Russian Agricultural Bank (RusAg, the Group) announces its interim condensed consolidated financial results for 3M 2020 according to International Financial Reporting Standards (IFRS).
“RusAg delivers the business model of a universal commercial bank while also functioning as the core industry bank. As in previous years, our key task is support of agribusinesses and rural residents. In Q1 2020 we have increased lending to agribusiness and issuance of state subsidized mortgage loans under the Integrated Rural Territories Development Program. In the current environment, we estimate that most agrarians will face difficulties and lots of them will need support. On the other hand, we can see a few opportunities opening up for agricultural producers. Therefore, we expect demand for lending to rise in the nearest term,” Kirill Levin, First Deputy Chairman of the Board at RusAg, said.
In the reporting period the Group showed upward dynamics across its core businesses ensuring both corporate and retail loan growth, while continuing to build a sizeable and stable funding base. Moreover, the Group has successfully maintained the level of operating efficiency and the bottom-line result.
In Q1 2020 the Group’s gross loan portfolio went up 4.7% (+RUB 116.4 billion) reaching RUB 2.587 trillion. Corporate loans (including loans to customers measured at fair value through profit or loss) rose by 5.6% (+RUB 112 billion) from YE2019 and totaled RUB 2.110 trillion. Retail loans grew by 1.0% (+RUB 4.5 billion) to RUB 478 billion from YE2019.
As at 31 March 2020 the Group’s assets totaled RUB 3.515 trillion. In Q1 2020 the Group’s assets grew 9.3% (+RUB 299.7 billion).
Deposits and customer accounts in 3M 2020 grew by 11.4% (+RUB 282.4 billion) and added up to RUB 2.769 trillion. Corporate customer accounts came in at RUB 1.525 billion, expanding by 17.8% (+RUB 230.7 billion). Retail deposits and customer accounts grew 4.3% (+RUB 51.7 billion) from YE2019 and amounted to RUB 1.243 trillion.
The share of customer funding in the Group’s total liabilities stood at 83.3%. The Group’s loan-to-deposit (LTD) ratio stood at 94% as at 31 March 2020.
In Q1 2020 net interest and fee and commission income grew by 11% to RUB 23.7 billion from RUB 21.4 billion year-on-year. Net interest margin stayed flat year-on-year. In the reporting period, the Group’s Cost/income ratio (operating expenses divided by net operating income (before allowance for credit losses)) stood at 57%.
In Q1 2020 the Group earned a net profit of RUB 618 million.
The Group’s equity amounted to 191.4 billion as at 31 March 2020.
The Group’s capital adequacy ratio (N1.0) (under the Bank of Russia requirements) stood at 14.7% as of 1 April 2020.
“Amid the spread of the pandemic caused the novel coronavirus infection COVID-19, a slump in global energy commodity prices and increased volatility in the global financial markets, the key economic industries have seen the first signs of diminished business activity. In such environment, the Russian Government and the Bank of Russia have worked out a set of measures to ensure comprehensive support of economy, financial sector and individuals. These measures have yielded immediate results, however the size of losses arising from the temporary shutdown of production can be objectively assessed at each stage as the business activity recovers. RusAg, for example, as part of the State subsidized mortgage lending program 2020 reduced interest rates down to 5.9% p.a.”, Kirill Levin said.
According to Kirill Levin, RusAg came up to this instability period well prepared, continuing uninterrupted operations and offering its clients the full range of traditional banking services while also developing hi tech remote banking services. “Despite the fact that Russian agrarians appear to be less vulnerable to the negative effects of the current crisis as compared to a number of other sectors we will be able to gauge such impact on our clients at later stages. We will adjust our business plans based on such assessments. Our solid market positions lay the groundwork for further implementation of our strategy with focus on complex support of production and increase in Russian agribusiness exports,” Kirill Levin added.