Loans allowed reserves to grow

Although Sberbank earned slightly more in seven months of this year than in the same period last year, the growth rate of its profits is gradually falling. Sberbank's July pre-tax profit was the lowest since the beginning of the year. The main reason is the increase in expenses for reserves. In this way, the bank compensates for the risks associated with accelerated lending growth.

Yesterday, Sberbank published its operating results according to Russian accounting standards as of August 1. According to them, for seven months of this year the bank received a net profit of 212.4 billion rubles. against 201.17 billion rubles. for the same period last year. In July, Sberbank's net profit amounted to 29.4 billion rubles, profit before tax for the month was 34.7 billion rubles, which was the lowest result since January of this year.

“The July results show that the growth rate of Sberbank’s profit is gradually decreasing,” notes Olga Belenkaya, deputy head of the analytical department of the Sovlink company. “In general, the bank’s ability to increase profit compared to last year is limited, including because, unlike last year, the bank bears the costs of creating reserves, while last year it received income from their dissolution." Since the beginning of the year, Sberbank's expenses on reserves amounted to 23.4 billion rubles, while in the seven months of last year the bank received income from restoring reserves - 28.7 billion rubles.

Sberbank points out that, despite the lower rate of profit growth, it has become qualitatively different. “If you look at the profit cleared from the reserves, then this year in seven months we earned about 50 billion rubles more than last,” says Sberbank CFO Alexander Morozov. “There is no contribution to this year’s profit from the dissolution of reserves, On the contrary, adhering to a conservative approach in an unstable financial situation, we are increasing provisions despite the improvement in the quality of the loan portfolio." By August 1, the share of overdue debt in Sberbank’s loan portfolio decreased to 2.99% compared to 3.36% at the beginning of the year and 4.51% as of August 1, 2011. In absolute terms, only the quality of the corporate loan portfolio improved: from January to July, the volume of overdue loans in it decreased by 4 billion rubles - to 226.4 billion rubles. In the retail portfolio, on the contrary, overdue payments increased - by almost 3 billion rubles, to 50.6 billion rubles. Thus, in general, Sberbank’s overdue payments have decreased in absolute terms. According to Merrill Lynch Bank of America analyst Olga Veselova, Sberbank has indeed become more conservative in its reserve policy: for example, if the bank previously gave a guideline for the reserve level of 0.1% or less of the loan portfolio, now it is already 0.5%.

According to Alexander Morozov, a more cautious approach to risks is also due to the fact that the bank is growing its business faster than the market. “The faster you grow, the higher the risks,” he says. In the first half of the year, Sberbank increased the volume of loans to individuals by 24.2%, to legal entities by 7.2%; similar figures for the banking system as a whole amounted to 18.4% and 6.2%, respectively. In July, despite the traditional summer lull and the recent increase in consumer loan rates, Sberbank also demonstrated higher business growth rates than the banking system as a whole. According to preliminary data from the Central Bank, in July Russian banks increased the volume of loans to legal entities by 1%, to individuals - by 2.7%, Sberbank - by 1.4% and 2.9%, respectively.

In contrast to lending, in the segment of raising funds from citizens, Sberbank’s position is growing weaker than the market, Olga Veselova points out. According to preliminary data from the Central Bank, deposits of the population as a whole in the banking system in July decreased by 0.1% - mainly due to currency revaluation (see material on this page). Sberbank showed a reduction twice as large - by 0.2%. This was to be expected, given that Sberbank’s rates are significantly lower than the market, Ms. Veselova concludes.

Ksenia Dementieva

Sberbank minimized profit