CREDIT BANK OF MOSCOW reports its IFRS income for 3M2019

30.05.2019

<p><strong>Key results</strong></p> <ul> <li>Basel III capital stood at RUB 293.8 bln ($4.5 bln), with the capital adequacy ratio rising by 1.5 pp ytd to 23.4% and the Tier 1 Capital adequacy ratio by 1.0 pp to 15.1%.</li> <li>Equity was RUB 191.6 bln ($3.0 bln), the same as at end-2018.</li> <li>Assets stayed at the same level of RUB 2.1 tln ($32.7 bln).</li> <li>Gross loan portfolio was RUB 731.0 bln ($11.3 bln), the same as at end-2018.</li> <li>Ratio of NPLs (90+ days) to gross loan portfolio remained at a low level of 2.5%.</li> <li>Loan loss provisions grew from 4.2% to 4.8% of gross loan portfolio.</li> <li>Retail deposits rose by 10.5% ytd to RUB 414.5 bln ($6.4 bln).</li> <li>Net income amounted to RUB 238 mln ($3.7 mln<sup>1</sup>).</li> </ul> <p><strong>Key financial results</strong></p> <table border="0" cellpadding="0" cellspacing="0"> <tbody> <tr> <td> <p><strong>Balance sheet</strong></p> </td> <td> <p><strong>1Q2019</strong></p> </td> <td> <p><strong>2018</strong></p> </td> <td> <p><strong>change, %</strong></p> </td> <td> <p> </p> </td> </tr> <tr> <td> <p>Assets, RUB bln</p> </td> <td> <p>2,118.7</p> </td> <td> <p>2,145.9</p> </td> <td> <p>-1.2%</p> </td> <td> <p> </p> </td> </tr> <tr> <td> <p>Gross loan portfolio, RUB bln</p> </td> <td> <p>731.0</p> </td> <td> <p>740.1</p> </td> <td> <p>-1.2%</p> </td> <td> <p> </p> </td> </tr> <tr> <td> <p>Liabilities, RUB bln</p> </td> <td> <p>1,927.1</p> </td> <td> <p>1,954.8</p> </td> <td> <p>-1.4%</p> </td> <td> <p> </p> </td> </tr> <tr> <td> <p>Customer deposits, RUB bln</p> </td> <td> <p>1,142.6</p> </td> <td> <p>1,272.2</p> </td> <td> <p>-10.2%</p> </td> <td> <p> </p> </td> </tr> <tr> <td> <p>Equity, RUB bln</p> </td> <td> <p>191.6</p> </td> <td> <p>191.2</p> </td> <td> <p>+0.2%</p> </td> <td> <p> </p> </td> </tr> <tr> <td> <p>Capital (Basel), RUB bln</p> </td> <td> <p>293.8</p> </td> <td> <p>297.4</p> </td> <td> <p>-1.2%</p> </td> <td> <p> </p> </td> </tr> <tr> <td colspan="4"> <p><strong><em>Key financial ratios, %</em></strong></p> </td> <td> <p> </p> </td> </tr> <tr> <td> <p>90+ NPL ratio (before provisions)</p> </td> <td> <p>2.5%</p> </td> <td> <p>1.6%</p> </td> <td> </td> <td> <p> </p> </td> </tr> <tr> <td> <p>Cost of risk (COR)</p> </td> <td> <p>3.2%</p> </td> <td> <p>1.0%</p> </td> <td> <p> </p> </td> <td> <p> </p> </td> </tr> <tr> <td> <p>Provisioning ratio</p> </td> <td> <p>4.8%</p> </td> <td> <p>4.2%</p> </td> <td> </td> <td> <p> </p> </td> </tr> <tr> <td> <p>Net loans / deposits</p> </td> <td> <p>60.9%</p> </td> <td> <p>55.7%</p> </td> <td> <p> </p> </td> <td> <p> </p> </td> </tr> <tr> <td> <p>Basel capital adequacy ratio (CAR)</p> </td> <td> <p>23.4%</p> </td> <td> <p>21.9%</p> </td> <td> </td> <td> <p> </p> </td> </tr> <tr> <td> <p><strong>Income statement</strong></p> </td> <td> <p><strong>3m2019</strong></p> </td> <td> <p><strong>3m2018</strong></p> </td> <td colspan="2"> <p><strong>change, %</strong></p> </td> </tr> <tr> <td> <p>Net interest income (before provisions), RUB bln</p> </td> <td> <p>9.6</p> </td> <td> <p>13.0</p> </td> <td colspan="2"> <p>-25.9%</p> </td> </tr> <tr> <td> <p>Fee income, RUB bln</p> </td> <td> <p>3.4</p> </td> <td> <p>3.4</p> </td> <td colspan="2"> <p>+1.6%</p> </td> </tr> <tr> <td> <p>Net income, RUB bln</p> </td> <td> <p>0.2</p> </td> <td> <p>2.3</p> </td> <td colspan="2"> <p>-89.6%</p> </td> </tr> <tr> <td colspan="5"> <p><strong><em>Key financial ratios, %</em></strong></p> </td> </tr> <tr> <td> <p>Net interest margin (NIM)</p> </td> <td> <p>1.9%</p> </td> <td> <p>3.0%</p> </td> <td colspan="2"> <p> </p> </td> </tr> <tr> <td> <p>Net interest income as percentage of average RWA (NII/ARWA)</p> </td> <td> <p>3.2%</p> </td> <td> <p>5.0%</p> </td> <td colspan="2"> <p> </p> </td> </tr> <tr> <td> <p>Cost-to-income ratio (CTI)</p> </td> <td> <p>65.0%</p> </td> <td> <p>40.5%</p> </td> <td colspan="2"> <p> </p> </td> </tr> <tr> <td> <p>Return on equity (ROAE)</p> </td> <td> <p>  0.7%</p> </td> <td> <p>6.9%</p> </td> <td colspan="2"> <p> </p> </td> </tr> <tr> <td> <p>Return on assets (ROAA)</p> </td> <td> <p>0.0%</p> </td> <td> <p>0.5%</p> </td> <td colspan="2"> <p> </p> </td> </tr> </tbody> </table> <p><strong>Total assets </strong>amounted to RUB 2.1 tln as at 1Q2019.</p> <p><strong>Gross loan portfolio</strong> remained at the 2018YE level of RUB 731.0 bln. The share of corporate loans in the total loan portfolio was 86.6%, while its retail portion grew to 13.4%. The retail loan portfolio expanded in 1Q2019 by 1.1% to RUB 97.7 bln as mortgage lending rose by 7.3% to RUB 22.2 bln. The share of non-performing loans (NPL 90+) in the gross loan portfolio increased from 1.6% to 2.5% mostly due to the deteriorated financial condition of a large corporate borrower from the oil & gas sector alongside with the change of its owner. The NPL90+ coverage ratio remained at a high level of 189.5%, with the cost of risk increasing by 2.2 pp to 3.2%.</p> <p><strong>Customer deposits </strong>were RUB 1,142.6 bln or 59.3% of the Bank’s total liabilities. Retail deposits increased by 10.5% to RUB 414.5 bln, the growth being observed in both term and demand deposits. Corporate deposits dropped by 18.8% to RUB 728.1 bln. The ratio of net loans to deposits rose to 60.9% as at the end of 1Q2019.</p> <p><strong>Debt securities issued </strong>grew by 59.6% to RUB 168.0 bln after USD 500 mln and EUR 500 mln senior Eurobonds were issued in February and March.</p> <p>The Basel III <strong>capital adequacy ratio</strong> increased by 1.5 pp ytd to 23.4% and the Tier I capital adequacy ratio by 1.0 pp to 15.1%. The Bank’s total capital according to the Basel III standards decreased by 1.2% in 1Q2019 to RUB 293.8 bln, mostly due to currency revaluation.</p> <p><strong>Net income</strong> for the first 3 months of 2019 was RUB 238 mln. It declined compared to 1Q2018 mainly due to a RUB 5.2 bln increase in loan loss provisions attributable mostly to the deteriorated financial condition of a large corporate borrower.</p> <p><strong>Net interest income </strong>was RUB 9.6 bln, <strong>net interest margin </strong>decreased to 1.9% as highly liquid low-risk assets represented a significant percentage of the Bank’s balance sheet while the cost of funding increased. <strong>Net interest income as percentage of average RWA</strong><sup>2</sup> was 3.2%. <strong>Net interest income after provisions</strong> was RUB 4.4 bln.</p> <p><strong>Fee and commission income</strong> increased by 1.6% yoy to RUB 3.4 bln. One of the key drivers of this growth was fees on cash operations, including cash handling, which increased by 40.5% to RUB 0.7 bln.</p> <p><strong>Operating income</strong> (before provisions) shrank by 31.9% yoy to RUB 6.5 bln, in particular because of negative currency revaluation of perpetual subordinated Eurobonds, which is unrealized and technical. <strong>Operating expense</strong> was RUB 4.2 bln, having grown by 9.1% compared to 1Q2018 due to the growth of staff costs as the Bank expands its business.</p> <hr /> <p><sup>1</sup> $1 = RUB 64.7347, CBR’s exchange rate as at 31.03.2019 </p> <p><sup>2</sup> The ratio of net interest income to average risk-weighted assets classified into banking and trading books</p>