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Gazprombank releases financial results for 1H2020, with net income at RUB 28.3 bn in accordance with International Financial Reporting Standards (IFRS)
28 August 2020

Moscow, August, 28, 2020 -  Gazprombank (Joint Stock Company) (hereinafter, “Bank GPB (JSC)” or “the Bank”) published its interim condensed consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) for the first half of 2020 as at 30 June 2020.

Key financial indicators of the Gazprombank Group (hereinafter, “the Group”) for 1H2020 / as at 30 June 2020:

  • Net income totaled RUB 28.3 bn compared to RUB 36.1 bn for 1H2019;
  • Normalized net income would be RUB 15.6 bn, with due regard to the net foreign exchange loss of RUB 12.7 bn on issued perpetual bonds (redeemed in April 2020).  The net foreign exchange loss was recognized as capital according to IFRS.

All the other press release indicators were calculated on the basis of normalized net income of RUB 15.6 bn;

  • Net commission income reached  RUB 16.8 bn compared to RUB 10.9 bn for 1H2019;
  • Net interest margin comprised RUB 2.7%, remaining the same as in 1H2019;
  • Cost of Risk was 0.5%, with due regard to the adjustment of loans accounted at fair value, compared to  -0.1% in 2019;
  • ROE and ROA were 4.3%*  и 0.4%* , respectively, compared to  6.3% and 0.7% in 2019;
  • Cost-to-income ratio comprised 59.3%* compared to 65.1% at year-end 2019.
  • Assets amounted to RUB 7,071.8 bn (against RUB 6,582.2 bn as at 31 December 2019);
  • The total loan portfolio [1] was RUB 4,875.5 bn (against RUB 4,593.3 bn as at 31 December 2019);
  • Non-performing loans (NPL) (overdue 90+ days and defaulted loans) in the total loan portfolio reached 2.4% compared to 2.2% as at 31 December 2019.
  • The provisioning ratio amounted to 4.5% compared to 4.4% as at 31 December 2019;
  • Customer accounts comprised RUB 5,452.2 bn compared to RUB 4,968.5 bn at year-end  2019, while the loan-to-deposit ratio was 89.4% as at 30 June 2020,  compared to  92.4% as at 31 December 2019;
  • Basel I total capital reached RUB 770.4 bn compared to RUB 758.1 bn as at 31 December 2019, the total capital adequacy ratio was at 12.6% as at the reporting date, and the Tier 1 capital adequacy ratio comprised 12.0%.


[*] Calculated with due regard to FX loss included in the capital as redeemed perpetual bonds.
[1] Includes gross corporate and retail loans accounted at amortized cost before loan provisioning and also loans accounted at fair value.

The key financial indicators are presented below:

RUB, bn.

30 June 2020 31 December 2019 Change
Assets 7,071.8 6,582.2 +7.4%
Shareholders’ equity (capital) 734.8 722.2 +1.7%
Cash and cash equivalents 893.8 739.0 +20.9%
Loans to corporate customers 4,209.1 3,985.0 +5.6%
Retail loans 666.4 608.0 +9.6%
Securities and investments in associates [2] 637.9 647.7 -1.5%
Corporate customer accounts 4,070.8 3,748.5 +8.6%
Retail customer accounts 1,381.3 1,220.0 +13.2%
Capital market borrowings [3] 261.5 267.6 -2.3%
Subordinated debt 78.8 74.6 +5.6%
1H2020 1H2019 Change
Net income 28.3 36.1 -21.6%
Normalized net income* 15.6 36.1 -56.7%
Comprehensive income 34.1 32.3 +5.6%
Normalized comprehensive income* 21.4 32.3 -33.7%
30 June 2020 / 1H2020 31 December 2019 / 12M2019 Change
Total Capital Adequacy Ratio [4] 12.6% 13.1% -0.5 p.p.
Tier 1 Capital Adequacy Ratio 12.0% 11.9% +0.1 p.p.
Ratio of non-performing loans [5] (NPL) to gross loans 2.4% 2.2% +0.2 p.p.
Ratio of loan loss provisions to gross loans accounted at amortized cost 4.5% 4.4% +0.1 p.p.
Loans-to-deposit ratio 89.4% 92.4% -3.0 p.p.
ROE 7.8% 6.3% +1.5 p.p.
Normalized ROE* 4.3% 6.3% -2.0 p.p.
ROA 0.8% 0,7% +0.1 p.p.
Normalized ROA* 0.4% 0.7% -0.3 p.p.
Net interest margin [6] 2.7% 2.8% -0.1 p.p.
Cost of Risk [7] 0.5% -0.1% +0.6 p.p.
Cost to income ratio [8] 51.1% 65.1% -14.0 p.p.
Cost to normalized income ratio* 59.3% 65.1% -5.8 p.p.



[2] Including trading securities, investment securities, and investments in associates
[3] Including bonds issued both at the domestic and international markets
[4] In accordance with Basel I Framework
[5] Loans are deemed “non-performing” if their principal or interest is 90+ days overdue, as well as in the event of counterparty default
[6] The ratio of net interest income to the chronological mean of quarter-end interest bearing assets for the year. Interest-bearing assets include those due from financial institutions, loans to customers and debt securities (all before allowances of loan loss provisions)
[7] Charges of provisions for loan loss and loan adjustment accounted at fair value as of the reporting period to the chronological mean of quarter-end interest-bearing assets for the reporting period;
[8] Operating expenses include salaries, other allowances and benefits to the personnel, and banking-related administrative expenses. Operating income includes net interest income, non-interest income and non-banking operating profits. Operating income does not include provisions and loan adjustments accounted at fair value.
[*] Calculated with due regard to FX loss included in equity as perpetual bonds issued


Financial result

The Group ended 1H2020 with recorded net income of RUB 15.6 bn adjusted for FX loss included in the capital as perpetual bonds issued and the net comprehensive income of RUB 21.4 bn, including inter alia currency revaluations of the Group’s foreign investments. By comparison, year-on-year, the Group’s net income and its comprehensive income amounted to RUB 36.1 bn and RUB 32.3 bn, respectively. The Group’s ROE was down by 2.0 p.p. to 4.3%* in 1H2020 against that at year-end 2019. ROA was 0.4%* in 1H2020 – a drop of 0.3 p.p. against 0.7% at year-end 2019.  

The Group’s net interest income was RUB 79.0 bn in 1H2020, which is 14.2% higher than that year-on-year (RUB 69.1 bn), with interest income up 2.2% to RUB 207.3 bn and interest expense down  4.0% to RUB 128.3 bn. The net interest margin in 1H2020 remained unchanged year-on-year − at 2.7%.

The Group’s recurring core banking income, including net interest income before loan loss provisions and net commission income, was up 19.6% to RUB 95.8 bn in 1H2020 compared to RUB 80.1 bn year-on-year. At the same time, net commission income for the same period (RUB 16.8 bn) was 1.5 times higher than in 1H2019 (RUB10.9 bn). Higher commission income resulted from continued active development of the retail business, which started in 2019 (sales of packaged offers, insurance and service ones, both on lending and investment products for individuals).

Recurring income in the Group’s operating income accounted for 96.9%* against 94.8% in 1H2019.

Combined income from transactions in securities [9]  in 1H2020 totalled RUB 0.1 bn  compared to the income of RUB 15,0 bn in 1H2019 − mostly due to negative revaluation of securities, loss in associates and expense incurred from the disposal of subsidiaries.

Non-banking segments ended 1H2020 with the operating income of RUB 1.8 bn compared to the loss of RUB 0.8 bn in 1H2019.

Impacted by the above factors, the Group’s operating income (before provisions for loan loss and impairment of assets) reached RUB 98.8* bn in 1H2020 compared to RUB 84.5 bn in 1H2019.

Operating expenses amounted to RUB 58.6 bn in 1H2020 compared to RUB 50.4 bn in 1H2019. Higher expenses were driven by the continued implementation of projects for the business technology transformation, including transformation of the retail business. At the same time, the cost-to income ratio was down 5.8 p.p. to 59.3%* compared to 65.1% at year-end 2019.

Asset quality

Loan loss provisions totalled RUB 7.9 bn in 1H2020 compared to RUB 6.2 bn in 1H2019. The negative adjustments of loans and receivables accounted at fair value were RUB 5.7 bn in 1H2020 against the positive adjustment of RUB 9.8 bn in 1H2019.

The Group’s cost of risk (including valuation adjustment of loans and receivables accounted at fair value) grew to 0.5% in 1H2020 compared to -0.1% at year-end 2019.

NPLs (non-performing loans) in the gross loan book accounted for 2.4% as at 30 June 2020 – up 0.2 p.p. against 31 December 2019. The provisioning ratio (total loan loss provisions to the portfolio of loans accounted at amortized cost) was 4.5% as at 30 June 2020 compared to 4.4% as at 31 December 2019.

At the same time, loan loss provisions created as at the reporting date exceeded NPLs 1.9 times against 2.0 times in 2019.

Business volumes

The Group’s total assets reached RUB 7,071.8 bn as at 30 June 2020 – up 7.4% against RUB 6,582.2 bn as at 31 December 2019.

In particular, cash and cash equivalents reached RUB 893.8 bn as at 30 June 2020 compared to RUB 739.0 bn as at 31 December 2019 − mostly due to higher account balances in  the Central Bank of the Russian Federation.

The gross loan book before loan loss provisions was at RUB 4,875.5 bn as at 30 June 2020 − up 6.1% against RUB 4,593.3 bn as at 31 December 2019.

The gross loan book (net of provisions for loan loss and loan adjustments accounted at fair value) in the Group’s total assets was 65.9% compared to 66.8% as at the end of December 2019.

In 1H2020, corporate loans were up 5.6% to RUB 4,209.1 bn as at 30 June 2020 against RUB 3,985.3 bn at year-end 2019. Retail loans also grew, with their volume up 9.6% in 1H2020 – from RUB 608.0 bn to RUB 666.4 bn as at 30 June 2020.

Mortgage loans form the bulk of the Group’s retail loans, accounting for RUB 403.0 bn as at 30 June 2020 – up 2.5% compared to 31 December 2019. Mortgage loans share in the retail loan book were down 4.1 p.p. in 1H2020 − from 64.6% to 60.5%. Consumer loans to retail customers grew in 1H2020 from RUB 207.6 bn to RUB 256.4 bn. (up 23.5%).

In 1H2020, the Bank extended RUB 91 bn of retail loans, which is 70% higher than the figure in the same period of 2019. The first six months of 2020 saw the launch of some new products and services with an emphasis on developing remote service channels. Thus, the Bank entered the market of online car loans in February and launched a state-supported scheme of preferential mortgage loans at the rate 6% per annum in April. 

Corporate loan book grew strongly in 1H2020, resulting in a small rise of retail loans  share in the gross loan book profile as at 30 June 2020 (up 0.5 p.p. to 13.7%).

The portfolio of securities and investments in Group associates was RUB 637.9 bn as at 30 June 2020, down 1.5% (as at 31 December 2019: RUB 647.7 bn).

Securities and investments in associates share in the Group’s assets were down 0.8 p.p. in 1H2020 to 9.0% as at the reporting date against 9.8% at year-end 2019. The profile of the Group’s securities portfolio mostly consists of fixed income instruments such as investments in Russian government debt, bonds and promissory notes of Russian issuers, with debt securities down 0.2 p.p. − from 80.6% to 80.4%.

Amounts owed to financial institutions were down 7.3% in 1H2020 to RUB 296.2 bn (against RUB 319.4 bn at year-end 2019). Amounts owed to financial institutions share in the liabilities were down from 5.5% to 4.7% as at 30 June 2020. 

Corporate and retail accounts grew to RUB 5,452.2 bn as at 30 June 2020 against RUB 4,968.5 bn as at 31 December 2019 (their total growth was 9.7%). At the same time, corporate accounts were up 8.6% to RUB 4,070.8 bn in the funds raised as at 30 June 2020 compared to that at year-end 2019 (RUB 3,748.5 bn), with retail accounts also up 13.2% in 1H2020 – from RUB 1,220.0 bn to RUB 1,381.4 bn. Retail accounts in the customer accounts profile edged up (by 0.7 p.p. − from 24.6% at year-end 2019 to 25.3% as at 30 June 2020).

Customer accounts in the Group liabilities comprised 86.0% as at 30 June 2020 − up 1.2 p.p. (against 84.8% at year-end 2019).

Capital market borrowings were down as at 30 June 2020 to RUB 261.5 bn against RUB 267.6 bn at year-end 2019 (down 2.3%). At the same time, capital borrowings in the resource base declined 0.5 p.p. to 4.1%.

Capital adequacy

The Group’s Basel I total capital based on consolidated IFRS financials amounted to RUB 770.4 bn as at 30 June 2020 −  up 1.6% in 1H2020 compared to  RUB 758.1 bn at year-end 2019. Early in 2020, the Group obtained funding from the Gazprom Group in subordinated interest-free demand deposits totalling RUB 40,000 mln (in 2019 – RUB 90,000 mln). Since these deposits do not have any maturity date and are interest-free, the Group classified them into the capital in the consolidated statement of financial position, and also as part of Tier 1 capital for the purposes of calculating the capital adequacy ratio. The Bank of Russia approved the inclusion of demand and interest free deposits in the additional capital when calculating capital adequacy in accordance with the national rules. At the same time, April 2020 saw the early redemption of USD 1 bn perpetual Eurobonds.

The Group’s risk weighted assets were up 5.6% to RUB 6,093.9 bn in 1H2020.

Hence, the Group’s capital adequacy indicators as at 30 June 2020 were as follows: the Group’s total capital adequacy ratio at 12.6% (compared to 13.1% at year-end 2019 – a drop of 0.5 p.p. for the first 6 months); the Tier 1 capital adequacy ratio at 12.0% (compared to 11.9% at year-end 2019 – up 0.1 p.p. for 1H2020).



[*] Calculated with due regard to FX loss included in equity as perpetual bonds issued
[9] Combined income from transactions in securities includes both realized and unrealized gains from securities transactions, and also a change to the Group’s investment value and net derivative results, as well as expenses of transactions in financial liabilities designated as measured at fair value, changes in which are shown in profit or loss for the period following initial recognition, as well as income from the disposal of subsidiaries.


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