Page 81 - RusRPTJun20

and sees mortgage rates on the secondary market declining until the year end, following the path of the key rate cuts. The Central Bank of Russia (CBR) cut rates by an aggressive 50bp at the last meeting in May and is expected to cut by another 50bp at the next meeting in June.
Real estate has been one of the sectors hurt by the crisis but the primary housing market will be supported by the subsidized government program, which kicks in at interest rates of 6.5%.
In the meantime the bank has ordered 70% of its staff to work remotely, except for front office in branch network, until July, but only 30% at the management level.
Sberbank released 4m20/April RAS financial results. ​P&L stays under pressure of higher CoR and lower transactional activity, yet NIM is strong. Ruble appreciated by 5.2% for the month and depreciated by 19% for 4m20, affecting financials.
§ ​NIM continues to show resilience and stays unchanged at 5.8% in April and for 4m20 (-30bp y/y) with NII up 10% y/y.
§ ​Loan issuances expectedly contracted in April mostly on retail side -42% to average levels 1Q20, especially on unsecured -59%, with corporate issuances -22%. Corporate loans added 1.8% in real terms and retail declined by 0.4% in April.
§ ​On Funding side retail deposits inflow supported with +2% m/m, offset with corporate accounts -5% m/m, optimizing funding structure.
§ ​Fees came weak in April -32% m/m and -20% y/y, affected by lower transactional activity during lockdown, but supported by stronger brokerage.
§ ​CoR remained elevated at 3.5%, closer to the levels of 2015 with NPLs are slightly up to 2.24% from 2.15%.
§ ​OpEx dynamics look supportive with +3% y/y in April, yet a question of sustainability. CIR came elevated in April at 40.5%, yet looks strong at 26% for 4m20.
§ ​CAR levels look strong with N1.0 (total CAR) at 15% as of May,1 vs 8% regulatory min, supported by further RWs reduction through IRB approach with RWAs -6% m/m.
Sberbank​ reported 1Q20 earnings dropping 24% y/y to RUB121bn (ROE 10.6%) coming 21-24% below consensus​. The 1Q20 results were similar to those reported by US and European banks, with the first front-loaded IFRS9 driven provisions (RUB44bn) to reflect the expected impact of COVID-19.
1Q20 was strong in terms of volumes, with loan growth accelerating to 11.2% y/y as retail demand was strong and the corporate look book revalued amid RUB weakness. net interest margin (NIM) was down 14bp q/q, which we had expected, while fee growth accelerated to 22.8% y/y. Operating jaws were negative, with costs up 11.6% y/y.
Amid the IFRS9 provisions, cost of risk (CoR) rose threefold to 298bp, with an underlying one of 219bp. Asset quality was stable, with non-performing loans (NLPs) at 4.4% and 158% coverage. Sberbank reported 1Q20 earnings dropping 24% y/y to RUB121bn (ROE 10.6%), coming 21-24% below
81​ RUSSIA Country Report​ June 2020 ​ ​www.intellinews.com