Page 89 - RusRPTAug21

Bottom line. Sber showed another quarter of solid operating income growth, supported by strong demand for loans and favourable asset repricing after the key rate hikes. We think the strong RAS numbers suggest a management upgrade to its FY21 IFRS guidance, especially in CoR, as the strong macroeconomic background supports asset quality. To recap, our FY21F CoR forecast is at 69bp and our provision charge forecast is 38% below today’s Bloomberg consensus. We expect forecast revisions, if management reduces its CoR guidance during the 2Q21 IFRS reporting on 29 July.
SBER’s 2Q21 net profit exceeded RUB325bn, while various consensus estimates expected net profit to be closer to RUB300bn. Following this, SBER upgraded its management guidance for the bank’s FY21 ROE to more than 22% vs. the previous estimate of more than 20%, a change that is likely due to the lower-than-expected cost of risk during the quarter.
SBER published its 2Q21 IFRS results today. Quarterly net profit came in at an all-time high of RUB325bn vs. the consensus estimate of RUB294bn compiled by the bank. The net profit beat vs. consensus was mostly driven by the bank’s lower-than-expected cost of risk, which came in at 0.4% in 2Q21 vs. the consensus estimate of 0.7%. The Stage 3 loan coverage ratio ticked up to 96% in 2Q21 vs. 94% in 1Q21.
Net interest income and net fee income both came in slightly above consensus in 2Q21. Quarterly NIM dropped c. 40bps y/y, on our calculations, as the average asset yield lost c. 130bps y/y and the average funding cost only improved c. 60bps y/y. In particular, the average cost of corporate term deposits, which tend to reprice faster than retail ones, surged c. 30bps y/y (c. 60bps q/q) following the CBR rate hikes. However, in absolute terms, quarterly NII added 10% y/y, as the loan and securities books soared 13% y/y and 38% y/y, respectively.
Net fee income surged 31% y/y in 2Q21 vs. the low base of 2Q20, with the fastest growing lines being income from bank cards and acquiring.
Opex was also slightly above consensus in 2Q21 (+17% y/y). One of the major contributors to this expansion was opex for SBER's non-financial businesses. At the same time, this was more than offset by growing revenue, leading to the C/I ratio dropping to 32% in 2Q21, its lowest Q2 level since 2Q18.
Discontinued operations (mostly represented by Eurocement) generated net profit of RUB7.7bn in 2Q21. SBER closed a deal to sell Eurocement in mid-July. We estimated the potential pre-tax gain from that sale at RUB40bn at the time, a figure that included the effect of extra provisions on the likely loan to Eurocement's buyer. During today's call, management could provide additional color on this.
Due to its low cost of risk and above-consensus earnings in 2Q21, SBER upgraded its management guidance for this year’s ROE to more
89 RUSSIA Country Report August 2021 www.intellinews.com