Page 71 - RusRPTDec18

believe that the bank requires additional capital to extend lending activity, as the capital adequacy ratios are at comfortable levels already. The bank, whose mandate is to support the agricultural sector, is famously corrupt with farmers and regional officials taking advantage of its light touch when it comes to lending to organise scams involving fake production or non-existent farms. As most loans are invested in agricultural production it can take a year for the miscreants to become apparent and the organisers can always blame their “bad luck” on the weather.
Bank St Petersburg has published the third quarter of 2018 attributable earnings of RUB 2.0bn, which implied 11.3% ROE. The bottom line was 2% above consensus forecasts on a higher than expected operating result. We consider results as positive, but during the conference call shall be looking for more details from management on the sustainability of loan expansion, NIM performance, CoR and opex growth, as well as capital distribution. Our unchanged 12-month Target Price of RUB 69 implies an ETR of 54%: Buy reiterated. NIM grew further QoQ, supported by loan growth. NII was up 5.0% QoQ and NIM grew 15bp QoQ to 3.8% as the gross loan portfolio expanded 6.0%, driven by both retail and corporate portfolio growth. Net F&C grew a robust 10.4% QoQ (4% above the consensus forecast), likely due to support from the lending business growth. Yet, lower non-core income pushed opinc down 2.8% QoQ. Operating performance was aided by a 13.2% QoQ decline in opex (both in staff and administrative costs), but 9mo18 y/y growth was 6.7% (in bank’s calculation, which is still above the FY18 target of 5%). LLP grew on higher CoR. As a result, earnings were down 18.8% QoQ to RUB 2.0bn.
In 3Q18, TCS Group earnings totalled RUB 7.3bn, 11% above consensus and 10% above our expectations. The outperformance vs. the consensus came from lower than expected opex and LLP. The bank has increased its guidance for FY18 for earnings to over RUB 26bn from over RUB 24bn before; the consensus forecast is RUB 25.8bn (BBG, 26 November). We consider results strong and see upside risks to our earnings estimates. Strong operating performance. NII was up 5.1% QoQ and 22.8% YoY, driven by solid asset growth and coming in line with the consensus forecast. However, NIM was down 81bp QoQ to 24.2% amid lower asset yields. Net F&C also was up 9.9% QoQ. Expansion of core income, together with an increase in other operating income, helped opinc to increase 10.6% QoQ. Opex was up only 3.0% QoQ (2% below consensus) amid lower marketing costs, pushing CIR down 2pp YoY to 42%. LLP only edged 0.8% up QoQ (4% below consensus). As a result, earnings grew 20.8% QoQ to RUB 7.3bn, implying 81% ROE.
Moscow’s Basmanny District Court has detained ex-president of Globex Bank Vitaly Vavilin until January 14 as part of embezzlement case, RAPSI has learnt in the court’s press office. Vavilin could face up to 10 years in prison if convicted. Earlier, the former banker was questioned as a witness in several cases related to Globex Bank. Established in 1992, Globex Bank is one of major Russian banks with most of its shares (99.9%) owned by the state-run Bank for Development and Foreign Economic Affairs.
In the third quarter of 2018, TCS Group earnings totalled RUB 7.3bn, 11% above consensus and 10% above our expectations. The outperformance vs. the consensus came from lower than expected opex and LLP. The Bank has increased its guidance for FY18 for earnings to over RUB 26bn from over RUB 24bn before; the consensus forecast is RUB 25.8bn (BBG, 26 November). We consider results strong and see upside risks to our earnings
71 RUSSIA Country Report December 2018 www.intellinews.com