Page 78 - RusRPTDec20

8.1.8 ​Bank news
Otkritie will sell its 9% stake in VTB to Trust​. The CBR announced that a 9% stake in VTB, which currently belongs to Otkritie bank, will be transferred to Trust at market price – Rb44bn as of close on 27 November. Both Otkritie and Trust are owned by the CBR, but Trust is mostly for non-profile assets. Overall, Otkritie and its structures own 14.78% of VTB, with 9% owned by the bank and 5.7% by NPF Otkritie. There were a lot of discussions on Otkritie’s sale of VTB’s stake, given this is a non-profile asset for Otkritie with plans for an IPO or sale in the future. We see no implications for VTB from this deal, given execution at market price. Yet, the transaction reduces overhang risks in the medium-term.
VTB’s net profit fell 54% y/y in 9M20 to RUB59bn mostly due to the RUB186bn provision charge (+139% y/y). ​VTB guides for RUB70-75bn net profit in 2020, but believes it could have been on target for 2020 earnings of RUB230bn (as per Strategy 2022) if it were not for the pandemic’s negative impact on provision charge. Indeed, the pandemic has had no impact on VTB’s way of doing business and the company continues to see demand for in-branch services.
VTB​ 3Q20 IFRS beat on stronger fees and better cost of risk (CoR). 30%/17% beat to BCSe and consensus on VTB 3Q20 earnings of RUB17.2bn (-66% y/y; 8x gr q/q) with 4.0% ROE, mostly on stronger fees and lower CoR (relatively to cons-s). Besides, 3Q20 was affected by FX gain of RUB16.7bn (we attribute to perp position, given Rub depreciation by 14% over Q), offset by RUB23.6bn another set of negative revaluations of the investment property. We treat results as supportive, given signals of improvement.
§ NIM of 3.8% looks strong, given current monetary easing cycle with NII RUB135.5bn (+23% y/y; +2% q/q) – mostly inline with expectations with gross loans added 8% over the quarter, partially attributed to Rub depreciation.
§ Net F&C came surprisingly stronger, part of the beat to bottom line – 15% /12% above BCSe and consensus with RUB31.8bn (+42% y/y; +28% q/q) – with investment and insurance lines mostly serving as the catalysts as outlined in press release.
§ CoR came again elevated at 2.3%, above 2.0% BCSe, below 2.7% cons-s with NPLs at 5.7% (119% coverage) vs 5.1% at 2Q20. Provision charge comprised RUB71.1bn – 18% beat to BCSe and 13% miss to cons-s.
§ OpEx came mostly inline at RUB63bn (+7% y/y; -3% q/q).
§ On capital side CAR levels do not change a lot, given strong assets growth with local total CAR N20.0 at 11.9% vs 11.2% as of December, 31 2019.
78 ​RUSSIA Country Report​ December 2020 www.intellinews.com