Page 70 - RUSRptSept18

Russia's largest bank Sberbank started selling investment life insurance (ILI) in the mass segment , bringing the minimum price of the policy from RUB100,000 to RUB50,000, Vedomosti daily reported citing the insurance division of the bank. Other insurers selling ILI are life insurance divisions of VTB and Alfa Banks. ILI with an accrued savings component yielded 6%-9% return on average in 2017, making the instrument is on par or even more profitable than the banking deposit , which had the average maximum yield of 8.4% interest in 2017. ILI is a capital-protected product that guarantees the return of the investment, Sberbank Life Insurance analyst Boris Borzunov previously told the daily. He noted that large insurers have a wide choice of assets to invest the underwritten premiums in, and mixed with more risky assets such as tech companies yields can be pushed up. The insurance division of Sberbank in 2017 was the second largest insurance company in Russia . In January-September 2017, Sberbank Life Insurance sold policies worth of RUB70.1bn ($1.2bn), second behind Sogaz with RUB138.7bn.
Sberbank’s CFO assured investors on August 13 that “work on closing [disposable] deal [of Turkey’s Denizbank] is going according to plan ” and price stays within the previously announced range soothed concerns. Current turmoil in Turkey raised concerns over Debniz bank’s sale to Emirates NBD in a deal that is due to be closed in 2H18. “Deniz’ sale may add ~110bp to Sberbank’s CET1R at price $3.4-3.7bn (subject to TRY/USD) or P/BV1.17x. Ruble devaluation is one of the concerns for the bank’s capital position currently. According to Sberbank every RUB10 devaluation against the dollar may eat up to 60bp of CET1R, so about 30 bp negative effect over the last week or 60bp since end 1Q18 to 11.6% (almost 2017 end level). Although given Sberbank’s high capital generation capacity (ROE 2018 ~20%), 2018 guidance of CET1R over 11.5% looks achievable. Still, to get to 50% payout CET1R at 12.5% is set as a threshold,” BCS Global Markets said in a note.
Russia'ssecond-largestbank V TB facesrepeateddifficultiesinacquiring smaller private rival Vozrozhdenie, as the High Court of London for the second time since July arrested the assets of ailed banker brothers and owners of the bank Dmitri and Alexei Ananyevs, according to the report by Kommersant d aily of August 17. In September VTB is set to buy a controlling stake of at least 75% in Vozrozhdenie that belongs to the former owners of the nationalised Promsvyazbank (PSB), newswires reported on August 14. This became possible after the arrest on $15.6mn and €11mn worth of assets of Ananyevs was lifted in the case initiated by wealthy PSB clients that had invested in securities issued by the bank. However, now another group of seven Russian investors claims $11.2mn and €0.5mn from PSB, according to Kommersant, which led to repeated arrest of Ananyev's assets. The Central Bank of Russia (CBR) took over one of the largest Russian private banks PSB in 2017, and ordered the Ananyevs to bring their controlling stakes in another bank, Vozrozhdenie, to below 10%. Later the VTB was approached by the CBR as a possible buyer. After splitting the assets across several industries, the Ananyevs are selling most of them. Apart from Vozrozhdenie bank eyed by VTB Bank and reportedly tycoon Suleiman Kerimov, Ananyevs' high tech assets and agricultural assets are also up for sale.
Russia’s state-owned VTB opened the season of the second quarter of 2018 IFRS reporting among Russian banks and posted strong profits. The country’s second largest lender posted the quarterly net profit of RUB 43 bn (+42% y/y and -23% qoq), thus achieving the half-year bottom line of RUB 98.5 bn (+70% y/y) and ROE of 13.7%. On the back of the accelerated retail lending growth (the second quarter of 2018: +6% qtd), the bank’s NIM edged up to 4.2% (the first quarter of 2018: 4.1%), while fee and commission income also strengthened (+9% y/y). That said, the market attention was towards the loan provisions line, which came in at RUB 54.9 bn translating in the quarterly cost of risk at 2.2% (the first quarter of 2018: 0.9%) booked mainly in April (RUB 26.2 bn) and June (RUB 18.5 bn), including towards sanctioned
70 RUSSIA Country Report September 2018 www.intellinews.com