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plans to leave Russia, hoping that the full-scale military invasion of Ukraine will end before the bank will have to cave in to sanctions pressure and scrap its presence in the country.
The General Meeting of Sovcombank shareholders expectedly approved an additional issue of shares to finance the acquisition of HCF Bank, previously approved by regulatory authorities (51% will be financed through shares, 49% through cash in 2024–2025). The additional issue will amount to 1.173 billion shares (5.7% of the existing 20.694 billion shares). The latter is slightly larger than the previously announced volume (1 billion shares), since it includes a reserve for the exercise of preemptive rights on the part of shareholders who voted against or abstained from voting.
Sovcombank will present IFRS financial statements for 1Q24 by May 17 inclusive. The latter should take into account the acquisition of a controlling stake in HCF Bank. Earlier, Sovcombank presented RAS reports for 1Q24, which reflected near-zero growth in net interest income to RUB 30.6 billion, and an increase in net commission income by 16% YoY to RUB 11.7 billion. with a decrease in income from transactions with financial assets by 71% YoY to RUB 2.3 billion. Expenses for provisions for possible credit losses decreased by 29% YoY to RUB 7.5 billion, and operating expenses increased by 11% YoY to RUB 29.7 billion. Taking this into account, profit in 1Q24 under RAS (which does not reflect the results of the transaction to acquire HCF Bank) decreased to RUB 11.4 billion. (RUB 31.6 billion in 1Q23), total capital adequacy (N1.0) decreased by 0.5 percentage points. up to 11.5%.
TCS Holding disclosed financial results for 1Q24. The loan portfolio (both gross and after provisions) grew by 12% QoQ, while customer funds grew by 9% over the same period. Net interest margin continued to decline from its peak in 3Q23 (15%), reaching 14%, according to our estimates, which, taking into account asset dynamics, ensured net interest income growth by an impressive 56% YoY. The cost of risk, according to our estimates, increased by 0.5 percentage points. y/y to 7.9%, which resulted in an increase in reserve costs by 73% y/y. Operating expenses increased by 36% YoY, but their ratio to operating income decreased to 53% (55% a year earlier).
Net profit in 1Q24 increased by 37% YoY to RUB 22.3 billion, which corresponds to a return on equity of 32%. Against the backdrop of significant asset growth in 1Q24, the core capital adequacy ratio (CET 1) decreased by 1.5 percentage points. from the beginning of the year to 12.1%.
TCS Holding did not disclose new details regarding the deal to acquire Rosbank, confirming its intention to complete it by the end of 3Q24. Later this year, the company intends to present an updated development strategy, as well as a dividend policy (the previous version provided for the distribution of up to 30% of net profit quarterly). TKS Holding also reported that, as of the end
141 RUSSIA Country Report June 2024 www.intellinews.com