Page 67 - bne IntelliNews Country Report: Russia Dec17

191bn or 12% qtd, mainly via the loan portfolio (+9% qtd) and reverse repo position (reached RUB 702bn or 39% of total assets). The latter transactions remained sourced largely from direct interbank repo, yet still having about RUB 300bn (18% of total assets) of the received collateral as not re-pledged. Concerning the non-repo lending, CBOM grew mainly in the oil & chemicals sector, where the exposure increased to 1.7x total equity (Q2 2017: 1.2x). In Q3 2017, the bank’s overdue 90+ ratio edged further down to 1.7% (Q2 2017: 1.9%) and the stock of not past due but impaired loans contracted to 5.9% of the gross portfolio (Q2 2017: 6.9%). The two problem loan categories together were by 70% covered by provisions. On the funding side, we note corporate deposit inflows of about RUB 150bn (+28% qtd) and stable retail base. The management also depicted the deposit-flow situation for October and November (mtd) as neutral (monthly local GAAP data for October is expected later this month). As a reminder, in November the bank received RUB 22bn of subordinated deposits from Rosneft’s operating subsidiaries. In Q3 2017, CBOM’s CET1 capital ratio (IFRS-based) stood at 10.6% (Q2 2017: 10.4%). As commented during the conference call, the bank might consider coming to the market to refinance its $500mn senior unsecured bond CRBKMO 7.7% due 2018.
Russian state-run lender VTB saw its revenue declined 7% y/y to RUB17.4bn ($293mn) in July-September. Net interest income rose 13% y/y to RUB117bn with implied net interest margin at 4.1% (3.8% for July-September), while net F&C income added 24% to RUB23.9bn. VTB's provision charge declined 3% to RUB42.5bn with implied CoR at 1.9% (1.0% for April-June). Operating costs accelerated to 13%, with the implied C/I ratio at 45.8%. The total loan portfolio is almost flat ytd at RUB9.6trn, with NPLs (90+ days) adding 2% ytd to RUB614bn (6.4%), and implied coverage ratio at 103%. The Tier 1 ratio declined 2 bpts q/q to 12.1%. The bank guides for CoR below 2% and NIM at 4%, and reiterated its 2017 net income guidance of RUB100bn.
Troubled development bank Vnesheconombank (VEB) will have its state guarantees prolonged by 45 years , deputy Finance Minister Sergei Storchak said on November 12, as cited by Interfax. The state budget extended RUB550bnbn ($9.3bn) worth of credit guarantees to VEB as of end of 2016 that has been struggling to stay afloat since 2014 through a massive reorganisation effort and, most recently announced a RUB500bn asset sell-off. Vedomosti reminds on November 12 that VEB had to establish an Industrial Asset Fund, which bought out bad assets from the bank on the loans extended by VEB itself, which were backed up by state guarantees. In the meantime, an estimated of 22% of state debt of RUB12.6 trillion or 13.6% of GDP are state guarantees extended to state banks and corporations like VEB as of end of 2017. The share of state guarantees could increase to 30% in 2018. In the meantime unnamed federal officials told Vedomosti that bailed out industrial assets held off VEB’s balance "are so bad that the risk of turning guarantees into actual budget spending is high."
Russia’s bailed-out bank Otkritie will not repay $500mn of loans raised in Ireland , potentially making it harder for other Russian private banks to borrow abroad and casting a cloud over Dublin as a “shadow banking” hub Reuters reports. In a stock-exchange filing on November 2, OFCB, a vehicle that had issued $300mn of loan notes and lent the proceeds to Otkritie, said the Russian bank had “terminated” the repayment of the debt and more than $7mn of interest. BKM Finance, another vehicle that borrowed $200mn on behalf of
67 RUSSIA Country Report December 2017 www.intellinews.com