Page 53 - RusRPTJune18

supervisory board then approved a strategic development plan through to 2021 that will create a profitable "VEB 2.0,” according to Gorkov. In 2017 the bank's assets shrank by 5.5% to RUB3.38 trillion, with liabilities of RUB2.98 trillion. 56% of bank's bad debts account for "project financing" for potential state-supported investment projects .
Rosselkhozbank (Russian Agricultural Bank) could receive RUB15bn ($240mn) capital injection from the state in 2017 , deputy head of the bank Kirill Levin told the press. Overall the bank needs RUB30bn in additional capital, with RUB15bn raised through a placement of perpetual subordinated bonds , RUB5bn in support already budgeted, and additional RUB10bn now requested. "We hope very much that the shareholder [the state] will support on in the issue, RUB10bn is not such a big amount," Levin is quoted as saying by Vedomosti daily
Russia's leading bank state-controlled Sberbank posted a solid net profit of RUB212bn ($3.4bn) under IFRS in the first quarter of 2018 , up by 10% year-on-year, and making a return on assets and equity of 24.2% versus 23.1% for the same quarter of 2017. The results are seen as healthy and in line with expectations, Aton Equity commented on May 30, noting that a net interest margin (NIM) squeeze of 50bp quarter-on-quarter to 5.6% "may raise concerns from investors." "On the positive side, F&C income growth accelerated (+18% y/y), NPLs [non-performing loans] improved, and provisions declined, mitigating the negative impact of falling margins," Aton analysts added. VTB Capital also commented that "well-flagged NIM pressure" was offset by lower cost of risk (115bp versus consensus/guidance of 130bp), with the risk-adjusted margin down just 12bp q/q, and fee growth of 26% y/y (7% above consensus). Aton reiterated the Buy rating on Sberbank and underscored its value as a dividend-growth story, as well as an exposure to the softening of Russia-related risks. First quarter results show that trends underlying Sberbank's performance are solid, VTB argues, highlighting the sustainability of 20%+ ROE, while seeing 4%-6% upside potential to the 2018-19 consensus estimates. Both VTB and Aton see the chance of and a bigger dividend payout after the recent sale of Denizbank , "which is yet to be reflected in the market’s valuation", according to VTB. VTB confirmed the Buy recommendation for both ordinary and preferred share classes, with a 12-month target price of RUB360 and RUB320, respectively, implying 70% and 71% estimated total return (ETRs).
Billionaire and former presidential candidate Mikhail Prokhorov bought 39.4% in the International Financial Club (IFC) Bank under a put option from Cyprus-based Winterlux Limited controlled by sanctioned Viktor Vekselberg , the bank said on May 31. The latest round of US Treasury Department (USTD) sanctions of April 6 hit Vekselberg and another billionaire Oleg Deripaska the hardest. Previous reports suggested that his utility major T Plus could be sold to Gazprom's energy holding as part of the state support effort . Prokhorov now owns 87% in the IFC, with 19.7% indirectly through Onexim Holdings Limited. Another 13% are held by Ekaterina Ignatov, whose husband Sergei Chemezov heads the state technology agency Rostec. The IFC also known as the "oligarch club" was set up in 2009 by Prokhorov, then Russia's richest man, by polling $19bn from himself and other tycoons Suleiman Kerimov, Alexander Abramov, and Vekselberg. However, after a succession of financial crises the bank did not live up to expectations and remained at loss on operational level
53 RUSSIA Country Report June 2018 www.intellinews.com