In the first nine months of 2018, the net cumulative loss of the Agricultural Bank (RSHB) reached 15.16 billion rubles, according to IFRS. During the first half of the year, the state bank lost only 1.8 billion rubles, it suffered the main losses in the third quarter - 13.34 billion rubles.
In July - September, RSHB increased allocations to reserves - 19.34 billion rubles, while in the first two quarters the bank formed reserves of only 23.24 billion rubles. In the third quarter, the amount of additional reserves turned out to be more than the net interest income (18 billion rubles).
Of these 19.34 billion rubles. about 7 billion the bank allocated for problem loans - those that are referred to in IFRS 9 to the third stage, i.e., to impaired loans, says Moody’s analyst Svetlana Pavlova.
Back in the spring, the deputy chairman of the board of RSHB, Kirill Levin, promised that this year the bank will receive a positive result, but he did not mention specific indicators. Last year, the state bank ended up with a net loss of 19.5 billion rubles.
“We were moving to break even IFRS. We consider this direction to be targeted, but this quarter we had several clients, where we felt that we needed to reduce the risk, ”Levin said on a teleconference on Friday. He explained that RSHB had sold several loans to the “better risk-taker”, and since the risk was reduced, the rates were also reduced: “This led to an estimated loss”. Levin pointed out that this is a one-time loss and the state bank consciously made this decision.
However, now it is not necessary to wait for a positive result for the year. According to Levin, RSHB will complete the year with approximately the same losses as there are following the results of nine months. He believes the correct figure for a loss of 9.57 billion rubles. (net loss for the period), and the difference with the figure of 15.16 billion rubles. (cumulative loss) explains unrealized losses of the bank from investing in government securities.
“We will try to close the fourth quarter positively. But if there is a choice between preserving the viability of the borrower, preserving jobs and the life of the enterprise and a formal loss under IFRS, we will probably choose the first, ”said Levin.
The “capital to assets” ratio at RSHB amounts to 4% at the end of the third quarter, which is quite a low figure, Pavlova says, and notices that the state has already promised support to the bank.
This year, the state has already replenished RSHB capital by 5 billion rubles, another 15 billion rubles. the bank has attracted by issuing perpetual subordinated bonds. “By the end of the year, we are waiting for another 20 billion rubles. from state to capital. Plus, we close the deal for 5 billion rubles. with perpetual bonds at a rate of 10.1% - this money will be accounted for in additional capital. We are also looking for other opportunities [to replenish capital] in the market, ”Levin announced. In early November, the Central Bank registered 30 issues of perpetual subordinated bank bonds worth 90 billion rubles. and 10 more issues for $ 500 million.
In 2019, the government plans to allocate 15 billion rubles for the additional capitalization of RSHB, in 2020 - another 10 billion rubles, which follows from the government’s amendments to the budget for 2019–2021.
“It seems that the state does not capitalize the state bank for business growth, but for it to close the old problems and put its balance in order,” said Karina Artemyeva, an analyst at the National Rating Agency. Along with the growth of state support, the cost of risk will also grow for some time: the bank works with a portfolio and builds reserves, she continues. “Given the scale of the business, this is not a one-time procedure, but a gradual and slow process. Given the state’s plans to replenish the capital of the RSHB, we can assume that next year the bank will continue to clear the balance sheet, and in a year it will probably be more focused on asset growth, ”concludes Artemyeva.