ATFBank’s net interest income expanded by 43.4% yoy in 2Q2016. Customer deposits increased by 3.1% qoq, whilst the Eurobonds redemption in May led to a decrease in the bank's assets. We upgrade our recommendation from Hold to Buy ATFBank’s bonds. We expect the buyback of expensive to service perpetual subordinated Eurobonds, taking into account gradual exclusion of perpetual financial instruments from the calculation of regulatory capital since 2017. Our recommendation is supported by the excess liquidity, significant growth in net interest income yoy and our expectation of conservative growth of the loan portfolio in 2016-2017, which will not have material impact on capital ratios.

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