Assessing the investment attractiveness of VTB Bank bonds
Abstract. In conditions of economic instability, special attention is paid to ensuringthe investment attractiveness of commercial banks, which indicates the ability of the latter to maintain stable and profitable activities, timely meet their bond obligations of various types, effectively manage risks in case of changes in the macroeconomic and other environmental conditions and the occurrence of negative factors in the financial market. This determines the relevance of the chosen research direction. The purpose of the study was to analyze the investment attractiveness of VTB Bank bonds and assess the attractiveness of individual issues and types of bonds of this bank for unqualified investors in comparison with the bonds of its key competitors. The main research methods were the fundamental financial and economic analysis of VTB Bank as an issuer and a comparative analysis of the parameters of the key varieties of bonds of VTB Bank, Sberbank and Alfa-Bank. The issuer`s analysis confirmed the stability of the bank`s position, however, VTB`s weak point is its vulnerable capital position. As a bond issuer, VTB Bank mainly issues short-term bonds; bonds with fixed coupon payments are issued for a period of no more than 1 year, which does not comply with the principles of the passive investment strategy under which bonds are usually purchased. For a period of more than 1 year, VTB`s most attractive investment-grade bonds with variable coupon income and structural bonds are issued. However, the bonds of Sberbank and Alfa-Bank, based on a combination of parameters, are more attractive to investors, including unqualified ones.
Keywords: issuer analysis, assets, liabilities, mandatory ratios, financial multipliers, profitability, duration.
Highlights:
- the selection of bonds for an investment portfolio consists of an analysis of the parameters of the bond itself and an analysis of the reliability of the bank as an issuer;
- a number of banks are characterized by higher regulatory values, they have a stronger capital position compared to VTB. All banks, except VTB, have basic and fixed capital adequacy ratios that significantly exceed the minimum values of the standard, whereas VTB`s are below the required values and do not exceed 10%;
- variable coupon bonds are the most attractive among VTB bonds, since in the case of an increase in the key rate, they can receive higher yields due to coupon payments.
Olga G. Arkadieva - I.N. Ulyanov Chuvash State University, Cheboksary, Russia; Maria A. Petrova - VTB Bank (PJSC), Cheboksary, Russia