Alfa-Banking Group, which embodies Alfa-Bank and its subsidiaries, today reported a significant increase of net profit after tax of 17.8% to US$ 180.6 mln up from US$ 153.2 mln in 2004 based on the audited financial results for the full year 2005. This growth was mainly driven by a strong increase of net interest income, growing commission income and effective cost control. The Alfa-Banking Group’s after tax return on equity stood at a solid 23.1%.

In the audited reporting period Alfa-Banking Group’s total assets grew by 40% to US $9.8 bn from US $7.0 bn in 2004. Alfa-Banking Group’s loan portfolio net of provisions, significantly increased by 39.6% to $5.7 bn in 2005 from $4.1 bn in 2004. Funds raised from individuals and corporate clients increased by 21.4% to US $5.5 bn compared to US $ 4.5 bn in 2004.

Following the strategy of increasing diversification of funding sources, Alfa-Banking Group has been very active in the syndicated loan, ECP and MTN markets. Syndicated loans, ECP and MTN notes made up approximately US$ 1.5 bn of liabilities in 2005 compared to US$ 0.7 mln at the end of 2004. In addition to this, in December 2005, Alfa Bank issued $225 million of 10-year subordinated non-collateralized Eurobonds, a debt considered as Tier 2 capital according to Russian and international banking regulations.

Total equity of the Alfa-Banking Group increased to $855.5 mln in 2005 up from $710.4 mln in 2004.

“Alfa-Bank had a very successful year in 2005. We have strengthened our position on the Russian financial market through execution of key projects and focus on growth in all business lines. Our client base grew considerably, we entered the market of consumer and auto lending and again increased shareholder value. Alfa-Bank has a growing network of 121 branches and offices across Russia and is the country’s largest privately owned bank. Together with our subsidiaries in Kiev, London, New York and Amsterdam we provide services to clients that include some 40,000 corporations (including Russia’s largest companies) and 1.5 million individuals. Our evolving business model — focused on profitable and dynamic business segments, investing in high-tech operating platforms and in highly-qualified personnel — is bearing fruit. Having a solid foundation for development in 2005, our model should enable strengthening of our market position in the coming years. Today’s Russia is a country of tremendous opportunity. To develop rapidly and to achieve robust results, at the same time as maintaining stability, we must continuously analyze the profitability and risks of our products, distribution channels and client pools. This will enable us to set clear priorities, to wisely use our resources and to focus our efforts on the most profitable projects. Once again, we extend thanks to our shareholders, employees, customers and partners for making 2005 a record year in Alfa-Bank’s history”, — says Petr Smida, CEO of Alfa-Bank.

Alfa-Banking Group’s ISA figures have been audited by PriceWaterhouseCoopers.

International Credit Ratings
S&P: upgraded by two notches to BB-/Stable in November 2005.
Moody’s: Ba2/Positive, outlook changed in August 2005.