Sberbank Third-Quarter Profit Falls 8% as Provisions Climb

Sberbank PJSC said third-quarter profit fell about 8 percent as it set aside more money to cover bad loans and for debt in foreign currencies that gained against the ruble.

Net income declined to 65.4 billion rubles ($1 billion) in the third quarter from a year earlier, Russia’s largest bank said in a statement Wednesday. That was higher than the average estimate of 62 billion rubles from eight analysts surveyed by Bloomberg.

Sberbank, sanctioned by the U.S. and European Union since last year over Russia’s role in the Ukraine conflict, has been hit by slumping domestic demand amid falling oil prices. While the bank’s executives have said Russia may be over the worst of the economic crisis, the lender increased its net provision charge to 130 billion rubles from 104.5 billion rubles a year earlier.

“The general economic situation continues to call for substantial provisions,” Natalia Berezina, a banking analyst at UralSib Financial Corp., said in a report before the results. “The weaker ruble led to Sberbank posting higher nominal corporate lending growth.”

Sberbank shares have almost doubled this year, gaining 92 percent, while the Micex index of Russian stocks has gained 30 percent. They rose 1.5 percent after the results to 107.22 rubles at 11:46 a.m. in Moscow.

Net interest income, the difference between what a bank earns from lending and what it pays on deposits, was 263 billion rubles in the third quarter from 255 billion rubles a year earlier. The lender’s net fee and commission income was 81.9 billion rubles, up 28 percent from a year earlier.

Cost of risk grew to 2.8 percent as the bank said it needed additional provisions for foreign currency loans. The ruble lost 19 percent against the dollar in the quarter, according to Sberbank.

Sberbank’s Tier 1 capital adequacy ratio, a measure of financial strength, climbed to 9.1 percent from 8.6 percent at the start of the year. Total capital adequacy ratio under Basel I rules grew to 12.9 percent from 12.1 percent.

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