Page 72 - RusRPTSept19

Moody's compared Russian Sberbank to Brazilian Banco do Brasil, the State Bank of India (SBI), and Chinese Commercial Bank of China (ICBC). Russian bank has the highest share bad loans and the weakest macroeconomic profile "Weak+".
The ICBC has the strongest standalone credit profile (A1 stable, baa1), while Banco do Brasil S.A. has the weakest (Ba2 stable, ba2).
"China's ICBC scored highest for all financial factors except profitability and it benefits from the strongest macroeconomic conditions," said Olga Ulyanova, VP-Sr Credit Officer at Moody's. "Among the four countries, China has the highest Macro Profile score, which captures our assessment of a country's macroeconomic environment for banks, followed by India, Brazil and Russia."
The share of bad loans for Sberbank is at 8.1% (SBI 7.3%, ICBC and Banco do Brasil below 3%), which are carried over from the 2014-2016 crisis, Moody's notes. At the same time Sberbank is the most profitable out of four BRICS majors, with high net profit margin, and good operational efficiency.
Analysts surveyed by Vedomosti daily agree that Sberbank is affected by Russian macro environment and sanctions that are adding uncertainty and additional risks. Stale corporate lending is another negative factor, but investors are attracted to the bank's high margins.
The return on assets of Sberbank in 2018 was 2.9% for Sberbank versus 1.1% for ICBC and Banco do Brasil, 0.3% for SBI. Net interest margin is estimated at 5.3%. In 2Q19 Sberbank's net interest margin is estimated at 5.4%, but it is seen to decline following the downwards trend in the interest rates.
As reported by bne IntelliNews, Sberbank made net IFRS profit of RUB250bn ($4bn) in 2Q19, expanding by 16% year-on-year and 10% quarter-on-quarter, beating consensus expectations by 9%, and making a Return on Equity of 25%.
The bank also announced completing the sale of Turkish Denizbank at TRY15.5bn ($2.8bn) for 99.85% stake. The completion of the deal was anticipated as one of the short-term catalysts for Sberbank's shares.
Russian Accounting Standards (RAS) net profit of Russia's largest bank Sberbank stood at RUB75bn, flat month-on-month and gaining 6% year- on-year. In January-July 2019 net income increased by 11% y/y to RUB520bn ($8bn).
BCS Global Markets estimated Sberbank's return on equity in the reporting month at 23%, seeing the results as neutral. "July looks mild partly due to summer season," BCS commented on August 7, adding that net profit showed moderate increase "despite RUB22.7bn profit [that] was recognized from the sale of [Turkish] DenizBank."
As reported by bne IntelliNews, Sberbank recently announced completing the sale of Turkish Denizbank at TRY15.5bn ($2.8bn) for 99.85% stake. The completion of the deal was anticipated as one of the short-term catalysts for Sberbank's shares.
In July the dividend payment weakened net interest margin by 10bp to 5.3%, despite the support from the CBR’s interest rate cuts in June and July and
72 RUSSIA Country Report September 2019 www.intellinews.com