* Sberbank has plans ready if economy worsens
* Full year earnings miss Sberbank's own target
* Wrote down 9 bln roubles on Olympics projects
* Non-performing loans drop but bank boosts provisions (Recasts with comments from conference call)
By Megan Davies
MOSCOW, March 27 (Reuters) - Sberbank has plans in place to cope if the Russian economy worsens due to the Ukraine crisis and sanctions and is prepared for a scenario where growth hits zero, inflation spikes and consumer demand weakens.
Shares in Sberbank and VTB, Russia's two largest state banks, have fallen sharply this month due to uncertainty over what impact the Ukraine crisis and subsequent sanctions will have on Russia's economy.
"We have good responses to all potential threats," Sberbank CEO German Gref said on a conference call for analysts after publication of the bank's 2013 earnings.
"We are certainly more prepared than in (the financial crisis of) 2008 ... and we don't see anything coming at us from the horizon that can unseat us."
Gref said the bank has response plans that will be triggered if the economy worsens beyond its expectations, which factors in the risk of potential sanctions, although he forecast that sanctions against Russia would be limited to the current level.
In such a scenario, state-controlled Sberbank would plan to boost risk management.
"The situation around us is less than simple but far from life threatening," he said, adding that its plans had been discussed and approved by central bank head Elvira Nabiullina. Sberbank declined to give further details about its plans.
Sberbank has exposure of 130 billion roubles ($4 billion) to Ukraine - less than 1 percent of its balance sheet - and Gref reiterated that the bank has no plans to leave the country.
"Hopefully the Ukrainian turmoil will not deteriorate beyond current levels and we can develop good relations with the new Ukrainian government," he said.
Sberbank earlier reported a 4.1 percent rise in full-year earnings, falling short of its own target as it increased provisions for loan-losses in a deteriorating economy.
The bank's full-year net profit was 362 billion roubles, below its estimate of 370 billion roubles given in August last year as the economy slowed.
The bank said it wrote down the value of construction projects for the Olympics to zero which amounted to 9 billion roubles ($253 million). Sberbank was a partner in the Sochi 2014 Olympics and organised projects such as an ice climbing festival, according to the Sochi games website.
Net provision charges for bad loans came to 133.5 billion roubles, most of them for consumer and other loans to individuals, up from 21.5 billion roubles a year earlier.
Banks have been increasing provisions as a faltering economy makes it harder for companies and individuals to repay loans.
This has not yet led to a surge in the proportion of bad loans at Sberbank. The bank said non-performing loans edged down to 2.9 percent of total loans last year compared to 3.2 percent the previous year.
It attributed that improvement to an increase in overall lending which also boosted its bottom line. Like other Russian banks, Sberbank has been piling into high-margin consumer lending as demand for credit slowed at companies. It said it would focus on growing mortgage loans in 2014.
Sberbank's shares closed 3 percent lower by the close of trading, underperforming the broad Russian market index which was down 1.3 percent.
Sberbank and VTB shares are down 6.5 percent and 9 percent respectively since the United States raised the prospect of sanctions in early March.
Fourth-quarter net income of 94 billion roubles ($2.7 billion) was below a 96.3 billion consensus analyst forecast in a Reuters poll, but was up 10 percent on the same period the previous year. Sberbank did not publish fourth-quarter figures and the numbers were calculated by Reuters. ($1 = 35.5012 Russian roubles) (Additional reporting by Maria Kiselyova, Katya Golubkova and Oksana Kobzeva; editing by Tom Pfeiffer and Jane Merriman)