Sberbank: Neutral 10M 2016 RAS results

Sberbank 10M16 figures look neutral for us. Net income formed almost RUB 430 bn in January-October, which is 2.4x higher YoY.

Sberbank’s bottom line totaled RUB 53.1 bn (-1.4% MoM; +56.6% YoY) in Oct-16. Total income growth (+5.6% MoM) was offset by significant MoM increase in impairment charges. October impairment charges totaled RUB 30.3 bn, delivering 2.3% cost of risk. Impairment charges came at RUB 4.5 bn in Sep-16 (CoR was at 34bp). 10M16 CoR formed 1.85% which is close to FY16 management target (around 2% under IFRS).

The low effective tax rate (just 7.9%) accompanied by the operating costs (CIR dropped 5.7 pps MoM for the reported period) has turned out to be supportive to the net profit of the bank for October as well.

Balance sheet growth was insignificant: assets dropped by 1.6% MoM, gross loans were down by 10 bps MoM on the back of corporate loan portfolio contraction by 20 bps MoM. Total deposits dropped by 1.8% MoM due to corporate accounts decline by 5% MoM.

Asset quality has not changed significantly: overdue loans ratio has reached 2.9% in October (+10 bps MoM).

We assume today’s results are not capable of making a serious impact on Sberbank’s shares. 3Q 2016 IFRS results that are going to be published next week will form an important call for the investors.