CREDIT BANK OF MOSCOW’s IFRS net income for 2018 increased by 31.5% to RUB 27.2 bln
07.03.2019
Key results
- Net income increased by 31.5% yoy to RUB 27.2 bln ($391.9 mln1).
- Return on equity grew to 19.9% compared to 17.8% one year ago. Return on assets was 1.4% compared to 1.2% as at end-2017.
- Operational efficiency remained at a high level, cost-to-income ratio was 29.8%.
- Assets increased by 13.6% to RUB 2.1 tln ($30.9 bln).
- Ratio of NPLs (90+ days) to gross loan portfolio fell from 2.4% to 1.6%.
- Cost of risk (COR) decreased from 2.5% as at end-2017 to 1.0% as at end-2018.
- Customer deposits increased by 35.1% ytd to RUB 1.3 tln ($18.3 bln).
- Basel III capital grew by 8.4% ytd to RUB 297.4 bln ($4.3 bln).
Key financial results
|
Balance sheet |
2018 |
2017 |
change, % |
|
|
Assets, RUB bln |
2,145.9 |
1,888.2 |
+13.6% |
|
|
Gross loan portfolio, RUB bln |
740.1 |
818.8 |
-9.6% |
|
|
Liabilities, RUB bln |
1,954.8 |
1,710.6 |
+14.3% |
|
|
Customer deposits, RUB bln |
1,272.2 |
941.7 |
+35.1% |
|
|
Equity, RUB bln |
191.2 |
177.6 |
+7.6% |
|
|
Capital (Basel), RUB bln |
297.4 |
274.4 |
+8.4% |
|
|
Key financial ratios, % |
|
|||
|
90+ NPL ratio (before provisions) |
1.6% |
2.4% |
|
|
|
Cost of risk (COR) |
1.0% |
2.5% |
|
|
|
Provisioning ratio |
4.2% |
6.1% |
|
|
|
Net loans / deposits |
55.7% |
81.6% |
|
|
|
Basel capital adequacy ratio (CAR) |
21.9% |
23.4% |
|
|
|
Income statement |
2018 |
2017 |
change, % |
|
|
Net interest income (before provisions), RUB bln |
48.4 |
45.3 |
+6.9% |
|
|
Fee income, RUB bln |
15.8 |
15.5 |
+2.1% |
|
|
Net income, RUB bln |
27.2 |
20.7 |
+31.5% |
|
|
Earnings per share, RUB |
0.89 |
0.79 |
+12.7% |
|
|
Key financial ratios, % |
||||
|
Net interest margin (NIM) |
2.6% |
2.9% |
|
|
|
Net interest income as percentage of average RWA (NII/ARWA) |
4.4% |
4.5% |
|
|
|
Cost-to-income ratio (CTI) |
29.8% |
26.8% |
|
|
|
Return on average equity (ROAE) |
19.9% |
17.8% |
|
|
|
Return on average assets (ROAA) |
1.4% |
1.2% |
|
|
1$1 = RUB 69.4706, CBR’s exchange rate as at 31.12.2018
Net income grew by 31.5% yoy to RUB 27.2 bln. This was driven by the growth of business volumes coupled with a notable improvement of the loan portfolio quality.
Net interest income rose 6.9% to RUB 48.4 bln on the back of development of the Bank’s business segments. Net interest margin decreased to 2.6% as the percentage of highly liquid assets on the Bank’s balance sheet expanded. Net interest income as percentage of average RWA2 was 4.4%. Net interest income after provisions rose 73.1% to RUB 46.2 bln as the Bank’s loan portfolio quality improves.
Fee and commission income increased by 2.1% compared to 2017 and reached RUB 15.8 bln. That growth was notably driven by cash operations, including cash handling, that increased by 24.1% to RUB 2.6 bln.
Operating income (before provisions) grew by 4.5% to RUB 65.2 bln. Operating expense was RUB 19.4 bln having grown by 15.9% yoy due to the growth of staff costs. Operational efficiency remained at a high level with the cost-to-income (CTI) ratio being 29.8%.
The Bank’s total assets rose 13.6% to RUB 2,145.9 bln through diversification of sources of growth. Deposits in banks and other financial institutions grew by 28.8% to RUB 1,088.2 bln, and securities portfolio composed of high-grade issuers’ bonds expanded by 61.7% to RUB 230.1 bln.
Gross loan portfolio expanded by 5.2% in 4Q2018, however it decreased by 9.6% to RUB 740.1 bln as at end-2018, due to repayments and, to a great extent, settlement of loans to several large corporate borrowers which are impaired but not overdue (stage 3). Retail loan portfolio expanded by 10.1% to RUB 96.6 bln due to an increase in unsecured loans by 14.2% to RUB 72.2 bln. The share of corporate loans in the gross loan portfolio was 86.9%, its retail portion being 13.1%. The ratio of NPL90+ to gross loan portfolio decreased from 2.4% to 1.6% due to repayment of several big problem loans. The improving loan portfolio quality was also evidenced by a reduction in the cost of risk by 1.5 pp to 1.0%. The NPL90+ coverage ratio remained at the 2017YE level of 260.0%.
Customer deposits rose 35.1% to RUB 1,272.2 bln or 65.1% of the Bank’s total liabilities. That growth was mainly driven by corporate deposits which increased by 37.9% to RUB 897.1 bln. Retail deposits reached RUB 375.1 bln, having grown by 28.8% in 2018, in particular due to the assignment of Sovetsky Bank’s retail deposits in July 2018. Net loans to deposits ratio decreased to 55.7% owing partly to the Bank's conservative approach to lending and partly to the accelerated deposit base growth.
The Basel III capital adequacy ratio was 21.9% and the Tier I capital ratio was 14.1% as at end-2018. The Bank’s total capital according to the Basel III standards increased by 8.4% to RUB 297.4 bln, mostly due to its net income.
Capital markets activity
In February 2018, the Bank placed a senior 5-year USD 500 mln 5.55% Eurobond issue.
In July 2018, the Bank issued RUB 5 bln perpetual subordinated bonds series 15 with the proceeds qualified as Tier I capital. The interest rate for the first 12 coupon periods is 12%.
In October 2018, in order to optimise its capital structure, the Bank partially bought back USD 70 mln in aggregate of its USD 600,000,000 7.500% subordinated loan participation notes due 2027 and USD 700,000,000 8.875% subordinated perpetual callable loan participation notes.
In February 2019, the Bank placed its debut euro-nominated senior 5-year EUR 500 mln 5.15% Eurobond issue.
2The ratio of net interest income to average risk-weighted assets classified into banking and trading books