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. Last Updated: 07/27/2016

Inkombank Reports $8Bln in Profits

Inkombank, one of Russia's three largest banks and the first to issue American Depository Receipts, or ADRs, posted 1996 profits of $8.12 billion, its top executive said Thursday.

President Vladimir Vinogradov told a press conference his bank saw "dynamic growth" last year, increasing profits by 29 percent and assets by 126 percent, while capital holdings climbed 140 percent to 1.9 trillion rubles ($332 million).

Assets grew to 16 trillion rubles or 22 trillion rubles, depending on which aspect of Russia's two-tier accounting system is used, Vinogradov said.

Inkombank saw a 64.3 percent rise in credit cared accounts, making it the leading Russian provider, and became the largest Russian private holder of individual bank accounts, with only the state-owned Sberbank surpassing it.

Alexander Titov, the bank's first deputy director, said Inkombank would offer a ruble-denominated credit card that would be acceptable worldwide by the end of 1997. At this time, Russian credit cards valid abroad must be backed by a hard-currency account.

According to Vinogradov, Inkombank expanded its activities in 1996 by signing cooperation agreements with 16 regions and eight cities, and increased the number of its branch offices from 38 to 56.

One Moscow-based consultant, however, said a regional presence is by no means a sign of a healthy bank.

"Inkombank is a strange beast," he said. "It has been in the regions and afloat for a long time, despite repeated rumors that it is unhealthy and dying. It's like Mr. Yeltsin in that way."

Inkombank has several on-going negotiations, including one with Ukraine which would make it the first Russian bank with Ukrainian resident status, and a second with Westdeutsche Landesbank Girozentrale, WestLB, Vinogradov said.

Andrei Yashchenko, a research analyst at United City Bank, is loathe to take Inkombank's ADR issue as an authoritative indication of the company's health. "Inkombank's estimate of its ADR sales figure success is not entirely correct, and somewhat fictitious, because [at the time] the bank issued ADRs it did not yet have an internal market for its stocks," he said.

In the coming year, Inkombank plans to open branches in India, Kazakhstan and the Baltic states, said Vinogradov. But efforts to open a representative office in the United States have become bogged down within the U.S. Federal Reserve for the past three years.

Inkombank Chairman Vladimir Groshyov said he expects the bank's profits to impress the Americans and win their final approval. He complained that the continuing delays may be a sign that something is wrong with the American approval system.

"Our documents have been lying for three years at the Federal Reserve Bank. First they would say: 'Let's wait until the end of the quarter.' Then they would say the same thing at the end of the next quarter," he said.

A spokesman for Promstroibank, the only Russian bank which has a representative office in the United States, said officials there did not feel that the American verification system was problematic.

"We entirely understand the Americans' concern, especially with all the mafia structures and breaking of laws," said spokesman Abdurakhmanov. "Trust, but verify."