Russia Sberbank expects strong rise in 2010 profit

SKOLKOVO, Russia, Sept. 21 (Reuters) - Russia's biggest lender Sberbank SBER03.MM expects its profit will grow substantially in 2010 compared to this year when provisions are set to consume almost all of its earnings, its CEO said.

"Next year profit, of course, will be much higher, but it is to early to say whether or not it will get back to pre-crisis levels," German Gref told reporters late Sunday.

Russian banks are struggling with losses as provisions for bad loans consume their income and capital while the economy is suffering its first contraction in a decade.

State-controlled Sberbank earned 97.7 billion roubles ($3.22 billion) in 2008 and has stayed in the black so far this year unlike its largest peer VTB (VTBR.MM), which posted a 20.5 billion roubles net loss in the first quarter.

Sberbank, among other state-controlled banks, has been tasked by the government to lend to the real economy, which is suffocating without funding as the global credit crunch effectively dried up wholesale capital markets.

It is ready to provide fresh funding to Russia's largest developer PIK (PIKK.MM) under state guarantees, Gref said.

"We are ready, if the company keeps servicing its restructured debt, to finance PIK's new projects under the state guarantees and purchases from the Ministry of Defence. It is going to be a new loan of 10-15 billion roubles," Gref said.

Shares in PIK spiked more than 30 percent last week after the announcement that the government would guarantee more than $450 million of PIK's debt to the state banks. [ID:nLH630143].

"The decision has been made - we will restructure the company's debt," Gref said, adding PIK's total debt to Sberbank is around 14 billion roubles.

Russia's government allocated 300 billion roubles in 2010 budget to guarantee banking loans, in a bid to kick-start lending and to get the economy out of the recession. ($1=30.38 Rouble) (Reporting by Oksana Kobzeva, writing by Dmitry Sergeyev; Editing by Hans Peters)