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03.09.2008 - MDM Comment: RCCF released strong 1H08
Yesterday Renaissance Capital Bank (B1/B-, Bloomberg ticker RCCF) released strong 1H08 IFRS results. In a nutshell, the bank maintained high net interest margin of around 15% and a decent quality of loan book (NPLs 4%). However, strong asset growth helped to significantly improve profitability, as the bank is at the stage when it strongly benefits from economies of scale. Capital adequacy levels and liquidity profile of RCCF also look quite comfortable to us. On top of the acceptable stand-alone profile, the bank has a strong implicit support from a related Renaissance Capital Group (Ba3/BB-). We think that the RCCF ruble bonds are now perhaps among the top picks in the higher yielding segment of the Russian bond market. They offer around 14.5% to put option dates in less than 12 months. The RCCF-1 issue is also accepted for direct repo operations at the Central Bank. Overall we continue to view banking issues as a segment offering the best value from a risk/yield perspective in Russian bonds.
