Expobank reported 736 million rubles of net profit, almost equal to the same quarter last year in spite of significant increase in prudential provisions due to the early effect of the health crisis.
Andrei Shalimov, CFO of Expobank, commented, “All things considered the quarter results were very good. We have continued to see growth in operating income in spite of no increase in loans and a large increase in prudential reserves for possible losses. We have been careful with our credit exposures, with limited new lending to selected customers and reductions in overall risk in car loans and our express guarantees as we tightened our credit assessments. Careful management of the foreign currency exposure of the bank and our securities portfolio provided a slight positive effect. We have fully integrated our acquisition last year of Kurskprombank which is now our Black Earth branch. The integration was complete before the end of March. The full legal and technical integration raised our regulatory capital to a comfortable level of 14.2% against a required minimum of 10.5%. IFRS capital exceeded 20 billion rubles for the first time.
“We are taking the utmost care in the midst of the health crisis, both with the majority of our staff working from home and providing protection for our customers. I addition we are very pleased to see a number of moderate size banks have joined our “#helpingtogether” (#ПоможемВместе) initiative to provide support in the form of equipment to hospitals and protective gear to health workers.
“Looking forward, we expect the disruption in business due to the health crisis to have a significant effect on many of our corporate customers as they may have closed temporarily. We are working with most of them to mitigate the effect to the maximum extent possible. It is too early to quantify the impact on our credit losses and income, but we are confident that our capital and liquidity are sufficient to meet any potential effect.”
Total assets reached 101 billion rubles in 1Q’20, a slight increase of 3% from the beginning of the year. The proportion of liquid assets stayed at the level of year-end 2019 and was 36% as of 1 April 2020. Loans to customers were almost unchanged at 61 billion rubles.
On the liability side over 70% of deposit and account funding comes from retail clients. Customer deposits and current accounts amounted 75 billion rubles as of 1 April 2020, up slightly from year-end.
Equity grew by 4% from the beginning of the year to a record 20.4 billion rubles. The Bank’s capital adequacy ratio (N1.0) was 14.2% again the minimum CBR requirement of 10.5%.
Net interest income for the 1Q’20 grew by 38% from the same period of the last year to 1,775 million rubles. We increased expected credit loss allowance to 273 million rubles, up more than 4 times from the same period last year. Fees and commissions increased more than two times to 282 million rubles. Operating income was 1,797 million rubles in 1Q 2020, an increase of 15% from the same period of the last year. Operating expenses grew by 28% to 882 million rubles, cost to income ratio rose to 49% from 43%.
Recently two rating agencies confirmed our ratings: in April 2020 Fitch confirmed our rating at BB-, but changed the outlook to negative for us and a number of mid-size Russian banks; in May 2020 Expert RA affirmed Expobank’s rating at ruA- with a stable outlook.
Key financial indicators:
|Equity||20 397||15 069||35%|
|Total Assets||100 707||98 060||3%|
|Loans to corporate customers||31 449||33 792||(7%)|
|Loans to retail customers||30 496||27 825||10%|
|Guarantees||17 856||25 764||(44%)|
|Total Liabilities||80 310||78 534||2%|
|Retail customer accounts and deposits||53 603||52 689||2%|
|Corporate customer accounts and deposits||21 307||20 389||5%|
|Equity||20 397||19 526||4%|
|Net interest income||1 775||1 284||38%|
|Net interest margin||9,2%||7,5%||-|
|Increase in provisions||273||54||404%|
|Net fee & commission income||282||121||132%|
|Trading & other income||14||210||-|
|Total operating income||1 797||1 561||15%|
|Cost to Income Ratio||49%||43%||-|
|Profit before tax||901||942||(4%)|
|Profit after tax||736||766||(4%)|
|Total comprehensive income||871||846||3%|
|Total capital adequacy (N1.0)||14,2%||11,8%|
|Group capital adequacy (N1.2)||12,9%||11,0%|