Sovcombank Leasing (formerly Sollers-Finance)

Performance indicators

2023: Profit growth by 7% to RUB 1.75 billion

Net profit of Sovcombank Leasing in 2023 reached 1.75 billion rubles, which is 7% more than a year ago. Such data in accordance with international financial reporting standards (IFRS) were published in April 2024.

According to Interfax, citing materials from the leasing company Sovcombank, its net interest income before reserves in 2023 increased by 31% and reached 3.6 billion rubles, and after reserves they increased by 23%, to 3.3 billion rubles.

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As of the end of 2023, Sovcombank Leasing's assets amounted to 71.6 billion rubles against 36.2 billion rubles a year earlier. Assets grew largely due to investments in leasing and leaseback operations, the volume of which in 2023 also doubled and amounted to 63.6 billion rubles.

It also follows from the reporting that in December 2023 Sovcombank Leasing received a deposit in the amount of 0.5 billion rubles from its parent bank.

Non-current assets of Sovcombank Leasing by the end of 2023 amounted to 14.14 billion rubles, current assets - 70.8 billion rubles, capital and reserves - 8.21 billion rubles. The company's long-term liabilities in 2023 reached 46.52 billion rubles, short-term liabilities - 30.21 billion rubles.

In 2023, Sovcombank Leasing paid a windfall tax of 102 million rubles. The company's income tax expenses for the year increased by 41% and amounted to 580.7 million rubles.

The management of the group concluded that individual companies of the group are payers of this tax. The group took advantage of the opportunity to reduce the tax amount by making a security payment, the company said in its statements, excerpts from which Interfax cites[1]

2019

According to Expert RA, at the end of 2019, Sollers-Finance is among the top 40 leasing companies in terms of portfolio size (9.2 billion rubles). In terms of the number of new contracts concluded per year, the company ranks 19th. The basis of the leasing portfolio is truck (73%), cars (14%), as well as special equipment (12%).

History

2020: Sovcombank paid 1.2 billion rubles for 50% of the company and consolidated 100% in it

For half of the Sollers-Finance leasing company, Sovcombank paid 1.2 billion rubles. As a result of the transaction, the bank consolidated 100% of the shares of the leasing company.

The company's valuation turned out to be the lowest, based on well-known transactions in the leasing market. The discount could be provided by the relatively small size of the company itself, as well as the concentration of its funding on the bank itself. The transition of Sollers-Finance to the bank reflects the emerging tendency for credit institutions to enter more marginal areas, as well as the increased sensitivity of leasing companies to the cost of funding, the cheapening of which can be achieved at the expense of the reference bank.

The bank bought a 50% stake in the company from the Sollers automaker Vadim Shvetsov. The acquisition price of Sollers-Finance corresponds to 4.2 net profit (Net Income, NI) of the leasing company for the year, based on IFRS for mid-2019.

"The company's business has significantly diversified in recent years relative to Sollers brands," the bank representative noted, emphasizing the preservation of joint projects with the carmaker. It is assumed "to work more intensively in the segment of passenger cars, where important competencies of our team in car loans have already been built." At the same time, the bank is counting on "more competitive sources of financing." "One hundred percent belonging to the bank will convince creditors and investors to reduce expectations for the yield of bonds and loans to the company," said a representative of the credit institution. Fitch noted that this transaction is consistent with the tendency for credit institutions to penetrate high-margin industries in order to compensate for the reduction in margins in the banking business. At the same time, for the leasing company, "proximity to a strong bank allows you to save money and provides significant competitive^[2]

In 2018, the Region group of companies bought MKB Leasing for 1.6 billion rubles. (6 NI). Baltic Leasing, when moving to Otkritie FC Bank, was valued at 8.5 billion rubles. (almost 5 NI). Thus, Sovcombank from well-known transactions bought out a share in the leasing business the cheapest. According to the first deputy chairman of the bank's board, Sergei Khotimsky, "the price is determined by both the profit and the capital of the company."

A small discount could be provided by the small size of the company itself, a high concentration of funding at Sovcombank itself, as well as a more concentrated leasing portfolio compared to other competitors, "the top manager of one of the large leasing companies believes.

"Given that Sollers owned only a 50 percent stake in the leasing company, as well as the fact that Sovcombank was the main creditor, we can explain the small discount, but it is quite comfortable for the carmaker," says Ruslan Korshunov, senior director of banking ratings at Expert RA. According to him, the concentration of Sollers-Finance in one segment, freight, could have influenced the assessment cars.

2019: Sovcombank accounts for 44% of the company's liabilities

The main means of funding Sollers-Finance is bond issues, which accounted for 76% of liabilities (3.5 billion rubles) in the first half of 2019. Bank loans accounted for 14% (0.6 billion rubles). According to the Fitch rating agency, Sollers-Finance accounts for 44% of all obligations. The agency at the end of November 2019 indicated that the bank's management "carefully oversees" the company's activities, and is also "involved in strategic decision-making."

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