Sberbank reports half a year under IFRS

The price of attracting client funds by Sberbank in the retail segment remains stable. This is facilitated by both the lengthening of the average term of the deposit and the high proportion of “free accounts” in the structure of liabilities. On the contrary, for corporate clients, whose average check is larger, liabilities are becoming more expensive.

Sberbank disclosed IFRS results for half a year, from which it follows that for the second quarter in a row it keeps the cost of raising funds from retail clients, which is 3.4%, follows. At the same time, the price of attracting funds from corporate clients increased by 0.2 percentage points (p.p.) to 4.1%. The profitability of retail loans in the bank increased in April-June by 0.3 percentage points (up to 12%), corporate – by 0.1 percentage points (up to 8.4%).

The money of retail clients for Sberbank does not rise in price, since the share of free, that is, current and settlement accounts, is high, experts admit. According to the IFRS report, the bank’s share of current accounts in the structure of balances of funds of individuals is 50.3% (10.1 trillion rubles), while in 2022 – 48.45%, in 2021 – 44.6%. “We see a trend towards lengthening the average term of a deposit – this also affects the cost,” adds Taras Skvortsov, director of the Sberbank Finance Department.

In the structure of corporate funds as of July 1, current and settlement accounts accounted for 28.2% in Sberbank. Unlike the retail portfolio of liabilities, the corporate portfolio contains a rather large share of deposits. They are mainly placed for short periods, and there is competition in the market for these liabilities, admitted Mr. Skvortsov. As a result, Sberbank’s net interest margin rose to 5.8% in the second quarter (by 0.02 percentage points qoq).

Sofia Donets, chief economist at Renaissance Capital for Russia and the CIS, believes that the situation with the attraction price in Sberbank is typical for the entire banking sector.

According to the overall results, the cost of funding in the second quarter of 2023 also did not change in relation to the first (4.7%), but was almost twice lower than in the second quarter of 2022 (8.3%). But in individual banks, trends may differ. Thus, the RSHB says that the average rate of attracting funds from individuals in January-June “decreased somewhat.”

Bankers expect their liabilities to rise in price in the second half of the year. “Against the backdrop of economic recovery, the pace of lending is also increasing, and banks are increasing the volume of liquidity to ensure the growth of the loan portfolio and comply with regulatory requirements,” the PSB explains. This, the bank believes, will have a positive effect on the rates on ruble deposits, as credit institutions “will strive to ensure their attractiveness against the backdrop of macroeconomic changes.”

In the first half of the year compared to the same period in 2022, the cost of funding decreased significantly, “and this supported the growth of the net interest margin of many banks,” Alfa-Bank says.

But after the increase in the key rate of the Central Bank, the largest players increased their deposit rates at the end of July, which could provoke an increase in interest expenses. An increase in the key rate at the end of July will lead to a proportional increase in the cost of funding, Sofya Donets notes.

During the second half of the year, Ms. Donets expects, the net interest margin of banks will decrease relative to the current level (4.6%). However, banks will factor in the interest costs they face from rising funding costs into the cost of new loans, she says.

A similar revaluation will occur for loans at floating rates, which are widely available. So, for example, in Sberbank now half of the issuance of loans to corporate clients falls on loans with a floating rate. As Taras Skvortsov clarified, the bank also includes mortgages under state programs (the amount of subsidies there changes if the key rate of the Central Bank changes), which occupy a third of the core portfolio. For VTB, “one of the levers for optimizing the cost of funding” will be entering the lower mass retail segment.

Olga Sherunkova