Moscow, November, 29, 2019 - Gazprombank (Joint Stock Company) (hereinafter, “Bank GPB (JSC)” or “the Bank”)
published its consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) for the nine months of 2019 as at 30 September, 2019.
Bank GPB (JSC) key financial indicators for 9M2019 / as at 30 September, 2019:
- Net income totaled RUB 63.1 bn compared to RUB 41.5 bn for 9M2018;
- ROE and ROA reached 12.1% and 1.4%, respectively, compared to 6.8% and 0.6% in 2018;
- Net interest margin comprised 2.7% compared to 2.8% in 2018;
- Net commission income amounted to RUB 21.7 bn compared to RUB 13.7 bn for 9M2018;
- Cost of Risk was -0.6% including profit/loss on loans and receivables accounted at fair value against 0.5% in 2018;
- Cost-to-income ratio reached 57.9% compared to 57.5% at year-end 2018.
- Assets amounted to RUB 6,274.7 bn (RUB 6,532.1 bn as at 31 December 2018);
- The total loan portfolio [1] was RUB 4,250.8 bn. (RUB 4,239.9 bn as at 31 December 2018);
- Non-performing loans (NPL) (overdue 90+ days and defaulted loans) in the total loan portfolio were 2.4%, remaining as at 31 December 2018;
- The provisioning ratio comprised 4.4% compared to 5.0% as at 31 December 2018;
- Customer accounts comprised RUB 4,670.1 bn compared to RUB 4,813.5 bn at year-end 2018, while the loan-to-deposit ratio reached 91.0% as at 30 September 2019 compared to 88.1% as at 31 December 2018;
- Basel I total capital comprised RUB 757.8 bn compared to RUB 676.4 bn as at 31 December 2018, the total capital adequacy ratio was at 13.8% as at the reporting date, and the Tier 1 capital adequacy ratio comprised 12.5%.
[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.
|
|
30.09.2019
|
31.12.2018
|
Изменение
|
|
Assets
|
6274,7
|
6 532,1
|
-3,9%
|
|
Shareholders’ equity (capital)
|
729,6
|
616,7
|
18,3%
|
Cash and cash equivalents
|
743,1
|
1 049,3
|
-29,2%
|
|
Loans to corporate customers
|
3669,1
|
3 733,0
|
-1,7%
|
|
Retail loans
|
581,7
|
506,9
|
+14,8%
|
|
Securities and investments in associates [2]
|
634,2
|
754,6
|
-16,0%
|
|
Corporate customer accounts
|
3 527,6
|
3 822,7
|
-7,7%
|
|
Retail customer accounts
|
1 142,5
|
990,8
|
+15,3%
|
|
Capital market borrowings [3]
|
280,4
|
326,6
|
-14,1%
|
|
Subordinated debt
|
74,7
|
136,5
|
-45,3%
|
|
|
9 months 2019
|
9 months 2018
|
Change
|
|
Net income
|
63,1
|
41,5
|
+52,0%
|
|
Comprehensive income
|
58,4
|
43,4
|
+34,6%
|
|
|
30 September 2019 / 9 months 2019
|
31 December 2018 / 2018
|
Change
|
|
Total Capital Adequacy Ratio [4]
|
13,8%
|
12,4%
|
+1,4 р.р.
|
|
Tier 1 Capital Adequacy Ratio
|
12,5%
|
10,5%
|
+2,0 р.р.
|
Non-performing loans [5] (NPL) % of gross loan
|
2,4%
|
2,4%
|
-
|
|
Allowance for impairment to gross loans accounted at amortized cost
|
4,4%
|
5,0%
|
-0,6 р.р.
|
|
Loans-to-deposit ratio
|
91,0%
|
88,1%
|
+2,9 р.р.
|
|
ROE
|
12,1%
|
6,8%
|
+5,3 р.р.
|
|
ROA
|
1,4%
|
0,6%
|
+0,8 р.р.
|
|
Net Interest Margin [6]
|
2,7%
|
2,8%
|
-0,1 р.р.
|
|
Cost of risk [7]
|
-0,6%
|
0,5%
|
-1,1 р.р.
|
|
Cost to income ratio [8]
|
57,9%
|
57,5%
|
+0,4 р.р.
|
[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] Loan loss provision charges and profit/loss on loans accounted at fair value as of the reporting period to the chronological mean of quarter-end interest earning assets for the reporting period.
[8] Operating expenses include salaries and administrative expenses. Operating income includes net interest income, non-interest income and non-banking operating profits. Operating income does not include provisions and profit/loss on loans accounted at fair value.
Financial results
For 9M2019, the Group recorded net income of RUB 63.1 bn. Its total comprehensive income, including foreign exchange gain/loss on the Group’s foreign investments, comprised RUB 58.4 bn. By comparison, in 9M2018, the Group's net income and net comprehensive income amounted to RUB 41.5 bn and 43.4 bn, respectively. The Group’s ROE increased by 5.3 p.p. for 9M2019 to 12.1% against 2018. ROA in 9M2019 reached 1.4% − up 0.8 p.p. against 0.6% at year-end 2018.
The Group’s net interest income in 9M2019 remained actually intact year-on-year at RUB 104.7 bn (up 0.8%),with interest income up 11.6% to RUB 305.7 bn, and interest expenses up 18.3% to RUB 201.0 bn. The net interest margin for 9M2019 was 2.7% − down 0.1 p.p. compared to year-end 2018.
The Group’s recurring core banking income, including net interest income before loan loss provisions and net commission income increased by 7.6% in 9M2019 to RUB 126.4 bn against RUB 117.5 bn year-on-year, with net commission income (RUB 21.7 bn) up almost 1.6 times year-on-year (RUB 13.7 bn). Active development of retail banking lead to higher commission income this year: 2019 saw the launch of selling out-of-the box offers, insurance and service ones, either for lending or investment products for individuals.
Recurring income accounted for 93.6% in the Group’s operating income in 9M2019 compared to 89.5% for 9M2018.
Combined income from transactions in securities for 9M2019 totalled RUB 18.9 bn against the income of RUB 1.3 bn for 9M2018, mostly due to positive revaluation of investments and income from associates.
Non-banking segments ended 9M2019 with the operating loss of RUB 0.8 bn compared to the operating profit of RUB 3.9 bn for 9M2018.
Impacted by the above factors, the Group’s operating income (before loan loss provisions and impairment of assets) reached RUB 135.0 bn for 9M2019 compared to RUB 131.3 bn for 9M2018.
Operating expenses for 9M2019 reached RUB 78.1 bn compared to RUB 68.4 bn for 9M2018. Higher expenses were due to the on-going implementation of projects for technological transformation of business, including retail transactions. The cost-to-income ratio increased by 0.4 p.p. compared to year-end 2018− from 57.5% to 57.9%.
Asset quality
Recovery of loan loss provisions reached RUB 8.8 bn for 9M2019 compared to the provision charge of RUB 1.1 bn in 9M2018. Positive fair value adjustment of loans and receivables amounted to RUB 15.3 bn for 9M2019 due to the recovery of impairment resulting from the repayment of several loans accounted at fair value and due to the positive revaluation of loans to market value following the reduction in the key interest rate.
The Group’s cost of risk (including profit/loss on loans and receivables accounted at fair value) was -0.6% for 9M2019 compared to 0.5% at year-end 2018.
NPLs (non-performing loans) in the gross loan book amounted to 2.4% as at 30 September 2019 remaining at the level of 31 December 2018. The provisioning ratio (total loan loss allowance to the portfolio of loans accounted at amortized cost) was 4.4% as at 30 September 2019 compared to 5.0% as at 31 December 2018. At the same time, loan loss allowance created as at the reporting date exceeded NPLs 1.8 times, whereas at year-end 2018, the coverage ratio was 2.0.
Business volumes
The Group’s total assets comprised RUB 6,274.7 bn as at 30 September 2019 − down 3.9% against RUB 6,532.1 bn as at 31 December 2018.
In particular, cash and cash equivalents were at RUB 743.1 bn as at 30 September 2019 compared to RUB 1,049.3 bn as at 31 December 2018 mostly due to reduction in the fixed-term deposits in the Central Bank of the Russian Federation.
The loan book before loan loss provisions as at 30 September 2019 accounted for RUB 4,250.8 bn − up 0.3% compared to RUB 4,239.9 bn as at 31 December 2018.
The loan book (net of loan loss provisions)) in the Group’s total assets accounted for 64.9% compared to 61.8% at the end of December 2018.
Corporate loans were down by 1.7% to RUB 3,669.1 bn for 9M2019 compared to RUB 3,733.0 bn at year-end 2018. Reduction in corporate loans was due to a stronger rouble during 2019, which resulted in the negative revaluation of foreign currency assets, and also repayments of several loans. Retail loans accounted for RUB 581.7 bn as at 30 September 2019 – up 14.8% for 9M2019 compared to RUB 506.9 bn as at 31 December 2018.
Mortgage loans form the bulk of the Group’s retail loans, accounting for RUB 386.6 bn as at 30 September 2019 – up 6.7% compared to RUB 362.2 bn as at 31 December 2018. Mortgage loans in the retail loan book were down 4.9 p.p. during 9M2019 − from 71.4% to 66.5%. Consumer loans grew for 9M2019 from RUB 138.6 bn to RUB 188.2 bn (up 35.8%).
Consumer lending grew owing to the implementation of several transformation projects, which allowed the Bank to show multiple expansion of the active user database in the new mobile bank (now 1.2 mln users already); the Bank also started to process over 12 thousand loan applications a day. In 2019, the Bank posted fourfold growth in consumer loans’ disbursement a day and increased its sales via digital channels to 30%.
An increase in the retail loan book and a reduction in the corporate loan book led to the retail loans share growth to 13.7% within the total loan portfolio as at 30 September 2019 − up 1.7 p.p. compared to that as at 31 December 2018.
The portfolio of securities and investments in associates comprised RUB 634.2 bn as at 30 September 2019 – down by 16.0% for 9M2019 (securities stood at RUB 754.6 bn as at 31 December 2018).
The portfolio of securities and investments in associates share in total assets declined by 1.5 p.p. during 9M2019 to 10.1% as at the reporting date compared to 11.6% at year-end 2018. The profile of the portfolio of securities and investments in the Group’s associates mostly includes fixed income instruments such as investments in Russian government debt, bonds and promissory notes of Russian issuers, with debt securities up by 9.6 p.p. from 70.4% to 80.0%.
Amounts due to financial institutions fell by 28.9% for 9M2019 to RUB 288.5 bn (RUB 405.9 bn at year-end 2018). The share of amounts due to financial institutions in total liabilities were down from 6.9% to 5.2% as at 30 September 2019.
Corporate and retail deposits declined to RUB 4,670.1 bn as at 30 September 2019 compared to RUB 4,813.5 bn as at 31 December 2018 (overall reduction of 3.0%). At that, corporate deposits were down in the structure of raised funds – as at 30 September 2019 they comprised RUB 3,527.6 bn − 7.7% lower than at year-end 2018 (RUB 3,822.7 bn) whereas private deposits were up 15.3% from RUB 990.8 bn to RUB 1,142.5 bn for 9M2019. Retail funds share in the total customer deposits was up 3.9 p.p. from 20.6% at year-end 2018 to 24.5% as at 30 September 2019.
Customer deposits in Group liabilities accounted for 84.2% as at 30 September 2019 – up 2.9 p.p. for 9M2019 (81.3% at year-end 2018).
Capital market borrowings, including Eurobonds and local bonds, were at RUB 280.4 bn as at 30 September 2019 compared to RUB 326.6 bn at year-end 2018 (down 14.1% for 9M2019). 9M2019 saw the redemption of local bonds totalling RUB 10.0 bn, and also Eurobonds of USD 0.5 bn, issued in 2017, Eurobonds of EUR 1 bn and Eurobonds of USD 0.75 bn, both issued in 2014. The placements for 9M2019 included local bonds’ issues totalling RUB 77 bn, with maturity in 2021-2025. As a result, capital market borrowings in the resource base declined 0.5 p.p. to 5.1%.
Capital adequacy
The Group’s Basel I total capital based on consolidated IFRS financials comprised RUB 757.8 bn as at 30 September 2019 − up 12.0% for 9M2019 compared to RUB 676.4 bn at year-end 2018. In January 2019, the Group obtained financing from the Gazprom Group via the perpetual interest-free subordinated loan of RUB 90,000 mln. Such loan meets the criteria for it to be classified within Tier 1 Capital in order to calculate the capital adequacy ratio. In February 2019, the Central Bank of the Russian Federation approved the inclusion of the perpetual and interest-free loan in the additional capital when calculating capital adequacy in accordance with the national rules.
At the same time, upon receiving an official authorization of the Central Bank of the Russian Federation in the second quarter of 2019, the Group exercised a call-option on subordinated Eurobonds of CHF 350 mln.
The Group’s risk weighted assets remained at the level of year-end 2018 – up just 0.2% for 9M2019.
All in all, the Group’s capital adequacy indicators as at 30 September 2019 were as follows: the Group’s total capital adequacy ratio – 13.8% (12.4% at year-end 2018 − up by 1.4 p.p. for 9M2019); the Tier 1 capital adequacy ratio − at 12.5% (against 10.5% at year-end 2018, − up 2.0 p.p. in 9M2019).
[9] Combined income from transactions in securities includes realized and unrealized gain from securities transactions, change in the Group’s investments value and net derivatives with securities results, loss on transactions with financial liabilities designated as at fair value throughprofit or loss, as well as gain from disposal of subsidiaries.