July 30, 2020 / 9:42 AM / 14 days ago

UPDATE 2-Russia's Sberbank Q2 hit by provisions, but fewer than Q1

* Q2 net profit down 33.4% y/y at 166.7 mln roubles

* Q2 net profit up on Q1 thanks to fewer provisions

* Bank expects to pay dividends in H2 (Adds detail)

By Andrey Ostroukh and Tatiana Voronova

MOSCOW, July 30 (Reuters) - Sberbank’s net profit fell 33.4% year-on-year in the second quarter, but rose from the quarter before as Russia’s largest lender made fewer provisions against bad loans stemming from the coronavirus crisis.

Finance chief Alexandra Buriko also said on Thursday the bank expected to pay dividends in the second half of 2020 and saw no reason to changes plans to pay out 50% of net profit as dividends, although a final decision will be made later.

Russia’s banks have been hit by the COVID-19 pandemic and related lockdowns that have pushed the economy into contraction and pressured prices for oil, its key export, while weakening the rouble.

Sberbank made 166.7 billion roubles ($2.3 billion) in net profit in April-June versus 250.3 billion a year earlier. In the first quarter, net profit was 120.5 billion roubles, hit by higher provisions against bad loans.

The bank faced “unprecedented volumes of restructuring” of loans and had to work on optimising costs in the second quarter, Buriko said in a statement, referring to when Russia introduced lockdowns to combat the spread of COVID-19.

“As the economy gradually restores, we become cautiously optimistic for the second half of 2020,” Buriko said.

After shrinking 4.2% in 2020, the Russian economy is seen growing 3.2% in 2021, Sberbank said.

In the second quarter, Sberbank’s provisions against bad loans totalled 126.5 billion roubles, versus 9.2 billion a year earlier.

It raised its 2020 forecast for the cost of risk, which relates to the level of bad debt provisions, to 230-250 basis points from 100-110 basis points previously.

Impaired loans rose to 7.5% of the total at the end of the second quarter from 7.4% three months earlier, while non-performing loans that received no payments for more than 90 days rose to 5% from 4%.

Return on equity (ROE) from continuing operations - an indicator of how much profit the bank generates from money invested by its shareholders - was 14.2%, down from 24.9% in the same period of 2019, but up from 10.6% in late March.

$1 = 73.1400 roubles Reporting by Andrey Ostroukh and Tatiana Voronova; Editing by Emelia Sithole-Matarise and Mark Potter

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