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payout in terms of IFRS net profit would increase from 17.5% in April's proposal to 27%, which brings it closer to the state-ordered mandatory payout of 50% of profits. Net profit for 2018 is expected at RUB1.42 trillion or $20.4bn. In 2017 and 2016 Gazprom paid about RUB190bn in dividends, or about 27% and 20% of IFRS net profit, respectively.
Rosneft’s BoD recommended dividends of RUB 25.91/share, fully in line with the company’s dividend policy and consensus expectations. This implies a payout of 50% of 2018 IFRS net income and a dividend yield of 6.1%.
Tatneft’s BoD recommended dividends of RUB 84.91/share for both ordinary and preferred shares, positively surprising the market (BBGe RUB 70/share). This implies dividend yields of 11.1% and 13.2%, respectively. The total dividend payment for 2018 of RUB 197bn corresponds to 93% and 134% payout ratios of IFRS net income and the company’s FCF, respectively, which is much higher than the company’s official dividend policy envisages (50% of IFRS net income or 100% of FCF).
The Board of Directors of Surgutneftegas has recommended that shareholders approve dividends for 2018 of RUB 0.65/share for ordinary shares and RUB 7.62/share for preferred shares, according to the company press release on Friday. The record date for dividends might be set as 18 July. The annual shareholders meeting is scheduled for 28 June, with registration closing on 3 June. The recommended dividends for prefs are in line with our expectations and the company’s dividend policy (payout of 7.1% of RAS net income), while for ords the company’s BoD decided to recommend flat y/y dividends. VTBC calculates that the recommended dividends imply dividend yields of 2.7% and 19.3% for ords and prefs, respectively. The company’s preferred shares jumped some 3% on the dividend announcement.
● Banks
Sberbank’s Supervisory Board recommended dividends at 43.45% DPR,
with DPS of RUB 16 for both common and preferred shares, disappointing the market (BBGe RUB 17.7). This implies dividend yields of 6.9% and 7.9%, respectively.
At the annual shareholder meeting the CEO of Russia's largest state- controlled bank German Gref unveiled the plans to introduce a new dividend strategy beyond 2021, which will target payout at over 50% of IFRS net profit and possibly pay interim quarterly or semiannual dividends. Under current dividend strategy of Sberbank for 2018-2020, the bank said it would pay 43.5% of IFRS net profit in dividends for 2018, which was still shy of the 50% mandated by the Ministry of Finance for all state-owned enterprises.
Russia's second-largest state-controlled bank VTB Bank said it has included a switch to a new dividend strategy for 2019-2022 that would see dividend payments rise to 50% of IFRS net profit, Interfax reported on May 23 citing the unpublished presentation to investors and analysts. The company’s stock soared 10% on the news. This would make a major boost in dividends as for 2018 the bank paid 15% of IFRS profit. Russia's largest bank and investor darling Sberbank said in April it would pay 43.5% of IFRS net profit in dividends for 2018, which was still shy of the 50% mandated by the Ministry of Finance for all state-owned enterprises. As of the announcement the shares of VTB on Moscow Exchange jumped by 10%, beating the maximum share value since November 2018 and bringing the bank's capitalisation to RUB502bn. The new dividend payout of 50% already for 2019, is a "game changer for VTB, given attractive DY [dividend yield] and thin positioning of the investors," BCS Global Markets commented on May 24, estimating that the 50% payout implies DY for ordinary shares of 9% for 2019 and up to 11% for 2021 on expected net profit of RUB200bn. VTB expects to see its bottom line at RUB200bn in 2019, RUB230bn in 2020, RUB270bn in 2021, and RUB300bn in 2022. However, BCS GM notes that "the history of VTB’s divi payouts is volatile – 61% for 2017, 15% for 2018 and execution is
85 RUSSIA Country Report June 2019 www.intellinews.com