Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

Credit Bank Of Moscow Pjsc / Equity Bottom-Up

Founded in 1992 and acquired by Mr. Roman Avdeev in 1994,<a href="https://www.smartkarma.com/entities/24612" target="_blank" data-smartkarma-citation="entities:24612:1">Credit Bank Of Moscow Pjsc (CBOM RM)</a> benefits from an entrenched market position and strong brand recognition in its strategic market of Moscow which represents 25% of Russian GDP. CBM is an established operation in Moscow and the Moscow region with over 7,000 devices in high traffic locations.CBM has expanded fast, from commanding a mere 0.7% share of system Assets in 2013 to 2.9% today.The bank has a defined strategy underpinned by blue-chip, large, and medium-sized corporate services (fees, settlements, cash handling); high-margin consumer lending; and investment banking (SOVA Capital synergies, interbank, ECM, DCM, M&amp;A). CBM commands a client-base of 15k corporates: companies represent 87% of loans. The bank has 1.5MM retail customers: accounting for a third of deposits.In 2015 CBM acquired Inkakhran, swelling its nationwide cash handling market share to 17%. In this segment, CBM commands a client-base of 3k, of which 164 are banks, with 876 armoured vehicles covering 33k collection points.Management is focused on above-system growth, based on a relatively robust liquid Balance Sheet, reducing funding costs, and enhancing operating efficiency and productivity. 2018 was marked by building up liquidity and strengthening capital adequacy as well as managing Balance Sheet risk -after 5 years of forceful growth- while maintaining profitability and cost efficiencies.Technology highlights include the Your Bank Online system, MKB Business, and Foreign Exchange Control Dashboard.Avdeev’s Rossium, a domestic group with interests in agriculture, timber, oil and a pharmacy chain, is the majority shareholder (56%) while the EBRD holds a position which reduces the float (18%). The supervisory board contains 5 out of 10 independent non executives while 2 more are nominees of minority shareholders. Related party lending is 3.5% of the loan book. Rosneft exposure though represents a caveat to CBM and to the system in general though some view this more of a strength.<div class="content-highlight">CBM trades below Book Value, lies on a low Mkt Cap./Deposits rating of 13%, below the global and EM median, and commands an Earnings Yield of 13%. A quintile 1 PH Score™ of 8.0 captures the valuation dynamic while metric change is satisfactory. Combining franchise valuation, technical momentum, and the PH Score™, CBM stands in the top quintile of opportunity globally.</div>

Founded in 1992 and acquired by Mr. Roman Avdeev in 1994,Credit Bank Of Moscow Pjsc (CBOM RM) benefits from an entrenched market position and strong brand recognition in its strategic market of Moscow which represents 25% of Russian GDP. CBM is an established operation in Moscow and the Moscow region with over 7,000 devices in high traffic locations.CBM has expanded fast, from commanding a mere 0.7% share of system Assets in 2013 to 2.9% today.The bank has a defined strategy underpinned by blue-chip, large, and medium-sized corporate services (fees, settlements, cash handling); high-margin consumer lending; and investment banking (SOVA Capital synergies, interbank, ECM, DCM, M&amp;A). CBM commands a client-base of 15k corporates: companies represent 87% of loans. The bank has 1.5MM retail customers: accounting for a third of deposits.In 2015 CBM acquired Inkakhran, swelling its nationwide cash handling market share to 17%. In this segment, CBM commands a client-base of 3k, of which 164 are banks, with 876 armoured vehicles covering 33k collection points.Management is focused on above-system growth, based on a relatively robust liquid Balance Sheet, reducing funding costs, and enhancing operating efficiency and productivity. 2018 was marked by building up liquidity and strengthening capital adequacy as well as managing Balance Sheet risk -after 5 years of forceful growth- while maintaining profitability and cost efficiencies.Technology highlights include the Your Bank Online system, MKB Business, and Foreign Exchange Control Dashboard.Avdeev’s Rossium, a domestic group with interests in agriculture, timber, oil and a pharmacy chain, is the majority shareholder (56%) while the EBRD holds a position which reduces the float (18%). The supervisory board contains 5 out of 10 independent non executives while 2 more are nominees of minority shareholders. Related party lending is 3.5% of the loan book. Rosneft exposure though represents a caveat to CBM and to the system in general though some view this more of a strength.CBM trades below Book Value, lies on a low Mkt Cap./Deposits rating of 13%, below the global and EM median, and commands an Earnings Yield of 13%. A quintile 1 PH Score™ of 8.0 captures the valuation dynamic while metric change is satisfactory. Combining franchise valuation, technical momentum, and the PH Score™, CBM stands in the top quintile of opportunity globally. 

Credit Bank of Moscow: A Highly Ranked EM Opportunity