Russia’s biggest bank sees nearly 80% drop in profit on sanctions

Russia’s biggest creditor Sberbank reported a nearly 80% drop in 2022 net profit on Thursday as Western sanctions rocked the country’s financial sector in what the bank’s CEO called “the most difficult”.

Sberbank publishes results in accordance with international reporting standards for the first time in a year. Russian authorities ordered banks to limit disclosures and dividend payments last year as Moscow tried to maintain financial stability.

Sberbank’s annual profit was 270.5 billion rubles ($3.57 billion), down 78.3% from 2021 and around 30 billion rubles ($396 million) lower than reported for 2022 , according to Russian accounting standards.

CEO German Gref said this year’s profits should be close to the record 1.25 trillion rubles ($16.5 billion) achieved in the “pre-crisis year”.

“Our business model has passed another test of strength,” Gref said, adding that the bank will now resume factoring dividend payments into its 2022 earnings, with a decision expected in March.

Russia’s Ministry of Finance expects the state-owned creditor to pay 50% of its profits in 2022 as dividends.

“Anti-crisis plan”

Sberbank’s resilience in the face of sanctions helped Russia’s banking sector recover from a loss-making first half of 2022.

Other lenders such as No. 2 bank VTB have not fared as well and Russia’s central bank warned of “systemic risks” for the sector last week as lenders struggle to turn a profit.

Banks are now vying for business with the state – particularly with the increased defense budget – and the country’s big companies.

“We implemented an anti-crisis plan: we radically revised our priorities, introduced the strictest savings measures, closed and sold international businesses, and also made all the necessary provisions for the loan portfolio and blocked assets,” said Gref.

Sberbank said the savings exceeded 240 billion rubles ($3.2 billion), with operating costs down 1.5% year-on-year. The bank has recovered $6 billion in foreign currency from abroad since the sanctions were imposed, Gref said.