Page 84 - RusRPTNov18

Usmanov, the move stems from the company’s new digital strategy that requires more investments and from decreasing activities of Western investors.
Russian shoe manufacturer and retailer Obuv Rossii (OR) said it will spend up to RUB900mn ($14mn) on a share buyback, which could result in buying up to 10% of its shares, the company said on October 26. As the buyback, to be organised by BCS Global Markets that also organised the company’s IPO last year, was announced the shares of OR jumped by 10% on Moscow Exchange to RUB90.7 per share, correcting back to RUB83.2 by mid-session. The company raised $150mn with a rare IPO in October 2017 and has used the money to grow its market share, especially in Russia’s regions. OR reported second-quarter revenue growth of 23%, a gross profit increase of 24% year-on-year to RUB1.45bn ($171mn), and net income growth of 14% to RUB230mn. The company's Ebitda declined by 3.4% in 2Q at the margin of 23.8%. The results of the company showed an improvement of like-for-like sales and gross margin trends, and were met positively by the analysts . As of July 2018 44% stake in the company was held by the CEO Anton Titov, 16% by billionaire Mikhail Prokhorov, with 38% of the shares free floated. The shares that will be bought back could be used to finance the current operation or for the management incentive programme.
8.4 International ratings
Moody's Investors Service improved the outlook for Russia's banking system to Positive from Stable, reflecting its view that banks' asset quality and capital adequacy will benefit from the improving operating environment, the agency said on October 23 in a special report. "Russia's system-wide problem loan ratio will decline to 9.6% over the next 12 to 18 months from 11% reported as of end-2017, and may decline further when the central bank completes, as announced, the transfer of a big portion of problem loans and non-core assets from the balance sheets of several large banks bailed-out in 2017 to a dedicated "bad bank"," Moody’s vice president and senior credit officer Olga Ulyanova said. The sector's credit losses will decline to around 1.2% of average gross loans in 2018 and 2019 from 1.6% in 2017, she estimates. Moody's sees Russia's GDP growth averaging 1.7% in 2018 to 2019, as inflation remains low. Growth is expected to be underpinned by resurgent oil prices that support the Russian ruble. The agency also believes that capital adequacy will improve "given Russian banks' sound profitability and modest loan growth," estimating that the ratio of tangible common equity to risk-weighted assets will rise to 10.1% as of end-2019 from 9.7% at the end of 2017. Following the hike of the key interest rate, the growth of deposit rates will outpace that of credit interest rates, but even the shrinking interest margin of 4% in 2029 (down from 4.5% in 2017) will be enough to cover the sector's costs and to procure for bad loans, Ulyanova believes. Moody's did not discuss sanctions risks for the Russian banking sector, or the possibility of direct sanctions against Russian state-controlled banks.
New sanctions on Russian sovereign debt from the US are more likely than restrictions on the US dollar use , Senior Vice President of Moody's Investors Service Kristin Lindow told Reuters on October 26. In January Moody's upgraded Russia's outlook to Positive from Stable despite persisting sanction risks.
The agency sees Russia as fit to face sovereign debt restrictions due to strong
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