- Net Income reached RUB 3.3 billion for 1H 2017, including RUB 1.8 billion for 2Q 2017, – the highest net income since 2011;
- ROAE reached 10.7% for 1H 2017 and 11.7% for 2Q 2017 – the highest level in 3 years;
- Сost of risk decreased below 300 bp, the lowest level in 3 years;
- Retail loan portfolio increased by 12.9% during 1H 2017 to RUB 61.4 billion.
*Consolidated IFRS FS for 1H 2017.
Alexander Savelyev, Chairman of the Management Board, comments on the Bank’s 1H 2017 results:
”The Bank’s profit has been growing for four consecutive quarters and we are happy about it. The Bank has improved its capital position and broadened investor base through a new share issue, our credit rating was reaffirmed and ROE exceeded our guidance. As a result, both the Bank and our customers can feel confident in the current volatile environment as well as look for new opportunities”.
Bank Saint Petersburg is ranked 18th in terms of assets and 15th in terms of retail deposits among Russian banks (Interfax ranking). As at July 1, 2017, the Bank provides services to 1 830 000 individuals and 52 000 corporates; the number of cards issued by the Bank is 1 098 000; the Bank’s card network comprised of 789 ATMs. At present Internet Bank is used by 850 000 clients.
Among the significant events of 1H 2017, is decision of the Annual General Shareholders Meeting to allocate 20% of FY 2016 RAS net profit for dividends.
In 2Q 2017, Fitch Ratings has affirmed the Bank’s BB- rating and Stable outlook. The rating agency noted that the Bank’s capitalisation is satisfactory and asset quality is reasonable given reserve and collateral coverage of problem exposures.
In August 2017, the Bank successfully completed the placement of 60 mln new ordinary shares, thus increasing its capital by RUB 3.2 bn. The transaction drew strong interest from existing and new institutional investors: more than 50 funds took part in the placement by exercising their pre-emptive rights or through open subscription.
Starting from 2Q 2017, a new company, Cargo Terminal Pulkovo JSC, the largest aviation cargo terminal in the Northwest Russia, was consolidated in the Bank’s group. The terminal offers a full range of services on arranging and servicing cargo and mail air shipments. All details are available at www.pulkovo-cargo.ru/en-us/ The effect of consolidation on the group's financial results is disclosed below in the revenue and operating expenses sections.
Results summary for 1H 2017
Net interest income (NII) amounted to RUB 9.2 billion for 1H 2017 (-11.1% compared with 1H 2016) and RUB 4.6 billion for 2Q 2017 (-2.3% compared with 1Q 2017). Interest income for 1H 2017 decreased by 8.5% compared with 1H 2016; interest income is comprised mostly of interest income on loans and advances to customers (75.1%). Interest expense decreased by 6.8%: interest expenses on retail term deposits decreased by 9.7% (30.1% of total interest expenses) while interest expenses on corporate term deposits decreased by 9.9% (21.4% of total interest expenses). Net interest margin (NIM) amounted to 3.4% for 1H 2017 and for 2Q 2017 (3.9% for 1H 2016; 3.5% for 1Q 2017). The key factor behind the NII and NIM decline compared with 1H 2016 were increased interest expenses related to funding of trading activities (RUB 1.3 billion) that demonstrated exceptionally high results; its impact on NIM amounted to -0.5%.
Net fee and commission income for 1H 2017 increased by 6.0% compared with 1H 2016 and amounted to RUB 2.4 billion. Compared with 1H 2016, income from plastic cards settlements grew by 36.1% (39.4% of total F&C income), income from cash and settlement transactions grew by 4.3% (40.4% of total F&C income).
Net trading income for 1H 2017 reached RUB 4.1 billion (+62.3% compared with 1H 2016), a record high for the Bank. 96% of the net trading income is comprised of gains from operations with foreign currencies and derivatives. Exceptionally high gains from trading operations allowed the Bank to fully outweigh trading-related interest expenses.
Revenues amounted to RUB 16.2 billion for 1H 2017 (+5.5% compared with 1H 2016) and RUB 8.6 billion for 2Q 2017 (+14.7% compared with 1Q 2017). The consolidation with the new company added RUB 189 mln to 2Q 2017 revenues.
Cost-to-Income Ratio stood at 39.7% for 1H 2017 (39.1% for 1H 2016). Operating costs amounted to RUB 6.4 billion for 1H 2017 (+7.1% compared with 1H 2016) and RUB 3.4 billion for 2Q 2017 (+10.4% compared with 2Q 2016, 4.5% out of which (RUB 139 mln) are driven by the consolidation with the new company).
Net income amounted to RUB 3.3 billion for 1H 2017 (+67% compared with 1H 2017), including RUB 1.8 billion (+25.1% compared with 1Q 2017), – the highest net income since 2011. The Bank’s return on equity (ROAE) amounted to 10.7% for 1H 2017 (6.9% for 1H 2016) and 11.7% for 2Q 2017 (9.7% for 1Q 2017) – the highest level in 3 years.
As at July 1, 2017, the Bank’s assets amounted to RUB 559.7 billion (-3.6% compared with January 1, 2017; +1.2% compared with April 1, 2017).
Customer deposits totalled RUB 322.8 billion (-9.8% compared with January 1, 2017; -1.7% compared with April 1, 2017). During 1H 2017, the volume of current and settlement accounts increased by 2.3%; the volume of term deposits decreased by 14.8%. As at July 1, 2017, 61.4% of customer deposits belonged to individuals and 38.6% - to corporate customers.
Equity and capital. As at July 1, 2017, the shareholders equity amounted to RUB 64.1 billion (+5.2% compared with January 1, 2017; +2.9% compared with April 1, 2017). The Bank’s total capital amounted to RUB 82.9 billion (+1.6% compared with January 1, 2017; +0.8% compared with April 1, 2017). As at July 1, 2017, the Bank’s Tier 1 and total capital adequacy ratios were 11.8% and 16.7% respectively.
Loan portfolio before provisions totalled RUB 355.1 billion (+0.2% compared with January 1, 2017; +2.2% compared with April 1, 2017). Loans to corporate customers represented 81.4% of the loan portfolio, loans to individuals – 18.6%. During 1H 2017, corporate loan portfolio decreased by 1.8% to RUB 288.9 billion. During 1H 2017 retail loan portfolio increased by 12.9% to RUB 61.4 billion (mortgage loans grew by 10.9%, consumer loans grew by 23.2%, car loans decreased by 0.5%).
Loan portfolio quality. As at July 1, 2017, the share of problem loans in the Bank’s portfolio (total share of overdue loans and impaired not past due loans) amounted to 15.4% (15.2% as at January 1, 2017). The share of overdue loans in the Bank’s portfolio amounted to 7.8% of the total volume of loans. The share of the corporate overdue loans amounted to 8.6% of the total corporate loans; the share of the overdue loans to individuals amounted to 4.6% of the total retail loans. As at July 1, 2017, impaired not past due loans constituted 7.6% of the total volume of loans. The rate of provisions for loan impairment amounted to 12.4% (11.2% as at January 1, 2017). Provision charge for 1H 2017 amounted to RUB 5.2 billion. For 1H 2017, loans in the amount of RUB 0.8 billion were written off.
1H 2017 IFRS Financial Statements are available on the Bank’s website: