Sberbank’s Third-Quarter Net Interest Income Surged to 667.9 Billion Roubles
Date : 2nd November
THE SOIL – As it bounces back from declining earnings in 2022, Russia’s largest lender, Sberbank (SBER.MM), posted a record quarterly profit of 411.4 billion roubles ($4.41 billion) on Thursday along with a return on equity (ROE) of 27.6%.
Due to widespread Western sanctions against Russia for sending soldiers into Ukraine, which restricted banks’ access to international payment networks and severely curtailed their foreign operations, Sberbank had an over 80% decline in profits last year.
Excellent nine-month performance and a robust start to the fourth quarter, according to CEO German Gref, provided grounds for an improvement to Sberbank’s 2023 ROE prediction of more than 24%.
Sberbank’s third-quarter net interest income surged to 667.9 billion roubles due to higher margins and an increase in working asset volume.
Sberbank's Net Interest Margin Increased to 6% During Quarter
Since the central bank instructed banks to restrict disclosures following Moscow’s deployment of soldiers to Ukraine last year, no comparisons were offered.
Because of the increase in interest rates, Sberbank’s net interest margin increased to 6% during the quarter. Since July, the Bank of Russia has increased interest rates by 750 basis points; in late October, the rate was hiked to 15%.
Russian banks are demonstrating resilience by announcing increased banking revenues as their risk costs return to normal and by competing with the state, especially with regards to the expanding defence budget, and the nation’s large corporate clients.
While operating income before provisions grew, the total provision coverage for impaired loans decreased by 2% on a quarterly basis to 136.4%.
Sberbank Did Not Anticipate Q4 of 2023 To Be As Successful As Q3
Sberbank blamed the increase in operating expenses to 234.2 billion roubles on growth in the business, salary increases since July 2023, and the “large scale anti-crisis cost optimisation programme” implemented last year.
Sberbank did not anticipate the fourth quarter of 2023 to be as successful as the third in terms of performance dynamics, according to Financial Chief Taras Skvortsov.
By the conclusion of the third quarter, Sberbank’s retail lending portfolio had grown to 15.2 trillion roubles, up 22.1% year over year. According to Skvortsov, Sberbank anticipated a slowdown in loan trends in 2024 as opposed to 2023.
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