Page 100 - RusRPTOct20

BCS Global Markets wrote on September 25. As reported by ​bne IntelliNews,​ this month the competition between large digital ecosystems in Russia shifted gears,asthe​SberbrandwasunveiledbySberbank​andY​ andexsaiditwould merge with online bank Tinkoff​. The new launches of Sber "have some novel functionality for Russia and directly intercept with services and gadgets that Yandex and Mail.ru offer," BCS GM notes, while arguing that this may trigger more active releases in the area from internet companies.
In August 2020, Sberbank’s RAS earnings grew 4.1% y/y to RUB77bn​, which implied 18.9% ROE. On the negative side, we note a 10bp m/m decline in 3mo rolling NIM to 5.9%. However, the y/y growth of 8mo20 NII and net F&C income accelerated to 13.5% and 9.1%, respectively. Asset quality stabilised and CoR in August was at 168bp despite a weaker RUB. We consider result to be moderately positive, with management earlier guiding a NIM decline. In our view, the coming AGM will approve the 2019 dividend (8% DY) as the capital position remains solid on a standalone basis. We maintain our 12-month Target Price for ords unchanged at RUB250. Buy reiterated.
NIM declined MoM. NII grew 18.7% y/y, supported by strong loan growth at 14.5% y/y, with momentum in retail picking up. 3mo rolling NIM declined 10bp m/m to 5.9% as asset repricing became more visible. In the coming months, this trend is likely to be exacerbated as the potential for declines in the cost of funding is limited.
Net F&C income was up 11.2% y/y (down from 16.3% y/y in July, likely on seasonal trends). The further recovery in economic activity kept the 8mo20 y/y growth at 9.1%. Opex edged down 1.1% m/m and grew 6.7% y/y. In 8mo20, opex growth remained at 4.2% on cost cutting measures and slow business activity in 2Q20. However, the recovery of economic growth in 3Q-4Q20 might push opex growth up. Provision charges halved m/m to RUB32bn, including an additional RUB10bn provisioning due to FX revaluation. As a result, earnings were up 4.1% y/y to RUB77bn (18.9% ROE) and 8mo20 earnings declined 19.1% y/y to RUB480bn (15.3% ROE).
Solid loan growth outperforms customer accounts growth. Strong new issuance in both the corporate and retail segments supported a 2.5% m/m increase of the corporate loan book (net of the effect of the 2% m/m ruble weakening) and 2.4% m/m retail loan growth (in both mortgages and consumer loans). Customer accounts were up 1.3% m/m (net of FX effect) driving net LDR to 96%.
Asset quality stabilised. The share of overdue amounts remained flat m/m at 3.3% after a spike in July. CoR dropped 2pp m/m to 168bp as the bank did not create additional provisions on the existing portfolio apart from the 53bp created for the FX effect. The coverage ratio was at 207%.
100 ​RUSSIA Country Report​ October 2020 ​ ​www.intellinews.com