Sberbank reported for the three quarters of 2023 a net interest margin of more than 6%

Sberbank’s net interest margin exceeded 6% for the first time in several years. This was facilitated by the strong growth of the loan portfolio, revaluation of assets, as well as a significant spread between placement and borrowing rates. However, in the future, the net interest margin will be stable, but the pace of lending will slow down, due to rising interest rates and regulatory restrictions.

At the end of the third quarter of 2023, the net interest margin (NIM) of the Sberbank group amounted to 6.01% versus 5.8% and 5.78% in the second and first quarters, respectively. This follows from those disclosed on November 2 quarterly results IFRS groups. For 2022, quarterly margin values ​​were not disclosed; its annual level was estimated at 5.31%, its value was 0.07 percentage points lower than the margin for 2021.

This was also facilitated by the improvement of the balance sheet structure and the strengthening of the share of the ruble balance compared to the foreign currency balance, Taras Skvortsov, director of the finance department of Sberbank, said at the conference call. Thus, according to the quarterly report, NIM increased due to an increase in profitability of the corporate (by 0.8 percentage points, to 9.2%) and retail (by 0.4 percentage points, to 12.4%) loan portfolio after the growth of the key rates. In August-September, the Bank of Russia raised the rate by a total of 5.5 percentage points, to 13%.

At the same time, Sberbank now has about half of its portfolio of loans to legal entities issued at a floating rate.

At the same time, the cost of raising funds was several times lower – 5.5% for corporate clients and 3.6% for individuals. Against this background, interest income for the quarter increased to RUB 667.9 billion. (compared to RUB 597.6 billion and RUB 562.8 billion in previous quarters).

According to Olga Naydenova, a senior analyst at the Sinara investment bank, the growth in the share of the loan portfolio in the asset structure played a key role in the growth of Sberbank’s net interest margin. In particular, the ratio of loans to deposits amounted to 103.3%, having already increased by 5 percentage points. year to date.

Sberbank noted that “previously the NIM was already above 6%,” but did not specify specific periods. Judging by indirect evidence and the information disclosed by the Central Bank, there could not be a large margin in 2022: then the cost of funding was sharply increased, and in addition, there were restrictions on floating rates, as a result of which assets with a floating rate did not receive the same the revaluation that was expected, explains Olga Naydenova.

At the same time, in 2016–2018, Sberbank’s net interest margin was about 6%, and in 2010–2011, it was closer to 7% or higher, the expert recalls.

Historically, the bank has had low funding costs due to a large portion of its liability portfolio being held in free or nearly free accounts (typically customer current accounts). In particular, based on the group’s reporting, this is about half of the portfolio (48.1%, or 10.3 trillion rubles) in the structure of retail clients and 37.4% (3.4 trillion rubles) in the structure of private legal entities.

According to the updated forecast of Sberbank, the average NIM for 2023 will be 5.8%. At the same time, the bank expects a slowdown in lending rates. In particular, this will be affected by rising interest rates and regulatory restrictions on lending, for example, macroprudential limits and surcharges. In terms of the latter, the bank is now adjusting its business model to new regulatory requirements, counting on maintaining the current regulatory conditions for a long time, Mr. Skvortsov noted.

Olga Sherunkova