Page 74 - RusRPTJun19

The bank’s earnings of RUB75bn in April alone were up 13% year-on-year, and up by 12% y/y to RUB293bn ($4.5bn) for January-April overall, implying a solid 22% ROE. The metrics were supported by RUB11.2bn provision release from debt restructuring of agricultural holding Agrokor, BCS Global Markets commented on May 14.
The bank's net interest margin (NIM) showed a strong 36bp increase in April to 5.8%, still in January-April NIM was 61bp below y/y at 5.9%. Net interest income turned into positive territory for January- April with 1% y/y growth.
BCS GM notes that the Agrokor provision release will be accounted in 2Q19 IFRS results as well with a potential upgrade of 2019 guidance on cost of risk (CoR) from current 130bp. The analysts have a Buy recommendation for Sberbank shares with target price of RUB330 per share.
Sberbank's 1Q19 IFRS results were about 7% ahead of the analyst consensus on RUB226.6bn ($3.5bn) net income (up by 7% year-on-year and 28% quarter-on-quarter), making a 23% Return on Equity (ROE).
Sberbank is Russia's largest creditor and deposit holder. As reported by bne IntelliNews, the bank is consistently tending as the most valuable Russian company. It is an investor’s darling because it is seen as a proxy for the whole Russian economy, but also an innovative bank and one of the largest players in the new digital economy.
That said, the valuation of Sberbank remains well below what is should be thanks to sanctions and the perennial “Russia discount.”
8.1.8 Bank news
Morgan Stanley confirms previous reports that it is shutting down its equities, currency, and trading operations in Moscow, becoming the latest foreign bank to reduce its presence in Russia, the bank said on May 6. In the first quarter of 2020 the investment bank plans to submit the respective paperwork to the Central Bank of Russia (CBR), maintaining operational only its consulting arm, which does not require licensing, Vedomosti daily said on April 6 citing the 2018 annual report of Morgan Stanley. As of end of 2018 the bank has about 40 people on the sales and trading desks in Moscow. Morgan Stanley joins other foreign lenders that quit Russia, such as Deutsche Bank and Credit Suisse Group, while Russia's largest bank Sberbank also scaled investment operations back and said it would merge Sberbank CIB investment unit with its corporate banking division.
Life insurance premiums underwritten by Russian insurers went down by 5.5% year-on-year to RUB94.8bn ($1.5bn) in the first quarter of 2019 – the first time that premiums have fallen ten years, Vedomosti daily reported on May 27 citing the data by the Pan-Russian Union of Insurers (VSS).
Leading Russian consumer lender TCS Group that operates Russia’s only pure online bank Tinkoff Bank reported 25% year-on-year growth in IFRS net profit in 1Q19 to RUB7.2bn ($110mn), in line with consensus expectations of analysts. TCS reported record-high net profit in 2018 thanks to rapid growth in fee and commission income, and said in March it would sell $150mn worth of its GDRs or approximately 4.2% of its share capital through
74 RUSSIA Country Report June 2019 www.intellinews.com