Page 95 - RusRPTDec21

Pianov also commented on VTB’s recent sale of its stake in Magnit, which is expected to generate “tens of billions of rubles in profit” for VTB. This should be reflected in VTB’s November results, although this gain was not reflected in VTB’s updated FY21 net profit guidance of “above RUB300bn” released at the end of October. If VTB’s FY21 IFRS net profit reaches RUB330bn, the FY21 results-based dividend yield on ords could exceed 14.5%, on our calculations.
“We view the results release and Pianov’s comments as highly positive, as VTB earned RUB280bn in 10M21 vs. the FactSet consensus estimate of RUB284bn for FY21. On top of that, the windfall from the sale of VTB’s stake in Magnit should have a significant positive impact on VTB’s FY21 net profit and dividend yield once it is fully accounted for by the market, in our view. We therefore expect a range of estimate upgrades from the sell side, and we keep VTB on our list of top picks,” Sova Capital said in a note.w
TCS Group announced that the BoD might receive the right to issue additional capital (of up to $1bn in the next three years) to fund further organic and inorganic business growth and to replenish management incentive programmes instead of the current buyback approach that consumes capital (up to $310mn per year). TCS Group's signal of additional capital needs does not come as a surprise, and we agree with management that the delivery of strategic targets, together with sharp regulatory tightening in Russia, require more capital that the organic way can offer (despite TCS’s >40% ROE). We note a relatively small, albeit notable, price overhang risk for the next six months, and would expect that the announcement of international expansion and /or solid development of the business in 4Q21 might trigger the capital increase (perhaps not in full) by YE21.
Bank St Petersburg (BSPB) posted good financial results for 3Q21, with earnings of RUB4.1bn implying a 17.2% ROE (down 2.3% q/q adjusted to one-off gain in 2Q21).
The bottom line was 3.6% below the consensus (compiled by the bank on 11 November 2021) amid lower than expected non-interest income. Provision charges were well below our and consensus forecasts as asset quality slightly improved. The bank has announced renewed 2021-23 Strategy Targets. We see upside risks to our forecasts and intend to look for management comments on future NIM, CoR and non-core income performance during today’s conference call. Our unchanged 12-mo TP of RUB118 implies a Buy.
Solid operating performance. NII grew 7.3% q/q, driven by a 16bp q/q NIM increase, and was 6% above consensus expectations. Net F&C income disappointed, with a 4.9% q/q decline due to lower income from card operations and insurance agent fees. Adjusted for a one-off gain in 2Q21, non-core income dropped 24% q/q on the back of lower FX gains and other provisions, underperforming our and consensus expectations. Opex was up 5.6% q/q, driven by staff costs. Meanwhile, repayments, write-offs and NPL sales helped cut provision charges 46% q/q. Earnings totaled RUB4.1bn (4% below consensus and 8% above our forecast) and implied 17.2% ROE (2.3% lower q/q, adjusted for the one-off gain in 2Q21).
95 RUSSIA Country Report December 2021 www.intellinews.com