Page 13 - bne_Tech_07_2020

Fintech & E-commerce
July 2020 www.intellinews.com I Page 13
Russian electronic payment systems Qiwi sells consumer lending business
Russian electronic payment system Qiwi closed an agreement to sell the consumer lending business Sovest to Sovcombank, the company said. Qiwi would transfer the RUB7.6bn ($110mn) portfolio of Sovest card loans to the bank for
a cash compensation of RUB6bn-6.5bn.
As reported by bne IntelliNews, Sovest has been weighing down on Qiwi's earnings, and getting rid of the business is welcomed by the analysts. The CEO of Qiwi, Boris Kim, commented that continuing to develop Sovest would have exposed the company to additional investments, increased credit risks and competition.
"We welcome the sale of Sovest and Qiwi's shift toward reducing risk, and believe it should allow Qiwi to focus on its core payments business," Sberbank CIB commented on June 18, reminding that the loss from Sovest had been anticipated
at RUB2bn in 2020 and would now be reduced to a RUB1.5bn one-off impairment.
BCS Global Markets on June 18 also sees the
deal as positive, as it "clears a loss-making business from Qiwi’s P&L – whose prospects were also impacted by COVID – while stressing Qiwi’s attractive valuation (7-8x Price / Earnings in 2020 excluding Sovest)."
VTB Capital (VTBC) believes that irrespective
of the deal's terms, the sale is strategically important for Qiwi, as it eliminates losses, credit risks and funding costs related to the project. VTBC and BCS GM maintained their Buy recommendations on Qiwi.
Qiwi reported 17% revenue growth, and despite
a 2% year-on-year dip in adjusted Ebitda, it posted a net income growth of 6% in 1Q20.