PASHA Bank has disclosed its financial results for the first 6 months of 2013 at the press-conference at the Four Seasons hotel in Baku. The speakers at the conference were Mr. Farid Akhundov, the Chairman of the Executive Board, Mr. Shahin Mammadov, the Member of Executive Board and the Chief Financial Officer, Mr. Taleh Kazimov, the Member of Executive Board and Chief Investment Officer, and Mr. Farhad Guliyev, the Head of Advisory Services for Azerbaijan, Ernst & Young.

Despite the difficult process of stabilising the country's economy, Azerbaijan's banking sector grew by almost 10% in the first six months of 2013. PASHA Bank is fully on track to deliver on its 2012-2014 strategy, which aims to position the Bank as one top of the top Azeri companies and to provide more services to SMEs and corporate clients with international exposure.

The Bank has maintained its position as one of the largest commercial banks in terms of total equity, which reached AZN 193,727 thousands (USD 246,943 thousands) in the first half of 2013.

The Bank's strategic decision to diversify its assets portfolio has enabled it to maintain a strong service offering for its clients.

As at 30 June 2013, PASHA Bank's total assets amounted to AZN 659,570 thousands (USD 840,752 thousands), a decrease of 9% compared to 2012 (AZN 721,075 thousands / USD 919,152 thousands), mainly due to reduced activity on customers' accounts. The breakdown of these assets is as follows:
- loans to customers - 48%;
- securities portfolio - 35%;
- cash and cash equivalents - 11%;
- due from credit institutions - 2%;
- other non-current and current assets - 4%.

The number of disciplined loan repayments on the Azeri market has reduced and there is continued demand for credit among Azerbaijani corporate clients, mainly SMEs or companies with an international footprint. Throughout the crisis, PASHA Bank has benefited from its strong capital position and has established itself in the market as a strong and reliable business partner for companies with transparent and sustainable financial management. The Bank continues to successfully support its existing SME client base during current economic uncertainty.

We have generated strong loan growth, increasing our gross portfolio by 17% to AZN 331,690 thousands (USD 422,804 thousands) compared to AZN 282,837 thousands (USD 360,532 thousands) in FY 2012. The effective provision rate on the portfolio was 4.9% (year end 2012 - 3.1%).

Remaining loyal to our customers despite the volatile economic environment has helped us to build strong customer relationships, which are now benefiting our business. As a result, we have expanded our customer base with total customer accounts AZN 360,838 thousands (USD 459,959 thousands). Of these customer accounts, 66% were placed in demand accounts, and 34% into term accounts, compared to 58% and 42% respectively in financial year ended 2012.

The Bank's net profit for the first half of 2013 amounted to AZN 5,490 thousands (USD 6,999 thousands), which represents a marginal increase on the corresponding period last year (AZN 5,472 thousands /USD 6,975 thousands). Our pretax profit increased 12% in comparison with prior periodand amounted to AZN 7,999 thousands (USD 10,196 thousands). Total operating income for the first half of 2013 was AZN 25,950 thousands (USD 33,078 thousands), a 31% increase compared to the corresponding period of 2012 (AZN 19,802 thousands / USD 25,242 thousands).

The Bank's interest income increased by 21% and reached AZN 27,647 thousands (USD 35,242 thousands), whereas non-interest income increased by 19% and amounted to AZN 4,613 thousands (USD 5,880 thousands).

As a result of successful cooperation with international financial institutions, PASHA Bank was able to provide more trade finance services to its corporate clients by accessing a broader range of financial instruments. After obtaining credit ratings from two international credit agencies, it was also able to secure better terms for financing operations of its customers.

The Bank has continued its efforts of educating the corporate community of Azerbaijan about finance options and PASHA Bank's services and products by holding a number of seminars and workshops for its clients and wider community.

As at 30 June 2013, documentary operations balances reached AZN 103,018 thousands (USD 131,317 thousands). PASHA Bank's current target is to grow its trade finance portfolio to AZN 140,000 thousands (USD 178,458 thousands) by the end of 2013. As at 30 June 2013, the Bank attracted syndicated trade-related term loans with four foreign banks for the first time, amounting to AZN 23,947 thousands (USD 30,525 thousands).

The Bank generated strong internal capital growth, producing an estimated tier one capital adequacy ratio under the Central Bank of the Republic of Azerbaijan's capital requirements of 31% (compared to 34% for FY 2012), which means better utilisation of the Bank's share capital. We remain focused on meeting the required capital levels once Basel II and Basel III are finalised, while returning capital to our shareholders through dividends. During 2013, the Bank paid dividends of AZN 20,515 thousands (USD 26,150 thousands) to its shareholders from the 2012 net profit, and retained earnings of previous periods. *all figures are correct as at 30 June 2013 unless otherwise stated, and are based on the report of interim condensed consolidated financial statements