Savings accounts showed balanced growth
Operating income before allowances for impairment of assets gained 11.5% year-on-year and amounted to 470,9 RUB bn Net interest income before write-downs are formed for 76.2% of operating revenue (+6.5% to 358,6 billion). The savings Bank had reduced interest rates on loans and deposits followed the falling interest rates in the economy: the return on assets in the reporting quarter, accelerated compression, and decreased by 0.7 p. p (yoy) to 9% and the cost of liabilities fell by 0.5 percentage points (yoy) to 3.9%. In the result, the interest margin fell by 0.2 percentage points (yoy) to 5.6%. Previously, the management sounded forecasts at the margin for 2018 near 5.5 per cent, while maintaining the trend now looks optimistic scenario.
However, the negative side of the interest margin offset the added 10.6 per cent (yoy) to 27.3 trillion assets. In the structure of assets, the portfolio of loans to legal entities before provisions for impairment losses grew by 7.8% (yoy) to 14.2 trillion and loan portfolio to individuals has increased 18% (yoy) to 6 trillion rubles.
Fee and Commission income after the deduction of Commission expenses formed 20.3% of operating revenues, amid the growing popularity of cashless payments and monetization market share, up 26.2 percent (yoy) to 101.5 billion roubles.
Net profit of shareholders of Sberbank was up 26,3% to 212 billion RUB: a significant decline in provisioning for impairment losses (-27% y/y to 49.1 billion rubles) to compensate for an unexpectedly large increase in operating costs (+6,9% yoy to 157.4 billion rubles.).
Return on assets increased 0.4 percentage points (yoy) to 3.1%. Return on equity was added 1.1 percentage points (yoy) to 24.2%. Equity due to the net profit grew by 20.9% (yoy) to 3.44 trillion rubles.
Investment and M&A for the quarter was sent to 12.4 billion rubles., amortization amounted to RUB 16.8 billion.
In General, the reporting seems neutral with respect to the market capitalization. Main multiples: P/E – 6; P/B is 1.4. The negative side of the decline in interest margins and rise in operating costs offset by the growth of the loan portfolio amid the market recovery. It should be noted that the expansion of corporate and consumer credit does not lead to increased delay. Despite the events of April, the risk of a significant tightening of sanctions against the Bank is small.
The company pays dividends cache once a year. By the end of 2017 probable payout of 36% of net profit, or 12 rubles per common and preferred share. The dividend yield will be 5.5% per annum and 6.2% per annum respectively. Last date for purchase of shares until the cut-off – June 22, 2018. After the sale of the daughters of the Turkish Deniz Bank significantly improved the capital adequacy ratios. By 2018 it is quite possible to count on a dividend of RUB 20 per share.
At the moment we recommend to buy preferred shares of Sberbank with the aim of RUB 215 + dividend yield over the period of the position.