IFRS Financial Results for 12M2024

Key Results

• Assets expanded by 7.3% to RUB 5,009 bln as total loan portfolio grew by 14.8%.
• Net corporate loan portfolio expanded by 15.4% The bank focused on financing reliable borrowers in the key sectors of the Russian economy and offered products tailored to the market situation. A substantial slowdown in 4Q was caused by the toughening of the CBR’s monetary policy.
• Retail deposits expanded by notable 30.2%, in line with MKB’s strategic liquidity management goals and ahead of the market on average.
• Basel III total capital adequacy ratio stood at 11.8%.
• Net income was RUB 20.9 bln. The decrease compared to 2023, which set an all-time record for the bank, was expected. This was due to general market trends, such as narrowing margins across the banking sector and corporate lending slowdown, as well as to one-off regulatory factors.
• Return on capital (ROAE) was 7.0%.
• Cost-to-income (before provisions) ratio (CTI) was 37.2%.
• Net interest margin stood at 2.3%.
• ACRA affirmed A+(RU) credit rating with stable outlook in October 2024.
• In December 2024, Expert RA upgraded MKB’s rating to ESG-II(b) and assigned ESG-A rating on the Bank of Russia’s scale with a stable outlook.
• In December 2024, RAEX upgraded MKB’s ESG rating to АА with a score of 86.87 points out of 100.
• MKB arranged 96 domestic DCM transactions. Total face value of placed bonds exceeded equivalent of RUB 1.5 tln.
• MKB headed two domestic rankings of Cbonds Awards 2024[1]:
• #4 arranger of replacement bonds, 11% market share;
• #6 arranger of publicly placed issues, 5% market share.
• MKB continues to expand its factoring portfolio and dominate international factoring sector: #1 by import factoring portfolio and #2 in export factoring segment.
• Active retail customer base expanded by 12%, while number of customers in premium retail segment rose by 36%.

Income Statement Analysis

Net income for the 12 months of 2024 was RUB 20.9 bln. The profitability was under heavy pressure from one-off developments (of both market and regulatory nature): negative revaluation of the securities portfolio as the Bank of Russia toughened its monetary policy and provisions charged for blocked assets.  As at 31 December 2024, 84% of the securities portfolio was on the CBR's Lombard List.

Return on equity and assets was 7.0% and 0.4% as at the end of the reporting period, respectively.

Provisioning charges for debt financial assets amounted to RUB 41.6 bln, which corresponds to the cost of risk of 130 bps. The growth of provisions was largely driven by a change in CBR’s approach to treating blocked assets.

Net interest income shrank by 8.9% yoy to RUB 105.8 bln. Net interest margin was 2.3%, in line with the downward market trend, as the competition for liquidity in the deposit market exacerbated.

Net fee and commission income was RUB 12.7 bln for 12M2024. The bank focused on documentary operations for corporates and invested in customer loyalty, yielding a more active retail customer base. That income was also affected by the closure of inefficient segments of the cash collection franchise.

Operating expense increased by 3.0% to RUB 41.5 bln. The bank invested in digitalisation and import replacement, while making sure its operating expenses grew below the inflation. Cost-to-income (CTI) ratio was 37.2%.

Balance Sheet Analysis

Total assets rose by 7.3% and reached RUB 5.0 tln, mainly because the loan portfolio increased by 14.8% (13.2% net of currency revaluation).

The net corporate loan portfolio expanded by 15.4% ytd (13.6% net of currency revaluation) to RUB 2,480.0 bln. The bank continues to focus on its loan portfolio’s sectoral diversification, increasing exposure to such sectors as transport services (+244%), food and agricultural products (+56%), mining of precious metals and ores (+49%); industrial machinery and equipment (+40%); chemicals (+36%), clothes, shoes, textile, sporting goods (+22%).

As its retail customers prefer saving, MKB's net retail loan portfolio expanded by moderate 8.5% ytd to RUB 217.6 bln.  

The ratio of non-performing loans (NPL 90+) was 3.2%. The LLP/NPL coverage ratio was at a comfortable level of 132.5%.

Customer deposits, representing 68% of the total liabilities or RUB 3,178.5 bln, expanded by 11.1% yoy.

Corporate deposits increased by 3.9% to RUB 2,155.6 bln.

Retail deposits rose by 30.2% yoy to RUB 1,022.9 bln. MKB continues to offer highly competitive terms in the retail deposit market, diversifying its funding base and sticking to its strategic liquidity management goals.

Loan-to-deposit ratio (LDR) stands at the optimal level of 84.9%.

The core Tier 1 capital adequacy ratio was 8.1% as at 31 December 2024, the tier 1 capital adequacy ratio was 10.0%, and the total capital adequacy ratio was 11.8%.

MKB enjoys a wide safety margin over the Bank of Russia's regulatory capital adequacy ratios.

[1] According to Cbonds’ Bookrunner League Table of Local Russian Bonds, 2024.