The Asia-Pacific Bank (ATB), which the Central Bank plans to sell first among those sanitized by it, cannot yet demonstrate a result that satisfies potential investors. According to Russian reporting, the bank is profitable, but according to the results of the first three quarters, it could not get out of chronic losses under IFRS. Experts note that reporting by international standards is more important for investors. Potential buyers are already counting on the Central Bank to lose in price.
ATB published IFRS financial statements for the nine months of 2019, showing a loss of 0.3 billion rubles. against 0.2 billion rubles. loss for the same period last year. However, the bank received the main loss in the first quarter, and then reduced it. According to RAS, the bank earned about 3.4 billion rubles in three quarters. net profit.
The key reason for the discrepancy between the ATB report on financial results under RAS and IFRS is the surge in interest income accrued on loans to individuals in the first quarter of 2019, says Stanislav Volkov, managing director of the NKR rating agency. ATB then reflected almost 4.5 billion rubles in Russian reporting. of such incomes, although in the second half of 2018 and in the second and third quarters of 2019, this figure did not exceed 2 billion rubles. There is no such surge in IFRS reporting. According to Mr. Volkov, it is likely that one-time events (for example, changes in accounting policies) affected RAS reporting, therefore, IFRS reporting gives a more accurate idea of the current performance of the bank. This conclusion is confirmed by the analysis of the cash flow statement, which is less dependent on the features of accounting policies and in which the amount of interest income actually received is much closer to the figure indicated in IFRS. Andrei Nagurny, partner, head of the Deloitte restructuring and financial recovery team, also believes that IFRS reporting more adequately reflects the current financial situation of ATB.
ATB reporting is of interest because it reflects the likelihood of a bank sale. The Central Bank took over ATB in April 2018. At the same time, financial recovery was carried out by the Central Bank itself through the Banking Sector Consolidation Fund, and not by outside investors. The regulator ultimately plans to sell the banks rehabilitated under the new scheme. ATB was the first credit institution that the Central Bank tried to auction, since selling a small bank is easier than giants like Otkrytie. However, on March 14, an auction for the sale of ATB did not take place: not one of the investors wanted to buy a credit institution (see Kommersant on March 14). Then the Central Bank decided to leave the bank in its ownership for another year and hold a new auction in 2020, after the disclosure of the financial statements for 2019.
Despite not too impressive IFRS reporting, experts note positive changes. “The funding structure and the liquidity situation at the bank have really improved markedly over the past year,” says Andrei Nagurny, “but a high share of bad loans and provisioning costs still determine weak operating results.”
Last year, the Central Bank tried to sell ATB in the range of 6 billion rubles. (corresponds to the authorized capital) up to 9.9 billion rubles. (corresponds to the amount of equity at that time). But investors were not satisfied with even the minimum price. One of the potential buyers told Kommersant that there is still interest in this bank, but everything, as before, will depend on the price offered by the Central Bank. “The Bank of Russia will conduct an assessment before the sale to determine the price below which ATB will not sell,” the Central Bank said. “Based on the current assessment of the situation, this will be at least 6 billion rubles.”
ATB published IFRS financial statements for the nine months of 2019, showing a loss of 0.3 billion rubles. against 0.2 billion rubles. loss for the same period last year. However, the bank received the main loss in the first quarter, and then reduced it. According to RAS, the bank earned about 3.4 billion rubles in three quarters. net profit.
The key reason for the discrepancy between the ATB report on financial results under RAS and IFRS is the surge in interest income accrued on loans to individuals in the first quarter of 2019, says Stanislav Volkov, managing director of the NKR rating agency. ATB then reflected almost 4.5 billion rubles in Russian reporting. of such incomes, although in the second half of 2018 and in the second and third quarters of 2019, this figure did not exceed 2 billion rubles. There is no such surge in IFRS reporting. According to Mr. Volkov, it is likely that one-time events (for example, changes in accounting policies) affected RAS reporting, therefore, IFRS reporting gives a more accurate idea of the current performance of the bank. This conclusion is confirmed by the analysis of the cash flow statement, which is less dependent on the features of accounting policies and in which the amount of interest income actually received is much closer to the figure indicated in IFRS. Andrei Nagurny, partner, head of the Deloitte restructuring and financial recovery team, also believes that IFRS reporting more adequately reflects the current financial situation of ATB.
ATB reporting is of interest because it reflects the likelihood of a bank sale. The Central Bank took over ATB in April 2018. At the same time, financial recovery was carried out by the Central Bank itself through the Banking Sector Consolidation Fund, and not by outside investors. The regulator ultimately plans to sell the banks rehabilitated under the new scheme. ATB was the first credit institution that the Central Bank tried to auction, since selling a small bank is easier than giants like Otkrytie. However, on March 14, an auction for the sale of ATB did not take place: not one of the investors wanted to buy a credit institution (see Kommersant on March 14). Then the Central Bank decided to leave the bank in its ownership for another year and hold a new auction in 2020, after the disclosure of the financial statements for 2019.
Despite not too impressive IFRS reporting, experts note positive changes. “The funding structure and the liquidity situation at the bank have really improved markedly over the past year,” says Andrei Nagurny, “but a high share of bad loans and provisioning costs still determine weak operating results.”
Last year, the Central Bank tried to sell ATB in the range of 6 billion rubles. (corresponds to the authorized capital) up to 9.9 billion rubles. (corresponds to the amount of equity at that time). But investors were not satisfied with even the minimum price. One of the potential buyers told Kommersant that there is still interest in this bank, but everything, as before, will depend on the price offered by the Central Bank. “The Bank of Russia will conduct an assessment before the sale to determine the price below which ATB will not sell,” the Central Bank said. “Based on the current assessment of the situation, this will be at least 6 billion rubles.”
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