Page 96 - RusRPTSept21

Loan loss provision charges remained moderate in July as in June, with cost of risk close to 1%.
In contrast, net fee income continued to expand. Net fees surged 11% m/m and 23% y/y in July, which the bank attributed to “a steadily increasing volume of commissions from the sale of insurance products and commissions from the brokerage business.”
Opex expanded 22% y/y in July due to (i) the costs of the continuing digital transformation and (ii) the higher base rate of deposit insurance contributions, which are recorded as part of opex in RAS accounts. Despite this, the C/I ratio was as low as 30% last month vs. 35% in July 2020 because of the solid y/y growth in core revenue.
Following the strong monthly RAS standalone results for July, VTB's management reconfirmed its recently updated FY21 net profit guidance of RUB295bn.
“We view the results release as positive, with the bank reporting a strong y/y growth in core revenue and a moderate cost of risk in July. We keep VTB on our list of top picks, as the FactSet consensus estimate for VTB's FY21 IFRS net profit of RUB227bn remains well below management's guidance of RUB295bn. This suggests scope for some estimate upgrades by the sell side, we think,” Sova Capital said in a note.
Bank Otkritie reported record profits on August 10, as the Central Bank of Russia begins to actively look for a strategic buyer of a controlling stake.
However, the bank itself is aiming for an IPO in 2022, to capitalize on the current window of enthusiasm for Russian stocks, according to bne IntelliNews sources close to the bank. There has been a string of successful billion-dollar Russian IPOs in the last year as the international markets are awash with liquidity and western stock markets are already at all time highs, leaving little upside for investors.
“The CBR has announced it is looking for a buyer, but it's more likely to IPO given the current market environment,” a source close to the bank told bne IntelliNews.
The RTS has already returned circa 20% year to date, but the bulk of portfolio investment has gone into the financial sector – widely used as a proxy by investors looking to invest into Russia’s
96 RUSSIA Country Report September 2021 www.intellinews.com