January 31, 2014 / 10:17 AM / in 4 years

Russia's Sberbank sees slight profit rise in 2014

MOSCOW, Jan 31 (Reuters) - Sberbank, Russia’s top lender by assets, expects to post a slight rise in net profit this year, its deputy CEO said on Friday, anticipating it will outpace the growth of the domestic market while controlling costs.

Sberbank, which accounts for around a third of total lending in Russia and is viewed by many investors as a proxy for the economy as a whole, sees domestic corporate lending growing by 11 to 12 percent and retail loans expanding by between 20 and 25 percent.

“We expect our profit to be slightly higher than in 2013,” Alexander Morozov told a conference call on Friday. “We expect to grow a bit better in loans and deposits compared to the overall market.”

Sberbank, headed by a former economy minister German Gref, posted net profit up 13 percent at 392.6 billion roubles ($11 billion) in 2013 under Russian accounting standards.

Sberbank’s results under Russian accounting rules are close to those under international norms and are indicators for the market on how Russia’s biggest bank - and the domestic banking sector in general - performed.

The bank will publish results under international standards by the end of March.

Sberbank is being impacted by Russia’s faltering economy, whose growth was just over 1 percent last year. The country sees average annual growth of 2.5 percent over the next two decades, compared with more than 6 percent in the previous decade.

Sberbank has already started to suffer from a rise in bad loans, including in credit cards, and high provisions are eating into its profits.

Under Russian standards, it set aside 97.3 billion roubles to cover potential bad loans last year, up from 29.9 billion the year earlier.

On Friday, Morozov declined to comment in detail about bad loans, but said the bank took the necessary measures to stabilise the quality of its loan portfolio. He promised to address the issue further following the company’s fourth-quarter earnings presentation.

Morozov added that the bank sees its return on equity at around 20 percent this year, slightly down from 20.9 percent for the first nine months of 2013, but still double its closest European peers such as HSBC, Europe’s largest bank by stock market value.

For 2012, Sberbank paid shareholders 17 percent of its internationally reported profit in dividends - or 2.57 roubles per ordinary share and 3.20 roubles per preferred share - and Morozov said that for 2013, the payout may increase to some 20 percent, but the decision needs to be approved by management.

$1 = 34.9626 Russian roubles Reporting by Katya Golubkova; Editing by David Holmes

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