Page 83 - RusRPTFeb19

which is expected to grow by 15–18%. Deposits of individuals, according to forecasts, will grow by 5-7%, which corresponds to forecasts for the sector, and deposits of corporate clients will grow by 8-11%. These figures slightly exceed the results of the sector, the document says.
Russia’s state-owned Sberbank finished 2018 on a high note, reporting December RAS earnings of RUB52bn ($777mn), a +78% y/y increase and a 16.5% return on equity, the bank reported on January 15.
The strong results were despite facing headwinds from a depreciating ruble which fell 4.1% m/m and 21% y/y, as well as the ongoing provisioning of exposure to oil refineries.
Sberbank also reported a significant improvement in asset quality, especially in the corporate segment, as the share of overdue amounts was down 31bp y/y to 2.1%.
“While the 2018 RAS standalone earnings of RUB 811bn are 3.6% below the IFRS-consolidated based Bloomberg consensus, we view the results as neutral. Bigger picture-wise, underlying CoR below 100bp offers a big safety buffer for 2019, even with the consumer credit cycle showing signs of maturity and regulatory scrutiny on fees (card-to-card, interchange) increasing. While sanctions and the broader appetite to EM remain pivotal for the stock, given the undemanding 2019F P/BV of 0.97x, P/PPP of 3.1x, as well as the DY of 9.5%, the stock is poised for a gradual re-rating, we think,” VTB Capital (VTBC) said in a note.
The Bank issued RUB1.6 trillion in loans in December, including a record monthly loan volume of RUB324bn issued to retail clients, the bank said in a press statement.
Retail deposits added in December 5.3% or almost RUB660bn, while the bank executed mortgage securitization worth RUB46bn in December.
Deputy Chairman of Sberbank Alexander Morozov stated: “Net profit for 2018 excluding effect of subsequent events exceeded RUB800bn, Return of Equity reached 22.6%, Cost to Income Ratio improved to 30.9% and Cost to Assets Ratio – to 2.3%. The results fit well Strategy 2020 financial targets.”
Net interest income increased by 3.3% for the year to RUB1,253bn driven mostly by working assets expansion.
Net fee and commission income grew by 19.5% to RUB429bn. The largest contributors to fee income growth were operations with bank cards and acquiring, settlement transactions and fees from insurance product sales.
Growth in operating expenses slowed gradually through the year, as the Bank pursued the approach of a more even allocation of accrued expenses. As a result, operating expenses grew by 4.2% for the year, which was slower than growth in operating income before provisions (+10.0%). Cost-to-Income Ratio improved to 30.9% from 32.6% in 2017.
Provision charges for the year totalled RUB267bn, which was 13.0% lower as compared to 2017. December provision charge amounted to RUB29.3bn, which was for the most part related to FX-loans revaluation. In 2018, loan-loss provision coverage increased from 2.6 to 2.9 times the overdue loans.
83 RUSSIA Country Report February 2019 www.intellinews.com