Ru
Войти в личный кабинет
Москва
К
С
П

Ваш город Москва?

Да
Нет

AHML’s 9M 2017 net profit under IFRS rises by 18.1% to RUB 11.1 bn

AHML’s 9M 2017 net profit under IFRS rises by 18.1% to RUB 11.1 bn
AHML has published its interim condensed consolidated financial statements for 9M 2017 in accordance with the International Financial Reporting Standards (IFRS). The financial statements include the report on the review conducted by Ernst & Young.
AHML’s key financial highlights for 9M 2017:
  • net profit increased by 18.1%, or RUB 1.7 bn y-o-y, to RUB 11.1 bn;

  • annualised ROE for the period reached 10.4% compared to 9.2% for 9M 2016;

  • as at 30 September 2017, the portfolio of mortgage assets1 grew by 15.5%, or RUB 42.3 bn, totalling RUB 314.4 bn;

  • as at 30 September 2017, the portfolio of rental housing and apartment projects2 grew year-to-date by 75.0%, or RUB 10.1 bn, totalling RUB 23.6 bn;

  • as at 30 September 2017, the capital adequacy ratio3 stood at 32.0% versus 34.6% as at 31 December 2016.

AHML is successfully running the mortgage refinancing programme involving the use of one-tranche mortgage-backed securities. In October 2017, it acquired a mortgage portfolio worth over RUB 48 bn from the VTB Group in the run-up to a new issue; more transactions with Sberbank and leading private banks are currently under preparation. By the year end, AHML’s portfolio of mortgage assets is expected to reach RUB 350 bn, with the volume of one-tranche mortgage-backed securities under the MBS Factory programme exceeding RUB 100 bn.

Mortgage interest rates offered by major lenders plunged to their record lows of 9–9.5%. Now is the right time to get a mortgage and buy a property. At this stage, it is crucial to balance the interests of borrowers and lenders. The State Duma is currently considering two key draft laws providing for the disclosure of the full cost of loans by banks in accordance with the Organisation for Economic Co-operation and Development (OECD) standards and the introduction of an Electronic Mortgage System. This will help cut mortgage loan issuance and servicing costs and mitigate risks by giving the borrower comprehensive information on the loan. In the near future, AHML, the Bank of Russia and experts will start working on responsible mortgage lending standards that all leading market participants will be encouraged to adopt, said AHML’s CEO Alexander Plutnik.

This year, pursuant to Federal Law On the Federal Budget for 2017 and the Planning Period 2018 and 2019, AHML expects to see Rossiysky Capital shares contributed to its authorised capital. On 26 October 2017, the shares held by Deposit Insurance Agency State Corporation were transferred to the Treasury of Russia.

Before the year end, we plan to approve the strategy to transform Rossiysky Capital into a universal mortgage and construction bank. We assume that changes to the laws on shared-equity construction effective from 1 July 2018 will significantly mitigate housing construction risks. In the mid-term, project financing for developers will be one of AHML’s growth points along with mortgage lending. In the horizon of three to five years, we intend to build up our loan portfolio in this segment to at least RUB 100 bn, noted Mr Plutnik.

Financial highlights

9M 2017

9M 2016

Change in absolute terms

Change, %

Net interest income, RUB m  13 783  14 513  (730)  (5,0)
Reversal of provisions / (provisioning) for impairment of debt financial assets, RUB m  802  (2 111)  2 913  (138,0)
Net operating income for acting as the agent of the Russian Federation, RUB m  3 260  1 251  2 009  160,6
Net operating income from investment property, RUB m  302   -  302   -
Other income4, RUB m  263  1 083  (820)  (75,7)
Operating expenses, RUB m  (5 127)  (3 645)  (1 482)  40,7
Net profit, RUB m  11 127  9 418  1 709  18,1

Key financial ratios

Net interest margin (NIM), % 5,7 6,2  (0,5) pp (8,1)
Сost-to-income ratio, % 29,1 21,6 7,5 pp 34,7
ROE, % 10,4 9,2  1,2 pp 13,0
Net interest income for 9M 2017 decreased by 5.0%, or RUB 730 m y-o-y, to RUB 13,783 m. The decrease was due to:
  • a NIM decline by 50 bp (from 6.2% in 9M 2016 to 5.7% in 9M 2017);

  • an increase in average interest earning assets by 3.5% (from RUB 309,864 m in 9M 2016 to RUB 320,588 m in 9M 2017).

The NIM declined because of:
  • a 83 bp decrease in the average return on interest earning assets (from 12.07% in 9M 2016 to 11.24% in 9M 2017) and a subsequent 83 bp decrease in the NIM;

  • an increase in the average debt to average interest earning assets ratio from 59.93% in 9M 2016 to 61.23% in 9M 2017 resulting in a 8 bp decrease in the NIM;

  • a 72 bp decrease in the cost of debt (from 9.72% in 9M 2016 to 9.00% in 9M 2017) and a subsequent 41 bp increase in the NIM;

In 9M 2017, income from reversal of provisions for impairment of debt financial assets totalled RUB 802 m compared to RUB 2,111 m of provisioning expenses in 9M 2016. The change was due to:
  • reversal of the provision for the impairment of the Military Mortgage portfolio worth RUB 517 m with respect to loans that will not be covered by Rosvoenipoteka’s payments by the expiry dates of loan agreements. The decrease in provisioning is due to the limits of maximum floating interest rates on Military Mortgage loans set by AHML's Supervisory Board at 12% per annum for 2017, partial early repayment of loans for RUB 2,663 m from the savings accumulated in the Mortgage Savings System, and lower key interest rate set by the Bank of Russia;

  • an improved credit quality of the mortgage portfolio in 9M 2017;

  • cutting of provisioning expenses for loans issued, including as a result of reversal of provisions in connection with a partial sale of claims against Territoriya-Innopolis in May 2017, by RUB 92 m, or 81.4%, compared to 9M 2016, when the Agency made additional provisions of RUB 125 m due to the non-performance by Territoriya-Innopolis of its obligations on mortgages purchased in 2014.

Other income in 9M 2017 dropped by 75.7%, or RUB 820 m y-o-y, to RUB 263 m. The change in other income / (expenses) was mainly due to:
  • a decrease in net income from transactions with derivative financial instruments by RUB 1,130 m, or 108.4% y-o-y, on the back of reduced liabilities to repurchase mortgage-backed securities, capital market rebounding and overall decrease in bond yields in 2016;

  • a decrease in income from the early redemption of financial assets by RUB 310 m, or 60.2% y-o-y, mainly due to fewer loans issued under the Stimulus programme;

  • a reversal of provisions for contingent liabilities in the amount of RUB 54 m as a result of the discontinued Stimulus programme offering loans at interest rates below the market;

  • an increase in net income from securities transactions by RUB 134 m, or 304.5% y-o-y;

  • a partial reversal of the provision for legal claims associated with acting as the agent of the Russian Federation in the amount of RUB 69 m (compared to provisioning expenses of RUB 364 m in 9M 2016).

 

Metric, RUB m

9M 2017

9M 2016

Change in absolute terms

Change, %

Income from early redemption of financial assets  205  515  (310)  (60,2)
Net income from securities transactions5  178  44  134  304,5
Net income from transactions with derivative financial instruments  (88)  1 042  (1 130)  (108,4)
Net expenses from transactions with real estate available for sale  29  30  (1)  (3,3)
Loss from initial recognition of financial assets  (257)  (230)  (27)  11,7
Provisions for impairment of other assets  (158)   -  (158)   -
Reversal of provisions / (provisioning) for contingent litigation liabilities  69  (364)  433  (119,0)
Reversal of provisions for contingent credit liabilities  54   -  54   -
Other income  231  46  185  402,2

Total other operating income

 263

 1 083

 (820)

 (75,7)

Operating expenses  for 9M 2017 increased by 11.1% (RUB 514 m) compared to the 9M 2016 average, reaching RUB 5,127 m.

Metric, RUB m

9M 2017

9M 2016

Change in absolute terms

Change, %

Employee compensations and contributions to funds  (2 566)  (1 277)  (1 289)  100,9
Professional services  (370)  (213)  (157)  73,7
Depreciation and amortisation  (229)  (236)  7  (3,0)
Rent  (201)  (166)  (35)  21,1
Communication and information services  (135)  (38)  (97)  255,3
Advertising and marketing expenses  (108)  (11)  (97)  881,8
Repair and maintenance  (34)  (108)  74  (68,5)
Charity expenses  (30)   -  (30)   -
Taxes other than income tax  (26)  (92)  66  (71,7)
Other administrative expenses  (12)  (26)  14  (53,8)

General and administrative expenses

 (3 711)

 (2 167)

 (1 544)

 71,3

Rossiysky Capital integration expenses  (151)   - (151)   -
Servicing and depository fees  (1 265)  (1 478)  213  (14,4)

Operating expenses

 (5 127)

 (3 645)

 (1 482)

 40,7

Balance sheet highlights, RUB m

30 September 2017

31 December 2016

Change in absolute terms

Change, %

Interest earning assets, RUB m 341 280 299 893  41 387  13,8
- Mortgages and stabilisation loans, RUB m 246 210 201 375  44 835  22,3
- Mortgage-backed securities (MBS)6, RUB m 68 163 70 696  (2 533)  (3,6)
- Liquid assets7, RUB m 16 551 20 996  (4 445)  (21,2)
- Securities8, RUB m 3 803 2 586  1 217  47,1
- Loans issued, RUB m 6 553 4 240  2 313  54,6
Investment property, RUB m 18 869 13 495  5 374  39,8
Total assets, RUB m 372 136 323 687  48 449  15,0
Liabilities, RUB m 229 155 180 589  48 566  26,9
Equity, RUB m 142 981 143 098  (117)  (0,1)
Contractual and contingent liabilities, RUB m 74 407 89 452  (15 045)  (16,8)

Key financial ratios

Mortgages and stabilisation loans 90+ dpd (NPL), % 3,6 4,6 (1,0) pp  (21,7)
Provision for impairment of mortgages and stabilisation loans to NPL, % 85,5 90,1 (4,6) pp  (5,1)
Capital adequacy ratio9, % 32,0 34,6 (2,6) pp  (7,5)
As at 30 September 2017, interest earning assets increased by 13.8%, or RUB 41,387 m from the beginning of the year, totalling RUB 341,280 m. Changes in interest earning assets are mainly due to the expansion of the mortgage asset portfolio by 15.5%, or RUB 42,302 m from the beginning of 2017 and an increase in loans issued by 54.6%, or RUB 2,313 m. As at 30 September 2017, the portfolio of mortgage assets grew by 15.5%, or RUB 42,302 m from the beginning of the year, totalling RUB 314,373 m. Changes in the portfolio of mortgage assets were due to:
  • expansion of the mortgage and stabilisation loan portfolio by 22.3%, or RUB 44,835 m from the beginning of 2017, mainly attributable to the acquisition of mortgage loans for the purpose of issuing one-tranche mortgage-backed securities guaranteed by AHML;

  • decrease in the MBS portfolio by 3.6%, or RUB 2,533 m;

As at 30 September 2017, loans issued increased by 54.6%, or RUB 2,313 m from the beginning of 2017, totalling RUB 6,553 m. This was mainly due to the loan issued to Rosneftegaz under the rental housing development programme.

As at 30 September 2017, provision for impairment of interest earning assets reduced by 9.3%, or RUB 917 m from the beginning of the year, to RUB 8,930 m. This was mainly due to the reversal of the Military Mortgage provision. As at 30 September 2017, coverage by provisions for the impairment of mortgages and stabilisation loans 90+ dpd decreased by 4.6 pp from the beginning of 2017 to 85.5%.

As at 30 September 2017, investment property  increased by 39.8%, or RUB 5,374 m, totalling RUB 18,869 m. This came on the back of the purchase of rights to the real property in the Symvol Housing Complex located at 11 Zolotorozhsky Val St., Bld. 31, Moscow. The investment property also includes apartments in the Liner Multifunctional Housing Complex located at 2 Khodynsky Blvd., Moscow, and Match Point Multifunctional Complex located at 13 Vasilisa Kozhina St., Moscow.

As at 30 September 2017, liabilities increased by 26.9%, or RUB 48,566 m from the beginning of the year, totalling RUB 229,155 m. The increase was mainly driven by the issuance of one-tranche mortgage-backed securities guaranteed by AHML.

As at 30 September 2017, contractual and contingent liabilities decreased by 16.8%, or RUB 15,045 m from the beginning of the year, totalling RUB 74,407 m. The decrease was due to a RUB 4,960 m reduction in obligations to purchase mortgages and a decrease in sureties for mortgage-backed bonds by RUB 8,670 m, as well as a RUB 2,885 m reduction in obligations to extend loans under the Stimulus programme, with contractual and contingent financial liabilities increasing by the amount of contractual liabilities under the rental housing development programme worth RUB 2,800 m.

As at 30 September 2017, the capital adequacy ratio decreased by 2.6 pp to 32.0%.

AHML's credit ratings as at 30 September 2017 and 31 December 2016 are shown in the table below.

Rating agency

Scale

30 September 2017

31 December 2016

ACRA National AAA AAA
Fitch International BBB- BBB-
Standard & Poor’s International BB+ BB+
Moody’s International Ba1 Ba1

1 Mortgages and stabilisation loans, mortgage-backed bonds classified as loans issued, including those pledged under repo agreements
2 Investment property (rental housing and apartments) and loans issued as part of the rental housing development programme
3 Equity to assets, contractual and contingent financial liabilities
4 Net income / (expenses) from transactions with securities at fair value through profit and loss, net income from transactions with available-for-sale securities, expenses less income from initial recognition of financial assets, income from early redemption of financial assets, net income (expenses) from derivative financial instruments, net income (expenses) from transactions with real estate available for sale, (provisioning) / reversal of provisions for impairment of other assets and contingent liabilities (excluding those related to the transactions of the agent of the Russian Federation), other income
5 Net income from securities transactions at fair value through profit or loss, net income from transactions with available-for-sale securities
6 Mortgage-backed bonds classified as loans issued, including those pledged under repo agreements
7 Cash and cash equivalents, including amounts due from credit institutions
8 Securities at fair value through profit and loss, available-for-sale investment securities
9 Equity to assets, contractual and contingent financial liabilities