VEB.RF and VTB Infrastructure Holding Agree on IRIIS Certification for Projects
The company’s projects will be provided with independent quality assessment in accordance with international governance standards and best practices.
VTB Infrastructure Holding is a member company of VTB Group and the largest investor in Russian infrastructure.
It is intended that its project initiatives and infrastructure projects will be assessed for compliance with the IRIIS requirements.
Developed by VEB.RF in collaboration with the National PPP Development Center and AECOM, IRIIS uses an infrastructure project assessment methodology to evaluate economic efficiency, environmental safety and social outcomes.
The memorandum of cooperation was signed during VTB Capital’s “RUSSIA CALLING!” Investment Forum. The document was signed by VEB.RF’s Deputy Chairperson and Member of the Management Board Svetlana Yachevskaya and VTB Infrastructure Holding’s CEO Oleg Pankratov.
The Ufa East Exit project of Bashkir Concession Company (part of VTB Infrastructure Holding) is the first in Russia to be awarded IRIIS certification. A syndicate of VEB.RF and VTB is financing the project through the Project Financing Factory. Due diligence showed that high quality standards had been applied to the preparation and planning of the project from the very beginning.
Svetlana Yachevskaya, Deputy Chairperson and Member of the Management Board, VEB.RF:
“It’s particularly important to build up a portfolio of projects for quality infrastructure investment, taking account of Russia’s goals of creating new, modern infrastructure. We hope IRIIS will enable Russian infrastructural projects to be compliant with the highest quality standards and attractive across a wide range of investors. This will increase private infrastructure investment and help the government to support the most promising project initiatives, which today incorporate sustainability and ESG factors to an increasingly large extent.”
Oleg Pankratov, CEO, VTB Infrastructure Holding:
“VTB Infrastructure Holding has always been committed to ESG principles. When we embark on a project, as early as conceptual design, we investigate how it will reduce environmental impacts, what tax revenues it will generate, what jobs it will create, and how it will improve quality of life, contribute to regional planning and raise environmental standards. The agreement with VEB.RF is a significant strategic step for us and reaffirms our commitment to achieving the sustainable development goals and moving from theory to practice.”
VEB.RF published its interim condensed consolidated financial statements under IFRS as at September 30, 2021.
“VEB.RF generated a net profit of RUB 14.7 bn in accordance with IFRS for the nine months of 2021 and provided unprecedented support for nationally significant projects and projects aimed at improving the quality of life, with the loans given by VEB.RF growing by RUB 554.8 bn. The major drivers of the financial result delivered in the three quarters of 2021 were the net interest income and the net fee and commission income. VEB.RF’s liquidity cushion and capital adequacy ratio of 15.9 percent allow VEB.RF to scale up financing for infrastructure, industry, exports, and regional and municipal development with support from the Russian Government. VEB.RF’s absolute priority is to invest in new facilities and support businesses during the pandemics by issuing guarantees to banks for zero- or low-interest loans to entrepreneurs designed to help them retain employees,” VEB.RF Chief Financial Officer Andrey Moskovskikh said.
VEB.RF Group’s key financials for 9M 2021 are as follows:
In 9M 2021, the VEB.RF Group made a profit of RUB 14.7 bn against a loss of RUB 29.7 bn as compared to the same period last year.
The positive financial result was driven by:
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net operating income (net of allowance) of RUB 101.8 bn, which is by RUB 11.9 bn less than for the same period of 2020;
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decrease in non-interest expense to RUB 76.8 bn from RUB 111.4 bn for 9M 2020.
The operating income dynamics was stipulated by the following factors.
- Net interest income in the reporting period went up to RUB 16.1 bn as compared to RUB 6.3 bn for 9M 2020. Increase in interest income by RUB 3.0 bn was mainly due to the interest income growth from the loan portfolio, and interest expense decreased by RUB 6.8 bn, as the effect of the reduced cost of funding.
- Net fee and commission income went up by RUB 12.2 bn from RUB 11.1 bn for 9M 2020 to RUB 23.3 bn for 9M 2021 due to the commission income on guarantees issued as part of the state anti-crisis programme (amortization of loss on initial recognition of guarantees).
- Non-interest income for 9M 2021 amounted to RUB 26.1 bn compared to RUB 76.7 bn for the same period last year. In the reporting period that ended September 30, 2021 the loss was recorded on initial recognition of guarantees issued on preferential terms as part of the new state COVID-19 rescue scheme.
The Group’s assets went up by 14.5% (+ RUB 492.7 bn) against the beginning of 2021 and as at September 30, 2021 reached RUB 3 898.8 bn. The assets increase was mainly driven by a substantial growth in the loan portfolio.
Against the beginning of 2021 the total loan and leasing portfolio (net of provision for impairment) went up by 34.2% (+ RUB 460.4bn) to reach RUB 1 805.3 bn. In total, the loan and leasing portfolios account for 46.3% of the Group’s total assets.
The amount of loans granted by VEB.RF in 9M 2021 reached record RUB 554.8 bn, with the amount of loans granted in Q3 almost doubling the result of the first six months. Investment priority sectors include industry, infrastructure including urban economy projects, as well as export support. Since the beginning of 2021, financing has started for twenty eight new projects in priority economic sectors.
In the reporting period allowance for expected credit loss was charged in the amount of RUB 8.0 bn.
The Group’s liabilities increased by 16.3% (+ RUB 442.3 bn) since the beginning of 2021 and as at September 30, 2021 reached RUB 3 159.4 bn. Inter alia, amounts due to banks went up by 39.0% (+ RUB 231.7 bn) and debt securities issued increased by 13.3% (+ RUB 101.7 bn). Amounts due to the Russian Government and the Bank of Russia went down by 3.1% (- RUB 19.4 bn).
VEB.RF has consistently built up its market funding to ensure increased financing of major projects of the national economy.
The Group’s equity in 9M 2021 went up by RUB 50.4 bn (+7.3%) to reach RUB 739.4 bn as at September 30, 2021. This equity growth was stipulated by the profit for 9M 2021, increase in gains from investment financial assets at fair value through other comprehensive income, and receipt of an asset contribution from the federal budget to increase a subsidiary’s authorized capital.
VEB.RF’s capital adequacy ratio was 15.9% as at September 30, 2021 (17.0% as at December 31, 2020).
In August 2021, the Bank of Russia Board of Directors approved amendments to Instruction No. 199-I which stipulate weighing all bank credit claims on State development Corporation VEB.RF nominated and funded in rubles with the risk weight of 20% when calculating the prudential ratios of banks (previously, from 20% to 100%, depending on credit claims parameters). These amendments came into effect in October 2021.
The decision of the Bank of Russia will contribute to the expansion of interbank cooperation, including due to the growth in demand of Russian banks for VEB.RF public debt instruments.