Sberbank Profit Rises 3.7% on Consumer Lending, Bank Card Fees

OAO Sberbank, Russia’s largest lender, said second-quarter profit rose 3.7 percent on higher fee income and lending to households.

Net income in the quarter advanced to 86.5 billion rubles ($2.6 billion) from 83.4 billion rubles in the same period last year, the Moscow-based bank said in a statement today, just below the 86.9 billion-ruble average estimate of 11 analysts surveyed by Bloomberg.

Sberbank, Europe’s sixth-largest bank by market value, said bank cards were the “key driver” of its fee income in the first half. The lender has benefited as Russian purchasing power has increased, with consumer spending accelerating in July as unemployment unexpectedly fell and inflation eased.

The acquisition of Turkey’s DenizBank AS (DENIZ) in the third quarter of last year also brought “a significant volume of operating income,” the bank said.

Net interest income, the difference between what a bank earns from lending and what it pays on deposits, rose to 174.8 billion rubles in the quarter from 165.8 billion rubles for the same period a year ago. The share of non-performing loans remained unchanged at 3.2 percent of total lending.

Consumer lending gained 11 percent to 3.15 trillion rubles in the quarter, while corporate lending rose 4.2 percent to 8.57 trillion rubles. For the first half, fee and commission income jumped 24.5 percent to 97.5 billion rubles.

Shares Slip

Sberbank’s shares slipped 1 percent to 89.15 rubles at 2:12 p.m. in Moscow, compared with a decline of 0.4 percent for the Micex Index.

The bank said it has set aside 30.9 billion rubles against potential bad loans, up from 2.1 billion rubles a year ago.

Jason Hurwitz, a senior analyst at Alfa Bank in Moscow who rates Sberbank overweight, said the lender will withstand slowing growth in corporate and consumer lending, “as long as it’s not abrupt,” which would expose more bad loans.

Interest, fee and commission income accounted for 78 percent of total operating income before provisions for loan impairments.

Sberbank’s return on equity slumped to 20.8 percent from 26.1 percent a year ago. Its Tier 1 regulatory capital ratio, a measure of financial strength, increased to 10.5 percent from 10.4 percent six months ago. Total capital adequacy increased to 13.9 percent from 13.7 percent at the start of the year.

To contact the reporter on this story: Jason Corcoran in Moscow at jcorcoran13@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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