MKB net profit for 1Q 2023 reached RUB13.0 bln in accordance with IFRS

26.05.2023

Key Results

• Net income reached RUB 13.0 bln
• Return on equity and return on assets increased to 22.9% and 1.3% respectively (2022YE: 3.7% and 0.2%).
• Net interest margin expanded to 2.6%.
• Operational efficiency remains at a high level: cost-to-income ratio was 27.2%.
• Cost of risk (COR) reduced to 0.9%.
• Net loan portfolio rose by 10.4% to RUB 2,037.4 bln.
• MKB became a top-3 domestic arranger of market issues denominated in yuan. The Bank arranged 17 bond issues in roubles and yuan with the aggregate principal equivalent to RUB 400 bln.
• The Bank made the first transaction with digital financial assets (DFA).
• MKB joined the Digital Bank Guarantee (DBG) service on the blockchain platform Masterchain. The Bank issued Russia's first blockchain-based digital bank guarantee in yuan.
• A foreign ETL platform was migrated to domestic software without any loss of efficiency and any disruption of the current business processes.

 

Key Financial Results

Income statement	1Q2023
Net interest income (before provisions), RUB bln	24.8
Net fee and commission income, RUB bln	3.7
Provision charges for credit losses on debt financial assets, RUB bln	4.7
Net income, RUB bln	13.0
Key financial ratios, %
Net interest margin (NIM)	2.6%
Cost of risk (COR)	0.9%
Cost-to-income ratio (CTI)	27.2%
Return on equity (ROAE)	22.9%
Return on assets (ROAA)	1.3%

 

Balance Sheet	31.03.2023	31.12.2022	change, %
Assets, RUB bln	4,240.3	3,973.1	+6.7%
Net loan portfolio, RUB bln	2,037.4	1,845.4	+10.4%
Net corporate loan portfolio, RUB bln	1,836.8	1,648.5	+11.4%
Net retail loan portfolio, RUB bln	200.6	196.9	+1.8%
Liabilities, RUB bln	3,955.3	3,699.3	+6.9%
Customer deposits, RUB bln	2,634.3	2,388.1	+10.3%
Corporate deposits, RUB bln	2,040.2	1,794.0	+13.7%
Retail deposits, RUB bln	594.1	594.1	+0.0%
Equity, RUB bln	284.9	273.8	+4.1%
Key financial ratios, %
Net loans / deposits	77.3%	77.3%

 

Net income for the first 3 months of 2023 reached RUB 13.0 bln, driven by net interest and fee income boosted by the dynamic development of the Bank’s business.

Strong financial results and operational efficiency improved the return on equity and return on assets ratios, which increased to 22.9% and 1.3% ytd, respectively.

Net interest income rose to RUB 20.1 bln largely due to higher interest income from the corporate loan portfolio. Banking business margins materially improved: the net interest margin is almost restored, reaching 2.6% mostly thanks to the lower cost of funding.

Active business development with a focus on prime corporate borrowers, and lowered probabilities of default for some customers helped decrease the charge for credit losses on debt financial assets to RUB 4.7 bln, which translates into a cost-of-risk (COR) ratio of 0.9%. Lower provision charges for credit losses on debt financial assets in their turn supported net interest income after provisions, which reached the record-setting RUB 20.1 bln.

Net fee and commission income grew to RUB 3.7 bln driven by the transactional business, mainly guarantee and letter of credit issuance fees. Net operating income reached RUB 24.2 bln.

Operating expense rose to RUB 8.2 bln, as the salaries and employment benefits, and administrative expenses grew. MKB demonstrates a high level of operational efficiency: its cost-to-income ratio (CTI) for the first three months of 2023 was 27.2%.

Total assets expanded by 6.7% ytd to RUB 4.2 tln, driven mainly by the loan portfolio.

The total net loan portfolio grew by 10.4% to RUB 2,037.4 bln ytd. Loans to customers remain one of the largest components of MKB’s assets, accounting for 48.1% thereof.

The portfolio had a 90.2% share of corporate loans and a 9.8% share of retail loans. The net corporate loan portfolio expanded by 11.4% to RUB 1,836.8 bln ytd, taking advantage of stabilised interest rates.

The retail loan portfolio grew by 1.8% to RUB 200.6 bln. mainly driven by the mortgage portfolio thanks to the high demand for mortgage products and strategic cooperation with largest developers.

Customer deposits, representing 66.6% of the total liabilities or RUB 2,634.3 bln, grew by 10.3% ytd. The deposit base expanded mainly due to a strong 13.7% inflow of corporate deposits that reached RUB 2,040.2 bln or 77.4% of total deposits, and thanks to the influx of new customers.  Retail deposits remained the same as at end-2022, i.e. RUB 594.1 bln. The ratio of net loans to deposits was 77.3% as at end of 1Q2023.

Capital calculated in accordance with Basel III grew by 3.5% ytd to RUB 357.5 bln driven by retained earnings. The core Tier 1 / Tier 1 / total capital adequacy ratios were 9.0% / 10.9% / 13.8%.