Russia’s largest bank suffers a 78% profit slump as sanctions take hold

Moscow Russia’s dominant lender Sberbank on Thursday reported a nearly 80% drop in net profit in 2022 as sweeping Western sanctions rocked Russia’s financial sector in what the bank’s CEO described as “the most difficult year”.

Sberbank (SBRCY) published results according to international reporting standards for the first time in a year. Russian authorities last year ordered banks to limit disclosures and dividend payments as Moscow sought to maintain financial stability.

Sberbank’s annual profit was 270.5 billion rubles ($3.57 billion), down 78.3% from 2021 and about 30 billion rubles ($396 million) below what it was reported under Russian accounting standards for 2022.

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

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

The Russian Treasury expects the majority state lender to pay out 50% of its profits as dividends in 2022.

“Anti-Crisis Plan”

Sberbank’s resilience in the face of sanctions helped the Russian 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 last week warned of “systemic risk” for the sector as lenders look to lock in profits.

Banks are now jostling for business from the state — particularly with the country’s burgeoning defense budget — and the country’s big corporations.

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

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 The bank has withdrawn $6 billion in foreign currency from abroad since sanctions were imposed, Gref said.

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