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 9M2021 as at 30 September 2021.
Mr. Alexander Sobol, Deputy Chairman of the Management Board: “The recovery of indicators in most sectors of the Russian economy to almost “pre-pandemic” levels observed during 9 months of 2021 contributed to the Bank's profit exceeding the target. In addition, both business-related commission revenues and net interest income rose, the latter accelerated its growth, including under the influence of changes in the Bank of Russia’s key rate. At the same time, the negative forecasts for 2020 associated with the pandemic and taken into account when assessing the expected credit losses did not realise, which allowed partial recovery of the expected credit losses later”.
Key financial indicators of the Gazprombank Group (hereinafter, “the Group”) for 9M2021 / as at 30 September 2021:
- Net income totaled RUB 128.2 bn compared to RUB 30.0 bn for 9M2020;
- Net commission income was RUB 33.8 bn compared to RUB 28.1 bn for 9M2020;
- Net interest margin was 3.1% compared to 2.7% as at year-end 2020;
- Cost of Risk was -0.8%, including adjustment of loans accounted at fair value, compared to 0.2% in 2020;
- ROE and ROA were 21.3% and 2.2%, respectively, compared to 7.7% and 0.8% in 2020;
- Cost-to-income ratio was 45.2% compared to 55.2% at year-end 2020;
- Assets amounted to RUB 8,141.6 bn (against RUB 7,530.7 bn as at 31 December 2020);
- Total loan portfolio[1] was RUB 5,938.0 bn (against RUB 5,365.9 bn as at 31 December 2020);
- Non-performing loans (NPL) (over 90 days past due and defaulted loans) in the total loan portfolio were 1.9% compared to 2.0% as at 31 December 2020.
- Provisioning ratio was 3.3% compared to 4.1% as at 31 December 2020;
- Customer accounts amounted to RUB 6,387.3 bn compared to RUB 5,829.2 bn at year-end 2020, while the loan-to-deposit ratio was 93.0% as at 30 September 2021, compared to 92.1% as at 31 December 2020;
- Basel I total capital reached RUB 914.6 bn compared to RUB 793.4 bn as at 31 December 2020, the total capital adequacy ratio was 13.3% as at the reporting date, and the Tier 1 capital adequacy ratio stood at 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.
|
|
30.09.2021 | 31.12.2020 | Change |
| Assets | 8,141.6 | 7,530.7 | +8.1% |
| Shareholders’ equity (capital) | 862.4 | 739.3 | +16.7% |
| Cash and cash equivalents | 942.9 | 943.4 | -0.1% |
| Loans to corporate customers | 5,130.3 | 4,627.1 | +10.9% |
| Retail loans | 807.8 | 738.8 | +9.3% |
| Securities and investments in associates[2] | 765.9 | 776.5 | -1.4% |
| Corporate customer accounts | 4,776.3 | 4,305.4 | +10.9% |
| Retail customer accounts | 1,610.9 | 1,523.7 | +5.7% |
| Capital market borrowings | 264.5 | 285.1 | -7.2% |
| Subordinated debt | 70.6 | 69.7 | +1.3% |
|
|
9M2021 | 9M2020 | Change |
| Net profit | 128.2 | 30.0 | +327.3% |
| Comprehensive income | 125.1 | 45.0 | +178.0% |
|
|
30.09.2021 / 9M2021 | 31.12.2020 / 12M2020 | Change |
| Total Capital Adequacy Ratio[3] | 13.3% | 12.7% | +0.6 p.p. |
| Tier 1 Capital Adequacy Ratio | 12.5% | 11.8% | +0.7 p.p. |
| Ratio of non-performing loans[4] (NPL) to gross loans | 1.9% | 2.0% | -0.1 p.p. |
| Ratio of loan loss provisions to gross loans accounted at amortized cost | 3.3% | 4.1% | -0.8 p.p. |
| Loans-to-deposit ratio | 93.0% | 92.1% | +0.9 p.p. |
| ROE | 21.3% | 7.7% | +13.6 p.p. |
| ROA | 2.2% | 0.8% | +1.4 p.p. |
| Net interest margi[5] | 3.1% | 2.7% | +0.4 p.p. |
| Cost of credit risk[6] | -0.8% | 0.2% | -1.0 p.p. |
| Cost to income ratio[7] | 45.2% | 55.2% | -10.0 p.p. |
[2] Including trading securities, investment securities, and investments in associates.
[3] In accordance with Basel I Framework.
[4] Loans are deemed “non-performing” if their principal or interest is 90+ days past due, as well as in the event of counterparty default.
[5] The ratio of net interest income for the reporting period to the chronological average 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 loan loss provisions).
[6] Charges of provisions for loan loss and loan adjustment accounted at fair value for the reporting period to the chronological average of quarter-end interest-bearing assets for the reporting period.
[7] Operating expenses include salaries, other allowances and benefits to the personnel, and 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.
Financial results
The Group finished 9M2021 with recorded net income of RUB 128.2 bn and comprehensive income of RUB 125.1 bn. By comparison, year-on-year, the Group’s net income and its comprehensive income amounted to RUB 30.0 bn and RUB 45.0 bn, respectively. The Group’s ROE grew by 13.6 p.p. to 21.3% in 9M2021 against that at year-end 2020. ROA was 2.2% in 9M2021 – a rise of 1.4 p.p. against 0.8% at year-end 2020.
The Group’s net interest income was RUB 154.8 bn in 9M2021, which is 30.2% higher than that in 9M2020 (RUB 118.9 bn), with interest income up 8.5% to RUB 332.9 bn and interest expenses down 5.2% to RUB 178.1 bn. Net interest margin was up 0.4 p.p. to 3.1% in 9M2021.
The Group’s recurring core banking income, including net interest income before loan loss provisions and net commission income, was up 28.3% to RUB 188.6 bn in 9M2021 compared to RUB 147.0 bn year-on-year. Net commission income for the same period (RUB 33.8 bn) was up 20.3% than in 9M2020 (RUB 28.1 bn).
Recurring income in the Group’s operating income accounted for 87.3% against 87.0% in 9M2020.
Combined income from transactions in securities [8] in 9M2021 totaled RUB 9.0 bn compared to the income of RUB 1.5 bn in 9M2020.
Non-banking segments finished 9M2021 with the operating income of RUB 25.1 bn (against RUB 1.6 bn in 9M2020), RUB 13.0 bn of which were non-recurring income from real estate sale to a third party.
Impacted by the above factors, the Group’s operating income (before provisions for loan loss and impairment of assets) reached RUB 216.1 bn in 9M2021 compared to RUB 168.9 bn in 9M2020.
Operating expenses amounted to RUB 97.7 bn in 9M2021 compared to RUB 86.7 bn in 9M2020. 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 10.0 p.p. to 45.2% compared to 55.2% at year-end 2020.
Asset quality
Income from loan loss provisions recovery totaled RUB 24.3 bn in 9M2021 compared to loss of RUB 16.6 bn in 9M2020. Positive adjustments of loans and receivables accounted at fair value were RUB 12.8 bn in 9M2021 against the negative adjustment of RUB 14.0 bn in 9M2020.
The Group’s cost of risk (with regard to the adjustment of loans and receivables accounted at fair value) dropped to -0.8% in 9M2021 compared to 0.2% at year-end 2020.
NPLs (non-performing loans) in the gross loan book accounted for 1.9% as at 30 September 2021 – down 0.1 p.p. against 31 December 2020. The provisioning ratio (total loan loss provisions to the portfolio of loans accounted at amortized cost) was 3.3% as at 30 September 2021 compared to 4.1% as at 31 December 2020. At the same time, loan loss provisions created as at the reporting date exceeded NPLs by 1.6 times against 2.0 times as at year-end 2020.
Business volumes
The Group’s total assets reached RUB 8,141.6 bn as at 30 September 2021 – up 8.1% against RUB 7,530.7 bn as at 31 December 2020.
Cash and cash equivalents reached RUB 942.9 bn as at 30 September 2021 compared to RUB 943.4 bn as at 31 December 2020.
The gross loan book before loan loss provisions was at RUB 5,938.0 bn as at 30 September 2021 − up 10.7% against RUB 5,365.9 bn as at 31 December 2020.
The share of loan book (net of provisions for loan loss and loan adjustments accounted at fair value) in the Group’s total assets was 70.6% compared to 68.4% as at the end of December 2020.
For the 9M2021, corporate loans were up 10.9% to RUB 5,130.3 bn as at 30 September 2021 against RUB 4,627.1 bn at year-end 2020. Retail loans also showed growth, with their volume up 9.3% in 9M2021 – from RUB 738.8 bn to RUB 807.8 bn as at 30 September 2021.
Mortgage loans formed the bulk of the Group’s retail loans, accounting for RUB 413.8 bn as at 30 September 2021 – up 0.9% compared to 31 December 2020. At the same time, mortgage loans share in the retail loan book was down 4.3 p.p. in 9M2021 − from 55.5% to 51.2%. Consumer loans to retail customers [9] grew in 9M2021 from RUB 328.9 bn to RUB 394.0 bn. (up 19.8%).
The proportion of corporate customers vs retail customers in the gross loan book experienced minor fluctuations resulting in the increase of corporate loans share by 0.2 p.p. to 86.4% as at 30 September 2021.
The portfolio of securities and investments in the Group’s associates was RUB 765.9 bn as at 30 September 2021, down 1.4% (as at 31 December 2020: RUB 776.5 bn).
Securities and investments in associates share in the Group’s assets was down 0.9 p.p. in 9M2021 to 9.4% as at the reporting date against 10.3% at year-end 2020. 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 standing at 85.1% of the total portfolio as at 30 September 2021 showing the same level as at 31 December 2020.
Amounts owed to financial institutions were down 7.2% in 9M2021 to RUB 298.2 bn (against RUB 321.4 bn at year-end 2020). The share of amounts owed to financial institutions in the liabilities was 4.1% as at 30 September 2021 compared to 4.7% as at 31 December 2020.
Corporate and retail accounts grew to RUB 6,387.3 bn as at 30 September 2021 against RUB 5,829.2 bn as at 31 December 2020 (total growth was 9.6%). At the same time, corporate accounts were up 10.9% to RUB 4,776.3 bn as at 30 September 2021 compared to that at year-end 2020 (RUB 4,305.4 bn), and retail accounts were up 5.7% in 9M2021 – from RUB 1,523.7 bn to RUB 1,610.9 bn. Retail accounts in the total customer accounts profile edged down (by 0.9 p.p. − from 26.1% at year-end 2020 to 25.2% as at 30 September 2021).
Customer accounts share in the Group’s liabilities was 87.7% as at 30 September 2021 − up 1.9 p.p. (against 85.8% at year-end 2020).
Capital market borrowings as at 30 September 2021 were down to RUB 264.5 bn against RUB 285.1 bn at year-end 2020 (down 7.2%). At the same time, capital borrowings in the resource base declined by 0.6 p.p. to 3.6%.
Capital adequacy
The Group’s Basel I total capital based on consolidated IFRS financials amounted to RUB 914.6 bn as at 30 September 2021 − up 15.3% in 9M2021 compared to RUB 793.4 bn at year-end 2020.
In December 2020, the General meeting of the Bank resolved on the increase of authorized capital, and in March 2021, additional ordinary shares were placed for the total amount of RUB 25 bn.
The Group’s risk weighted assets were up 9.9% to RUB 6,866.7 bn in 9M2021.
With due regard to the current year income, the Group’s capital adequacy indicators as at 30 September 2021 were as follows: the Group’s total capital adequacy ratio was 13.3% (compared to 12.7% at year-end 2020 – a rise of 0.6 p.p. in 9M2021); the Tier 1 capital adequacy ratio was 12.5% (compared to 11.8% at year-end 2020 – a rise of 0.7 p.p. in 9M2021).
[8] Combined income from transactions in securities includes both realized and unrealized gains from securities transactions, and also a change to the Group’s investments 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.
[9] Including car loans, credit cards and overdrafts.
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