OREANDA-NEWS. June 04, 2010. Sberbank will post 1Q10 IFRS results on Monday (7 June), followed by a conference call on 8 June, reported the press-centre of OTKRITIE Financial Corporation.

View: We expect the bank’s net profit to rise 2.6x QoQ to RUB37bn, primarily due to 33% lower provisioning charges and moderated NPL growth (our forecast is for a 50bp increase).  We also think 1Q10 was quite strong in fixed income markets, which supported the bank’s non-core revenues at RUB12bn-- even though over 80% of the bank’s securities portfolio is accounted as available for sale.  On the other hand, with more than 50% of its assets financed with retail deposits in conditions of declining interest rates, the bank faces NIM contraction which we estimate at 0.6ppts. Our forecast is for NIM at 8.1%. Despite the sizable (5%) reduction in staff, Sberbank saw costs rise 8% YoY thanks to increased average wages and its investment program.

Valuation and Action: We like Sberbank at current levels -- the bank is trading on a 2010 P/BV of 1.8x and a 2011 P/BV of 1.4x. The decline in NIM will likely end in 2Q10, which would send a strong positive signal regarding the bank’s share price performance.