Page 97 - RusRPTSept21

economic recovery – and the sector’s shares are up a whopping 57% YTD as of August 10.
The CBR took Otkritie over during the “Garden ring banking crisis” when a series of Russia’s biggest commercial banks ran into trouble and nearly collapsed as part of the regulator’s attempts to clean up the sector.
The central bank recapitalized them and quickly returned stability to the sector which came close to a systemic meltdown, but the regulator took the unusual decision to take the banks onto its own balance sheet, but it is in the awkward position of both being a bank owner and the regulator of the banking sector. The CBR remains keen to unload these banks and announced last week that it was actively looking for a buyer for Otkritie.
The former owners and state firms are barred from participating in the bank’s privatization. In theory the bank should be easy to sell or list as it has been performing well as the sector as a whole puts in the best profits in five years and Russia’s banking titans Sber and VTB have also both posted record profits in the last month.
Chairman of the Management Board of Bank Otkritie Mikhail Zadornov said: “For the first six months of 2021 Otkritie reported a net profit of RUB38bn – the highest half-year result in the Group’s recent history. The Group’s return on tangible equity (ROTE) for the period stood at 19%.”
Citing improvements in operating efficiency, Zadornov went on to say “These results were achieved thanks to growth of Otkritie’s core banking income, which increased by 39% y/y and accounted for more than 70% of operating income. The results were also positively impacted by a reduction in the cost of risk, as well as continued stability in the quality of the loan portfolio and high loan loss provision coverage.”
Bank Otkritie has returned strongly since its 2017 collapse and subsequent bailout by the Russian Central Bank, cleaning up its balance sheet by ridding itself of toxic assets.
The bank’s profit of RUB38bn ($282mn) for the first half of this year is an increase of 2.6x y/y. Return on tangible equity (ROTE), has risen from 8.3% for 1H20 to 18.9% in 1H21 driven by rapid growth of regular banking income.
97 RUSSIA Country Report September 2021 www.intellinews.com