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player on the fragile NPF market often undermined by government intervention in the past. The CBR is also the de-facto the controlling shareholder of Russia's largest bank Sberbank. Should the new fund have its goal to compete with Sberbank's NPF (RUB439bn of assets) other market participants will be significantly squeezed, analysts surveyed by Vedomosti on January 31 warned.
The Central Bank of Russia reported its first loss since 1997 of RUB435bn ($7bn) in 2017 . The loss was attributed to costs of last year’s the banking sector clean-up, which brought down some of the largest private banks in the country. The cost of forming reserves for the regulator jumped 13-fold to RUB386bn, while about RUB1.45 trillion were spent on providing liquidity and new capital. Notably, the government would not be receiving the dividends from the CBR, which previously paid 90% of profits to state budget (RUB39.2bn payout last year).
Russian state-owned VTB said on May 16 its profits had doubled in the first quarter of this year to RUB55.5bn ($898mn), beating market expectations and confirming the bank’s return to health. Analysts polled by Reuters forecast a net profit of RUB34.3bn between January to March, an increase from RUB27.6bn earned by the bank in the same period a year earlier. Shares in state-owned VTB rose 0.9% on the day after the earnings report, outperforming the broader MOEX stock index that was up 0.1% at 0942 GMT, Reuters reported. The increase was “driven by growth of net interest income and net fee and commission income, continued improvement of cost efficiency, and supported by stable asset quality,” VTB said in the report. VTB said provisions against bad loans stood at RUB20.7bn in the first quarter, down from RUB45.9bn a year earlier. The bank’s net interest income rose 2.9% on the year to RUB116.3bn in the first quarter, while the cost of risk declined to 0.9% from 1.9% in the first quarter of 2017.
Russian Railways ( RZD ) state railroad transportation monopoly plans to sell its leasing subsidiary Transfin-M and Absolut Bank, both controlled by RZD's pension fund Blagosostoyanie, Reuters and Vedomosti daily reported on May 30 citing unnamed sources. Transfin-M is Russia's fifth largest transportation leasing company owning 63,000 rail cars. Absolut Bank is one of Russia's s top 40 banks in terms of assets. Reportedly Russia's three largest banks Sberbank , VTB , and Gazprombank are considering acquiring Absolut and Transfin, with VTB being the most active. Sources in VTB confirmed negotiations with RZD taking place and interest in Transfin in particular to Vedomosti . Previously Kommersant daily reported the Absolut plans to be recapitalised by RUB9bn in 2018-2019, planning to boost asset growth by 15% and increase the retail loan portfolio to 70% of total. As for Transfin, it maked RUB1.6bn IFRS net profit in 2017, up by 10% year-on-year. The transportation leasing market is estimated at RUB1.1 trillion in Russia, growing by 48% last year as the industry recovered, Vedomosti said citing the data of Ekspert RA.
Russia's largest bank Sberbank continued to post strong results in April, reporting 27% year-on-year earnings growth to RUB262bn in January-April under Russian Accounting Standards (RAS), making a return on equity of 23% for the period and 22% in April alone. In January-April the bank’s capital position remained robust, despite growth of risk-weighted assets on FX re-pricing and solid loan growth, with the first-tier capital ratio of 12.2%, VTB Capital commented on May 10, viewing the results as positive. VTB
56 RUSSIA Country Report June 2018 www.intellinews.com