Net profit of the banking group Societe Generale in Russia amounted to 1.5 billion rubles for 1Q 2018 according to IFRS

    22 May

"In Q1 2018, the banking group Societe Generale in Russia* continued to maintain its market positions, both in the retail and corporate segments, despite the high competition. The Group enhances its transactional banking positions and offers new products and services. Over the past 12 months the volume of retail current accounts portfolio increased by more than 50%. Also the Group actively invests in the service quality improvement and expanding the offerings to clients including expanded functions of internet banking, additional functions of cards “MIR”, new «e-trading» platform and other. The Group continues to increase loan production in corporate lending to small and medium-sized business as compared to 2017. In accordance with the new strategy, we will continue to use the expertise of the Societe Generale Group in key sectors of the economy, as well as diversify the business into new client segments. Rosbank is the most reliable bank according to Forbes, which confirms the high level of the Bank’s reliability and the strong position in the banking sector", summed up Ilya Polyakov, Rosbank CEO.

Main achievements in the retail business

In 1Q 2018 the Group continued to enhance the quality of service and expanding the offerings to retail clients:

  • Development of services provided to holders of "MIR" cards:
    • Transfers from card to card for "MIR" cardholders of Rosbank were implemented;
    • Rosbank joined to loyalty program “MIR, privet”;
    • Cards of “MIR” payment system is available for small-sized business clients;
  • Scheduled transfers were implemented in internet-bank, as well as agreed payments were implemented in mobile-bank;
  • Optimization of financial analyses of small-sized business customers is available. This enables to speed up services and improve quality;
  • An opportunity to deposit cash on corporate cards of international payment systems was implemented for small-sized business customers;

In 1Q 2018 the volume of retail loan production increased by 28% as compared to 1Q 2017. This trend is mainly driven by the increase of consumer loan production by more than 30% over the same period. The Group continues to maintain its leading positions in retail lending market with the stable market share of 3,2%. At the same time, the market share in loans issuance through points of sale increased from 7,6% (as at the end of 2017) to 8,2% (as at the end of 1Q 2018).

Specialized subsidiary banks: DeltaCredit and Rusfinance Bank, show confident results in mortgages and car loans, respectively.

Thus, in Q1 2018 the volume of mortgage loans production increased by 70% as compared to the same period in 2017. In 1Q 2018 the Group confidently holds the market share in mortgage lending by portfolio volume at 3.3%. In 1Q 2018 DeltaCredit Bank joined the state program “State support for families with children” and started to issue loans under this program in Moscow, St. Petersburg and Ekaterinburg. Also, the development and installation of the B2B system for realtors, real estate agencies and developers was completed: more than 7.5 thousand partner clients joined to this service.

Rusfinance bank continually steadily belongs to TOP-3 banks in the car lending market with stable market share by portfolio volume above 12,5% as at the end of 1Q 2018. In 1Q 2018 car loans production increased by 9% as compared to the level of 1Q 2017. Over the same period consumer loan production increased by 13%.

Also the Group continued to increase its customer accounts portfolio. The focus was made on retail current accounts. In 1Q 2018 the Group’s market share in this segment increased from 1,7% to 1,9%. The growth of this portfolio amounted to 4% in 1Q 2018 and 54% over the past 12 months.

Main achievements in corporate business

Despite the high competition, Rosbank confidently holds its market positions in the largest companies segment in 1Q 2018.

Thus, Societe Generale/Rosbank (as part of a syndicate of international banks) acted as a coordinating authorized organizations and book runners of the loan agreement in the amount of USD 400 million with "Moscow Credit Bank" PJSC in the syndicated loan market.

Rosbank acted as organizer of the following significant transactions in the debt capital market:

  • placement of 5 years’ ruble bonds of JSC "New Shipping Company". The total nominal value of the bonds amounted to RUB 5 billion. The demand for bonds exceeded RUB 27 billion.
  • the first placement of JSC "Bashkirskaya sodovaya company" exchange bonds totaling RUB 8 billion.

Rosbank continues to actively expand its presence in the segment of small and medium-sized businesses. In 1Q 2018 the portfolio increased by 8% as compared to the same period of 2017. In 1Q 2018 net banking income in this segment increased by 17% as compared to the same period of 2017.

In 1Q 2018 “Rosbank Factoring” increased the portfolio of debt on paid factoring financing by 45% as compared to 1Q 2017, which is the best result among international factors on the Russian market.

Also in 1Q 2018 “Rosbank Leasing” demonstrated portfolio growth by more than 8% as compared to the level of 1Q 2017.

Rosbank launched its own electronic trading system (e-trading) which represents the simple and user-friendly interface and enables legal entities to make conversion transactions for the purchase / sale of currency. The system is designed to make conversion transactions in rubles, US dollars, euros and other currencies, as well as to monitor the quotes in real time.

Also Rosbank continues its active cooperation with clients and increases their loyalty. Thus, the seminar for corporate clients was organized in the head office of the Bank, as well as a number of events and seminars for international companies. The purpose of these events was to improve business climate and the business integration in the Russian economy and its markets.

Loan portfolio

The growth of lending activity in the retail business, observed in 2017, continued in 1Q 2018. This enabled the Group to increase its retail loan portfolio by 1% in 1Q 2018 and by 9% over the past 12 months (all excluding foreign currency revaluation).

Corporate loan portfolio denominated in rubles increased by 1% over the 1Q 2018 and by 3% over the past 12 months (excluding foreign currency revaluation)

General decrease in the corporate loan portfolio (by 8% over the 1Q 2018) is driven by a planned reduction in the loan portfolio denominated in foreign currency.

Deposits and current accounts

In 1Q 2018 the Group’s total customer accounts portfolio decreased by 16% (excluding foreign currency revaluation). This trend is explained by the return of the Group's corporate deposit portfolio to the previous stable level that existed before 4Q 2017, when the maximum volume of this portfolio was recorded, caused by excessive liquidity in the banking sector.

Over the past 12 months the Group’s Corporate accounts portfolio increased by 27% (excluding foreign currency revaluation).

The volume of retail current account is steadily increasing. The increase amounted to 4% over 1Q 2018 and 54% over the past 12 months (excluding foreign currency revaluation). This trend is in line with the Group’s focus on transactional business development.

Financial results

Net profit of the Group in 1Q 2018 amounted to RUB 1,5 billion, exceeding the level of 1Q 2017 by 8%.

Net operating income of the Group in 1Q 2018 amounted to RUB 12,8 billion, exceeding the level of 1Q 2017 by 9%.

Net interest income of the Group in 1Q 2018 amounted to RUB 9,7 billion, exceeding the level of 1Q 2017 by 5%.

Net fees and commissions in 1Q 2018 increased significantly by 27% as compared to 1Q 2017. Net fees and commissions of the Group in 1Q 2018 amounted to RUB 2,5 billion and in 1Q 2017 amounted to RUB 1,9 billion. One of the main drivers of the positive dynamics is rebound in retail lending and as a result increase in commissions paid by insurers (retail commission income increased by more than 60%). In addition, small and medium business commission income demonstrates a stable positive trend. Also the active work with payment systems (e.g. VISA) influenced the growth.

In 1Q 2018 operating expenses amounted to RUB 9,3 billion increasing by 7% as compared to the level of 1Q 2017. The dynamics is mainly driven by the significant growth of the subsidiaries’ businesses: DeltaCredit Bank and Rusfinance Bank.

Net cost of risk of the Group remained stable. In 1Q 2018 net cost of risk amounted to RUB 1,1 billion, which is comparable with net cost of risk booked in 1Q 2017 at RUB 1,2 billion. The stable trend is mainly driven by improved quality of recovery process. The quality of corporate loans remains high.

Ratings

In 1Q 2018 international rating agency “Fitch Ratings” affirmed the long-term issuer default rating at the level of sovereign rating of Russia «BBB-» to Rosbank, Rusfinance Bank and DeltaCredit Bank with “positive” outlook.

The affirmation of the national credit rating reflects Fitch's view that Rosbank, Rusfinance Bank and DeltaCredit Bank are among issuers with the strongest credit profiles in Russia. IDRs and Support Ratings are underpinned by the potential support the banks may receive from their shareholders. The ultimate owner of Rosbank and its retail subsidiaries (Rusfinance Bank and DeltaCredit Bank) is Societe Generale S.A. (“SG”, “A”/”Stable”/”a”, SG’s shareholding in Rosbank is at 99.95%, Rosbank’s shareholding in Rusfinance Bank and DeltaCredit Bank is at 100%).

The affirmation of the Banks' Viability Ratings at the “bb+” level reflects their stable asset quality, strong capital and liquidity buffers, and conservative risk policy and management.

On April 26, 2018 The Analytical Credit Rating Agency (ACRA) affirmed the highest credit rating at the AAA (RU) level to Rosbank, Rusfinance Bank and DeltaCredit Bank with a "stable" outlook.

 

Appendixes

Key indicators of Statement of Financial position

Subscribe