Page 58 - RusRPTOct19

8.1.8 Bank news
VTB published IFRS results for July and 7m19. The bank also restated 7m18 numbers to reflect the deconsolidation of Post Bank, MultiCarta and VTB Bank Ukraine, as well as the disposal of VTB Insurance Group and VTB Bank Belgrade. VTB posted a solid 15.6% ROE for July, mainly due to a low cost of risk (just 0.5% in July), and as a result, its ROE improved to 10.9% in 7m19 from 10.4% in 1H19. Earnings. Net income for July came in at R20.5bn, up 33% y/y, with a 15.6% ROE. For 7m19, earnings were R97.3bn, down 14% y/y, with a 10.9% ROE. VTB confirmed its 2019 earnings guidance of R200bn. Revenues. NII was down 1% y/y in July, and down 3% y/y for 7m19. NIM stood at 3.4% in July and 3.3% in 7m19, versus 3.3% in 2Q19 and 3.2% in 1Q19. Fee income was up 4% y/y in July and 8% y/y in 7m19. Growth. Gross loans were up 1.8% YTD. Retail lending growth was at 0.7% m/m and 11% YTD, while corporate lending declined 0.2% m/m (down 1.5% YTD). According to VTB's deputy CEO, the bank expects 22% retail loan growth this year. Retail deposits were flat m/m (up 6.4% YTD, outperforming the sector). Corporate deposits were up 2.3% m/m and 2.9% YTD. The bank's loan-to-deposit ratio came in at 100%, versus 102% in June. Asset quality. The cost of risk was low in July at 0.5% (0.8% in 7m19). The reported NPL ratio was flat m/m and YTD at 5.7%. Costs. Costs were up 8.5% y/y in July and 20.2% y/y in 7m19. However, the cost-income ratio showed slight improvement at 38.5% in July and 45.3% in 7m19, versus 46.6% in 6m19. Capital. The reported Tier 1 CAR was up 20 bps m/m to 12.2%.
Alfa Insurance of Alfa Banking Group will have to pay $46mn in insurance compensations to Urals Airlines for the loss of Airbus 321 jet that made a spectacular emergency landing in a cornfield on August 15, Vedomosti daily reported on September 20 citing the deputy head of Alfa Insurance Ilya Kabachnik. The jet that carried 226 passengers made an emergency landing in a field outside of one of Moscow's Zhukovsky airport after colliding with a flock of birds.
8.2 Central Bank policy rate
The board of the Central Bank of Russia (CBR) cut the key interest rate by 25bp to 7% at the policy meeting on September 6, in line with wide consensus expectations cutting the key rate for the third consecutive time this year.
Notably, the last time the key interest rate was at 7% was in March 2014 just before the Crimea crisis broke, after which the rate was ramped up by 8pp by December 2014 in an emergency hike due due to the extreme ruble volatility that followed the collapse of the oil prices.
The CBR attributed the rate cut, as before, to slowing inflation and underperforming economic growth, and noted that further cuts could be considered at one of the coming meetings.
Inflation has been falling faster than expected this year and in August declined by 0.2% month-on-month and eased to 4.3% in year-on-year terms, according to the latest data by Rosstat statistics agency.
"Given the current inflation dynamics, we have downgraded our year-end inflation forecast to 3.8% y/y, below the CBR's forecast of 4.2-4.7%," Sberbank CIB commented on September 6.
58 RUSSIA Country Report October 2019 ww.intellinews.com