OREANDA-NEWS. August 9, 2011. For the sixth consecutive month Sberbank recorded healthy monthly earnings, with net profit of RUB29.8bn in July. The bottom line exceeded RUB201bn for the period with core revenues and the loan book demonstrating good dynamics.

Key takeaways include:

It is encouraging that the robust bottom line level is mainly due to core income items: net interest income (+RUB43.4bn in July) and net F&C income (+RUB13.6bn) were both slightly higher than YtD average monthly levels.

Balance sheet. Total loan portfolio growth was 1.3% MoM (+9.7% YtD), with acceleration noted in the retail loan portfolio (+2.3%/13.6% MoM/YtD) and corporates +1.0%/8.6 MoM/YtD. We note a slowdown in deposit inflows +0.3% MoM, which is positive given the excess liquidity in the banking system, that has been putting pressure on margins.

Asset quality. Sberbank released a notable amount (RUB11bn) in provisioning for July, while NPLs were flat MoM at 4.5%. Loan loss reserves as a portion on total loans declined slightly from 9.7% of loans in June to 9.5% in July

Profitability remains high. RoE decreased by 30 bpts, but was still at a healthy 30.3%, while RoA remained stable in July at 4%.

Bottom line

The results are positive for Sberbank as earnings were strong, RoA and RoE are high and loan growth continues, while we note a slowdown in deposit inflows. In particular Sberbank’s retail business growth pace is at impressive level.