The Commercial Banking portfolio continues to benefit from effective risk management, a resilient economic environment and continued low interest rates with the increased impairment charge driven by lower releases and writebacks
This compares to a EUR762 million pretax profit in the first half of 2018, when the company recorded a EUR142 million net credit writeback
and gains on loan portfolio disposals.
Net reserve writebacks
were recorded for the second time in three months (the last occasion was in Dec 2010), totalling RUB1.8bn in February.
In January, we saw no net reserve writebacks
, but the level of provisioning was still quite low at RUB5.0bn.
- Management does not rule out provisions turning into net writebacks at the end of 2010, and expects these to become sizeable in 2011E.
Thereafter, we should see an earnings recovery triggered by reserve writebacks, with support from a NIM stabilisation.
- Management does not rule out net writebacks
of provisions at the end of 2010, and expects these to become sizeable in 2011E.
He estimates that approximately twothirds of the bank's NPLs (which comprised around 10% of the loan portfolio at 1Q10) are likely to be recovered and expects some writebacks
of reserves, potentially at the end of 2010E.
The bank targets 2x NPL coverage at YE10, and 2011 should see writebacks
- Bank St Petersburg: another two-to-three quarters of RUB2-2.5bn provisioning charges (approximately equal to the average over 2Q-4Q09) and possible writebacks
However we believe that this risk, if it materialises, is unlikely to significantly affect our numbers, as we conservatively model provisioning charges of 3-5% in 2010E and no writebacks