OAO Sberbank (SBER), the holder of almost half of Russians’ bank savings, plans to cut 30,000 workers and close more than 3,600 branches over the next five years to boost profitability as loan growth slows.
The measures should help eastern Europe’s largest lender double profit and assets by the end of 2018, according to company documents handed out to reporters in Moscow before a presentation by Chief Executive Officer Herman Gref.
President Vladimir Putin is urging the country’s largest state-run companies to improve efficiencies by cutting costs and workers after six quarters of slowing economic growth in the world’s biggest energy supplier. Sberbank, which currently has about 250,000 employees and 18,400 branches, doesn’t plan any acquisitions in the coming years, according to Gref.
“Sberbank’s strategy is very ambitious and aggressive,” Mark Rubinstein, head of research at IFC Metropol, said by phone from Moscow. “They’re forecasting really high profit growth. They plan to boost their effectiveness while cutting costs. This will lift shares.”
Sberbank extended gains after Gref’s comments, rising 2.4 percent to 104.20 rubles at 6 p.m. in Moscow. The lender’s stock has surged about 12 percent this year, outpacing the Micex Index’s 1.7 percent advance.
The former Soviet savings bank has been transformed under Gref, who was once Putin’s economy minister. It held about 46 percent of the nation’s deposits last year, according to Deposit Insurance Agency data, and has diversified into investment banking and asset management and expanded with acquisitions in Eastern Europe and Turkey.
Sberbank bought Troika Dialog, Moscow’s oldest brokerage, in January 2012 for $1 billion and set up a consumer finance unit last year with BNP Paribas SA.
“Sberbank is present in 22 countries,” Gref said in the presentation on the company’s website. “We have demonstrated that not only Russian commodity companies can be major participants in the world market.”
Gref today reiterated Sberbank’s estimate that net income in 2013 will be 370 billion rubles ($11.3 billion). Profit under Russian accounting standards rose 7.5 percent in the first 10 months of the year from the same period last year, Sberbank said on Nov. 8.
The bank sees corporate loan growth slowing to a range between 18 percent to 20 percent in 2014, and then to 13 percent to 15 percent by 2018, according to the presentation. Retail lending growth will slow to 22 percent to 25 percent next year and to 12 percent to 15 percent by 2018, it said.
Weak economic growth in Russia over the next five years, increased competition, the growing cost of attracting customer financing, tighter bank regulation and credit-market risks are some of the challenges facing Sberbank, the presentation said.
“The new targets match the adjusted expectations and are consistent with the more muted macro outlook for Russia,” VTB Capital analyst Svetlana Aslanova wrote in an e-mailed report.
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