Sberbank’s Full-Year Profit Misses Analysts’ Expectations on Provisions

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MOSCOW - APR 14: People are queuing for service in Department ofEurope’s third-largest bank OAO Sberbank saw its full-year profit surge 4.3 percent, missing analysts’ estimates as provisions for bad loans rose.

Net income rose to 363.8 billion ($10.2 billion) in 2013, missing its expectation of 370 billion rubles that it announced in August last year. It also lagged the median estimate of 364.5 billion rubles calculated in a Bloomberg poll of 18 analysts.

Net loan provisions rose to 133.5 billion rubles, up from 21.5 billion rubles a year earlier. Most of the loans under provision were for consumer and other persons. However, non-performing loans fell to 2.9 percent of the outstanding loans, down from 3.2 percent a year earlier.

Net interest income rose 7 percent to 862.2 billion rubles, up from 804.9 billion rubles a year earlier, said the Moscow-based bank on Thursday. Net fee and commission income grew 29.4 percent to 220.3 billion rubles.

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Corporate loans climbed 19 percent to 9.8 trillion rubles while consumer lending surged 32 percent to 3.75 trillion rubles. The lender’s Tier 1 capital adequacy ratio, which measures its ability to withstand shocks, rose marginally to 10.6 percent, up from 10.4 at the beginning of the year.

However, return on equity plunged to 20.8 percent, down from 24.2 percent a year ago. Under the Basel 1 rules, capital adequacy slid to 13.4 percent from 13.7 percent.

The net income in the fourth quarter rose 10 percent to 94 billion rubles ($2.7 billion), which lagged the median forecast of 96.3 billion in a Reuters’ survey.

The bank’s shares plunged 2 percent to 80.85 rubles as of 1.10 p.m., Moscow time, giving the company a value of around $50 billion.

Sberbank’s Chief Executive, Herman Gref recently told Bloomberg that he fears the Russian economy may enter into a recession due to various macroeconomic factors.

“It’s not just about the sanctions,” said Gref on March 24. “We are seeing some areas in the Russian economy that are not working well, like agriculture, metals, machinery. This is the consequence of the whole economic situation and not just the Ukrainian situation.”

To contact the reporter of this story; Jonathan Millet at john@forexminute.com