Page 102 - RusRPTMay21

2m21, with retail loans up 2.9% and corporate loans down 0.6% (FX-adjusted). Retail deposits were down 0.1% YTD (FX-adjusted), with corporate accounts up 12% (FX-adjusted). The cost of risk was just 0.4% in 2m21, with a just R8 bln provision charge. NPLs were down 10 bps YTD at 5.6%. Staff costs and other opex looked good, down 4.6% y-o-y with 34% C/I.
VTB held an Investor Day, reiterating the main goals of the 2022 Strategy. The company also presented its views beyond 2022.
· 2022 Strategy reiterated, 2022+ views provided. The goals of the 2022 Strategy were largely reiterated – Rb310bn net profit (up from Rb300bn previously) and ROE of 15% on 1% CoR and 36.7% CIR. Dividend payout of 50% was confirmed for 2020-22 with CAR supported by the implementation of Basel 3.5 decreasing RWs. That said, the CFO noted 2021 dividend payment may require 2 tranches with an equalized approach for all 3 types of shares. Targets beyond 2022 include increasing net income by 10% annually with ROE >17%. Importantly, VTB added transparent disclosure of assets supplementary to the banking business (3.2% of group assets), which management sees as adequately valued post write-downs in 2020.
· 30mn retail active clients by 2025 vs current 14m, partially via partnerships. The retail business enjoys strong market positions with 19% in retail loans and 15.6% in individual savings, as well as a lucrative 21% ROE for 2020. Strategic goals lie in the growth of the customer base to 30mn by 2025 vs 14mn currently active. VTB sees room for cost optimization in retail with its “exceptional branch network” program and Rb5-7bn costs savings – c2ppt CIR in 2021. Guidance for 2021 implies Rb96bn profit (c37% of Group NI) and 22% ROE in retail.
· CIB – 17% ROE, supported by strong WIM arm. Current CIB metrics look strong with a 20% market share in corporate loans of Rb7tn and 17% ROE in 2020 on the back of low CoR of 1% and CIR of 26% (vs the Group’s 44%). Wealth & Investment Management (WIM), part of the CIB block, stands out with 19.5% growth of client base in 2021 to 1.4mn clients (vs +75% in 2020) and an estimated valuation of Rb497bn based on international peers P/E ‘21e multiple, comprising c80% of VTB’s current MCap. Main CIB guidance implies Rb129.7bn net profit in 2021 (+7% y/y and roughly 50% of 2021 NI), providing 17% ROE.
· SME – focus on digitalization. SME is a well growing segment with 27% record-high growth of clients to 636,000 in 2020, a 9.7% market share and good profitability (24% ROE in 2020). Goals for 2021 imply Rb31bn net profit (+10% y/y c.12% of Group NI) with
102 RUSSIA Country Report May 2021 www.intellinews.com