Bank-Saint Petersburg — Dividends and Growth

Bank St. Petersburg is known for its extreme urgency. With net profit of 10.8 billion in 2020, the Bank’s capitalization is only 33 billion. Moreover, this profit was not one-time and continues to grow. So for the first half of the year, the RSB report hints at the fact that in IFRS we will see about 8.7 billion pure profits only for the first half of the year. That is for 2021, net profit may well translate for 14 billion.

BSP pays dividends. 20% of net profit is sent to dividends, which allows the bank to increase capital faster, while the strong underestimation of shares gives an interesting percentage in annual. At a profit of 14 billion, 2.8 billion will be directed to dividends, which corresponds to the dividend yield of 8.2% per annum.

At the same time, the idea is far from dividend in the promotions. For its indicators, the bank should be worth two times more expensive. Moreover, twice a year the Board of Directors is going to address the issue of reverse ransom. At the last meeting, 14 million shares of 75 rubles were decided to redeem. The reverse ransom, most often leads to the growth of quotations, as the business begins to share for a smaller number of shares, and accordingly, the value of one paper increases.

Let’s summarize. Shares of BSP remain undervalued for no first year, but to be in them at 8% of the dividends with growth potential due to the underestimation is quite comfortable. Moreover, the reverse ransom is included, which is likely to be a trigger to growth before fair values. For its streams, a normal assessment of the bank is at the level of ~ 80 billion. For comparison, Aeroflot, which before the pandemic could count on profits comparable to the BSP, and now 160 billion is currently in an extremely deplorable position, against 33 billion at the BSP.

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