Net profit of the banking group Societe Generale in Russia amounted to 5.4 billion rubles for 1H 2018 according to IFRS

    20 August

"In 1H 2018, the banking group Societe Generale in Russia[1] continued to maintain its market positions in accordance with the strategy, accepted this year. The Group continues to maintain its position among TOP-5 banks in retail lending market: over the past 12 months the volume of retail loan portfolio increased by 11% and the volume of retail current accounts portfolio increased by 50%. Also Rosbank continues to maintain its leading positions in corporate segment: in 1H 2018 Rosbank acted as organizer of syndicated loan agreements in the amount over USD 1,4 bln with the largest Russian companies. Rosbank subsidiary - “Rosbank Factoring” demonstrated significant growth: its portfolio increased by 214% during last 12 months.

The Group maintains its focus on development of digital solutions, optimization of processes and improvement of the customer services quality. We are expanding the offerings for all categories of customers, and we have plans for significant growth in the medium and small-sized business segment", - commented on the results of 1H 2018 by Ilya Polyakov, Rosbank CEO.

 

Main achievements in the retail business

In 1H 2018 the volume of retail loan production increased by 20% as compared to 1H 2017. This trend is mainly driven by the increase of mortgage loans production by 45% and consumer loan production by 25% over the same period.

The Group continues to maintain its position among TOP-5 banks in retail lending market with the market share of 3,1%. At the same time, the market share in loans issuance through points of sale increased from 7,2% (as in 1H 2017) to 8,1% (as in 1H 2018). The Group continually steadily belongs to TOP-3 banks in the car lending market with stable market share by portfolio volume 12,4% in 1H 2018.

In 1H 2018 the Group continued expanding the offerings to retail clients:

  • Rosbank launched a service to collect and transfer biometric data of Russian Federation citizens to the Unified Biometric System in its offices. Clients will be able to use financial services remotely in banks that will provide services using remote authentication;
  • 6 technological Rosbank offices are already opened. These offices combine the latest digital solutions and personal communication between customers and the Bank's specialists;
  • Rosbank entered TOP-10 best banks in premium banking services segment according to the research company Frank RG, which corresponds to the priorities of the Group for the development of this segment
  • More convenient banking packages and updated "PRO" cards became available for small-sized business customers.

Main achievements in corporate business

Rosbank confidently holds its market positions in the largest companies segment in 1H 2018.

Rosbank acted as one of the authorized leading organizers and book runners of the loan agreement in the syndicated loan market. In 1H 2018 significant syndicated loan were organized with:

  • Eurochem Group in the amount of USD 820 million with 3 years term;
  • Metalloinvest holding in the amount of USD 240 million with 5 years term;
  • "Moscow Credit Bank" PJSC in the amount of USD 400 million with 1 year term.

Transactions on pre-export financing of PJSC Uralkali totaling USD 825 million with 5 years term were also organized.

As at the end of 1H 2018 Rosbank's trade financing portfolio amounted to RUB 133.6 billion, which is 11% higher than the end of 2017. The Bank continues to successfully develop trade financing with companies from different client segments, as well as international companies, strengthening its positions in the 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.
  • placement of 15 years’ ruble bonds of JSC "RZhD" in amount of RUB 10 billion (6 years offer).
  • secondary placement of the International Investment Bank’s bonds in the amount of RUB 4 billion for a 6 months period.

“Rosbank Factoring” portfolio increased by 214% during last 12 months, significantly improved its positions in the Russian market. In 1H 2018 “Rosbank Factoring” took 5th place in portfolio volume according to preliminary rating of factoring companies published by Association of Factoring Companies. In 1H 2018 “Rosbank Factoring” introduced to the market international factoring products, represented both by export and import factoring. As a result the first export factoring transaction amounted to more than RUB 1 billion was realized.

 

Loan portfolio

The growth of lending activity in the retail business continued in 1H 2018. This enabled the Group to increase its retail loan portfolio by 5% in 1H 2018 and by 11% over the past 12 months (all excluding foreign currency revaluation).

Corporate loan portfolio denominated in rubles increased by 6% over the 1H 2018 and by 8% over the past 12 months (excluding foreign currency revaluation)

General decrease in the corporate loan portfolio (by 3% over the 1H 2018) is driven by a planned reduction in the loan portfolio denominated in foreign currency.

 

Deposits and current accounts

In 1H 2018 the Group’s total customer accounts portfolio decreased by 8% (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 8% (excluding foreign currency revaluation).

The volume of retail current account is steadily increasing. The increase amounted to 18% over 1H 2018 and 50% over the past 12 months (excluding foreign currency revaluation). The market share in this segment increased from 1,7% to 2,0%. This trend is in line with the Group’s focus on transactional business development.

 

Financial results

Net profit of the Group in 1H 2018 amounted to RUB 5,4 billion, exceeding the level of 1H 2017 by 39%.

Net operating income of the Group in 1H 2018 amounted to RUB 27 billion, exceeding the level of 1H 2017 by 9%.

Net interest income of the Group in 1H 2018 amounted to RUB 20 billion, exceeding the level of 1Q 2017 by 9%.

Net fees and commissions in 1H 2018 increased significantly by 26% as compared to 1H 2017. Net fees and commissions of the Group in 1H 2018 amounted to RUB 5,3 billion and in 1H 2017 amounted to RUB 4,2 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 50%). In addition, small and medium business commission income demonstrates a stable positive trend. Also the active work with payment systems influenced the growth.

In 1H 2018 operating expenses amounted to RUB 18 billion increasing by 4% as compared to the level of 1H 2017. The growth corresponds to the inflation level.

Net cost of risk of the Group remained stable. In 1H 2018 net cost of risk amounted to RUB 1,7 billion, which is 7% lower than in 1H 2017 (RUB 1,8 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 and national rating agencies affirmed credit ratings to Rosbank, Rusfinance Bank and DeltaCredit Bank:

  • “Moody’s” affirmed long-term rating in national currency at the level of Ba1, long-term rating in foreign currency at the level of Ba2 with a "stable" outlook.
  • “Fitch Ratings” affirmed «BBB-» with “positive” outlook (investment rating).

At the same time after the final confirmation the rating of Rusfinance Bank was recalled, due to the request from the Bank.

  • The Analytical Credit Rating Agency (ACRA) affirmed the highest credit rating at the AAA(RU) level with a "stable" outlook.

Rating Agency RAEX (Expert RA) keeps the highest credit rating at the ruAAA level to Rosbank with a "stable" outlook.

The affirmation of credit ratings to the Group reflects strong creditability as a result of comfortable capital adequacy level, adequate risk profile, liquidity and funding position as well as high possibility to receive extraordinary support from the Group’s shareholder with strong credit profile.

On June 26, 2018 international credit agency «Moody’s Investors Service”» assigned local and foreign-currency short-term Counterparty Risk Rating (CRRs) of Prime-3 and Baa3 accordingly to Rosbank, Rusfinance Bank and DeltaCredit Bank. The assigned ratings reflect the high ability of the Group to honor its debt.

 

Appendixes

Key indicators of Statement of Financial position

 

Key indicators of Statement of Profit and Loss

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