Raiffeisen Bank Aval (BAVL) last week reported encouraging 2Q10 financials. The bank substantially improved its 2Q pre-provisioning operating profit (7% q/q), though its 2Q bottom line was just US$ 1.8mn (US$ 4.5mn in 1H10). Aval’s interest-earning assets grew 1.0% q/q as the bank boosted its portfolio of held-to-maturity securities (up 69% q/q to US$ 564mn), which likely represent government T-bills, and net interest margin advanced 0.7ppts in the 2Q to 10.0%.
Vitaliy Vavryshchuk: Aval’s pre-provisioning operating profits came in above our expectations thanks to strong core earnings. We expect the bank will remain marginally profitable this year before boosting ROE to near 15% in FY11 on slashed provisioning charges. We retain our positive view of the bank and reiterate our BUY recommendation on the stock.
Raiffeisen Bank Aval 1H10 results, US$ mn
|
2Q10 |
Chg, q/q |
Chg, y/y |
1H10 |
Chg, y/y |
|
|
Net interest income |
136.4 |
8% |
-2% |
262.4 |
-6% |
|
Net fees and commissions |
34.2 |
15% |
-4% |
63.9 |
-2% |
|
Other income/loss |
7.4 |
-2% |
210% |
15.0 |
-15% |
|
Operating expenses |
-88.1 |
11% |
4% |
-167.2 |
-4% |
|
Pre-impairment profit |
90.0 |
7% |
-3% |
174.1 |
-7% |
|
Impairment charge for credit losses |
-88.2 |
8% |
-53% |
-169.6 |
-48% |
|
Net income |
1.8 |
-36% |
n/m |
4.5 |
-103% |
|
|
|||||
|
1H10 |
Chg, q/q |
Chg, YTD |
Chg, y/y |
||
|
Assets |
6,827 |
0% |
1% |
-9% |
|
|
Corporate loans |
2,871 |
0% |
-3% |
-13% |
|
|
Retail loans |
2,981 |
-3% |
-5% |
-12% |
|
|
Loan loss reserves |
-1,362 |
6% |
13% |
64% |
|
|
Liabilities |
6,014 |
-2% |
-1% |
-10% |
|
|
Corporate deposits |
1,231 |
4% |
6% |
6% |
|
|
Retail deposits |
2,175 |
-5% |
-6% |
-6% |
|
|
Equity |
813 |
18% |
22% |
-4% |
Source: Company data, BG Capital Research
