On May 13, Bank of Moscow posted its FY 2007 financial report, audited to IFRS. The bank's assets in FY 2007 rose by 40.3% to RUB 507.4 bn as of December 31, 2007. Total loans grew by 40.2% to RUB 361 bn as of the year end. The company's equity capital advanced 52.3% to RUB 44.57 as of 31Dec07.
Table 1. Key IFRS Financials FY 2007 RUB bn
| | 2007 | 2006 | Change |
|---|
| Assets (as of year-end) | 507.4 | 361.7 | 40.3% |
| Total loans (as of year-end) | 361.0 | 257.5 | 40.2% |
| Equity capital (as of year-end) | 44.57 | 29.28 | 52.3% |
| Interest income | 37.34 | 23.54 | 58.6% |
| Interest expenses | 21.49 | 12.25 | 75.4% |
| Net interest income (NII) | 15.86 | 11.29 | 40.5% |
| Operating income | 22.47 | 16.65 | 35.0% |
| Operating expenses | 9.40 | 6.97 | 34.8% |
| Net profit | 7.75 | 5.52 | 40.4% |
| ROAE | 21.0% | 21.8% | - 0.8 p.p. |
| ROAA | 1.78% | 1.89% | - 0.11 p.p. |
| Net interest margin | 3.7% | 3.9% | - 0.2 p.p. |
| Cost/Income | 45.6% | 46.7% | - 1.1 p.p. |
Source: company data, Finam's estimates
We are generally upbeat on Bank of Moscow's financial results for FY 2007. The bank's assets grew by 40.3% in FY 2007, comparable with the quick asset growth in the Russian banking sector as a whole (up 44.1%). NII went up by 40.5%, which fits the growth of assets. We should also highlight preservation of the bank's FY 2006 productivity levels in spite of quick growth. Among the bank's problems, an increase in resource costs has led to a 75.4% rise in interest expenses.
In line with our estimates, the fair value of Bank of Moscow's shares is USD 51.53 per share with a 2.5% downside potential, which corresponds to a Hold recommendation. Among the factors that limit the upside potential; we highlight high the concentration of the company's shares within the Moscow Government, a small free float and lack of a clear policy with respect to minority shareholders.
0.553
1.6
