Page 69 - RUSRptOct18

(NIM). However, with a time lag of around a year, the asset side would reprice, prompting a rebound in NII and NIM. A meaningful ruble devaluation (at least RUB10) would raise the value of banks’ FX-assets (loans) in ruble terms, putting pressure on capital ratios and limiting their ability to pay dividends. Sberbank’s average deposit maturity is 1.3-1.5 years, with three-year average loan maturity, and a sizeable interest-rate increase would result in liabilities repricing faster than assets. On our rough estimates and Sberbank data, a 100 bpt key rate hike could reduce SBER’s NII by RUB25-30bn – just 1.8% of its NII and therefore negligible (all else equal). However, FX fluctuations have a greater bearing on its capital ratios: a RUB10 devaluation reduces the CET1 ratio by about 0.6 bpt, according to the CFO.
The CBR clean up of the bank sector is nearly over. The overwhelming number of unscrupulous and weak credit institutions have already been withdrawn from the market, Elvira Nabiullina , chairman of the Bank of Russia , said in a video message at the forum of the Association of Banks of Russia on September 6. "The overwhelming number of banks of unscrupulous, weak are withdrawn from the banking market. This gives an impetus to the development of healthy competition,” Nabiullina said.
The unofficial goal is to reduce the number of banks operating in Russia to about 300.
8.1.8 Sberbank news
Russia's largest bank Sberbank reported RUB541bn ($7.7bn) net income on January-August 2018 , increasing 25% year-on-year and implying RoE of 23%. In August alone net income was up by 18% to RUB71.5bn, with RoE of 24%, equal to that of July . Sberbank is Russia's largest creditor, holds the largest share of country's deposit, and has been demonstrating robust results throughout 2017 and 2018 . However, recently the shares of the bank came under pressure due sanction risks. "Sberbank continues to deliver good results and we see no indications of earnings growth deterioration on the back of the
69 RUSSIA Country Report October 2018 www.intellinews.com