Petrocommerce spoiled the portfolio
The loan portfolio of the banking group “Discovery” in 2015, increased from 1.78 trillion to 2.56 trillion rubles, according to the published IFRS financial statements. The main growth came in the reverse REPO, the volume of which for the year doubled, from 782 billion to 1.57 trillion rubles In loans to the corporate sector grew less markedly (from 834 billion to 861,9 bn) and retail portfolio for the year decreased by $ 7 billion to 201 billion rubles.
“This is because we had no objectives to increase active operations”, — said financial Director FK “Opening” Sergey Kovtun. In 2016, according to the banker, the Bank also plans to increase its loan portfolio. “We’re not going to build the whole portfolio, but will due to repayment of old loans to issue loans to priority sectors, to comply with the terms of the DIA, which provided banks with assistance via OFZ bonds on the capital increase”, — he said.
The share of non-performing loans (NPL) in the portfolio of the banks group “Discovery” grew from 2.6 to 4.9%. The most significant increase of delay is observed in the corporate segment, in comparison with the year 2014 the volume of loans overdue more than 90 days (before provisions) has increased from 22.9 billion to 84.9 billion rubles, the Growth of problem loans in addition to the deterioration of the economic situation, the Bank communicates with connection in March 2015 Bank Petrocommerce, which, according to Kovtun, the share of arrears was significantly higher than that of other banks of the group, — “FC Opening” and “Opening of BKM”. “We expect that in 2016 the growth delay may continue, but will not be significant,” he said.
“The asset quality of the banking group deteriorated slightly during the year, including those connected with the accession of the Bank “Petrocommerce”, which has remained problems with the quality of the portfolio since the crisis of 2008-2009,” says S&P analyst Roman Rybalkin. According to him, given the fact that on a number of problem loans the Bank has collateral in the form of real estate, overall Bank losses may not be as significant.
The disputed reserves
Last year, the banking group is actively formed reserves on the loan portfolio. According to Kovtun, the ratio of provisions to total loan portfolio rose from 2.2 to 3.4%. “We built up reserves in 2015. The banking group has accrued more than 40 billion in reserves, as a result, the cost of risk (cost of risk) amounted to about 4%. This is the largest allocations to reserves that have produced the group’s banks in its history”, he said.
Moody’s analyst Peter] noted an increased level of cost of risk of the credit portfolio of “Opening”, which is 4.7% excluding loans granted by the Bank to customers reverse repurchase operations. In addition, he notes that the reservation of the loan portfolio at the “Open” lower than comparable banks. Assessment paklina, the level of coverage of bad loans (substandard, doubtful and past due over 90 days) increased from 33% in 2014 to 46% by the end of 2015. “On average, for universal banks, the figure is around 70%,” he says.
Kovtun with this approach to the evaluation of “problem loans” do not agree. “Under “problem loans” the Bank understands only the loans overdue more than 90 days, coverage of provisions amounts to 74,9%, he says. — Doubtful loans and non-standard is absolutely normal loans in which the reservation can reach 2-5%”.
Analyst BKS Yulia Malcova said that if we compare the level of coverage of overdue loans with other major banks, then “Open” it is significantly lower. For example, the coefficient backup overdue for more than 90 days from Alfa-Bank amounts to approximately 94%, Sberbank — about 120%. “The convenience from the point of view of credit quality is a more conservative indicator value above 100% depending on the level of provisioning and the amount of other loans with signs of impairment, however, the negative dynamics of the level of coverage of overdue reserves in General is now very typical for the market,” says the analyst.
Kovtun objected, noting that according to different loans can be different providing and the expectations of the Bank for repayment of these loans may vary as well. “So you can’t just compare two figures from different banks. The question is, how much the Bank expects to return on loans. Someone cover can approach 100% and this is not enough, and in other banks loans issued under such a provision. We believe that the level of coverage, which is at the banks group “Discovery” on loans, sufficient from the point of view of the expectations for their recovery,” said Kovtun.
According to Meltaway, the difference in redundancy in comparison with other banks can really be explained by the fact that the problem loans can be secured by appropriate collaterals. “However, there is a risk that in the future the Bank will still have to doodwali loan loss provisions and to maintain the increased cost of risk,” notes the analyst.
The difference between accrued and received interest income of the “Opening” is 15%. According to the IFRS, in 2015, interest income of the group “Discovery” amounted to 239.9 billion rubles, while the banks received the group’s interest income amounted to 204 billion rubles a Year ago the difference between accrued and received interest income was 4%. “This may mean that borrowers are “Open” or have received a deferral of interest payments, or worse and worse service credits. It can be not only restructuring in the form of deferred, but also a reflection of increasing arrears in the portfolio — the borrower is not repay the interest and the body credits”, — said the Deputy Director of “Interfax-CEA” Alexey Buzdalin.