Page 67 - RusRPTSept20

§ IFRS9 provision was partially released in 2Q20 – RUB599.8mn post RUB871mn created reserve in 1Q20, as situation normalized in 2Q20.
§ OpEx came mostly inline with expectations with RUB4.1bn (+7% y/y; +13% q/q) – within updated 2020G of 7.0-8.5%.
The up and coming mid-tier bank Sovcombank reports 1H 2020 IFRS results. The capital increased by 14% to RUB159bn and the assets went up by 33% to RUB1.5 trillion in 1H 2020. Sovcombank becomes 10th largest Russian banks by assets and capital.
Despite significant macroeconomic instability and challenging market conditions inflicted by Covid-19 pandemic and falling oil prices, Sovcombank managed to maintain positive dynamics of assets and capital. Thanks to the diversification of operations, Sovcombank’s profitability and margins remain stable: the net interest margin was 6.5% in 1H 2020 vs 6.4% in 1H 2019, ROE of regular lines of business (excluding one-off income and expenses) was 17% in 1H 2020 vs 18% in 1H 2019 (the reported ROE was 13.2%). The decrease in net profits and ROE year-on-year was due to higher provisions and hedging expenses.
The Bank meets the capital adequacy ratios with a safe margin: N1.0–14.5%, N1.1–10.5%. Liquidity cushion increased from 31% to 36%. NPLs are mostly flat: NPL 90+ was 2.5% (vs. 2.3% as at 31 December 2019), loan loss provisions for 90+ past due loans remain at 167%. The volume of restructured debt in the retail portfolio was 2.4%, including the Bank's and State programmes.
The Bank's retail business shows steady growth in assets and profits: its retail loan portfolio reached RUB285bn and net interest income generated by the retail portfolio rose by 38% to RUB28bn. The largest growth in interest income in 1H 2020 was seen in the instalment card portfolio (+133%). Thanks to the increasing popularity of interest-free instalment plans for goods and services, the Halva card portfolio increased by 11% to RUB45bn. Despite the severe quarantine restrictions introduced in April–May, the bank managed to increase mortgage and car loan portfolios by 4% and 2%, respectively.
The corporate business expanded through the Bank's active participation in government programmes to support small and medium-sized businesses and systemically important enterprises. In 1H 2020, the corporate loan portfolio grew by 32% to RUB254bn, of, which state-subsidised loans provided under the business support programmes amounted to about RUB30bn. Interest income of the corporate segment increased by 47% to RUB13bn. Segment’s fee and commission income grew by 15% to RUB5bn. The portfolio of current corporate accounts and deposits went up by 25% to RUB435bn in 1H 2020. The quality of the corporate loan portfolio remains high: Stage 3 loans remain at 1.8% and the loan loss coverage ratio – at 175%.
In 1H 2020, Sovcombank's CIB became the most active manager of market bond issuances, according to the Cbonds Agency ranking. Compared to 1H 2019, income generated by bond issuance fees increased by 10%.
Bank Saint-Petersburg released 2Q20 IFRS results mostly inline with BCSe, strong beat to consensus.
67 RUSSIA Country Report September 2020 www.intellinews.com