Updated July 9, 2008

   Sviaz-Bank net income grew 20 times for last year as compared to 2006. Such growth the bank received due to operations with financial assets and currency mainly, as well as due to their account revaluation.

The bank client base has considerably increased after new board chairman – Alla Aleshkina – had come.

   On July, 8 Sviaz-Bank published its activity results for 2007 by International Financial Reporting Standards (IFRS). Last year the bank received RUR 1,73 billion of net income, and that exceeded Sviaz-Bank activity results more than 20 times as compared to year before (in 2006 net income totaled RUR 84,7 million). None of the Russian banks showed such surge of earnings by last year results.

   Sviaz-Bank was found in 1991 on the initiative of

the Ministry for Communications of the USSR.

The bank core stockholder is RTC-Leasing OJSC (45,11%). According to IFRS reporting for 2007, the 39,95% Sviaz-Bank interest that belonged to Borodino CJSC structures (its owners are Tigran Nersisyan and Victor Lapkin) in 2008 was transferred to three new companies and

was distributed among current Sviaz-Bank stockholders. As per data of Kommersant-Dengi journal, as of January, 1, 2008 the bank book value was RUR 15,6 billion (the 24th place), net assets – RUR 155,8 billion (the 19th place).

   As it follows from the reporting by IFRS, operations with financial assets and foreign currency are the major part of Sviaz-Bank earnings.

In 2007 their stake in the total volume of non-interest income has grown considerably.

If in 2006 operations with currency and financial instruments in Sviaz-Bank total income to taxation (RUR 170,3 million) were 12% and 48% respectively, so in 2007 – 30% and 56% (in 2007 income to taxation totaled RUR 2,461 billion). However, commission income stake has gone from 45% in 2006 to 15% in 2007 down, although in absolute terms it has grown – from RUR 600 million to RUR 1 billion.

   Activity with securities and currency brought 85% of Sviaz-Bank non-interest income in 2007 (RUR 5,9 billion from received RUR 6,9 billion). Thus, as per the reporting, the major part of this RUR 5,9 billion falls not to active operations at the stock market, but to account operations concerning cost revaluation of the bank securities only, as explains head of Otkrutie Financial Company market analytics department Valery Piven.

   And such Sviaz-Bank activity results are rather surprising, as operations with securities exactly have been named as core reasons of other Russian banks' earnings reduction (for instance, in Soyuz Bank and Uralsib Bank) in terms of the changed world stock market environment last year, rem inds AntantaPioglobal analyst Maxim Osadchiy.

"Sviaz-Bank has been operating as an investment company mainly, but not as a commercial bank broadly", marks Valery Piven.

   However, in the nearest future Sviaz-Bank earnings stake should grow due to classic bank operations, as experts forecast. The thing is that by 2007-end the bank has had "powerful obligations inflow" due to deposits first of all, as marks Maxim Osadchiy, from RUR 17,1 billion by early 2007 to RUR 57,8 billion by year-end. And clients' funds grew almost three times – to RUR 93,6 billion.

"Thus, according to the Russian Sviaz-Bank reporting, its major development impulse was in 4Q (when it was announced that Alla Aleshkina, former the Savings Bank board's chairman, replaces Gennady Meshcheryakov at board's chairman post)", as adds Renaissance Capital analyst Maxim Raskosnov.

"Within 4Q facilities volume attracted from legal bodies has increased from RUR 67 billion to RUR 97 billion". However, attractions volume from companies related to postal and connection services, as well as metallurgical companies, has grown twice.