403
127 432

399
1 473
391
9 825

167
44
4 405

-

2 097
5 858
5 794
141 662

1 448
778

559
244

81

-

2 007
1 103

Total monetary financial assets

164 354

23 663

11 354

35

199 406

Monetary financial liabilities
Due to other banks
Customer accounts
Subordinated loans

3 544
135 546
7 000
2 803
315
3 500

1 146
19 955
32
24
2 551

2 957
8 356
11
-

19
-

7 647
163 876
7 032
2 803
350
6 051

Total monetary financial
liabilities

152 708

23 708

11 324

19

187 759

Net balance sheet position

11 646

(45)

30

16

11 647

Credit related commitments

23 979

455

862

-

25 296

23

Bank Vozrozhdenie
17


Liquidity risk. Liquidity risk is defined as the risk that the Group will encounter difficulty in meeting
obligations associated with financial liabilities. The Group is exposed to daily calls on its available cash
resources from overnight deposits, current accounts, maturing deposits, loan draw-downs, guarantees
and from margin and other calls on cash-settled derivative instruments.
The analyses of Group’s liquidity risk as at June 30, 2013 is as follows:
Demand
and less
than
1 month

From 1 to
6 months

From 6 to
12 months

Over 12
months

Total

39 829

-

-

-

39 829

916
7 956
928
3 774
947
947

497
48 138
1 340
-

366
34 317
1 044
-

602
484
63 790
519
-

2 381
7 956
1 412
150 019
3 850
947

Total financial assets

55 297

49 975

35 727

65 395

206 394

Financial liabilities
Due to other banks
Customer accounts
Subordinated loans

167
66 099
806
235
-

430
33 395
2 882
2 991

541
25 847
908
927

7 236
43 969
4 540
3 088

8 374
169 310
9 136
235
7 006

Total financial liabilities

67 307

39 698

28 223

58 833

194 061

Net liquidity gap based on expected
maturities at June 30, 2013

(12 010)

10 277

7 504

6 562

12 333

Cumulative liquidity gap as at
June 30, 2013

(12 010)

(1 733)

5 771

12 333

-

-

-

Financial assets
Mandatory cash balances with the
CBRF
Trading securities

Financial guarantees
Other credit related commitments

13 360
12 891

13 360
12 891

The above analysis is based on expected maturities. The entire portfolio of trading securities is therefore
classified within demand and less than one month based on management’s assessment of the portfolio’s
realisability.
The expected maturity of investment securities available for sale is based on offer agreement date.

24

Bank Vozrozhdenie
17


The analyses of Group’s liquidity risk as at December 31, 2012 is as follows:
Demand
and less
than
1 month

From 1 to
6 months

From 6 to
12 months

Over 12
months

Total

40 885

-

-

-

40 885

868
5 884
5 406
6 458
1 103

413
40 387
1 540
-

342
30 761
467
-

474
388
64 056
469
-

2 097
5 884
5 794
141 662
2 476
1 103

Total financial assets

60 604

42 340

31 570

65 387

199 901

Financial liabilities
Due to other banks
Customer accounts
Subordinated loans

155
68 500
1 406
350
-

462
31 051
2 179
346

502
26 189
1 340
1 213

6 528
38 136
2 107
2 803
4 492

7 647
163 876
7 032
2 803
350
6 051

Total financial liabilities

70 411

34 038

29 244

54 066

187 759

Net liquidity gap based on expected
maturities at December 31, 2012

(9 807)

8 302

2 326

11 321

12 142

Cumulative liquidity gap as at
December 31, 2012

(9 807)

(1 505)

821

12 142

Financial guarantees
Other credit related commitments

10 181
15 115

-

-

-

Financial assets
Mandatory cash balances with the
CBRF
Trading securities

10 181
15 115

25

Bank Vozrozhdenie
18

Contingencies and Commitments

Credit related commitments. The primary purpose of these instruments is to ensure that funds are
available to a customer as required. Guarantees and standby letters of credit, which represent irrevocable
assurances that the Group will make payments in the event that a customer cannot meet its obligations to
third parties, carry the same credit risk as loans. Documentary and commercial letters of credit, which are
written undertakings by the Group on behalf of a customer authorising a third party to draw drafts on the
Group up to a stipulated amount under specific terms and conditions, are collateralised by the underlying
shipments of goods to which they relate or cash deposits and, therefore, carry less risk than a direct
borrowing.
Commitments to extend credit represent unused portions of authorisations by the Group's management to
extend credit in the form of loans, guarantees or letters of credit. With respect to credit risk on
commitments to extend credit, the Group is potentially exposed to loss in an amount equal to the total
unused commitments. However, the likely amount of loss is less than the total unused commitments since
most commitments to extend credit are contingent upon customers maintaining specific credit standards.
The Group monitors the term to maturity of credit related commitments, because longer-term
commitments generally have a greater degree of credit risk than shorter-term commitments.
Outstanding credit related commitments are as follows:
June 30, 2013
(unaudited)

December 31,
2012

Guarantees issued
Unused limits on overdraft loans
Undrawn credit lines
Import letters of credit

13 360
11 283
1 549
59

10 181
13 921
1 163
31

Total credit related commitments

26 251

25 296


The total outstanding contractual amount of undrawn credit lines, letters of credit, and guarantees does
not necessarily represent future cash requirements, as these financial instruments may expire or
terminate without being funded.

19

Fair Value of Financial Instruments

Fair value is the amount at which an asset could be exchanged or which could be paid for the purpose of
transfer of liability in the frame of a current transaction between market participants as of the date of
valuation, so called “exit price”, from the point of view of market participant having the asset or liability
regardless whether such price is observable or calculated by means of another valuation method.
The price of the main market or - in the absence thereof - the price of the most favourable market, applied
for fair value determination of asset or liability, should not be adjusted with regard to the transaction
expense.
(a) Analysis by fair value hierarchy of financial instruments carried at fair value.
The Group uses the following hierarchy for determining and disclosing fair values of financial instruments:
Level 1: current quoted (unadjusted) prices of financial assets or quoted prices for similar financial assets.
Level 2: valuation technique, whose inputs that have a significant impact on the fair value can be directly
or indirectly observed in the market.
Level 3: valuation technique taking into account significant adjustments of market data or based on a
significant volume of data inaccessible to objective observation.

26

Bank Vozrozhdenie
19

Fair Value of Financial Instruments (Continued)

For financial instruments carried at fair value, the level in the fair value hierarchy into which the fair values
are categorised are as follows:
June 30, 2013

December 31, 2012

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

FINANCIAL ASSETS
Trading securities
- Corporate Eurobonds
- Corporate bonds
- Federal loan bonds (OFZ)
- Municipal bonds
- RF Eurobonds
- Corporate shares

4 139
2 903
563
350
1

-

-

1 517
3 636
603
102
26

-

-

Investment securities
available for sale
- Corporate bonds
- Municipal bonds
- Corporate shares
- Corporate Eurobonds

2 901
430
226
-

-

293
-

875
573
176
559

-

293
-

- Term deals

-

15

-

-

4

-

11 513

15

293

8 067

4

293

In million of Russian Roubles

TOTAL FINANCIAL ASSETS
CARRIED AT FAIR VALUE

Management applies judgement in categorising financial instruments using the fair value hierarchy. If a
fair value measurement uses observable inputs that require significant adjustment, that measurement is a
Level 3 measurement.
(b) Reconciliation of movements in instruments belonging to Level 3 of the fair value hierarchy.
A reconciliation of movements in Level 3 of the fair value hierarchy by class of instruments is as follows:

In million of Russian Roubles
Fair value at January 1
Fair valuation
Impairment

June 30, 2013
Securities available for
sale
Corporate shares
293
-

December 31, 2012
Securities available for
sale
Corporate shares
365
(1)
(71)

Fair value at June 30

293

293

Losses recognised in profit or loss for the current or
prior years for assets held at June 30, 2013

(71)

(71)

As at June 30, 2013, the fair value of non-quoted securities available for sale was assessed based on the
amount calculated by an independent appraiser in 2012.

27

Bank Vozrozhdenie
19

Fair Value of Financial Instruments (Continued)

(c) The methods and assumptions applied in determining fair values.
Fair value is the amount at which a financial instrument could be exchanged in a current transaction
between willing parties, other than in a forced sale or liquidation, and is best evidenced by an active
quoted market price. If there is no active market price, the Group applies analysis based on both
observable and non-observable market data.
The estimated fair values of financial instruments have been determined by the Group using available
market information, where it exists, and appropriate valuation methodologies. However, judgement is
necessarily required to interpret market data to determine the estimated fair value. The Russian
Federation economy continues to display some characteristics of an emerging market and economic
conditions continue to limit the volume of activity in the financial markets.
Market quotations may be outdated or reflect distress sale transactions and therefore not represent fair
values of financial instruments. Management has used all available market information in estimating the
fair value of financial instruments.
(d) Fair values of financial instruments carried at amortised cost.
Fair values of financial instruments carried at amortised cost corresponds to the value determined on the
basis of discounted cash flow model. Discount rates used to calculate the estimated fair value of
instruments carried at amortised cost depend on the Group’s credit risk, as well as the currency and
maturity of the counterparty’s instrument.

28

6M 2013 IFRS Results Reporting

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