Page 80 - RusRPTDec20

but 9m20 costs were only up 13% y-o-y.
The lawyers of troubled ​Russian Standard​ bank argue that the creditors and bondholders of the bank would not be able to claim 49% in the bank's equity ​due to inconsistencies in the credit agreement, RBC business portalreportedonNovember18.Asreportedby​bneIntelliNews,​ Rustam Tariko has been ​dragging the matter with several failed restructuring deals after it ​defaulted on the $545mn worth ​of bonds in November 2017. In April 2020 one of the largest bondholders of the default issue of Russian Standard Pala Assets (holds 25% of the bond issue) ​started proceedings for claiming a collateralised 49% of the bank's equity​. Russian Standard owes bondholders over $750mn, but the lawyers of the bank argue that intermediation of Citibank, which is not the direct creditor of the bank, makes their claims legally unsound. Previously the bank had offered to pay its bondholders 20% of the face value of its bonds plus a share of the bank’s profits, arguing that this was a more attractive offer ($136mn versus an estimated $50mn-70mn for 49% shares).
Bank of St Petersburg 3Q20 ifrs: decent quarter, 13% ROE​. The 3Q20 saw an improvement across the business, with almost 13% ROE in 3Q20. Net income of R2.75bn was up 36% y/y and 36% q/q, and pretax earnings were even stronger, up 62% q/q as there was quite a high tax rate in 3Q20. This brought 9m20 earnings to R6.3bn, up 15% y/y, with 10.1% ROE.
The management outlined guidance for 2021: 10-12% ROE, 8% loan growth (roughly 5% corporate and 15% retail) and 200 bps+ cost of risk, which looks very conservative to us, particularly given the bank still has R2bn macro adjustments written in 1H20 that could well be released next year. Other guidance included 10% cost growth as the bank comes out of cost savings mode and decent 15% fee income growth, and a slight drop in the core banking margin from the current 5.3% to 5%+. Our current net income forecast of R9.7bn for 2021 assumes 10.5% ROE.
As for 3Q20, NII was up 3% y/y and 0% q/q, bringing 9m20 NII to R18.3bn, up 8% y/y, while fee income was up 7% y/y and 16% q/q, and up 9% y/y in 9m20. NIM was down about 15 bps q/q at 3.7% (3.7% in 9m20), but 2Q20 had been supported by lower deposit insurance expenses and 3Q20 NIM was also pressured by sizable loan issuance late in the quarter, with an impact of about 30 bps on the banking margin.
Provisions fell 23% q/q, with 3Q20 cost of risk 1.8% (9m20 2.1%). Stage 3/POCI loans fell from 10.5% to 9.4%, helped by R1.7bn in write-offs, with provisions/gross loans at 8.8%. Costs were decent, up 1% y/y and down 2% q/q, bringing 9m20 cost growth to 6%, with 41%
80 ​RUSSIA Country Report​ December 2020 www.intellinews.com