Page 82 - RusRPTJun20

consensus and our forecast, respectively.
During a conference call, Sberbank revoked its 2020 guidance, but we consider the tone of the call to be confident, with Sberbank expecting a relatively moderate economic downturn (GDP – 4.2%, CPI 3.7%, key rate (eop) 5.0%).
Sberbank also provided disclosure on its restructuring efforts, with 0.8% of the loan book rescheduled so far with a limited negative effect on P&L. Sberbank is to revisit its dividend decisions on 26 June AGM (although we think that the base case is more a postponement of the dividend payment by six months to December 2020, rather than cancelling it). The record date for the dividends was set to 16 July.
While we think the earnings trough will be reached in 2Q20, restructuring is unlikely to stop the asset quality cycle given the moderate relief for borrowers, with the ultimate hit to be determined by the duration of the lockdown.
8.1.8 ​Bank news
VTB released 1Q20 IFRS. ​The results beat expectations with two major items within other income offsetting one another. Guidance for 2020 was put under review, as expected. NIM came in strong and mostly stable at 3.4%, supported by COF reduction and slower repricing of the asset yield. NII at RUB119.7bn is broadly in line with BCSe and cons​-s​ . Also, loan growth was strong and supportive – +5.2% q/q with corporate +5.8% to RUB8.6tn (+1.3% adj for FX move) and retail +3.8%, driven by mortgage growth of 5.2% q/q. Customer funds expanded by 7.7% in 1Q20 with LDR of 95.5% Net F&C was strong at +48% y/y, but ​-3​ 2% q/q to RUB28bn – 3% and 8% beat to BCSe and cons​-​s, respectively, mostly supported by settlement and trade finance, as well as sale of insurance and investment products Within other income, two big items compensated each other – RUB35.8bn gain from revaluation of open currency position and RUB37.8bn loss from revaluation of non​-​core assets. Management does not exclude more revaluations to come and mostly these non​-c​ ore assets are land and Real Estate CoR at 1.5% came in lower vs expectations (and Sberbank recently reported result), with provision charge of RUB43bn – 18% and 32% beat vs BCse and conss – the main reason for stronger bottom line. The 35bp, or RUB10bn, was a macro adjustment on IFRS9, based on rather optimistic, in our view, macro scenario –2% real GDP and average oil price of $35/bbl. Asset quality remained stable with NPLs 4.9% (4.7% 4Q19), 128.6% coverage. Three% of corporate loans is defined as mostly affected by COVID​-​19 OpEx grew 6% y/y to RUB64bn – mostly in line with estimates, providing further cost efficiencies with CIR at 38% vs 42% in 1Q19 Capital levels do not look very strong with N20.0 (local Total CAR on consolidated basis) at 12% vs 11.5% min. Yet, CAR levels will be supported by some easing measures from the CBR 2020 guidance was confirmed on NIM (around 3.4%), CIR (around 40%) and CoR and net income were put under review. According to the management, dividends may be adjusted for support measures on the government side, thus defending minority dividends with 50% payout, but on the table with DPS of RUB0.00388/sh – c11% DY.
Banking ​TCS Group​, which operates Russia's only online bank Tinkoff, reported net income of RUb9bn ($122mn) under IFRS for 1Q20,​ gaining 21% year on year and down by 18% quarter on quarter, but still beating the
82​ RUSSIA Country Report​ June 2020 ​ ​www.intellinews.com