Page 68 - RusRPTSept20

§ NII came slightly below BCSe / cons-s with NIM of 3.8% (+40bp y/y; -10bp q/q) on the back of key rate cuts, strong current accounts dynamics and gross loans growth of 14% y/y, yet -4% q/q (attributed to currency appreciation).
§ Fees of Rb1.6bn (-2% q/q; -6% y/y), affected by lower activity during lockdown – close to BCSe / 4% beat to cons-s. Press-release states clients activity reached February-March levels as of now.
§ CoR stays elevated at 2.3%, yet below 1Q20 level of 2.5% wit asset quality looks firm - NPLs at 10.5% vs 9.2% as of January, 1 2020. Provision charge of Rb2.5bn came 7%/8% stronger vs BCSe and cons-s.
§ OpEx dynamics normalized post elevated 1Q20, driven by uneven bonus accruals, and came 2%/7% stronger vs BCSe and con-s with Rb3.4bn (0% y/y; -17% q/q) with CIR down to 41% from 48% in 1Q20.
8.2 Central Bank policy rate
On July 24, the Central Bank of Russia (CBR) cut its key interest rate by 25 basis points to 4.25%. The cut was smaller than markets expected, with consensus predicting a 50bp reduction, but the bank left the possibility of further cuts open. Despite inflation edging up to 3.3% in late July (from 3.0% in May and 3.2% in June), the CBR is clear that deflationary risks outweigh inflationary ones.
Analysts interpret the smaller rate cut as a return to the CBR’s traditional caution as the bank awaits the effects of its extraordinary rate cutting cycle thus far. In line with other major markets, which seek to offset the economic effects of COVID via monetary easing, the CBR has slashed rates 325bp over the last year.
68 RUSSIA Country Report September 2020 www.intellinews.com