Page 9 - bne_March 2021_20210303

bne March 2021 Companies & Markets I 9
The bank’s CET1 ratio rose 0.5 percentage points quarter-on- quarter to 13.6% after dividends.
Provisioning for impairment losses on financial assets soared 169% to €630mn, an annualised ratio of 0.68%, up 0.42pp, but this was mostly for general provisioning for the macro-economic environment. In fact there was a slight improvement in the non-performing exposures (NPE) ratio, down 0.2pp to 1.9%, with the NPE coverage ratio up 0.5pp to 61.5%.
Rising demand from Europe boosts Metalloinvest’s iron production in 2020 to end the year flat
bne IntelliNews
Rising demand for iron lifted production at the Metalloinvest Group, which belongs to Russian metals magnate Alisher Usmanov, the company reported at the start of February.
As the coronavirus (COVID-19) pandemic begins to recede, a year’s worth of pent-up demand is being released that is already pushing up commodity prices.
Metalloinvest reported that at the end of 2020 it saw an increase in the volume of export deliveries by 15.6% compared to a year earlier. Most of the uptick in demand came from Europe, where orders were up by 43.8%, but also from the Middle East and North Africa, which were up by 16.7%, according to the company’s results.
Metalloinvest is one of the largest mining and metallurgical holdings in Russia with its main assets including OEMK, Lebedinsky and Mikhailovsky GOKs, and Ural Steel.
The sign of restored hope in the markets came in the last quarter of 2020 when the first vaccines were approved for use against the pandemic. Financial markets immediately rallied and there was one of the biggest rotations on record out of the “stay-at-home” stocks, such as Netflix and e-commerce companies, into the “back to work” stocks that include metallurgical corporations.
Net interest income fell 5% to €3.24bn as net interest margins compressed to 1.97% in Q4, down 0.3pp q/q. Net fee income fell 3.3% to €1.74 bn.
General administrative expenses were down 5% y/y at €2.95bn but the overall cost-income ratio remained high at 63.7% in Q4, up 9.6pp q/q.
The bank’s return on equity was 6.6%, down 0.9pp in Q4. The bank’s board has recommended a dividend of €0.48 per share for 2020.
The impact on production of iron has had a much bigger affect on iron prices than the impact on demand for iron, sending the cost of the metal up to a nine- year high of $172 per tonne in January, where analysts believe it is likely to stay for the first half of the year.
After slumping dramatically in the first quarter of 2020, however, iron prices rallied for the rest of the year as mine after mine around the world were hit by coronavirus-related production problems. The world’s largest producer, Brazilian- based Vale, has been struggling to return to full production. The impact of the virus on production has driven up the prices on the international market from around $90/tonne in the first quarter of 2020 to a nine-year high of $172/tonne in January, according to Trading Economics, due to stronger demand from China.
With the spill over health issues still causing production problems at major international producers and the faster-than- expected recovery in demand, especially in Europe, analysts at Credit Suisse raised their forecast for iron prices from $60 in the first half of this year to a whopping $170 average.
What has surprised analysts is the speed that orders for real-world commodities like metals have picked up. Many companies that had made investment plans were dusting them
“Most of the uptick in demand came from Europe, where orders were up by 43.8%, but also from the Middle East and North Africa”
www.bne.eu