Page 101 - RusRPTApr21

possibility that monthly cost of risk dropped below 1% in February when adjusted for the FX effect, in our view. As a result, further estimate upgrades by the sell side are likely, which should support SBER's share price. Consequently, we keep SBER in our list of top picks.
Finally, we now estimate the FY20 results-based DPS at RUB16.85/share based on the dividend payout ratio of 50%. The latter is likely to be confirmed during today's conference call. The implied dividend yields are 6.1% for SBER and 6.7% for SBERP, on our calculations.
Sberbank has disclosed how much money it makes from its non-financial business for the first time, and while the firm has rebranded to emphasize that it is “more than a bank,” its financial statements claim otherwise.
Last year, Sber brought in RUB71.4bn ($966mn) in revenue from its non-banking businesses, a sizeable increase from RUB26.4bn a year prior. Non-financial pre-tax profits similarly increased, from a RUB1.5bn loss in 2019 to an RUB8.6bn ($116mn) gain in 2020.
Yet compared to Sberbank’s overall financial performance, its non- bank earnings are a drop in the bucket. Sberbank’s total 2020 revenues amounted to RUB3.37 trillion ($45.6bn).
The firm’s non-financial ecosystem therefore accounted for just 2.1% of revenues, 1.1% of operating income, and 0.9% of profits. These figures are furthermore inflated by the bank’s split from Yandex, during, which it sold its 45% stake in Yandex.Market to the tech firm. Sber earned 19.8bn from the sale, which was catalogued as non- financial profit. Excluding this income, Sberbank’s non-financial businesses actually lost 12bn ($162mn).
The bank’s financial statements serve as a helpful reality check for assessing Sber’s transformation into lifestyle tech company. According to its corporate strategy, Sberbank plans to earn 5% of its net operating income from its non-bank ecosystem holdings by 2023 and 20-30% by 2030. Yet the company’s 2020 earnings show that despite Sberbank being a leader in creating an ecosystem of services that encapsulate Russians’ everyday lives, its goals still remain ambitious.
In February 2021, Sberbank's RAS earnings grew 6.8% m/m due to a net provision release to a record high RUB93bn, implying a 25% ROE. VTBC reports:
We note solid real loan growth (net of the FX effect) and a decelerated decline in 3mo rolling NIM as positive aspects of the results. While the FX revaluation-driven net provision release is unlikely to stay, we still
101 RUSSIA Country Report April 2021 www.intellinews.com