* Q2 net profit up 13 pct on forex gains
* CEO says bank sticks to strategic goals
* Bank will focus on cost controls, bad loans
(Adds details, quotes, background)
By Katya Golubkova and Oksana Kobzeva
MOSCOW, Aug 28 Sberbank, Russia's
biggest lender by assets, will focus on costs and loan quality
as it endeavours to hit targets set under its five-year
strategic plan in spite of a weakening Russian economy also
feeling the effects of Western sanctions.
The state-controlled bank is an important lender to Russia's
$2 trillion economy but is grappling with a weaking economic
outlook and capital flight in the wake of the sanctions in
response to the country's policy towards Ukraine.
Sberbank expects Russia's economic growth to be "close to
zero" this year, Chief Executive German Gref said, compared with
the Economy Ministry's official forecast of 0.5 percent growth.
The Russian stock market and the rouble fell further on
Thursday as Ukraine accused Moscow of sending troops to support
rebels in eastern Ukraine, raising the possibility of a new
round of sanctions.
Sberbank is one of five Russian banks subject to sanctions
banning all European Union nationals and companies from buying
or selling new bonds, equity or other financial instruments they
issue with a maturity of more than 90 days.
Gref, a former Economy Minister, said in a conference call
that sanctions have had some negative effect on the bank, both
in terms of business and its ability to raise capital.
"But I can't say yet that it had a significant influence on
our business - these are more moral loses," Gref said, adding
that he is trying to rebuild the bank as a modern and
transparent business while sanctions are "barriers blocking
Last November Sberbank unveiled an ambitious target of
doubling its assets and earnings by 2019 through increased
lending to consumers at home while developing its existing
network of businesses abroad.
"We remain optimistic over our ability to reach all our
strategic goals and I think we will not turn away from this
path," Gref said.
LIMITED STATE COFFERS
Sanctions can benefit large Russian banks in the short term
as borrowers turn to domestic lenders amid closed international
markets. But that holds true only as long as the banks have
access to state support to replenish capital and provide
Such support could become increasingly difficult to come by,
with a growing number of Russian companies asking for help from
the country's limited state coffers.
Sberbank reported 11 percent growth in retail loans and a 9
percent rise in corporate lending in the first six months of the
year, partly thanks to large clients turning to domestic banks
after a spike in Western interest rates since the beginning of
the Ukraine crisis.
Gref said he expected a slowdown in consumer lending and
"moderate" growth in corporate lending across the sector but
added that the bank will sharpen its focus on cost control and
non-performing loans (NPL).
Sberbank's NPLs were 3.4 percent of total lending at June
30, up from 2.9 percent at the end of last year. The bank's
cost-to-income ratio, meanwhile, improved to 41.7 percent from
The bank said that second-quarter net profit rose 13 percent
to 97.5 billion roubles ($2.7 billion), beating analyst
forecasts, partly thanks to revenues from foreign exchange
"The forex market volatility supported the bank's earnings
... as well as solid cost control," Gazprombank analyst Andrei
Forex operations contributed 10.1 billion roubles to the
Sberbank's loan-loss provisions stood at 73.8 billion
roubles in the second quarter, up from 30.9 billion roubles a
year ago, while its Tier 1 capital adequacy ratio was at 10.5
percent, down 10 basis points from the start of the year.
(1 US dollar = 36.6320 Russian rouble)
(Additional reporting by Vladimir Soldatkin; Editing by David