Ru
Войти в личный кабинет
Москва
К
С
П

Ваш город Москва?

Да
Нет

DOM.RF’s ROE under the IFRS grows 1.2 times in 1H 2018, from 9.5% to 11.0%

DOM.RF’s ROE under the IFRS grows 1.2 times in 1H 2018, from 9.5% to 11.0%
RUB 5,7 bn

was net profit, which decreased by RUB 1 bn, or 14.5% y-o-y;

11 %

was ROE, going up from 9.5% y-o-y;

14,8 %

сwas capital adequacy ratio1 Equity to assets. ; vs 15.0% as at 31 December 2017.

Acting upon decisions made by the Praesidium of the Presidential Council for Strategic Development and Priority Projects to implement a roadmap approved by Dmitry Medvedev, the Prime Minister of the Russian Federation, DOM.RF works together with the Bank of Russia, the Ministry of Finance and leading Russian banks to implement a mechanism for the integrated housing development institution to guarantee special-purpose developer loans.

«Once implemented, the mechanism will pave the way for a smooth transition to project financing mechanisms, complementing other measures of the roadmap to ensure continuous funding of the housing development industry and help lending volumes grow to RUB 3.5–4 tn from RUB 700 bn over the next 3–4 years. This successful launch is necessary to achieve housing development goals outlined in the Presidential Decree on National Goals and Strategic Objectives of the Russian Federation through 2024 and for the near future. It is a top priority for us,»
said DOM.RF’s CEO Alexander Plutnik.

«In 2018, the ongoing financial rehabilitation of Rossiysky Capital, a bank integrated into AHML at the end of 2017, as well as a project to house certain ministries under a single roof, put some pressure on our financial performance. Nevertheless, a constant focus on operational efficiency and creating economically viable products helped DOM.RF increase ROE by 1.2 times to 11.0%. For a fourth consecutive quarter, we managed to deliver ROE above the targets set in our strategy and long-term development program,»
said Alexander Plutnik.

Financial highlights
Metric, RUB m 1H 2018
1H 2017
Change in absolute terms
Change, %
Net interest income
10 142 9294 848 9,1
Reversal of provisions for credit losses on debt financial assets
440 382 58 15,2
Net operating income for acting as the agent of the Russian Federation 2 Fee for acting as the agent of the Russian Federation, expenses associated with acting as the agent of the Russian Federation, and reversal of provisions (provisioning) for contingent liabilities associated with activities of the agent of the Russian Federation. 1843 1087 756 69,5
Net fee and commission income
937 77 860 1116,9
Income less expenses on transactions with investment property
134 283 (149) (52,7)
Gross profit from other activities
89 89
Other non-interest income 3 Income less expenses from financial instruments at fair value through profit or loss, income less expenses from transactions with investment securities at fair value through other comprehensive income, income less expenses from initial recognition of financial instruments, income less expenses from early redemption of financial instruments, income less expenses from transactions with real estate available for sale, reversal of provisions (provisioning) for impairment of other assets and change in contingent liabilities (excluding those associated with activities of the agent of the Russian Federation), other income less other expenses. 2041 (10) 2051 20 510,0
Operating expenses
(8347) (3225) (5122) 158,8
Net profit
5733 6706 (973) (14,5)
Key financial ratios
Net interest margin (NIM), %
3,2 5,8 (2,6) п.п. (44,8)
Сost-to-income ratio, %
55 30,1 (24,9) п.п. (82,7)
ROE, %
11,0 9,5 1,5 п.п. 15,8

Net interest income

1H 2017
RUB 9294 m
1H 2018
RUB 10 142 m
+ 9,1%

The change in net interest income was a result of a 97.5% increase in average total value of interest earning assets, which grew to RUB 636,324 m in 1H 2018 from RUB 322,236 m in 1H 2017. The increase was partly offset by a 260 bp decline in net interest margin (NIM), to 3.2% from 5.8%, primarily driven by the integration of Rossiysky Capital and its subsidiaries (the «RC Group»), which had a higher average debt to average interest earning assets ratio, into AHML in December 2017. Another driver behind the decline was expenses associated with the purchase of IQ-Quarter, a complex for housing federal executive authorities under a single roof (the «Relocation»).

The change in NIM was driven by the following:

  • a decrease in average return on interest earning assets (from 10.91% in 1H 2017 to 9.89% in 1H 2018) causing a 102 bp decrease in NIM. The change was primarily driven by a decline in return on the Group’s mortgage assets, growth in liquid assets following the RC Group integration, and a lower return on those assets;


  • an increase in average debt to average interest earning assets ratio from 61.69% in 1H 2017 to 90.55% in 1H 2018 causing a 243 bp decrease in NIM (following the RC Group integration and the Relocation financing efforts);


  • a 92 bp decrease in cost of debt (from 8.33% in 1H 2017 to 7.41% in 1H 2018) causing a 85 bp increase in NIM.

The cost-to-income ratio deteriorated due to the consolidation of the RC Group’s results starting in 2018 (the RC Group’s 1H 2018 cost-to-income ratio was above 76%, causing a 22 pp increase in the Group’s ratio) and the Relocation financing efforts (causing a 2.5 pp increase in cost-to-income ratio).

Reversal of provisions for credit losses on debt financial assets

1H 2017
RUB 382 m
1H 2018
RUB 440 m
+ 15,2%

Other non-interest income

1H 2017
RUB 10 m
1H 2018
RUB 2041 m
+ 20 510,0%

The change in other non-interest income was primarily driven by the following:

  • income of RUB 998 m from the sale of investment securities measured at fair value through other comprehensive income recognised in 1H 2018 (vs RUB 138 m in 1H 2017);


  • a reversal of RUB 537 m in other provisions in 1H 2018 (vs RUB 42 m of other provisions made in 1H 2017);


  • net income of RUB 349 m from transactions with real estate available for sale (primarily from the disposal of real estate) recognised in 1H 2018 (vs RUB 39 m in 1H 2017).

 
Metric, RUB m 1H 2018
1H 2017
Change in absolute terms
Change, %
Net income from transactions with investment securities at fair value through other comprehensive income
998 138 860 623,2
Reversal of other provisions / (provisioning)
537 (42) 579 1378,6
Net income from transactions with real estate available for sale 349 (39) 388 994,9
Net income from early redemption of financial instruments
180 149 31 20,8
Net income from initial recognition of financial instruments
73 (252) 325 129,0
Net expenses from financial instruments at fair value through profit or loss
(18) 80 (98) (122,5)
Other net expenses
(78) (44) (34) (77,3)
Total other non-interest income 2041 (10) 2051 20 510,0

Operating expenses in 1H 2018 increased by 158.8%, or RUB 5,122 m y-o-y, to RUB 8,347 m. The change in operating expenses was driven by the following:

  • growth in employee compensations by 181.2%, or RUB 3,037 m, including RUB 2,583 m associated with the RC Group integration;


  • growth in real estate rental and maintenance expenses by 351.0%, or RUB 537 m y-o-y, including RUB 459 m associated with the RC Group integration;


  • growth in expenses on third-party professional services by 157.7%, or RUB 309 m y-o-y, including RUB 82 m associated with the RC Group integration and an increase in consulting, appraisal, legal and accounting expenses;


  • growth in depreciation and amortisation expenses by 167.3%, or RUB 251 m y-o-y, including RUB 139 m associated with the RC Group integration.

 
Metric, RUB m 1H 2018
1H 2017
Change in absolute terms
Change, %
General and administrative expenses
(7279) (2391) (4888) 204,4
Servicing and depository fees
(861) (775) (86) 11,1
Integration expenses
(207) (59) (148) 250,8
Total operating expenses
(8347) (3225) (5122) 158,8
Balance sheet highlights
Metric, RUB m
30 June 2018
1 January 2018
31 December 2017
Change in absolute terms 30 June / 1 January
Change, %
Interest earning assets
594 661 677 989 682 961 (83 328) (12,3)
Mortgage lending to individuals
318 207 322 808 324 820 (4601) (1,4)
Mortgage-backed securities (MBS) 4 Mortgage-backed bonds at amortised cost, including those pledged under repo agreements. 58 285 69 482 69 722 (11 197) (16,1)
Liquid assets 5 Cash and cash equivalents, including amounts due from credit institutions. 35 807 54 221 54 237 (18 414) (34,0)
Securities 6 Securities at fair value through other comprehensive income, investment securities at amortised cost. 72 514 80 305 81 146 (7791) (9,7)
Other loans and borrowings
109 848 151 173 153 036 (41 325) (27,3)
Investment property
16 467 16 414 16 414 53 0,3
Non-current assets held for distribution
27 000 21 154 21 840 5846 27,6
Total assets
680 697 762 632 767 447 (81 935) (10,7)
Due to financial institutions
16 936 47 075 47 075 (30 139) (64,0)
Due to customers
179 163 217 948 217 948 (38 785) (17,8)
Bonds and promissory notes issued
254 324 260 767 260 767 (6443) (2,5)
Other borrowed funds
53 475 55 615 55 615 (2140) (3,8)
Subordinated loans
34 601 32 423 32 423 2178 6,7
Provisions
22 366 29 445 27 527 (7079) (24,0)
Total liabilities 580 183 654 113 652 195 (73 930) (11,3)
Equity 100 514 108 519 115 252 (8005) (7,4)
Contractual and contingent liabilities
126 982 163 990 165 908 (37 008) (22,6)
Key financial ratios
Mortgages and stabilisation loans 90+ dpd (NPL), %
3,0 3,4 3,3 (0,4) п.п. (11,8)
Provision for impairment of mortgages and stabilisation loans to NPL, %
115,1 109,4 91,1 (5,7) п.п. 5,2
Capital adequacy ratio7Securities at fair value through other comprehensive income, investment securities at amortised cost., % 14,8 14,2 15,0 0,6 п.п. 4,0

On 1 January 2018, a new international financial reporting standard IFRS 9 Financial Instruments came into effect. It requires reclassification of certain financial instruments and recalculation of comparative balances. Hereinafter all changes in AHML’s metrics are provided in accordance with IFRS 9.

As at 30 June 2018, interest earning assets decreased by 12.3%, or RUB 83,328 m from the beginning of the year, totalling RUB 594,661 m. The change was attributable to:

  • decrease in other loans and borrowings by 27.3%, or RUB 41,325 m from the beginning of the year;


  • decrease in liquid assets, including cash and amounts due from financial institutions by 34.0%, or RUB 18,414 m from the beginning of the year;


  • decrease in the MBS portfolio measured at amortised cost by 16.1%, or RUB 11,197 m from the beginning of the year due to the amortisation of the portfolio;


  • decrease in the portfolio of other securities by 9.7%, or RUB 7,791 m.

As at 30 June 2018, the portfolio of mortgage assets decreased by 4.0%, or RUB 15,798 m from the beginning of the year, to RUB 376,492 m. The changes in the portfolio of mortgage assets were due to:

  • decrease in housing mortgage loans to individuals by 1.4%, or RUB 4,601 m from the beginning of the year;


  • decrease in the MBS portfolio measured at amortised cost by 16.1%, or RUB 11,197 m from the beginning of the year due to the amortisation of the portfolio.

As at 30 June 2018, other loans and borrowings decreased by 27.3%, or RUB 41,325 m from the beginning of the year, to RUB 109,848 m, primarily as a result of a decrease in commercial loans.

As at 30 June 2018, provisions for credit losses on interest earning assets decreased by 0.1%, or RUB 40 m from the beginning of the year, totalling RUB 66,584 m.

As at 30 June 2018, investment property increased by 0.3%, or RUB 53 m from the beginning of the year due to revaluation, totalling RUB 16,467 m.

As at 30 June 2018, liabilities decreased by 11.3%, or RUB 73,930 m from the beginning of the year, totalling RUB 580,183 m. The decrease in liabilities was attributable to:

  • decrease in amounts due to customers by 17.8% or RUB 38,785 m from the beginning of the year caused by the withdrawal of funds by individuals;


  • decrease in amounts due to financial institutions by 64.0%, or RUB 30,139 m from the beginning of the year due to reduced liabilities under direct repo transactions with other counterparties;


  • decrease in provisions by 24.0%, or RUB 7,079 m from the beginning of the year due to their partial repayment.

As at 30 June 2018, contractual and contingent liabilities decreased by 22.6%, or RUB 37,008 m from the beginning of the year to RUB 126,892 m primarily as a result of closing the limits on undrawn credit facilities.

As at 30 June 2018, the capital adequacy ratio stood at 14.8% versus 15.0% as at 31 December 2017.

AHML’s credit ratings are shown in the table below:

ACRA National
Fitch International
2017 BBB-
2018 BBB-

Standard & Poor’s International
Moody’s International