A substantial increase in guarantee and letter of credit (L/C) issuance fees has helped Credit Bank of Moscow (CBM) boost its net income by nearly 50 per cent in the first six months of 2021.

The bank's improved performance echoes results from other Russian financial institutions that suggest they were better able than anticipated to withstand the economic shocks in the coronavirus pandemic.

Improved performance

CBM's net income reached 13.6 billion Russian rouble (RUB13.6 billion - US$184 million) for the first six months of 2021, representing a year-on-year increase of 48.5 per cent.

Net fee and commission income was RUB6.4 billion for the same period, a 35.2 per cent increase year-on-year, fuelled by the active development of transactional business and by recovering business activity after the economic slump during the lockdown period.

In particular, guarantee and L/C issuance fees rose by 29.8 per cent to RUB2.5 billion. Fee income from settlements and wire transfers also rose substantially by 64.5 per cent to RUB1.1 billion.

Economic recovery

In June, Fitch Ratings revised the outlook on CBM's long-term issuer default ratings (IDRs) to stable from negative and affirmed the IDRs at 'BB'.

The upgrade followed the ratings agency's revision of the outlook on Russia's operating environment score to stable from negative.

Fitch said the negative implications from the pandemic on the Russian economy resulted in only a moderate weakening of Russian banks' asset quality and profitability in 2020.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.