Page 102 - RusRPTJun21

Asset quality. The share of 90D+ NPLs stayed flat QoQ at 4.3%, but CoR declined to only 40bp due to a repayment of loans and a net provision release in mortgages as the quality of borrowers improve. In our view, this result is unsustainable, but we still see CoR below the targeted 100bp in coming quarters.
Management FY21 outlook. SBER has increased its guidance for FY21 ROE to more than 20% by cutting its CoR outlook to 100bp. Its target for revenues from the non-banking business is up to more than RUB 200bn and for opex to 10-15% YoY growth. CET1 CAR is to be around 14%.
Capital position. RWA density improved to 91.8% from 94.7% at YE20, which, together with higher capital, helped CET1 CAR to improve 47bp QoQ to 14.3%, or in line management’s FY21 target.
Bottom-line. We saw the conference call as reassuring, and the guidance as reasonable. In our view, CoR will remain below 100bp in coming quarters amid good asset quality. So far, the target of more than RUB 200bn revenue from the non-banking business seems to have been too aggressive, or to imply an aggressive investment in customer and market share acquisition to achieve top line targets and scale in a highly competitive sector.
Changes in forecasts. Our 2021-22F EPS forecasts are up 3-4% and our 2023F estimate is down 3%, due to changes in our assumptions for CoR and loan growth.
Valuation and risks. The bank is trading at 6.5x 2021F P/E and 4.3x P/PPP, which is undemanding given the 19% ROE. Risks stem from macroeconomic development and M&A activity.
Russian banking giant Sber (formerly known as Sberbank) intends to reduce the carbon footprint of its offices to zero by 2030, the Russian baking and credit giant stated in its press release on May 7 as cited by Tass. "We plan to achieve carbon neutrality of our offices by 2030, that is, to fully compensate the carbon footprint left from our operations," First Deputy Chairman of the Executive Board of Sberbank Alexander Vedyakhin said in a comment. Sber intends to offset the carbon footprint of its office operations by cutting back paper consumption, procurement of new stationery, plastic card processing and reduced power consumption. In 2020, Sber already saved 742mn paper sheets roughly equivalent to 60 loaded railcars and 107mn sheets over the first quarter of 2021, the bank revealed. Sber will also abandon the procurement of 13,000 shredders and new printer cartridges in favor of refilling old ones. Furthermore, 2,500 Sber offices accept plastic banking cards for processing, and 800,000 cards were gathered in the first quarter alone. This totals 4,000 tonnes of plastic to be used further for making window frames for bank offices. "Savings from reduced power consumption in the first quarter of 2021 amounted to 85.8mn rubles ($1.16mn)," Sber reported.
102 RUSSIA Country Report June 2021 www.intellinews.com