-Russian lender TCS Group Holding on Friday said it was benefitting from increased liquidity as volatility and outflows hit its sanctioned rivals, and that central bank efforts to support the embattled sector were bearing results.
Major banks have been excluded from the SWIFT global messaging network, making it hard for lenders and companies to make and receive payments as Western nations seek to isolate Moscow over its invasion of Ukraine, something Russia calls a “special military operation”.
“Banks which have been sanctioned have seen some volatility and outflows, I believe that is now calming down a little bit,” Co-CEO Oliver Hughes said on an investor call as the lender reported record annual net profit.
“But we were actually, somewhat bizarrely, the beneficiaries of some of that liquidity coming in because we are not a sanctioned bank. We are now seeing inflows of liquidity increasing.”
Russia’s central bank has started carrying out daily repo auctions to help Russian banks manage their liquidity. It hiked its key interest rate to 20% on Monday.
CURRENCY SCRAMBLE
Queues developed at some ATMs in Moscow this week as Russians sought to get their hands on foreign currency.
Hughes said demand at Tinkoff machines for conversions from roubles to dollars had actually been quite mild and that some were depositing cash.
“We have seen queues around our ATMs on some days, but it is people depositing roubles and dollars on their accounts, not just withdrawing,” Hughes said. “There has been this weird two-way movement. It is difficult to pinpoint one particular trend.”
Last year’s net profit of 63.4 billion roubles ($561 million) came at around $860 million in dollar terms when calculated against the rouble’s 2021 average rate of 73.65.
Co-CEO Pavel Fedorov, said Tinkoff was committed to remaining a public company and to servicing its debt.
Trading of TCS’ London-listed global depositary receipts was suspended on Thursday along with several Russia-based companies.
Should that suspension last a long time, Tinkoff, which had 20.8 million customers by year end, said it may consider moving its primary listing from London to Moscow, or look at a third location.
“Our immediate focus now lies in making sure all our systems work as usual,” Hughes and Fedorov said in a statement. “We have all hands on deck. We have ample rouble and FX liquidity and a solid capital position.”
BOND BUYBACKS?
TCS said it may, at any time and from time to time, buy its outstanding debt in open-market purchases, privately negotiated transactions, or otherwise.
“Such repurchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors,” TCS said.
Full-year revenue grew by 40% to 273.9 billion roubles and the bank’s return on equity increased to 42.5% in 2021 from 50.6% a year earlier.
Its share price had plunged over 90% since Russia launched its assault on Ukraine last week by the time trading was halted.
Already eyeing expansion in Asia, Tinkoff on Friday said it was also looking at one market in Latin America on the acquiring and payments side.
($1 = 113.0000 roubles)
(Reporting by Reuters; editing by David Goodman, Jason Neely, Tomasz Janowski and Louise Heavens)
