A net loss of RUB 289.1m has been reported for 2Q09, below our forecast net income of RUB 10.8m and wiping out the net income of RUB 240.4m booked in 1Q09. Strong cost containment and lower-than-expected net provisioning was offset by weaker revenues, mainly net interest income but also net FX gains. We believe the news should have a somewhat negative trading impact today.
Net interest income came in below our expectation at RUB 2,285m for 2Q09, down 0.9% q/q and 5.3% y/y, with a decline in funding costs outpaced by a falling yield on assets. The net interest margin (over average assets) came in below our expectation at 4.20%, flat q/q but still down 212bp y/y.
Non-interest income came in at RUB 869.9m for 2Q09, down 47.0% q/q but up 196% y/y, driven mainly by weak foreign currency gains, only partly offset by better-than-expected net trading gains. Net fee income (up 14.4% q/q) continued to outperform on better-than-expected lending (+4.2% q/q) and deposits (+2.3% q/q).
costs came in at RUB 846.7m for 2Q09, up 2.9% q/q but down 8.4% y/y, below our expectations. The main driver was personnel expense cuts (-21% q/q) resulting from employment reduction. This offset an increase in other administrative costs (+44.4% q/q).
Net provisioning came in at RUB 2,650m for 2Q09, down 6.0% q/q, below our estimate of RUB 2,861m. This equates to net provisions of 685bp (over average gross loans) in 2Q09, versus 734bp in 1Q09 and 456bp in 4Q08. The NPL ratio jumped further to 7.5% in 2Q09 versus 4.3% in 1Q09 and 0.7% in 4Q08, whilst coverage dropped to 97% from 139% in 1Q09 and 532% in 4Q08. The level of restructured loans was stable at 6.6% of the total loans versus 6.5% at the beginning of the year.