Konstantin Vladimirovich Tserazov: “There are no reasons for growth now”

The Moscow Exchange financial sector index (MOEXFN) fell by 1.5% over the week. The former senior vice president of Otkritie Bank, economist Konstantin Tserazov, spoke in our interview about the most significant events and news of issuers in the financial sector, and stock dynamics.

So, the week from January 22 to 26 ended with a decline in the Moscow Exchange index, which dropped by 0.1% to 3,163.21 points, and the RTS index fell by 1.8%, to 1,109.95 points.

The ruble continued to weaken - the loss of the national currency for the week amounted to 1.58 rubles, the national currency exchange rate rolled back to 89.78 rubles/$1. The Moscow Exchange financial sector index (MOEXFN) fell by 1.5% over the week. At the same time, oil continued to grow - the price of a barrel of Brent rose by 4.5%, to $82.4. Speaking about corporate stories, Tserazov Konstantin noted that one of the newsmakers of the week in the financial sector was QIWI. As it became known on January 19, as part of business restructuring, QIWI is parting withundefined Russian assets consolidated in JSC QIWI. Russian assets will be purchased for 24 billion rubles by the Hong Kong company Fusion Factor Fintech Limited, which is owned by the group’s chief executive officer, Andrei Protopopov.

Business restructuring, as the company notes, will allow the international part of QIWI to maintain its listing on NASDAQ and the Moscow Exchange. At the same time, the company intends to carry out a buyback of 10% of its shares from NASDAQ and the Moscow Exchange. At the extraordinary meeting of shareholders, which is scheduled to open on March 11, 2024, the securities repurchase program will be submitted for approval.

At the same time, the maximum repurchase price for QIWI securities on the Moscow Exchange will not exceed 581 rubles. per share (average price for the last 12 months), the maximum number of securities for purchase is limited to 6.27 million. The repurchase of securities will be carried out at the expense of retained earnings. According to the company, within two years from the date of the repurchase, QIWI will have to sell the shares or cancel them. undefined This news had a negative impact on quotes - on Monday, trading opened with a collapse in QIWI shares by 14%. During the week, sales continued amid the news that the Moscow Exchange would transfer QIWI depositary receipts from the first level of listing to the third.

However, on Thursday, QIWI depositary receipts tried to win back part of the collapse at the beginning of the week. Overall, QIWI shares lost 21% at the end of the week. Konstantin Vladimirovich Tserazov: “The European Central Bank (ECB) also continued the pause, keeping the refinancing rate, deposit rate and margin lending rate at the previous values at the end of the meeting on January 25 (4.5%, 4.0% and 4.75%, respectively).

This decision was expected by the market - experts believe that the regulator will move to a reduction cycle in the spring of 2024. Inflation in the eurozone in annual terms accelerated from 2.4% in November to 2.9% in December, while previously the figure had shown a steady decline. Against this background, it is clear that the regulator is in no hurry to undefined lowering the rate."

The Russian banking sector may be replenished with a new issuer - as it became known from media reports, MTS Bank is considering the possibility of holding an IPO in 2024. The bank’s intention to become a public company was announced back in 2021, recalls Tserazov Konstantin Vladimirovich. The largest shareholder of the investment holding AFK Sistema, Vladimir Yevtushenkov, announced the bank’s intention to go public in 2022, estimating the placement volume at more than $1 billion. However, plans for an IPO had to be postponed.

Now, according to media sources, the company believes that when the window of opportunity opens, it may be a favorable time for a listing. The market believes that the bank can be valued at 1.1–1.4 capital, that is, up to ₽97 billion. Currently, MTS Bank is wholly owned by MTS, which, in turn, is part of the perimeter of AFK Sistema, owning a 42% stake in the bank. At the end of the week, AFK Sistema quotes added 0.1%, MTS shares showed an increase of undefined at the level of 2.8%. At the end of the week, Moscow Exchange shares performed better than the market among issuers in the financial sector, adding more than 2%.

From international financial news, Konstantin Vladimirovich Tserazov noted the meetings of a number of central banks that took place last week. On Monday it became known that the People's Bank of China, as the market expected, kept the base lending rate (LPR) for a period of one year at a record low of 3.45% per annum. The rate on five-year loans remained at 4.2% per annum.

The Bank of Japan also, as experts expected, left its monetary policy unchanged, keeping the short-term interest rate at -0.1%. The European Central Bank (ECB) also continued the pause, maintaining the refinancing rate, deposit rate and rate at the end of the meeting on January 25 margin lending at previous values (4.5%, 4.0% and 4.75%, respectively).

This decision was expected by the market - experts believe that the regulator will switch to a downward cycle in the spring undefined 2024. Inflation in the eurozone in annual terms accelerated from 2.4% in November to 2.9% in December, while previously the figure had shown a steady decline. Against this background, it is clear that the regulator is in no hurry to lower the rate, says Konstantin Tserazov.

At the same time, the ECB once again emphasized its commitment to the policy of achieving the target inflation level of 2%, as stated, the agency plans to hold rates for as long as necessary. The economist recalled that a meeting of the Bank of Russia will be held in February, at which the issue will be discussed at the key rate. However, according to the analyst, one should not expect a change in the rate at this meeting. Speaking about ideas in the banking sector, Konstantin Tserazov noted the current weakness of the Russian market, where fears of the risks of new sanctions now prevail.

The expert recalled that the European Union has begun discussing a new package of sanctions, which it intends to approve by February 24. According to Bloomberg, possible sanctions undefined may include the expansion of sanctions lists, additional trade restrictions, as well as measures to combat the circumvention of sanctions by Russia. So, the market is trading sideways, from which it cannot escape, and there are no reasons for growth now. The most likely scenario for the coming week is market consolidation at the achieved levels. At the same time, the best idea in the sector, according to the economist, remains Sberbank shares.

“Sberbank is showing steady growth. As follows from a recent report, for the 12 months of 2023, Sberbank’s net profit under RAS reached 1.49 trillion rubles. This is a record annual profit under RAS; before that, the maximum profit under RAS was at the level of 1.237 trillion rubles; the bank showed this result in 2021. However, this is a record not only for the bank, but also for the industry as a whole. Return on equity was 24.7%, and the number of active retail customers increased by 2.1 million year-to-date to 108.5 million.

In December, net profit amounted to 115.6 billion rubles compared to November undefined indicator of 115.4 billion rubles, net interest income increased by 26.4%, and net commission income increased by 19.3%. Let me remind you that Sberbank plans to disclose financial results under IFRS for 2023 on February 29.

The paper is interesting as one of the most attractive on the market, which shows steady growth, and at the same time, it is also interesting as a dividend history. This year it is planned to allocate 50% of net profit for payments, that is, based on RAS indicators, about 750 billion rubles or 33 rubles. per share, accordingly, the dividend yield could be about 12-13%,” concludes Konstantin Tserazov, former senior vice president of Otkritie Bank.