Page 80 - RusRPTNov19

accounting and a stronger RUB), NIM’s performance remains weak. The results are seen as mixed, with the quality of earnings deteriorating, and await management’s updated FY19 guidance during the 3Q19 IFRS reporting on 31 October 2019. VTBC reiterated its 12-month Target Price for ords of RUB390 and Buy recommendation (84% ETR)
From November 1, Sberbank is to launch a new product that shares rate discounts for developers between project finance under escrow accounts and mortgages for its clients. Discounts could go to 1.4pp for the lifetime of the mortgage or 4pp for the construction period. The deeper integration of escrow and mortgage financing is a rational step, as the banking sector is becoming a core risk taker under the new regulation and is able to increase product flexibility for its clients across the sectoral chain. Developers are likely to see higher rates upon discounts for mortgages, but could use the instrument to improve sales of their most illiquid lots.
Russia's largest bank Sberbank reported Russian Accounting Standards (RAS) results for 3Q19 and 9M19 , which showed improvement in net interest margin (NIM) by 30bp to 5.6% and strong return on equity of 24%. BCS Global Markets commented that NIM pick-up was a positive development that should be reflected in 3Q19 IFRS results, and reiterated a positive stance on the name with Buy recommendation and target price of RUB310 per share. The NIM support came from the CBR’s interest rate cut in September as well as from stronger loan dynamics (+0.7% m/m in corporate loans and +1.7% m/m in retail lending), BCS GM wrote on October 7. Nevertheless, the bank's fees dynamics for 9M19 dynamics remained "weakish" with +8% y/y increase. The cost dynamics remained elevated at +10% y/y in September, +9% in 3Q19 and + 9% for 9M19 "due to staff reallocation from Sberbank Technologies and also driven by annual wage increase and VAT change." As reported by bne IntelliNews, Sberbank madenetIFRSprofitofRUB250bn($4bn)in2Q19 , expanding by 16% year-on-year and 10% quarter-on-quarter, beating consensus expectations by 9%, and making a Return on Equity of 25%.
Russian Sberbank has admitted to a leak of client identity that saw up to 5,000 credit card details stolen by hackers . As reported by bne IntelliNews, last week the client database of Russia's largest bank was reportedly on sale online. Unconfirmed reports claimed that information on up to 200mn clients has been leaked. A quickly launched investigation in the bank revealed that a middle-level employer of the bank has breached security and sold the data of up to 5,000 clients on the black market. The analysts surveyed by the Vedomosti d aily noted that Sberbank's investigation first claimed that only 200 clients have been compromised, but had to increase the number to 2,000, and then 5,000. However, no signs of massive data breach are seen.
Prime Minister Dmitry Medvedev supports legislative changes, submitted earlier this year by the Federal Anti-Monopoly Service and the CBR, abolishing the fees for interregional P2P payments within a single bank. Sberbank controls 94% of this market, according to government studies, and bankers estimate that it earns some RUB20bn per annum (4% of net fee income, 1.8% of 2019F PBT). The CBR is also pushing Sberbank to join its FPS system of P2P payments.
80 RUSSIA Country Report November 2019 www.intellinews.o