SG Russia financial results in Q1 2016
The financial performance of SG Russia (Rosbank, DeltaCredit Bank, Rusfinance Bank, Societe Generale Insurance, ALD Automotive) has significantly improved in Q1 2016 vs Q1 2015.
- Net Banking Income increased by +31% at EUR 158m vs Q1 2015 as a result of improving margins and loan production volumes.
- Despite a backdrop of high inflation, operating expenses at EUR -122 m decreased by -1% vs Q1 2015 driven by numerous cost control initiatives. As was planned, retail network has been further streamlined and staff reduced by -20% vs Q1 2015 at 16 thousands employees.
- Cost of risk dropped by -39% vs to Q1 2015 thanks to a conservative credit origination.
Overall, SG Russia has a significantly reduced level of losses for the period at EUR -18m in Q1 2016 vs EUR -89m in Q1 2015.
In Q1 2016, the commercial activity has significantly rebounded vs Q1 2015 even if loan origination was still notably below pre-crisis level. Business environment has remained characterize by a low credit demand from individual clients and a sustained level of activity on corporate. In a still challenging environment, credit outstandings of SG Russia are down by -5.3% vs. Q1 2015 at EUR 7,9bn. Deposit outstandings decreased by -5.4% vs. Q1 2015 at EUR 6.6bn.
Corporate franchise has continued to gain momentum: As of Q1 2016, Rosbank entered TOP-3 investment banks in Cbonds arrangers’ league table for Russian bonds issues (Rosbank’s market share is 8.4%). Rosbank has arranged 7 issues of 6 issuers totaling RUR 20.5 bln.
Rosbank and its affiliates continue to benefit from a sound liquidity position and solvency ratio among the best in Russia, well above regulatory requirements. Solvency ratios (N1) as of April, 1, 2016: Rosbank at 14.9%, Rusfinance Bank at 16.7% and DeltaCredit Bank at 12.4% (vs. 8% regulatory minimum starting January 2016).
Importantly, Central Bank of Russia has confirmed Rosbank’s position in list of 10 systemically important banks (SIBs), indicating its high level of financial reliability and soundness.
These strengths are reflected in SG Russia ratings which are among the best in the Russian banking sector. Both Fitch Ratings and Moody’s Investors Service have affirmed Rosbank’s, Rusfinance and DeltaCredit ratings in 2016.
In 2016, we will continue to adapt our business to meet current constraints and to prepare for improving economic conditions. Our strategic priorities can be summarized as follows:
- Attract new customers and deliver quality services to our clients.
- Continue to roll out Rosbank daily banking model and develop our two specialized brands: DeltaCredit for mortgage lending and Rusfinance for consumer finance.
- Keep corporate business momentum.
- Prudent risk approach: Focus on best corporate names; strict risk criteria on retail lending; strategic focus on payroll clients.
- Further increase operational efficiency through streamlining of our organization and implementation of our critical projects.
These initiatives will lead to further loss reduction and a progressive return to profitability as conditions improve, in a banking market with strong potential.