OREANDA-NEWS. June 09, 2010. Bank St. Petersburg will publish 1Q10 IFRS results on 10 June, followed by a conference call at 4:00pm (Moscow time), reported the press-centre of OTKRITIE Financial Corporation.

View: We expect the bank to double its quarterly profits to RUB0.8bn. This is largely due to a slowdown in NPL growth, which should result in a 23% QoQ decline in provisioning charges. The bank’s net interest revenues will remain virtually unchanged, supported by the relatively short maturity of funding. However, NIM is expected to contract 30bp-– still one of the smallest contractions across the banking sector. Given that securities on Bank St. Petersburg’s balance sheet are almost fully accounted as trading portfolio, the bank’s non-interest revenues are expected to strongly contribute to its P&L. We also expect costs to rise 33% YoY thanks to the bank’s tight cost policy early in the crisis. However, this will still lead to a very comfortable 25% cost –to-income ratio.

Bank St. Petersburg trades at 1.2x and 1.0x P/BV for 2010 and 2011, respectively. Because it is likely to show the sector’s smallest margin contraction, we like the bank at these levels. We have a BUY rating for the stock, and a target price of USD 5.37/share. During the conference call we would be most interested to hear guidance on the expected NIM performance, considering that the rate declining cycle is nearly bottoming out.