Russia's Sberbank reports record annual profit of $16 billion

By Elena Fabrichnaya, Darya Korsunskaya and Alexander Marrow

MOSCOW (Reuters) -Russia's largest lender Sberbank reported a record annual profit of 1.5 trillion roubles ($16.3 billion) for 2023, a more than five-fold increase on the previous year as Russia's banking sector recovered from the impact of financial sanctions.

Last year, Russian banks collectively made record profits of 3.3 trillion roubles, driven by sharp rises in mortgage, consumer and corporate lending even as the central bank jacked up interest rates to their current level of 16%.

Sberbank, whose shares were down 0.3% as of 1145 GMT, dominates the banking sector and boasts more than 108 million customers.

CEO German Gref said the bank had issued 28.7 trillion roubles of loans to customers in 2023 and its overall loan portfolio grew 27% to 39.4 trillion roubles. Return on equity reached 25.3% in 2023.

Gref said Sberbank intended to pay dividends at 50% of net profit, a subject that the board will discuss in April.

That would see the company allocate 754 billion roubles, or 33 roubles per share, higher than the figure on 2022 profits, when the company paid well above 50%.

"Of course, any shareholder would like the company to pay 110% in dividends," Gref told reporters. "We can afford this, but not for long."

"We paid dividends last year at almost twice our net profit, but it is impossible to do this indefinitely," he said, referencing business development needs and technology investments.

Sberbank is investing more than 450 billion roubles in IT in the coming three years, as it continues its push to develop domestic technology solutions.

Gref placed artificial intelligence and digital transformation at the heart of the bank's new three-year strategy, as Russia adjusts to life without Western technology after sanctions over the conflict in Ukraine.

The bank expects profits from artificial intelligence (AI) in 2024-26 to be about 800 billion roubles.

That is among the factors pushing the bank towards another year of record profits.

"This year, we expect a better financial result than last year - a record," Gref said.

The record profits were largely priced into market expectations. Alfa Bank analysts said Sberbank's shares remain a favourite among retail investors.

Sinara Investment Bank analysts said the main positive surprise was the expansion of net interest margin - on the back of strong business growth.

($1 = 92.0875 roubles)

(Reporting by Elena Fabrichnaya, Darya Korsunskaya and Alexander MarrowAdditional reporting by Filipp LebedevEditing by Andrew Osborn, Mark Potter and Bernadette Baum)