Printer Friendly

Uralsib - Bank St Petersburg: 2Q11 IFRS review - Sep 13, 2011.

Mixed Bag of Results

2Q11 IFRS review

ROAE above 30% though partially driven by one-off gain. Bank St Petersburg (BSPB RX - Buy) released mixed 2Q11 results with net income 10% above consensus and in line with our estimates at RUB2.4 bln ($86 mln), up 15% QoQ. Net interest income rose 8% QoQ, reflecting a stabilization in NIM and providing stable core income growth (8% QoQ and 13% YoY). In addition, though not releasing provisions, the bank reduced its provisions charge by 70% QoQ, driving COR down to 0.4% versus 1.4% for 1Q11. Also, as we expected, the bank posted a one-off gain of RUB879 mln on the revaluation of MICEX shares. However, opex growth slightly exceeded our expectations with cost/income climbing to 39% from 26% in 1Q11. The bank posted around 31% ROAE in 2Q11, setting a new record, however, removing the revaluation one-off leaves it at only 19%. Nevertheless, we see the results as moderately positive, and during the conference call scheduled for later today we will focus on management's outlook on 2H11, including potential trading losses, lending growth and a possible provisions release.

(To view the original document, please click on the link below:

http://reports.aiidatapro.com/UralSibEN/110913_BSPB_2Q11_review.pdf)

Better asset quality; CAR yet to improve. The bank posted around 2% QoQ lending growth, which led NIM to rise

marginally to 5.1% in 1H11 from 5% in 1Q11. NPLs dropped 9% QoQ in absolute terms, reducing the NPL ratio 60 bps

QoQ to 4.6%. Provisions also contracted 3% QoQ, despite the provisions charge, and the LLP ratio lost 50 bps QoQ to

9%. This increased the coverage ratio to 196% from 182% in 1Q11, and we still do not rule out the bank will release some provisions in 2H11. Tier-1 CAR remained flat at 9.7%, despite the strong ROAE as in 2Q11 the bank declared RUB794 mln ($28 mln) in dividends for 2010. We expect the additional share issue to support CAR in 3Q11.

Discount unreasonably wide. The stock has lost more than 20% since the beginning of August with only Nomos Bank

being hit worse. It is currently trading with a 2011E P/BV of 1.1, offering a 29% discount to EM peers. It has also underperformed Vozrozhdenie Bank recently and is currently trading in line with it on 2011E P/BV and 2012E P/BV. We

see this as unjustified given Bank St Petersburg's 2011E ROAE of 26% versus only 11% for Vozrozhdenie and believe some premium would be more reasonable. We reiterate our Buy recommendation for Bank St Petersburg with a target price of $7.0/share and 89% upside.

***

Copyright: URALSIB Capital, All rights reserved.

For further Information please contact: URALSIB Capital, Efremova St, Moscow, Russia,119048

phone:+7(095)788-0888 , fax: +7(095)785-1206

www.uralsibcap.com
COPYRIGHT 2011 AII Data Processing Ltd.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2011 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Russian Banks and Brokers Reports
Geographic Code:4EXRU
Date:Sep 16, 2011
Words:477
Previous Article:Uralsib - CTC Media: Stock Fundamentally Cheap, But Likely To Stay Volatile - Sep 13, 2011.
Next Article:Veles Capital - Daily review - Sep 16, 2011.
Topics:

Terms of use | Privacy policy | Copyright © 2020 Farlex, Inc. | Feedback | For webmasters