The Bank’s Financial Performance
Since its foundation in 1993, the prime focus of Novikombank’s operations has been the financial support of the real sector of the Russian economy. In pursuit of this policy, Novikombank is continuing to strengthen its position in the national financial sector.
Today Novikombank is among the top 50 largest Russian banks. The assets of Novikombank as of December 31, 2011 amounted to 100 billion roubles. The solid basis of its balance sheet, high operational efficiency and the good quality of its assets enable Novikombank to remain one of the most stable and reliable Russian banks.
In December, 2008 JSC AVTOVAZ, Russia’s largest car manufacturer, acquired newly issued shares of Novikombank. By the end of 2011 these shares were sold to Russian Technologies State Corporation, which now holds 20% of the Bank’s authorised capital. In June, 2009 in accordance with the Federal law of the Russian Federation ¹ 173 of October, 13 2008 a 480 million roubles subordinated loan maturing December 31, 2018 was extended to Novikombank by Vnesheconombank. It enabled Novikombank to boost its capital base — shareholders equity of the Bank exceeded 9.8 billion roubles.
Services offered by the Bank
Novikombank’s customer-oriented policy is focused on providing hi-tech banking services in all areas of the financial market.
Among the products offered by Novikombank to its corporate customers are:
- Loan products, including loans, overdrafts, credit lines, signature loans, factoring, and leasing;
- Trade finance, including guarantees, letters of credit and payment collections;
- Project and investment financing;
- Settlements and cash services, including on-line services via the ‘Bank-customer’ system;
- Settlement services under customers’ foreign trade contracts, trade and structured finance of foreign trade operations;
- Treasury operations within the "Corporate settlement centre” service;
- Arranging operations in the debt markets, including syndications and bond issues;
- The full range of transactions with securities, including financing against pledged securities, issue/redemption of the Bank’s bills, broker services;
- Investment of free funds.
To Individuals Novikombank offers:
- Term deposits — in roubles, US dollars and euros, with a replenishment and/or partial withdrawal facility;
- Issue and servicing of bank cards;
- Broker and custody services in the securities market;
- Wire transfers in roubles or foreign exchange;
- Rental of individual safety deposit boxes in a specially equipped vault, including for real estate transactions;
- Operations in foreign currencies;
- Asset management and other services.
The Bank’s Customers and Projects
Among the customers of the Bank — recognised leaders of Russian industry.
They include major enterprises of the heavy-machinery and defence industry — the Russian Technologies State Corporation, Rosoboronexport State Corporation, OBORONPROM Industrial Corporation, Foreign Economic Association Technopromexport, JSC Tactical Missiles Corporation, VSMPO-AVISMA Corporation, Foreign Economic Association Tyazhpromexport, TsAGI, United Aircraft Corporation, Air Defence Concern Almaz–Antey, JSC Russian Helicopters, JSC Russian Aircraft Corporation MiG, JSC Beriev Aircraft Company, JSC A.S. Yakovlev Design Bureau, and many others; automotive industry — AVTOVAZ Group of Companies, its dealers and suppliers; textile and light industries — Industrial Group Rosko, JSC Ivanovskoye Textilnoye ob’edinenie, ZAO Ostashkov Tannery, and others; food industry — ZAO Masan Rus Trading, Amtel Group of Companies; fuel and energy complex — Transneft Joint-Stock Company (OJSC), Itera Group of Companies, JSC RusHydro, JSC Zarubezhneft, mining — MMC Norilsk Nickel, and many others.
At present a number of large industrial projects are being implemented with the financial support of Novikombank.
Among them: financing the production of innovative devices using GLONASS, implemented by JSC MDB Compas, the leading developer of navigation systems, the creation of helicopter engineering centre by MIL Moscow Helicopter Plant of OBORONPROM Industrial Corporation and the construction of «AgustaWestland» helicopter manufacturing complex by the JSC Russian Helicopters. Novikombank is also actively involved in lending to the development programme of domestic enterprises operating in the sphere of aircraft engine manufacture and repair.
Owing to the dynamic development of business within target customer segments, Novikombank’s loan book is steadily growing. It now exceeds 50 billion roubles and is characterised by diversification and high quality collateral.
Business diversification and expansion
To diversify its business and expand the range of customer products, Novikombank pays considerable attention to the development of investment services. Novikombank actively acts as an organiser and underwriter in the debt market — it organised the placement of several issues of JSC ‘AVTOVAZ’ securities, and also participated as a co-underwriter in the distribution of several issues of bonds by Russian Agricultural Bank, Òranscreditbank, Rosbank and others. Novikombank is also an investor in the major construction project of the technological park in Samara region, which may become a free economic zone in the future.
A prospective area of activity is the financing of small and medium-sized businesses. At the early 2008 the Bank was in sixth place in the RBC rating of ‘Best banks in terms of volumes of loans to small businesses’. Novikombank received loans totalling 900 million roubles under the government programme for SME support. The loans will allow more extensive financing of this category of customers.
In November of 2010 the Bank placed its debut 3-year bond in the amount of 2 billion roubles. The issue was three-times oversubscribed, and the coupon rate was lowered from the initial range to 9%.
Novikombank’s stable relationships and cooperation with its partners and clients is also based on the active participation in the work of leading public associations and organizations, both in the financial sector and in strategic sectors of the Russian economy. Amongst them are: the Russian Engineering Union, the Russian Union of Industrialists and Entrepreneurs (RSPP), the Moscow Chamber of Commerce and Industry (MCCI), the Association of Russian Banks (ARB), the Association of Regional Banks of Russia (Association “Russia”), the Moscow Bank Union, the Moscow Interbank Currency Exchange, the National Securities Market Association, RTS Stock Exchange, the Moscow International Currency Association (MICA) and several others.
International transactions
A wide network of correspondent banks enables Novikombank to effect all forms of customer payments promptly in accordance with international banking practice, and effectively service export and import customer transactions using letters of credit, guarantees, and pre-export financing facilities.
Novikombank also offers its customers mid-term and long-term import transaction financing. It provides loans using the available credit lines of foreign banks, including IKB Deutsche Industriebank AG, Dexia Bank, Raiffeisen Zentralbank Oesterreich AG and some others with the insurance coverage of export credit agencies such as Euler Hermes (Germany), EGAP (Czech Republic), ERG (Switzerland), OeKB (Austria), Coface (France).
Stability and Reliability
Alongside the technological effectiveness of its business, one of Novikombank’s major priorities is high efficiency and reliability of its own operations and transactions performed under customer instructions. A steady policy of the best practices in risk management enables Novikombank to ensure a reasonable balance between asset and income growth and maintaining an acceptable level of risk. This is reflected in analyst and rating agency assessments — in particular, the international rating agency Moody's Investors Service has assigned a B2 rating to Novikombank with a stable forecast. The ‘Expert RA’ rating agency assigned an ‘A’ rating to the Bank, confirming the Bank’s high creditworthiness.
Strategy and development prospects
Strategic plans for the development of Novikombank’s business envisage a significant expansion of operations in all segments of the banking market. In the mid-term, the key factor for the Bank’s further growth should be its increased cooperation with corporate customers within top 1000 Russian companies. In particular, Novikombank will continue strengthening its position as a partner of choice for the heavy-machinery enterprises, defence complex, the automotive industry, and the high-tech companies. Leveraging its unique franchise, Novikombank is focusing on further enhancement of successful long-term cooperation and gaining a foothold as one of the leading Russian financial institutions in these industries.
At the end of 2008, an agreement on cooperation with the Russian Technologies State Corporation was signed by Novikombank. The agreement, established to promote the development, production and export of high-tech commercial and defence-oriented industrial products, is supposed to have a crucial impact on the further development of Novikombank’s business. The Russian Technologies State Corporation unites over 420 enterprises, many of them loyal Novikombank customers. As a financial partner, Novikombank provides the Corporation and its subsidiaries a wide range of banking products, including the allocation of temporary free funds, settlement and cash services, support of import–export transactions, and asset management services. In addition, the Bank is developing cooperation in the investment sphere — it advises the Corporation on investment projects, works out possible schemes for their financing to create competitive hi-tech industrial products and promote them in the internal and external markets.
The partnership with the Russian Technologies State Corporation and the involvement of Novikombank in solving national tasks of prime importance is a framework for the further expansion of the Bank’s business volumes. Furthermore, Novikombank’s participation in the implementation of nationwide long-term projects has created prerequisites for the Bank’s qualitative growth. The Bank is developing its tailor-made financial solutions and scaling up its products to meet the needs of the Corporation enterprises, thus contributing to the progress of high-tech production in Russia and modernization of the national economy.
