Russia's Sberbank expects strong profit rebound after sanctions-hit 2022

By Elena Fabrichnaya, Alexander Marrow and Marina Bobrova

MOSCOW (Reuters) -Russia's dominant lender Sberbank expects profits to rebound sharply this year after a nearly 80% drop in 2022 as sweeping Western sanctions rattled Russia's financial sector in what the bank's chief executive called "the most difficult year".

Sberbank, which boasts around 107 million active retail clients, was releasing results under international reporting standards for the first time in a year. Russian authorities ordered banks to limit disclosures and dividend payments last year as Moscow tried to maintain financial stability.

Sberbank's annual profit came at 270.5 billion roubles ($3.57 billion), down 78.3% from 2021 and around 30 billion roubles lower than what it reported under Russian accounting standards.

Profit under Russian standards for January-February 2023 stood at 225 billion roubles, Sberbank said on Thursday. Its Moscow-listed shares hit a more than one-year high at market opening before easing 0.3% on the day.

CEO German Gref said this year's profits should be close to the record 1.25-trillion roubles earned in the "pre-crisis year".

DIVIDEND RESUMPTION

Net interest income rose 6.6% year-on-year to 1.87 trillion roubles, the bank said, while net commission income rose 15.4% to 697.1 billion roubles. Return on equity (ROE) slumped by 19 percentage points to 5.2%.

Gref said 2023 ROE was expected to reach around 20%, with net interest margin seen in the 5.3%-5.5% range.

"Our business model passed another strength test," Gref said, adding that the bank would now resume consideration of dividend payments on its 2022 results, with a decision due in March.

Gref, who said the bank would always try to pay dividends in future, declined to offer a specific figure. The finance ministry expects the majority state-owned lender to pay out on 50% of 2022 profits.

ANTI-CRISIS PLAN

Sberbank's resilience in the face of sanctions helped Russia's banking sector recover from a loss-making first half in 2022.

Other lenders, such as No. 2 bank VTB, have not fared so well and the Bank of Russia warned of "systemic risks" to the sector last week as lenders scramble to turn a profit.

Banks are now jostling for business from the state, particularly a burgeoning defence budget, and the country's big corporate accounts.

"We implemented an anti-crisis plan: we radically revised our priorities, introduced the strictest savings measures, closed and sold international businesses and also made all the necessary provisions for the loan portfolio and blocked assets," Gref said.

Sberbank said savings exceeded 240 billion roubles, with the group's operating costs down 1.5% year-on-year. The bank recovered $6 billion in foreign currency from abroad since sanctions were imposed, Gref said.

($1 = 75.8500 roubles)

(Reporting by Elena Fabrichnaya, Alexander Marrow and Marina Bobrova; Editing by Tom Hogue, Bernadette Baum and Tomasz Janowski)