Sberbank Quarterly Profit Hits Record as Dividend Boost Eyed

(Bloomberg) -- Sberbank PJSC set a record for profit in the third quarter, strengthening the case for fatter dividends as Russia’s biggest bank weighs changes to shareholder payouts.

Net income rose 62 percent from a year earlier to 222 billion rubles ($3.68 billion), compared with a 193 billion-ruble average estimate of eight analysts surveyed by Bloomberg. The previous record was set in the second quarter. Sberbank is considering a plan to raise dividends to as much as 40 percent of this year’s profit, Bloomberg reported last week, citing two people with direct knowledge of the discussions.

Sberbank’s bottom line has benefited from Russia’s return to growth and a central bank purge of weak lenders. It has cut operating expenses and headcount even as renewed demand for credit has expanded its consumer loan book. The bank is also enjoying wide margins on loans as the central bank has moved slowly to cut its key interest rate despite record-low inflation.

“These results show that they can afford to pay dividends at 40 percent,” said Natalia Berezina, an analyst at UralSib Financial Corp. “They have enough capital to do it.”

Sberbank began reporting its capital position under Basel III standards, with Tier 1 capital adequacy at 11 percent at the end of the quarter. Sberbank Chief Financial Officer Alexander Morozov said in August the bank is targeting a “comfortable” level of 12.5 percent, but that it could raise dividends before achieving that goal.

The supervisory board will review a new three-year strategy, including changes to the dividend policy on Dec. 12, Chief Executive Officer Herman Gref told reporters in Moscow Tuesday. He declined to comment on the details of the plan. Sberbank will present the strategy to investors in London later that week.

“Increased lending activity and strong focus on fee and commission income on the back of improving macro-economic environment resulted in a solid quarter,” Morozov said in a statement.

The number of full-time employees has fallen 2.4 percent this year to 311,433 at the end of the third quarter, Sberbank’s report said. Last December, the lender said it planned to cut headcount by about 8 percent in 2017, according to people who had seen a presentation for analysts.

Sberbank shares rose as much as 2.5 percent and were trading up 0.7 percent at 222.84 rubles at 12:58 p.m. in Moscow. They have gained 29 percent this year and are trading near a record high.

To contact the reporter on this story: Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net.

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Cindy Roberts, Torrey Clark

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