Page 67 - bne IntelliNews Russia Country report May 2017

slowdown including significant depreciation of the Turkish Lira against the ruble, which is applicable to Deniz bank, some accounting changes, and lower FX volatility on the market. The net provision charge declined 20% to RUB67.3bn, with implied cost of risk at 1.46%, and opex added just 2% to RUB147bn, which are both are good results. Total CAR stands at 16.6% which is strong. The results are mixed: weaker on core revenue, and stronger on CoR and opex. However, the follow-up conference call with the management made a good impression on us. They pointed out that the main reason for the weaker numbers was FX fluctuations, while the bank anticipates rising activity in lending, and reiterated its guidance for loan growth at 5-7%. Therefore we reiterate our positive view on the stock, as one of our top picks in the sector.
Sberbank saw its interest revenue go up by 5% to RUB376.9bn and commission revenue increase by 10.5% to RUB104.9bn in January-April, y/y, the state-run lender said on May 10. The interest revenue mostly grew thanks to a decrease in interest rates on customers' deposits, and the main drivers for growth in the commissions segment were card transactions, including acquiring and bank insurance, the lender said. Sberbank's operations expenses went up 11.7% to RUB153bn. The lender's net profit amounted to RUB207.1bn, including RUB52.1 for April alone. In April, Sberbank released a RIUB800bn worth of loans to corporate clients, and another RUB150bn to individual clients. The proportion of unpaid loans declined by 0.02% to 2.59%, compared with the sector's average figure of 7%.
Sberbank again received a record profit in 2017 said CEO German Gref in an interview on CNBC. "We are going this year to put the record net profit. Net income this year will be greater than the previous "- he promised. Sberbank's cost of risk this year, too, must be improved, says the banker. In 2016 the Bank was already a record profit under IFRS, whereas it has almost doubled compared with the crisis in 2015, reaching RUB541.9bn . The result exceeded the forecast of analysts, who expected that he will earn RUB517bn . Net interest margin for 2016 increased from 4.4 to 5.7%, and the cost of risk on the back of improved quality of the loan portfolio and the strengthening of the ruble fell by 70 basis points to 1.8% due to a decrease in the cost of reserves 28% to RUB342bn . In this case, the State Bank's loan portfolio before provisions decreased by 6.3% to RUB18.7bn , after -7.3% to RUB17.4 trillion , which was mainly due to deposits of legal entities..
Russian state owned development bank VEB made significant a loss in 2016 amid additional risk provisioning. VEB released the shortened version of the full-year 2016 financial statement. Net loss totaled RUB 111.9bn (vs. RUB 14.9bn profit in 2015) amid nearly two-fold y/y growth in provisioning (RUB 510bn vs. RUB 293bn in 2015). The bank’s loan portfolio decreased by 26% y/y to RUB 1.9 trillion amid a conservative approach to lending. The proportion of FX loans in the portfolio dropped 56% y/y to 29%. VEB’s equity rose y/y from RUB 481bn to RUB 556bn amid additional capitalization of RUB 163.8bn in 2016, while capital adequacy calculated according to the CBR’s methodology, stood at 11.6% vs. 11.7% a year earlier. Effect on bonds. None. VEB’s significant losses were attributable to transformation of the lender and more conservative risk assessment by the new management. More important factors for the bank’s credit history include a coordinated plan of state assistance for 2017-19 (RUB 450bn) and a new business development strategy, the success of which will also depend on whether the bank is able to sell its non-core assets. Notably, of the $2bn of anticipated redemptions on VEB’s market debt (including $1.35bn in eurobonds) $750mn on the eurobond
67 RUSSIA Country Report May 2017 www.intellinews.com