Sberbank’s profit for 2022 exceeded expectations, allowing you to count on dividends

(Added expert comments, quotes, reference data)

Elena Factory

MOSCOW, Jan 17 (Reuters) – Russia’s largest state-owned bank, Sberbank, said it posted RUB 125.5 billion in net income under Russian accounting standards last December, up 40.1% from December 2021; for the whole of 2022, the profit amounted to 300.2 billion rubles.

Compared to the result of 2021, net profit decreased by 75.7%, the bank said.

“2022 has become a serious test of our ability to respond to external challenges, quickly rebuild business and technology… Since the second half of the year, we have been able to return to the trajectory of profit growth, increased capital and sufficiency, as a result, profit under RAP for the year exceeded 300 billion rubles “, – said the head of the bank German Gref, whose words are given in a press release.

The growth of the bank’s net interest income accelerated in December to 19.5% year-on-year to 176.5 billion rubles, and in 2022 it exceeded the level of the previous year by 5.2% against the backdrop of an increase in the volume of operating assets and the normalization of attraction rates.

Net fee and commission income increased by 16.7% in December 2022 to 67.5 billion rubles and amounted to 614.8 billion rubles in 2022, exceeding the level of the previous year by 6.2%.

In December, the cost of risk amounted to 0.2%, including due to a positive result from the return of bad debts.

“In the first half of the year, in connection with the realized and potential risks, a significant amount of reserves was created. In the second half of the year, they normalized, and in general for the year the cost of risk amounted to 3.7%,” the bank said, without disclosing the number of provisions.

“Net income for 2022… was better than we expected, thanks to a lower cost of risk,” analysts at Alfa Bank wrote.

WILL THERE BE DIVIDENDS?

Sberbank indicated that it meets with a margin all restrictions on risk appetite under capital adequacy ratios and the results were achieved without the use of CBR concessions for credit institutions. That is, there are no obstacles to paying dividends, analysts say.

“Based on 50% of net profit, the bank can pay 6.6 rubles in dividends, but it should be borne in mind that, according to the dividend policy, dividends are paid based on the IFRS, although profit indicators historically do not differ much compared to RAS,” analysts calculated Finama.

The bank’s shares fell 1.9% to 150.79 by 11:34 am Moscow time, but are up about 8% year-to-date.

“After the release of the report, the quotes at the moment decreased by almost 2% – there is a fixation on the fact on the part of speculators. The main medium-term driver is the bank’s intention to resume paying dividends,” Finam’s experts said.

Last year, after earning a record profit of 1.246 trillion rubles, Sberbank, on the recommendation of the government and the Central Bank, decided not to pay dividends for 2021. In 2020, Sberbank spent 422.4 billion rubles on dividends, or 18.7 rubles per share.

“In order to understand whether there will be dividends, you still need to look at the capital adequacy ratios,” says Nadezhda Gromova, an economist and lecturer in financial disciplines at the RANEPA.

She noted that in the abbreviated version of the reporting presented today by the bank, there is not a single indicator that can be compared independently with the amount of own funds for 2021.

“And this indicator is key in order to understand how the country’s largest bank ended the year,” Gromova said.

According to Alfa-Bank analysts, Sberbank’s net profit in 2023 could potentially recover to 1.2 trillion rubles.

“Given this, we believe that Sberbank could comfortably distribute 100% of 2022 net income along with a portion of 2021 retained earnings,” they said, assuming a dividend of 25 rubles per share.

LENDER NUMBER ONE

Sberbank’s retail loan portfolio grew by 1.7% in December to 12.0 trillion rubles, and by 12.9% since the beginning of the year.

“The main driver was mortgages, whose growth accelerated in anticipation of a change in state support programs from 2023. Issuance of mortgage loans in December was a record for the entire history of the bank and amounted to 382 billion rubles,” the bank said.

At the end of 2022, the portfolio of housing loans amounted to 7.7 trillion rubles, having increased over the year by more than 20%.

Sber’s corporate loan portfolio increased by 0.5% in December and by 12.4% since the beginning of the year, amounting to 18.8 trillion rubles.

In 2022, the share of foreign currency loans decreased by 10 percentage points in the structure of the corporate loan portfolio.

“The quality of the loan portfolio remains stable. The share of overdue debt decreased in December to 2.2%, which is lower than the level of the end of 2021,” the bank said.

Retail deposits grew by 8.2% in December and for 12 months of 2022, exceeding 18.3 trillion rubles.

The share of foreign currency deposits almost halved in 2022.

Funds of legal entities grew in December by 0.8% to 8.7 trillion rubles, having decreased by 0.7% since the beginning of the year.

The share of funds in foreign currency in the structure of funds of corporate clients decreased by 18 percentage points over the year. (Elena Fabrichnaya. Editor Dmitry Antonov)

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