Sberbank 10-Month Income Drops Due to Bad Loan Charges

OAO Sberbank reported a 7.8 percent drop in profit this year as Russia’s largest lender more than tripled provisions for overdue loans, blaming a slide in the ruble and a decline in economic conditions in Ukraine.

Net income under Russian accounting standards fell to 294 billion rubles ($6.3 billion) through October from 319 billion rubles for the same 10-month period a year ago, according to a statement today on Sberbank’s website. Its provision charge for the 10 months rose to 311.5 billion rubles from 99.5 billion rubles a year ago.

“A sizable provision charge” created due to the depreciation of the ruble and the deterioration in Ukraine’s economy were the main reasons for “negative dynamic” on profit, Sberbank said in the statement.

Russia’s central bank said yesterday that gross domestic product will probably stagnate in 2015, reflecting the damage wreaked by a slump in oil prices and international economic restrictions over the conflict in Ukraine. It said net capital outflows would probably double this year.

Sberbank, which controls about 46 percent of Russia’s deposits and a third of the nation’s lending, said consumer deposits jumped by 124 billion rubles in October after shrinking 33.9 billion rubles in September.

“It looks like Sberbank is benefiting from a flight to quality,” Luis Saenz, the head of equity sales and trading at BCS Financial Group in London, wrote in e-mailed comments.

Net interest income, the difference between what a bank earns from lending and what it pays on deposits, climbed 22 percent to 712 billion rubles.

Corporate lending increased to 10.2 trillion rubles, up 18.4 percent from the first 10 months of last year. Consumer loans advanced by 19.3 percent to 4 trillion rubles.

Non-performing loans climbed by 10 basis points in October to 2.3 percent of total lending.

Sberbank’s shares advanced 0.7 percent to 78.33 rubles at 11:32 a.m. in Moscow, paring this year’s loss to 22 percent.

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