VEB.RF Reports Net Profit of RUB 22.7 bn for Q1 2021

VEB.RF published its interim condensed consolidated financial statements prepared in accordance with IFRS as at 31 March 2021.

“We are pleased to report a net profit of RUB 22.7 bn for the VEB.RF Group for the first quarter of 2021 in accordance with IFRS. At the end of the first three months we observe the growth in the loan portfolio, net interest income and fee and commission income.

Support for business during the pandemics remains high on our agenda. Guarantees issued by VEB.RF against interest-free and low-interest loans for commercial banks enabled companies to retain jobs and resume operations. We can see the results of our efforts. We note the general trend for improved performance of our borrowers.

With support from the Russian Government, VEB.RF is vigorously building up its new portfolio of high-quality projects in infrastructure, industry, exports and urban development. Liquidity and capital adequacy ratios allow VEB.RF to be actively involved in priority business areas,” VEB.RF Chief Financial Officer Andrey Moskovskikh said.  

Key financial results of the VEB.RF Group in Q1 2021:

- In the first quarter of 2021, the VEB.RF Group made a profit of RUB 22.7 bn against a loss of RUB 22.5 bn as compared to the corresponding period of last year.

The positive financial result was driven by:

• net operating income of RUB 33.9 bn;
• reversal of allowance for expected credit losses of RUB 16.7 bn. In the corresponding period in 2020, the allowance for ECL was charged in the amount of RUB 10.5 bn;
• the decrease in non-interest expense from RUB 51.7 bn in Q1 2020 to RUB 26.0 bn;

- Operating income (net of allowances) was RUB 33.9 bn in Q1 2021, or RUB 9.2 bn less than in Q1 2020.

• The decrease in operating income was attributable to the decrease in non-interest income to RUB 13.0 bn against RUB 33.0 bn in Q1 2020. The dynamics is related, among other things, to the loss on initial recognition of guarantees issued in Q1 2021 on preferential terms as part of the new state COVID-19 rescue scheme.
• Net interest income grew to RUB 3.0 bn in the reporting period (Q1 2020: RUB 0.7 bn) largely as a result of the decrease in interest expense on amounts due to banks, the Government of the Russian Federation and the Bank of Russia due to reduced liabilities and interest expense on debt securities issued because of lower interest rates in debt markets.
• Net fee and commission income also went up from RUB 2.3 bn in Q1 2020 to RUB 9.2 bn in Q1 2021 due to the amortisation of loss on initial recognition of guarantees issued as part of the state anti-crisis programme.

- The VEB.RF Group’s assets decreased by 4.4% (–RUB 150.9 bn) against the beginning of the year to RUB 3,255.2 bn as at 31 March 2021. The amounts of reverse repurchase agreements with non-banking credit institutions for up to 90 days went down, brought about by the decrease in idle cash balances largely due to the increase in the loan and leasing portfolios and settlement of VEB.RF’s obligations as at 31 March 2021.

- As compared to the beginning of 2021, the loan portfolio (net of provision for impairment) increased by 5.8% (+RUB 67.4 bn) to RUB 1,236.5 bn. The leasing portfolio grew by 11.3% (+RUB 19.9 bn) to RUB 195.7 bn. In total, the loan and leasing portfolios account for 44.0% of the Group’s total assets.

- The loans granted by VEB.RF in Q1 2021 totalled RUB 89.6 bn. Investment priority sectors were industry, infrastructure and urban economy as well as export support.

- Allowance for expected credit losses was reversed in the amount of RUB 16.7 bn in Q1 2021. The allowance for financial guarantees was reversed in the total amount of RUB 8.8 bn largely due to the decrease in guarantees issued under the state support programme for business during the pandemics. The loan loss provision was reversed for RUB 4.4 bn.  

- The Group’s liabilities decreased by 6.7% (–RUB 181.1 bn) in Q1 2021 to RUB 2,536.0 bn as at 31 March 2021. This dynamics was attributable to the decrease in amounts due to banks by 22.9% (–RUB 136.3 bn) and to the Government of the Russian Federation and the Bank of Russia by 5.5% (–RUB 34.0 bn).

- The Group’s equity went up by RUB 30.2 bn (+4.4%) in Q1 2021 to RUB 719.2 bn as at 31 March 2021. The equity growth was primarily driven by the profit in Q1 2021 and the increase in gains from investment financial assets at fair value through other comprehensive income. There were no changes in the authorised and additional paid-in capital.

- VEB.RF’s capital adequacy ratio in accordance with RAS was 17.0% as at 01 April 2021 (17.0% as at 01 January 2021).