February 27, 2020 / 8:15 AM / a month ago

UPDATE 3-Russia's top lender Sberbank sees profit jump as govt prepares to buy majority stake

* Sberbank fourth-quarter net profit up 20%

* Profit strength supported by commission income

* Central bank prepares to sell its Sberbank stake to government

* Plans to pay 50% of profit in dividends (Adds CEO comment)

By Gabrielle Tétrault-Farber

MOSCOW, Feb 27 (Reuters) - Russia’s largest lender Sberbank posted a 20% jump in 2019 fourth-quarter net profit on Thursday, benefiting from a move into digital services and strong commissions from bank card operations.

Sberbank, which dwarfs other state-run banks with its share of retail deposits, has ambitions to become a key player in the digital sector, competing with private lenders and hi-tech companies in the digital services market.

The bank said it had made 212 billion roubles ($3.25 billion) in 2019 fourth-quarter net profit.

The government has plans to buy the central bank’s controlling stake of 50% plus one share in the lender, to remove conflicts of interest and help it drive growth and raise living standards.

As Russia’s largest bank by capital and number of clients, Sberbank has invested in everything from food deliveries to taxi services in its digital transformation.

On Thursday it also said it had seen a steep increase in commissions from bank card operations, including for transactions on Russia’s vast public transportation network, which boosted fee and commissions income by nearly 24% in the fourth quarter of last year.

Annual net profit rose 1.6% and took into account the sale of Turkey’s DenizBank, it said. The sale resulted in a loss of 69.8 billion roubles.

Sberbank CEO German Gref said that the bank’s management would propose that 50% of its net profits in 2019, which amounted to 835 billion roubles ($12.8 billion), be allocated to dividend payments.

Gref cautioned that the coronavirus outbreaks around the world could negatively affect the bank.

“We are completely dependent on the situation on the global markets and our clients,” he said on a conference call. “The situation is unpredictable for the time being.”

Dividends and regulatory concerns led to the decision this month by the finance ministry to tap into its rainy day fund to purchase the central bank’s stake in the bank.

Proceeds from the sale will help the central bank recoup some losses from 2017 bailouts, while the remainder will be channeled back to state coffers.

The funds from the sale are expected to help finance a string of new social pledges announced by Russian President Vladimir Putin last month when he proposed overhauling the country’s political system. ($1 = 65.3110 roubles) (Reporting by Gabrielle Tétrault-Farber, Tatiana Voronova and Andrey Kuzmin Editing by Emelia Sithole-Matarise and Elaine Hardcastle)

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