Corporate lending, which accounts for the largest portion of the bank’s loan portfolio, is of significant importance in its business structure.
The bank offers its customers a wide range of services such as secured/unsecured loans, overdrafts, current account facilities, loans backed by collectable sale proceeds, loans for financing investment/operational activities and so on. The bank targets large companies who are leaders in their sectors, whose credit quality is confirmed by leading rating agencies, and whose operating and financial indicators are strong enough to forecast no difficulties in servicing and repaying debt obligations.
Having been developing its corporate business for many years, the bank has succeeded in building close relationships with its customer base consisting, as at end-2019, of more than 15,000 active customers. The bank is adapting to new economic conditions without compromising its traditionally low level of non-performing loans (NPL 90+). The gross corporate loan portfolio expanded in 2019 by 12% to RUB 719 bln, mainly due to loans issued to large high-quality corporate customers.
The sectoral structure of the corporate portfolio is fully in line with the bank’s strategy, according to which MKB pays special attention to high-quality large corporate customers. Focusing on large borrowers from less risky industries, MKB is able to maintain a high portfolio quality. As at end-2019, oil production and refining, accounting for 34% and 14%, respectively, dominate the corporate loan portfolio. Historically, the companies in this sector are the most stable, develop actively and are supported by the government. Large borrowers also included companies in the construction, property rental and automotive sectors, accounting for 9%, 9% and 8%, respectively.
The bank also lends to such key sectors as equipment leasing, industrial chemistry, finance, food products etc.
As an authorised bank, MKB offers the full range of services under Federal Law 214-FZ. Particular growth is observed in project finance for developers using private escrow accounts.
The bank participates in implementation of the Government’s SME Support Programme and cooperates with Moscow’s Fund of Small Business Credit Assistance by providing a variety of banking products, including guarantees and surety bonds.Such growth potential is seen in fee and commission income, which, unlike interest income, is low-risk and can be increased without additional funding, and, therefore, without affecting the net interest margin.
Despite the high competition, the bank’s adjusted interest rate policy coupled with the launch of many new products helped increase corporate business income by 6% compared to 2018. At the same time, the net financial result of corporate business dropped from RUB 16.9 bln in 2018 to RUB 7.9 bln in 2019, mostly because large corporate deposits were repriced in the first half of 2019.
Using its vast experience in corporate lending, the bank plans to pursue further its balanced approach to analysis of corporate lending risks, further diversify its corporate loan portfolio and focus on lending in the segments that are most resilient to changes in the macroeconomic situation.