Russian internet major Mail.ru and Russia's second-largest bank state-controlled VTB signed a memorandum for partnering on Mail.ru VK Pay payment service (part of VK or VKontakte social network). 

Under the partnership, VTB will provide online instalment plans to VK Pay customers (currently over 17mn customers with around 60mn transactions each month). VTB estimates that the average monthly turnover of VK Pay customers' purchases in VTB instalments could reach RUB19bn ($262mn) by 2025. 

As followed by bne IntelliNews, at the beginning of 2021 the outlook for the Russian fintech market has quickly become very competitive. 

A number of internet majors, e-commerce, retailer and telecom names have stepped into the field, adding to existing banking players such as Sberbank with its Sber digital ecosystem and TCS Group with online Tinkoff Bank. Mail.ru Group and its peer Yandex have also announced initiatives to move into Fintech. 

VK Pay customers would be able to use interest-free instalment plans for around 700 partners and suppliers, including AliExpress, the VK marketplace and Svyaznoy electronics and handset retailer. 

The parties are planning a pilot launch this autumn, and they could expand the product offering in 2022.

Sova Capital sees the news as marginally positive for Mail.ru, as the partnership with VTB should help scale VK Pay’s service offering, potentially making it more attractive to users. The analysts maintain a Buy recommendation on VTB shares and Buy recommendation on Mail.ru shares. Mail.ru is trading at an estimated 2022 Enterprise Value/EBITDA of 8.4x and Price/Earnings of 23.6x. 

In the meantime, in Sova analysts' opinion, Mail.ru's partnership with VTB could add to concerns about the IT company’s relationship with its long-time partner state-controlled bank Sber.