RU

3.

FINANCIAL STABILITY


The effectiveness of the non-commodity exports support directly depends on the capital as the main long-term funding source. It is the capital that makes it possible for the bank to undertake long-term projects and support Russian exports by maintaining low rates. To fund the projects with a timeframe of 2 to 3 years, the Bank attracts market financing.

A++

Credit rating (‘Exceptionally high’, ‘Highest possible’), outlook stable, according to RAEX rating agency (Expert RA)

Ва2

long-term credit rating in foreign currency, outlook negative, Moody’s [i]



355
million RUB the Bank’s net profit in 2016

To support the exports, funds have been allocated from the federal budget for the capital increase of Eximbank of Russia in 2015–2017. As of 1 January 2017 the registered capital of the Bank amounted to RUB 20.751 billion, following the capital increase of RUB 10 billion in 2015. In 2016, there was a further capital increase by RUB 8.1 billion. At 2016 year-end Eximbank of Russia JSC was included in the list of Russia’s Top 100 banks based on assets.

As a development institution, Eximbank of Russia JSC is charged with stimulating exports while remaining breakeven. Net income of the Bank at 2016 year-end before allocations to reserves stood at RUB 2 billion, with the net profit amounting to RUB 355 million. Though maintaining low profitability has been the Bank’s deliberate strategy, it has successfully prevented capital loss or reduction, in particular due to increasing the efficiency of its operations in the financial markets and minimizing the costs. Thus, the Bank has maintained financial stability and has never failed to meet the standards set by the Central Bank of Russia.

In 2016 the credit ratings of Eximbank of Russia were affirmed, in particular:

  • Long-term credit rating in foreign currency rated at Ba2, outlook is negative (according to Moody’s) [i];
  • Debt rating at А++ (the highest rating possible), outlook is stable, according to Expert RA (RAEX), Russia’s largest rating agency.

3.1

Cooperation with financial institutions

FUNDING

The Bank has conducted transactions in the interbank lending market and the stock market to manage its liquidity and minimize risks, as well as to attract the funding required for exports support.

In February 2016 the Central Bank of Russia included the first ruble bond issue of Eximbank of Russia JSC in the Lombard List. In July 2016 the MOEX included the issue in the list of securities eligible as collateral for repo transactions with CCP.

In November 2016 Eximbank of Russia JSC successfully completed the one-year offer for the first ruble bond issue worth RUB 5 billion placed in 2015. The coupon rate for the year before the next offer was set at 10.25% p.a. As the result, less than 7% of the bonds were submitted for redemption; within a week, these bonds were placed in the secondary market.

In December 2016 a 10-year bond issue worth USD 150 million with a 2-year offer was placed on the Moscow Exchange. The placement was successful, with the yield set at 4.86% (vs 4.81%–5.06% expected). The issue was oversubscribed by more than 60%.

Eximbank of Russia JSC is planning two bond issues worth USD 350 million and RUB 50 billion in 2017. The two exchange-traded bond programs were registered by the Moscow Exchange in 2016.

CORRESPONDENT BANKING AND SETTLEMENT IN NATIONAL CURRENCIES

In 2016 Eximbank of Russia JSC continued to expand its correspondent accounts network aiming to create the infrastructure required for export lending and export support of the Russian enterprises. To enable settlements between the Russian exporters and their buyers, correspondent accounts were opened in China, Germany, Turkey and India.

Availability of correspondent accounts at foreign banks of the buyer counties makes it possible to optimize the timing and costs related the transactions and create a favorable environment for the parties to perform their obligations under the export contract. The development of correspondent and partner bank networks will facilitate the promotion of products of Russian exporters due to lower credit risks and greater availability of information related to potential buyers.

The Bank constantly strives to expand the practice of using national currencies in lending and settlements on export/import operations. The foreign agency banks opened lines of credit for Eximbank of Russia JSC to support trade finance and guarantee transactions. This will deliver additional benefits to Russian exporters by ensuring greater reliability of suppliers operating in the export receiving countries.

MAJOR CORRESPONDENT BANKS FOR SETTLEMENTS IN NATIONAL CURRENCIES

USA

HSBC Bank USA, N.A.

GERMANY

Deutsche Bank AG

Japan

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

UK

Clearstream HSBC Bank plc

SWITZERLAND

Gazprombank (Switzerland) Ltd.