The Bank “Ugra”, received in 2016 from the shareholders grant assistance in the amount of 28.6 billion rubles in IFRS brought these funds in the capital and in “other operating income”. Such a remark was made by the auditor of a credit organization BDO’s reports on the financial statements of the Bank for international standards published on 3 may.
Reflection joint assistance as income is significantly different from IFRS standards, says a leading expert of “Expert RA” Yuri Belikov. Otherwise, the financial result would be less than the amount of the contribution of shareholders, explains the Deputy General Director of “FinExpertiza” Natalia Borzov.
According to IFRS the Bank for the year 2016 received 2.3 billion rubles. net profit. “If the operation infusion of the assistance of shareholders was reflected only in equity, but not income, to assess the financial condition, close to reality, should be deducted from net profit through the shareholders. In this case, the net loss excluding other comprehensive income, which is relatively small, amounted to RUB 26 billion,” says Belikov.
According to Alexei Nefedov, free help shareholders in addition to “other operating income” recorded also in the line “retained earnings” in the change of equity at the reporting date. “In the preparation of consolidated financial statements the Bank has taken including one of the mandatory IFRS principles, establishes the priority of substance over form the presentation of financial information,” he says.
In the Bank’s report indicates that in February of 2017 the Board of Directors made the decision on partial repayment of the loss of 2016 with the assistance of shareholders. What part of the aid was provided so the document is not specified, but Nefedov said that the damages was sent to all support of shareholders.
If you look at the report on movement of funds, which gives the overall picture of results on actually received the funds by the end of 2016, the Bank received substantial income just from investing activities – RUB 10.7 billion From operating activities net cash flow was negative and amounted to 19 billion rubles., and from financing activities, the Bank received only 4.3 million rubles, the document says.
According to the Russian accounting standards the Bank has received over the past year loss in the amount of 31.7 billion rubles, according to “Interfax-CEA”. As a result, the Bank took the 562 th place in the rating agencies on the financial result of banks. For the first nine months of 2016 a net loss of “Ugra” in accordance with IFRS amounted to 22 billion rubles. “the Unprofitable activity of the Bank associated with the accrual of additional reserves for loan receivables. For reimbursement of the Bank for reserving the main shareholder and has supported the Bank”, — says the President of the Bank Nefedov. In the first quarter of 2016 Bank had to charge reserves at 21 billion rubles, said earlier the analyst of National rating Agency (NRA) Karina Artemyev.
“Income or loss is the result of his activities, and not coming from outside. The purpose of the compiler of IFRS was to increase the financial result”, — says Natalia Borzova from “FinExpertiza”.
“I do not recall that banks used this practice in IFRS. It is clear that the Bank “Ugra” the need to conduct this operation in this form has arisen from the fact that the Bank suffers losses from its direct activities”, — said managing Director of NRA Pavel Samiev.
Earlier Russian accounting standards (RAS) joint assistance was conducted through the form of statement of profit and loss and recorded as income of the organization and in the capital, says a leading expert of “Expert RA” Yuri Belikov. However, the first quarter of 2016, the regulator has amended the chart of accounts, and joint grant aid was recorded only in capital, in income it does not reflect, he said. “Such changes in the principles of accounting was implemented in order to bring the accounting policies under Russian standards with international standards, that finally the Russian companies have as from 1 January 2019,” — said the expert.
As for the authority of the auditor, then it is up to the certification of the statements could make a recommendation to the Bank to reclassify the operation, but in turn the Bank has the right to disagree with the auditor, says Belikov. “The opinion of the auditor and the audited entity of the accounting policies may differ and in such cases, there are such reservations. From the auditor’s report, we see that the decision to record assistance to the Bank through the income was made by the Board of Directors of the Bank,” says Belikov.
However, such operation is not prohibited, says the managing Director of the NRA Pavel Samiev. “Although fundamentally adjusted financial result in IFRS does not change the essence of the activities of the Bank are yet unprofitable, as evidenced by the company”, — he said.
As reported by the President of the Bank Alexey Nefedov via external press service, “the Bank’s financial result is very important for the development of the Bank, including promotion of corporate products.” Requirements for profitable operations of banks can meet the corporate clients when tendering for Bank services (Bank guarantees, placement of funds on deposits, salary projects), says the managing Director on Bank ratings “Expert RA” Stanislav Volkov. And if the Bank is not showing a profit, then it may lose the opportunity to participate in such contests, the expert concludes.
Auditor BDO has not provided their comments.
PJSC “Bank “Ugra” — the largest by assets Bank, replaced in October 2016 “residence” — with the KHMAO (Megion city) in the capital. According to “the Banks.ru”, “Ugra” is a 30-th place by assets — 319 billion. the Main source of funding for the Bank — the expense of citizens. They amount to 180 billion rubles (56% of all attracted funds). Yugra is in the top 20 banks in terms of deposits. Funds of enterprises in the Bank amount to 38 billion rubles (12%), issued bonds and notes — 437 mln (0,15%). The Bank is not credited in the interbank market, the site says, “Banks.ru”.
According to the website of the Central Bank data on the Bank Supervisory persons, 52% of shares of “Severstal” belongs to the Swiss company Radamant Financial AG, the ultimate owners of which owns the shopping center “Gorbushkin yard” Alexey Khotin, former Chairman of the Bank, Yuri Gusev and its President Alexey Nefedov. 9.4% of the shares are owned by Maia Alongi.
In the summer of 2016, the Bank announced that it intends to IPO to raise capital. But later decided to postpone the deal and to attract funds from existing shareholders. In December 2016, the Bank returned to the plans to hold an IPO, in which he wanted to draw 1-2 billion.