Sovcombank earned RUB 10 billion in IFRS 6-month net profit

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AK&M 04 August 2020 15:15

IFRS net profit of Sovcombank for the first half of 2020 was RUB 10 billion. The bank's capital increased by 14.4% to exceed RUB 159 billion. In January-June 2020, the bank's assets increased by 33% to RUB 1.5 trillion. Sovcombank is currently one of the top 10 largest banks in Russia in terms of assets and capital, the bank informed.

Sovcombank demonstrated stable profitability and margins: the net interest margin was 6.5% in 1H 2020 vs 6.6% in 1H 2019, ROE of regular lines of business (excluding one-off income and expenses) was 17% in 1H 2020 vs 18% in 1H 2019 (the reported ROE was 13.6%). The decrease in net profits and ROE year-on-year was due to higher provisions and hedging expenses.

The Bank meets the capital adequacy ratios with a safe margin: N1.0–14.5%, N1.1–10.5%. Liquidity cushion increased from 31% to 36%. NPLs are mostly flat: NPL 90+ was 2.5% (vs. 2.3% as at 31 December 2019), loan loss provisions for 90+ past due loans remain at 167%. The volume of restructured debt in the retail portfolio was 2.4%, including the Bank's and State programs.

The Bank's retail business shows steady growth in assets and profits: its retail loan portfolio reached RUB 285 billion and net interest income generated by the retail portfolio rose by 38% to RUB 28 billion. The largest growth in interest income in 1H 2020 was seen in the instalment card portfolio (+133%). Thanks to the increasing popularity of interest-free instalment plans for goods and services, the Halva card portfolio increased by 11% to RUB 45 billion. Despite the severe quarantine restrictions introduced in April–May, the bank managed to increase mortgage and car loan portfolios by 4% and 2%, respectively.

The corporate business expanded through the Bank's active participation in government programmes to support small and medium-sized businesses and systemically important enterprises. In 1H 2020, the corporate loan portfolio grew by 32% to RUB 254 billion, of which state-subsidised loans provided under the business support programmes amounted to about RUB 30 billion. Interest income of the corporate segment increased by 47% to RUB 13 billion. Segment's fee and commission income grew by 15% to RUB 5 billion. The portfolio of current corporate accounts and deposits went up by 25% to RUB 435 billion in 1H 2020. The quality of the corporate loan portfolio remains high: Stage 3 loans remain at 1.8% and the loan loss coverage ratio – at 175%. Income generated by bond issuance fees increased by 10% versus 1H 2019.

PJSC Sovcombank (tax number: 4401116480) was established 1990. The bank acquired credit agency chain ARCA in 2007, GE Money Bank in 2014, ICICI Eurasia in 2015.

At the end of 2019, Sovcombank was the third biggest privately-run Russian bank in terms of RAS assets according to the Interfax rating, the branch network growing to 2,500 outlets, with more than 15,000 employees, The group's capital according to IFRS amounted to RUB 139 billion.