Russia’s Sberbank reports record Q1 profit, raises forecasts

5:57 am Thursday, May 18th, 2023

By Elena Fabrichnaya and Alexander Marrow

MOSCOW (Reuters) -Russia’s largest lender Sberbank on Thursday reported record first-quarter net profit of 357.2 billion roubles ($4.6 billion) and raised forecasts for several indicators, keeping the bank on course to rebound sharply from a difficult 2022.

The central bank ordered Russian banks to limit disclosures soon after Moscow despatched troops to Ukraine in February 2022 and sweeping Western sanctions rattled Russia’s financial sector.

Sberbank, whose profits slumped almost 80% last year, did not provide a comparison with the year-ago period for most figures, but CEO German Gref said profits hit a record for the quarter.

“The strong results of the first quarter, the resilient quality of the loan portfolio and high operational efficiency give grounds for an increase in our return on equity (ROE) forecast for 2023 to above 22%,” Gref said in a statement.

The bank had previously expected ROE of around 20%. It also raised expectations for its net commission income growth to more than 12% from higher than 10%, and improved forecasts for loan portfolio growth.

Financial chief Taras Skvortsov said there was a high likelihood that Sberbank’s profits this year would exceed the record 1.25 trillion roubles hit “pre-crisis” in 2021.

Sberbank said first-quarter net interest income rose year-on-year to 562.8 billion roubles and net commission income for the quarter declined to 171.1 billion roubles on the back of the flurry of transactions in the same period last year.

The bank’s net interest margin climbed to 5.78% as borrowing rates normalised. The central bank raised its key interest rate to 20% last year before a series of rate cuts to the current level of 7.5%.

Already Russia’s dominant lender with 106.5 million retail clients, state-owned Sberbank has become one of the country’s leading technology players, taking on an increasingly important role as sanctions and exiting rivals create gaps only a handful of firms can fill.

Shares in Sberbank were 1.1% higher at 0854 GMT, outperforming the wider market. Skvortsov said Sberbank, which is paying record dividends on 2022 results, would present a new dividend policy later this year.

($1 = 77.7205 roubles)

(Reporting by Elena Fabrichnaya and Alexander MarrowEditing by Sharon Singleton and Mark Potter)