Sberbank Second-Quarter Profit Slides 44%, Beats Estimates

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Sberbank PJSC’s second-quarter profit slid 44 percent, less than analysts estimated, as higher income from trading currencies helped offset rising loan-loss provisions.

Net attributable income dropped to 54.2 billion rubles ($786 million) from 97.6 billion rubles a year earlier, Russia’s largest bank said in a statement on its website Wednesday. Eight analysts surveyed by Bloomberg estimated 41.8 billion rubles on average. Income from trading currencies rose to 17.4 billion rubles from 6.7 billion rubles a year ago.

“The results are better than expected, thanks to trading” and other non-core, non-interest income, said Natalia Berezina, a banking analyst at UralSib Financial Corp.“ The provisioning was lower than expected, but not substantially.”

Russia is in its first recession since 2009, squeezing lenders’ profits. High interest rates and the sharp decline of crude, the nation’s biggest export revenue earner, have exacerbated the impact of sanctions on Sberbank over the Ukraine conflict.

Sberbank increased loan-loss provisions to 117.1 billion rubles in the second quarter from 73.8 billion rubles a year ago as non-performing loans increased to 4.9 percent of total lending in the first half from 3.4 percent at the end of June 2014.

Sberbank’s common shares fell 0.7 percent to 70.27 rubles by 11:43 a.m. in Moscow. The Micex index of Russian stocks fell 0.6 percent.

“Quarterly results aren’t enough to untether Sberbank from the ruble,” Berezina said. The ruble went from an 18.5 percent gain against the dollar in the first half of the quarter to a 11.2 percent decline in the second half amid a fresh wave of oil price weakness.

Net interest income, the difference between what a bank earns from lending and what it pays on deposits, dropped to 227 billion rubles in the second quarter from 250 billion rubles a year earlier.

Sberbank’s Tier 1 capital adequacy ratio, a measure of financial strength, climbed to 9.6 percent from 8.6 percent at the start of the year. Total capital adequacy ratio under Basel I rules grew to 13.4 percent from 12.1 percent.

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