Page 70 - RusRPTFeb22

partially offset the seasonal decline in opex. On the downside, we note the negative revaluation of the securities portfolio, that pressured the capital position and might limit dividend payments to 50% of FY21 earnings (implies a 10% DY and downside risks to our forecast of a 60% payout). In our view, the underlying results are positive and supportive for the stock price, with all major risks being priced in, given the 15% correction in the stock price YTD. Sberbank is to report its FY21 IFRS results on 2 March and we expect management to update its outlook for this year. We keep our 12-month Target Price for ords unchanged at RUB450. Buy reiterated, given the 77% ETR.
Financial performance. Core income grew robustly y/y, with NII up 14.8% y/y and net F&C income up 10.6% y/y amid business growth. However, 3mo rolling NIM continued to decline, at 3bp m/m to 5.6%, as management highlighted before. Opex growth remained high, at 10.7% y/y, pressured by inflation, the FX factor and the indexation of salaries. The weaker RUB(2.0% y/y and 4.5% m/m) was the main factor behind the m/m spike in the provision charge. Still, earnings were up 15.6% y/y to RUB100bn and implied 22.1% ROE.
Balance sheet. Retail loans grew 1.3% m/m, supported by growth in all segments, but consumer loans (+1.3% m/m) slightly outpaced mortgages (+1.1% m/m). The corporate portfolio was up 1.2% m/m, including a 1% m/m increase in RUB-denominated loans. Retail deposits decreased 3.0% m/m amid seasonal trends, while corporate accounts grew 5.0% m/m.
Asset quality. The share of overdue amounts increased 10bp m/m to 2.4%, but the coverage ratio stayed at 213%. 3mo rolling CoR increased 59bp m/m to 81bp amid the FX revaluation pressure.
Capital position. The N1.1 and N1.0 ratios were down 35bp and 53bp to 10.1% and 13.7%, respectively. The 3.1% m/m increase in RWA and the significant negative revaluation of the trading portfolio directly in capital (the net comprehensive loss was at RUB102bn) affected the capital position. The bank estimates that the RAS results audit will increase N1.1 by 2.5pp.
FY22 targets. In December 2021, management announced its FY22 targets and we see the bank delivering on them, including net F&C income growth (11-13% y/y), CoR (80-90bp) and ROE (>20%). However, we expect management to discuss its targets during the FY21 IFRS results announcement on 2 March 2022, as we see a further tightening of CBR monetary policy and rising geopolitical risks.
Sber (formerly known as Sberbank) has been named the strongest brand in
70 RUSSIA Country Report February 2022 www.intellinews.com