good afternoon and good morning ladiesand gentlemenwelcome to the amkb first quarter 2021financial and business resultsconference callwe must advise you that this conferencecall is being recorded at this timewe would like to pass the floor to ericdebosham head of investor relations atmkb eric over to youthank you adam good afternoon ladies andgentlemenwe are pleased to welcome you today atthe call dedicatedto financial and business results of mkbin the first quarter of this year inthe course of our presentation today ourceo of lemire troubarand our cfo mikhail pavlov we'll give anupdateon the business developments and willpresent the financial performance of thebankour presentation will be followed by a qa sessionso now i turn the floor over to thefirst speakerso please let me go aheadthank you eric good afternoon ladies andgentlemeni hope that all of you and your familiesarein good health and mood i gladto start our discussion on financialresultsof financial results of first quarter ofthis year of our bankbefore we get into more details on ourperformance in the first quarter of thisyeari would like to focus on macro outlookfor the current year and provide a verybrief snapshotof current environment in russiamore than a year and after the globaleconomy sharply shut downas a result of the pandemic thecoronaviruspandemic continues to have a significantimpact on peoplebusinesses and communities and aroundthe worldwhilst we are seeing positive signsnotably the progressof the vaccine rollout economic activitycontinues to pick up speed acrossthe world including russia amid growingoptimism around several countries easingrestrictionsmarkets continue to debate whetherinflation will be transistory orsustainedcbr monetary policy has proved itsefficiency maintaining the inflationin four five percent range during thelast three yearsthree four years addressing the shocksandsupporting the investment and creditdemandwe expect the cpr will keep inflationunder controlalthough the key interest rate will notbe significantly increasedwithin mid-term perspectivethis year the russian economy isexpected to see a strong reboundon the back of substantial governmentsupport strong vaccination efforts aswell as oil price recovery of almost165 percent since march dropped lastyearthis should provide positive tailwind toour business performancefinally strong resilience of russianeconomy going forwardis supported by the low public debtcurrent account surplus and more than600 billiondollars international reserves slidenumber three pleaseas i have already mentioned the increaseof economic activity which boostsour corporate and business developmenthad positive impact on average marketadjustmentmade by management and in applying theaccounting policiesgenerally mkb remains absolutely focusedon supporting its customersand helping russian recover from thefinancial effects of the pandemicamid such recovering environment mkbdemonstrated strong business performancein the first quarter we launchednew digital business initiatives theecosystem digitalplatform in mkb online launched abusiness registration service for smesand mkb onlineonline online retail deposits havesteady growgrowing dynamic the share of remotelyopen accounts reached 48the increase in circuit 28 in thereporting periodgenerally need to admit the strongcontinuation of the trend that began in2020 ofdigitalization in customer servicemkb headed reich's expertesg rating of russian banks andhas been retaining leadingpositions since since then uh wecontinued to develop psg initiativesand established strategy and sustainabledevelopment commitcommittee under the supervisory boardrussian rating agency accra the firmcredit rating at the level ofa with a stable outlook fourth of marchin march 21 the group acquiredcommercial bankcalls overall ural ring an assetmanagement company mkb investmentthe acquisitions were based on thebusiness targets in line with ourlong-term strategic coursebesides i need to mention that on 24thof may mkb successfully completed ashare capital raising in the amount ofalmost 23 billion rubles spo will allowthe bank to develop in accordance withthe bank strategy updateannounced in march 21. the positiveeffectof the transaction will promote thefocus on high quality growth acrosskey business lines our solidfinancial performance reflects bothbusiness momentum and improved economicoutlook in the list of key eventsachievements and trends i would includerecord for first quarter net incometotal loan portfolio expansion by sixpercent growth rate that outperformsstrategy targetsupdated market adjustmentsimplementation in the first quarter thisyearthat had a certain positive effect onall portfoliosthe new eurobond issue priced at recordlow coupon rateof 3.1 percent in january theacquisition of the bankcalls overall which as i i justmentioned before in addition to assetmanagement company mkb investmentwhich will widen and diversify ourclients geography andthe range of industries and products interms of sustainable developmentanother esg link tranche raised fromaldbwand esg rating from rice europe affirmedat triple blevel with the more than eight percenthigher scorenow i would like to pass the floor tomikhail forfurther further details on our financialperformance mikhail please go aheaduh thank you vladimir good afternoon uhladies and gentlemenas we already mentioned mkb hasdelivered a solid financial performancein the first quarter we see a strongpositive dynamic of net income for theperiodtotal operating income increased by 44and and amounted to 16.6 billionrubles driven by dynamic raise ofnet interest income before provisions to16 billionrubles by actually 27 percentand 16 growth of net fee and commissionincomethe ratio of net interest income to riskweighted assets reached4.3 in comparison with first quarter2020interest expense in first quarter 2021decreased by13 or 3.4 billion rublesmainly due to a decrease of interestpaid on due to customers by 17or 3 billion rubles decrease of theinterestexpense on due to customers is mostlyexplained by the reduction ofweighted average interest rates from 4.5to 2.8 percent and portfolio ofcorporate clients andfrom 6 to 4.5 in portfolio of retailclients the bank's operating expensesgrew by 21in comparison to first quarter 2020as a result of consolidation of threeacquired companiesas well as growing charges for bonus paybonuses paymentcost to income ratio is on itssustainable long-term levelsin the reporting period net income ofthe bank reached8.3 billion rebels uh61 year-on-year deliverance strongreturn on actreturn on equity of 17.3 percentthat even surpassed our strategicstrategic targetsuh as demonstrated on slides numbersevenuh the bank balance sheet has grownsteadily mainly driven byby an increase in corporate businessincluding loan portfolio and deposits incredit and financial organizationsmqb total assets increased by 8in the first quarter the gross rate ofthe retail loan portfoliouh was at the same level 65of total assets are represented by highliquidassets securities cash and depositsincrease and financial organizationsand it was mentioning that share ofthe essential part of the balance sheetreverse report operationsis flat at the level of around 45percent umthe um the share of the loan portfoliois amounted to34 in the reporting periodmkb's main source of funding remainsdeposits offrom corporate and retail customers witha share of 61 percent of the liabilitiesas we may see from the right hand chartallsources of funding demonstrated growthincludingthe insecurities issued due to theplacement of 600 million euroeuro bonds in january 2021uh solid liabilities expansion reflectsthe bank's strong reputationand ability to attract funding fromdifferent customers groupsemit various market environmentlet's move to slide number eight withbreakdown of the bank'stotal assets 33 percent of total assetsis low on portfolio with a focus oncorporate lendingconsisting of 87 percent of theportfolioand the first quarter 2021 balance ofcorporate customers loan portfoliodemonstrated increase by six percent to945 billion rublesuh and this in the reporting periodmcabeeclassif uh classifier reclassified itsuh allocation of industries by economicsectorsdue to materiality and market practicecommerce and trading was singled outinto separate industry and appropriatereallocation of loans to customers froma number ofexisting industries were included to thenew industryline current breakdown is demonstratedon the leftdiagram total share ofreverse repo operations uh in totalassets over the end ofthe first quarter was 45 percentin line with the bank's mid-termstrategyover 96 of securities that serveas collateral and repair repo agreementshave investment gradesuh 14 of total assets are represented bysecuritiesthe securities portfolio now consists of81 percent of top tierhighly liquid investment grade debtsecurities eligible forpledge in the cbr that serve as a partof the bank'sliquidity buffer during the reportingperiodthe increase of securities portfolio byeight percent year-to-datei was mainly through purchasing russiangovernment bondsalso the growth of the portfolio wasrelated to consolidation ofuh the new subsidiary a commercial bankalsowith incoming balance of securities andthe amount of 12.2 billion rublesuh total amounts of additional unusedliquidity sources compressed a verysignificant bufferof roughly 829 billion rublesuh which components are detailed on theright hand pie chartuh these namely are unpledged securitieswhich the bank received on the reversereport transactionsand securities from own portfoliobelonging to the cbrlombard list nowi will take a few more minutes todiscuss law on portfolioquality on the slide number nineuh during first quarter 2021ecl recovery for corporate loansand cost was 1.4 billion rublesand losses on loans at fair value was1.6 billion rublestotaling for corporate law and portfolio0.2 billion rublecharges well charge for retail loanswere 0.9 billion rublesupdated macro adjustment emit recoveryin economic activityhad a certain positive effect on allportfoliosduring first quarter a sale rate forcorporate butfor the was decreasing despite portfoliogrowththe main reason was issuance of clausewith highratings recalibration of the ratingmodelconsidering upgraded gr statisticsand degrees of marker adjustment forcorporate loans portfoliothe bank made special recalibration forcorporate loansand the following factors contributed topd rates decreaseuh first default rate was suggested from2.6 percent uh uh to2 uh 0.0 percentssecond macroeconomic adjustment wasdecreased from108.6 to 100 percentand third uh sample for calibration hasbeen updateddue to the fact that updated data onnon-financialfactors became availableas a result of described measures costof risk in first quarterdecreased to 0.4 percentuh the npl level for corporate uhportfolio demonstrated the continuingdownward trend year-on-yearuh decreased to 2.5 percenta retail portfolio ratio amounts7.3 which mainlyresulted from the increase of overdueand cashconsumer loans most of which relatesdirectly orindirectly to the pandemic outbreaktotal loan portfolio npl ratio is flaton the level of 3.1 percentas shown on the bottom left diagram theshare of stage 3and pokey loans amount amounts fivepercent of total portfolioand the impairment allowance provides asufficient coverageof 99uh now i suggest turning to slide number10 where corporate law and portfolioclassification in accordance with ifrs 9is providedon the diagram there is an evolution ofcorporate loans credit quality analysisuh total amount of stage one loansincreased from779to 860 and 36 billion rublesuh plus seven percent during the firstquarteruh 2021 due to the issuance of new loansthe share of stage one loans increaseduh sinceuh first quarter 2020at the level of93.3 percent there is adecrease in stage 2 in the amount of2 billion robbers mostly due todue to the repayment of some loansthe share of stage 3 loans being themost riskysegment reduced from four point onepercentin four score fourth quarter 2020 to 3.8percentin the reporting period and theimpairment allowance provides asufficient coverage of 75 percentuh let's now move to slide number 11uh which illustrates the fundingstructure of the bankuh total liabilities reflects growth of8.5during three months of 2021.57 of total liabilities are representedby customer deposits uh volume ofcorporatedeposits comprises to 71and individuals around 29deposits by credit institutions whichaccounted for about 27 percent of totalliabilitieswere mainly represented by repotransactionsfor around 93 percentthe share of debt securities issued inis seven percentwith major part in foreign currenciesincluding the recent placement of eurodenominated bondsthat repayment schedule is comfortablefor the bankwith the bulk of wholesale funding youfrom2025let's move to slide number 12.ifrs capital developments are depictedon the uppergrounds i ifrs total capitalamount is flat in the report and periodcomprised to 331 billion rublesa good financial result in the firstquarter allowedthe bank to grow 41 uh capitaluh to 198 billion rublesbut uh negative revolution of azeriareflected in tier 2 capitalequals the total volume of the capitalcapital ratio of the mkb groupcalculatedin accordance with the basal 3requirementsbased on the ifrs financial statementshas slightly decreased in the reportingperiodthe dynamic of capital ratiosand the russian accounting standards isshownon the bottom graphs on the left sideyou may see the regulatory minimumsincluding buffersapplicable for systematically importantbankson the right diagram actual mkb'scapital adequacy ratiosare represented the ma the bankdemonstrated strong capital positionwith all ratios as of april the 1stwell above minimum regulatoryrequirementsthese were the main highlights of thebank financial and businessresults of the first quarter of 2021