May 30, 2018 / 10:37 AM / 9 months ago

Russia's Sberbank reports record profit for the first quarter

MOSCOW (Reuters) - Russia’s largest lender Sberbank (SBER.MM) reported record high profits on Wednesday for the first three months of 2018 and said it was on track to reach its full-year financial targets.

FILE PHOTO: Participants cast their shadows on a board with the logo of Sberbank at the St. Petersburg International Economic Forum (SPIEF), Russia, June 1, 2017. REUTERS/Sergei Karpukhin/File Photo

For the past few years state-owned Sberbank has performed better than the wider Russian banking sector, which has been in crisis and saw the central bank stepping in to rescue three major lenders last year and shut down dozens of smaller banks in a clean-up of the sector.

Sberbank, which is majority owned by the central bank, has benefited from its reputation for strong management and has been seen as a safe bank to do business with.

Sberbank said its net profit in the first quarter rose 27.3 percent to 212.1 billion rubles ($3.4 billion), slightly exceeding a Reuters poll forecast of 211.3 billion rubles.

Shares in Sberbank were up 0.4 percent at 21.98 rubles by 0945 GMT, outperforming a 0.18 percent increase in Moscow’s MOEX stock index .IMOEX.

Sberbank’s return on equity (ROE), an indicator of how much profit the company generated from money invested by its shareholders, rose to 24.2 percent in the first quarter of 2018, from 23.1 percent in the same period of 2017.

Higher ROE was “achieved mainly on the back of dynamic retail loan growth and strong fee and commission income formation that set positive momentum to reach financial targets for the year,” Chief Financial Officer Alexander Morozov said in the earnings report.

Sberbank’s net interest income in the first quarter rose 6.5 percent year on year to 358.6 billion roubles, while provisions against bad loans declined to 49.1 billion rubles, from 67.4 billion rubles in the same period of 2017.

The bank, which had 20.1 trillion rubles in its gross loan portfolio in the first quarter of 2018, said its non-performing loans ratio decreased to 4.2 percent as of the end of March from 4.5 percent as of Jan. 1.

Despite strong financial results at home, Sberbank faces challenges abroad. This month the bank said it was further scaling down its operations outside Russia after agreeing to sell its Turkish subsidiary Denizbank.

Reporting by Andrey Ostroukh; Editing by Susan Fenton

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