Page 103 - RusRPTJun21

8.1.8 Bank news
VTB reports strong April IFRS results across the board. Monthly net profit came in at RUB29.5bn, a record high for April, on the back of the strong growth in core revenue, normalized provisioning and a lack of visible negative asset revaluation charges.
Monthly ROE came in at 19% as net profit exceeded RUB29bn, a record high for April. This was thanks to:
· The growth in NII (+20% y/y), which reflects the bank’s asset growth and stable NIM y/y.
· The expansion in net fees (+2.4x y/y and +9% m/m), which was driven by the current economic rebound, increased agency sales of insurance products (mostly linked to retail lending) and the success of VTB's retail brokerage offerings.
· The normalization in cost of risk (1.1% in April 2021 vs. 1.7% in April 2020) and the lack of visible downward asset revaluation charges last month.
Opex added 8.5% y/y in April, but the C/I ratio remained below 35% thanks to faster revenue growth.
VTB’s CFO confirmed both VTB's current guidance and the proposed DPS for ords (RUB0.0014/ord), although there could be changes to the DPS for prefs proposed earlier. The BoD should meet this week to make a new recommendation for prefs, as well as to decide on the new AGM and dividend record dates.
TCS Group published 1Q21 IFRS results and held a conference call. It was a very solid start to the year, in what is consistently the weakest earnings quarter. The management chose not to raise guidance, but this now seems likely with the mid-year numbers, in our view.
Core revenues were strong but broadly in line with our forecast and the consensus, while a beat on net income was driven by lower provision charges, and opex continued to increase strongly as competition for quality IT staff intensified.
Net income of R14.2 bln beat our forecast and the consensus and was up 57% y-o-y, with 44% ROE. Customer acquisition remained very robust, with MAU up from 9.3 mln to 10.7 mln and Tinkoff Black up from 7.5 mln to 8.9 mln.
Total pre-provision operating income was slightly above expectations, rising 11% y-o-y (and up 18% adjusted for securities gains), as NII rose 8% Q-o-Q and 14% y-o-y, helped by dynamic loan growth and funding costs dropping another 10 bps to 3.2%, while the gross loan yield was very slightly lower than expected at 25.6% (down 80 bps Q-o-Q). F&C income was flat Q-o-Q and up 81% y-o-y. Within F&C, acquiring and FX revenues beat expectations, interchange/SME came in lower, brokerage was in line (R2.7 bln, up 17% Q-o-Q) and the F&C expense was bang in line. Segmentally, non-consumer finance businesses contributed an unchanged Q-o-Q 43% of revenues, with
103 RUSSIA Country Report June 2021 www.intellinews.com