Page 98 - RusRPTNov21

(3.6%). 9mo21 revenue of the non-financial business increased 183% y/y to RUB122bn, which implies acceleration is needed in 4Q21 to reach the FY21 target (>RUB200bn). This is challenging but achievable given the upcoming Green Day on 11-12 November 2021 (similar to Prime Day at Amazon or Singles Day at Alibaba).
Capital position. The bank posted higher RWA density (+1.4pp q/q to 92.5%) due to increased market risk. With the new operating risk assessment, T1 CAR slid only 10bp q/q to 13.9%. Total CAR also was high at 14.8%.
Management guidance. The FY21 management outlook is up due to the key rate: more than 23% ROE (vs 22%); the NIM outlook is up 5bp to 5.25%.
Changes in forecasts. Our new 2021-23F EPS is 21-24% higher than previously, as we see better core income on solid loan growth. This implies 21-25% ROE in the forecasted period, and assuming the strong capital position of 3Q21, Sber, in our view, will be able to further increase its DPR to 60% from 57% in 2020, which implies an eye-catching 10% DY for ords.
Valuation and risks. We have increased CoE to 7.5% by raising our RFR to 7.5%. The stock is valued at 2022F P/E of 5.4x and P/PPP of 4.0x, which is attractive, in our view, given the more than 20% ROE and 9-10% 2021 DY. Risks stem from the regulatory and macroeconomic environment, as well as the efficiency of ecosystem investments.
8.1.8 Bank news
VTB is interested in the retail operations of American Citibank’s Russian subsidiary: towards the end of August, VTB sent the bank a non-binding agreement, according to Dmitry Pyanov, a member of the state bank’s board of directors. He went on to say that VTB had yet to get an official answer from Citibank, Vedomosti writes.
“The bank will win the battle for assets because it will be certain of incurring the fewest losses from the transaction,” Pianov said.
According to a VTB senior management, VTB’s estimate of Citibank’s customer turnover is cautious. However, the bank recognizes that this is a particular customer who has the option of switching to another bank.
Citigroup stated in mid-April 2021 that it will leave its retail operations in Russia and 12 other countries. According to the company’s financial report for the first quarter of 2021, the group chose to concentrate its retail operations in four private wealth management centers: Singapore, Hong Kong, the United Arab Emirates, and London. Citi will continue to provide corporate services in Russia.
Citibank has been expanding its retail presence in Russia since 2002, and it
98 RUSSIA Country Report November 2021 www.intellinews.com