Page 92 - RusRPTAug21

RUB295bn from the previous range of RUB250-270bn.
VTB released its 2Q21 IFRS results. As opposed to our and consensus estimates following management’s relatively cautious statements made earlier, VTB's quarterly net profit did not drop in 2Q21 vs. 1Q21, remaining above RUB85bn. Both revenue and provisions were better than our and consensus estimates, while opex was in line with expectations.
Quarterly NII came in 4% above consensus and was in line with our estimate, as VTB’s NIM improved c. 10bps y/y, on our calculations. This was due to cost of funding dropping faster than asset yields, as VTB's cost of funding was historically elevated while the proportion of assets invested in floating-rate instruments increased. The bulk of OFZs held by VTB are floaters, while a significant portion of corporate loans has been converted into floating-rate ones since last year.
Quarterly net fee income was 6-7% above our and consensus estimates, surging 60% y/y. The biggest drivers were transactional commissions; agency fees from the sale of insurance policies (likely boosted by the expansion in mortgage lending); and securities/capital market fees.
Cost of risk rose to 1% in 2Q21 vs. 0.7% in 1Q21, but this was still below our estimate of 1.2%. The NPL90+ coverage ratio improved to 138% at the end of 2Q21 vs. 120% at the end of 1Q21.
Opex was in line with our and consensus estimates for 2Q21, adding 9% y/y. Since revenue grew faster than expected, the C/I ratio came in at 33% (one of VTB’s lowest in its history) vs. our and consensus estimates of 36%. However, there could be some acceleration in opex growth in 2H21, as VTB's investments in technological transformation could intensify.
The strong 2Q21 results led VTB's management to improve its FY21 net profit guidance to RUB295bn from the previous range of RUB250-270bn. With the current FactSet consensus estimate for VTB's FY21 net profit at RUB198bn, we expect some estimate upgrades by the sell side following this results release.
TCS Group held an investor call dedicated to ESG. TCS’ management and Sustainability Committee members provided an overview and highlighted the main topics of the recently issued 2020 Sustainability Report.
· Current Board of Directors consists of 9 members with 6 Independent Non-Executive Directors, which will be expanded into 11 members. Four committees are in place – Audit, Remuneration, Sustainability and Strategy with no current need for new committees to be added. The strategy committee is currently focusing on M&A and geographical expansion
· TCS defines ‘sustainability’ as best possible employer, customer needs first, investment in Tech, digitalisation, financial literacy, high quality governance and risk standards
· The company has set three sustainability objectives – responsible
92 RUSSIA Country Report August 2021 www.intellinews.com