Moscow, August, 27, 2021 — 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 1H2021 as at 30 June 2021..
Key financial indicators of the Gazprombank Group (hereinafter, “the Group”) for 1H2020 / as at 30 June 2021:
[1] Normalized net income is indicated with due regard to the net foreign exchange loss of RUB 12.7 bn on issued perpetual bonds (redeemed in April 2020). The net foreign exchange loss was recognized as capital according to IFRS; all the following indicators for 2020 in this press release were calculated on the basis of normalized net income
[2] Includes gross corporate and retail loans accounted at amortized cost before loan provisioning and also loans accounted at fair value.
RUB, bn.
| 30.06.2021 | 31.12.2020 | Change | |
| Assets | 7,920.5 | 7,530.7 | +5.2% |
| Shareholders’ equity (capital) | 810.5 | 739.3 | +9.6% |
| Cash and cash equivalents | 1,063.1 | 943.4 | +12.7% |
| Loans to corporate customers | 4,841.4 | 4,627.1 | +4.6% |
| Retail loans | 784.9 | 738.8 | +6.2% |
| Securities and investments in associates [3] | 765.0 | 776.5 | -1.5% |
| Corporate customer accounts | 4,644.4 | 4,305.4 | +7.9% |
| Retail customer accounts | 1,570.1 | 1,523.7 | +3.0% |
| Capital market borrowings | 257.1 | 285.1 | -9.8% |
| Subordinated debt | 70.2 | 69.7 | +0.7% |
| 1H2021 | 1H2020 | Change | |
| Net profit | 76.1 | 28.3 | +168.9% |
| Normalized net income* | 76.1 | 15.6 | +387.8% |
| Comprehensive income | 73.1 | 34.1 | +114.4% |
| Normalized comprehensive income* | 73.1 | 21.4 | +241.6% |
| 30.06.2021 / 1H2021 | 31.12.2020 / 12M2020 | Change | |
| Total Capital Adequacy Ratio [4] | 13.4% | 12.7% | +0.7 p.p. |
| Tier 1 Capital Adequacy Ratio | 12.5% | 11.8% | +0.7 p.p. |
| Ratio of non-performing loans [5] (NPL) to gross loans | 1.9% | 2.0% | -0.1 p.p. |
| Ratio of loan loss provisions to gross loans accounted at amortized cost | 3.6% | 4.1% | -0.5 p.p. |
| Loans-to-deposit ratio | 90.5% | 92.1% | -1.6 p.p. |
| ROE | 19.4% | 7.7% | +11.7 p.p. |
| Normalized ROE* | 19.4% | 6.0% | +13.4 p.p. |
| 30.06.2021 / 1H2021 | 31.12.2020 / 12M2020 | Change | |
| ROA | 2.0% | 0.8% | +1.2 p.p. |
| Normalized ROA* | 2.0% | 0.6% | +1.4 p.p. |
| Net interest margin [6] | 2.9% | 2.7% | +0.2 p.p. |
| Cost of credit risk [7] | -0.8% | 0.2% | -1.0 p.p. |
| Cost to income ratio [8] | 49.4% | 55.2% | -5.8 p.p. |
| Cost to normalized income ratio* | 49.4% | 59.1% | -9.7 p.p. |
[3] Including trading securities, investment securities, and investments in associates.
[*] Calculated with due regard to FX loss included in capital as perpetual bonds issued.
[4] In accordance with Basel I Framework.
[5] Loans are deemed “non-performing” if their principal or interest is 90+ days past due, as well as in the event of counterparty default.
[6] 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).
[7] 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.
[8] 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 ended 1H2021 with recorded net income of RUB 76.1 bn and comprehensive income of RUB 73.1 bn. In comparison, normalized net income, adjusted for FX loss included in the capital as perpetual bonds issued, and comprehensive income, including, inter alia, currency revaluations of the Group’s foreign investments, in the same period last year were at RUB 15.6 bn and RUB 21.4 bn, respectively. The Group’s ROE grew by 13.4* p.p. to 19.4% in 1H2021 against that at year-end 2020. ROA was 2.0% in 1H2021 – a rise of 1.4 p.p. against 0.6%* at year-end 2020.
The Group’s net interest income was RUB 96.8 bn in 1H2021, which is 27.0% higher than that in 1H2020 (RUB 76.2 bn), with interest income down 0.6% to RUB 206.0 bn and interest expenses down 16.7% to RUB 109.2 bn. Net interest margin was up 0.2 p.p. to 2.9% in 1H2021.
The Group’s recurring core banking income, including net interest income before loan loss provisions and net commission income, was up 26.1% to RUB 117.3 bn in 1H2021 compared to RUB 93.0 bn year-on-year. Net commission income for the same period (RUB 20.5 bn) was up 22.0% than in 1H2020 (RUB 16.8 bn).
Recurring income in the Group’s operating income accounted for 90.2% against 92.5%* in 12M2020.
Combined income from transactions in securities [9] in 1H2021 totaled RUB 5.8 bn compared to the income of RUB 0.1 bn in 1H2020.
Non-banking segments ended 1H2021 with the operating income of RUB 9.2 bn compared to that of RUB 1.8 bn in 1H2020.
Impacted by the above factors, the Group’s operating income (before provisions for loan loss and impairment of assets) reached RUB 130.1 bn in 1H2021 compared to RUB 96.0* bn in 1H2020.
Operating expenses amounted to RUB 64.1 bn in 1H2021 compared to RUB 55.8 bn in 1H2020. 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 9.7 p.p. to 49.4% compared to 59.1%* at year-end 2020.
Asset quality
Income from loan loss provisions recovery totaled RUB 18.5 bn in 1H2021 compared to loss of RUB 7.9 bn in 1H2020. Positive adjustments of loans and receivables accounted at fair value were RUB 7.3 bn in 1H2021 against the negative adjustment of RUB 5.7 bn in 1H2020.
The Group’s cost of risk (including adjustment of loans and receivables accounted at fair value) dropped to -0.8% in 1H2021 compared to 0.2% at year-end 2020.
NPLs (non-performing loans) in the gross loan book accounted for 1.9% as at 30 June 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 3.6% as at 30 June 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 1.8 times against 2.0 times as at year-end 2020.
Business volumes
The Group’s total assets reached RUB 7,920.5 bn as at 30 June 2021 – up 5.2% against RUB 7,530.7 bn as at 31 December 2020.
In particular, cash and cash equivalents reached RUB 1,063.1 bn as at 30 June 2021 compared to RUB 943.4 bn as at 31 December 2020.
The gross loan book before loan loss provisions was at RUB 5,626.3 bn as at 30 June 2021 − up 4.9% against RUB 5,365.9 bn as at 31 December 2020.
The gross loan book (net of provisions for loan loss and loan adjustments accounted at fair value) in the Group’s total assets was 68.5% remaining at the year-end 2020 level.
In 1H2021, corporate loans were up 4.6% to RUB 4,841.4 bn as at 30 June 2021 against RUB 4,627.1 bn at year-end 2020. Retail loans also showed growth, with their volume up 6.2% in 1H2021 – from RUB 738.8 bn to RUB 784.9 bn as at 30 June 2021.
Mortgage loans form the bulk of the Group’s retail loans, accounting for RUB 413.0 bn as at 30 June 2021 – up 0.8% compared to 31 December 2020. At the same time, mortgage loans share in the retail loan book was down 2.9 p.p. in 1H2021 − from 55.5% to 52.6%. Consumer loans to retail customers [10] grew in 1H2021 from RUB 328.9 bn to RUB 371.9 bn. (up 13.1%).
In 1H2021, the proportion of corporate customers and retail customers in the gross loan book experienced minor fluctuations resulting in the increase of retails loans share by 0.2 p.p. to 14.0% as at 30 June 2021.
The portfolio of securities and investments in the Group’s associates was RUB 765.0 bn as at 30 June 2021, down 1.5% (as at 31 December 2020: RUB 776.5 bn).
Securities and investments in associates share in the Group’s assets was down 0.6 p.p. in 3M2021 to 9.7% 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 was up 0.3 p.p. − from 85.1% to 85.4% in 1H2021.
Amounts owed to financial institutions were down 9.1% in 1H2021 to RUB 292.1 bn (against RUB 321.4 bn at year-end 2020). Amounts owed to financial institutions share in the liabilities was 4.1% as at 30 June 2021 compared to 4.7% as at 31 December 2020.
Corporate and retail accounts grew to RUB 6,214.5 bn as at 30 June 2021 against RUB 5,829.2 bn as at 31 December 2020 (total growth was 6.6%). At the same time, corporate accounts were up 7.9% to RUB 4,644.4 bn as at 30 June 2021 compared to that at year-end 2020 (RUB 4,305.4 bn), and retail accounts were up 3.0% in 1H2021 – from RUB 1,523.7 bn to RUB 1,570.1 bn. Retail accounts in the customer accounts profile edged down (by 0.8 p.p. − from 26.1% at year-end 2020 to 25.3% as at 30 June 2021).
Customer accounts share in the Group’s liabilities was 87.4% as at 30 June 2021 − up 1.6 p.p. (against 85.8% at year-end 2020).
Capital market borrowings as at 30 June 2021 were down to RUB 257.1 bn against RUB 285.1 bn at year-end 2020 (down 9.8%). At the same time, capital borrowings in the resource base declined 0.6 p.p. to 3.6%.
Capital adequacy
The Group’s Basel I total capital based on consolidated IFRS financials amounted to RUB 864.4 bn as at 30 June 2021 − up 8.9% in 1H2021 compared to RUB 793.4 bn at year-end 2020.
Early in 2020, the Group obtained funding from the Gazprom Group in subordinated interest-free demand deposits totaling RUB 40 bn (in 2019 – RUB 90 bn). Since these deposits do not have any maturity date and are interest-free, the Group classified them into the capital in the consolidated statement of financial position, and also as part of Tier 1 capital for the purposes of calculating the capital adequacy ratio. The Central Bank of Russia approved the inclusion of demand and interest-free deposits in the additional capital when calculating capital adequacy in accordance with the national rules.
In July 2020, the bank placed USD 250.25 mln subordinated bonds. The Central Bank of Russia approved the inclusion of the above subordinated bonds in Tier 2 capital when calculating capital adequacy in accordance with the national rules.
At the same time, April 2020 saw the early redemption of USD 1 bn perpetual Eurobonds. July 2020 witnessed the redemption of USD 400 mln subordinated Eurobonds on their maturity date.
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 3.3% to RUB 6,450.6 bn in 1H2021.
Hence, the Group’s capital adequacy indicators as at 30 June 2021 were as follows: the Group’s total capital adequacy ratio at 13.4% (compared to 12.7% at year-end 2020 – a rise of 0.7 p.p. in 1H2021); the Tier 1 capital adequacy ratio at 12.5% (compared to 11.8% at year-end 2020 – a rise of 0.7 p.p. in 1H2021).