The “savings” will be very serious dividend

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Wednesday, March 21, the head of Sberbank German Gref at a meeting with Vladimir Putin announced that in 2017 the “savings” will be very “serious benefits” on dividends. Ordinary shares of Sberbank responded to the news with a rise by 4.56% by the end of yesterday’s trading. Preferred shares rose by 7.61% as for them the amount of dividends is more important.
However, questions remain to Gref. The market would prefer specific digital targets for dividends. The phrase “serious benefits” can be interpreted in different ways- maybe they are serious for shareholders, and perhaps for the company. Last year Sberbank has directed on dividends 25% of IFRS net income. It was planned that by 2020 the largest Russian Bank will increase payouts to shareholders to 50% of IFRS net income as the number of public companies. This year “Sberbank” can direct on dividends 25% of IFRS net profit (last year) or 35% (by analogy with “Rosneft”), or 50%. The final decision will be announced at the meeting of the Supervisory Board of Sberbank in mid-April. In our opinion, the most likely second option.
By the end of 2017, the net profit of Sberbank under IFRS amounted to 748,7 bn or 34.68 rubles per share. Correspondingly, the annual dividend of 8.67 RUB (25%), 12,14 RUB (35%) and of 17.34 RUB (50%). The last scenario is equivalent to a yield of 6.5% at current prices. This is an attractive level for such high-quality liquid asset (growing the business) in the eyes of investors, including foreign ones. If the dividend increase is confirmed, ordinary shares of “Sberbank” to fly for the strength to rise to 300 rubles. But while in these papers there is uncertainty, so it is likely increased volatility. It is significant that today the shares of Sberbank, after rising 1% in the morning, the afternoon fell back to negative territory.
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Roman Tkachuk,
Senior analyst,
Alpari