Charge / reversal of provisions for loan impairment

RUB million 2011 2010 Change, %
Provision for loan impairment at 1 January 702,523 579,814 21.2
(Recovery) / charge for the year (1,193) 153,809 (100.8)
Currency translation effect (1,741) - -
Loans to customers written off during the year as uncollectible (37,182) (31,100) 19.6
Provision for loan impairment as of 31 December 662,407 702,523 (5.7)

Net gains from recovery of provision for loan impairment amounted to RUB 1.2 billion in 2011, while in 2010 net provision charges equalled RUB 153.8 billion. This shows that general quality of the loan portfolio improved on the back of positive developments in the Russian economy. Efforts to optimise overdue and non-performing loans management system also had a positive effect on the Group’s figures. As a result of these efforts, a number of non-performing loans were sold or repaid. The amount of loans written off as uncollectible increased 19.6% in 2011. A significant part of write-offs results from the sale of non-performing loans by the Group.

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