Page 102 - RusRPTApr21

see stable asset quality as an upside risk to management’s FY21 CoR guidance under IFRS. Despite some warning signs on NII performance, the NIM dynamics likewise suggest upside to the guidance. Overall, we viewed the results as positive. Our unchanged 12-month Target Price of RUB420/ord suggests a 56% ETR: Buy reiterated.
Operating performance. NII declined 10.0% m/m as corporate segment yields decreased on the back of lower interest rates and a stronger ruble (+2.4% m/m).
Net F&C income m/m growth was 14.5%, driven by card operations, while y/y F&C income growth accumulated for two months improved to 6.6%, but was still below management's FY21 target level of approximately 10%. Opex growth was also underneath the FY21 guidance amid the high base effect; however, we expect an acceleration during the year. The net provision release, driven by the FX factor, helped earnings grow 6.8% m/m to RUB93bn, which implied a record high 25.0% ROE.
Balance sheet. Net of the FX effect, corporate loans were up 0.7% m/m, while mortgages and consumer loans again posted solid growth of 1.7% and 0.8%, respectively. LDR edged up 1pp m/m to 105% as the decline in corporate accounts offset retail deposit growth. Net of the FX effect, retail deposits were up 1.1% m/m and corporate accounts declined 1.2% MoM.
Asset quality. The share of overdue amounts remained flat m/m at 3.2%. Stable asset quality allowed management not to create additional provisions on the portfolio, while the FX effect resulted in a net provision release in February. The 3mo rolling CoR increased 18bp m/m, but remained below management’s outlook for FY21 at 110bp.
Capital position. As the bank still waits for its audited FY20 earnings, the N1.1 ratio was flat m/m at 11.2%. Meanwhile, inclusion of subordinated bonds issued in January into the Bank's total
8.1.8 Bank news
Investment fund Baring Vostok — run by detained U.S. investor Michael Calvey — and Artem Avetisyan's Finvision have sold their stakes in Russia’s Vostochny Bank to rival Sovcombank for an undisclosed amount, Sovcombank said in a statement Thursday, cited by the RBC news site. “The parties expect that the transaction will be closed within a few weeks. The transaction takes place under market conditions, but the financial parameters and price of the deal are not being disclosed. Sovcombank plans
102 RUSSIA Country Report April 2021 www.intellinews.com