UPDATE: Russia’s Sberbank needs no capital injections with oil below $25

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MOSCOW, Jan 21 (PRIME) -- Top Russian lender Sberbank will need no increase of its shareholder capital at an oil price at U.S. $25 per barrel of Brent or even lower in 2016, CFO Alexander Morozov said during a conference call on Thursday.

“We have developed various stress scenarios pegged to oil at $25 or even lower. And in any case we can state that we will maintain our capital adequacy at a necessary level without raising additional liquidity in the form of shareholder capital,” he said.

The Basel III regulations, introduced in Russia from January 1, decreased pressure on Sberbank’s capital by 0.4 percentage points, as seen by PRIME in Sberbank’s data.

NOT SENSITIVE TO KEY RATE CHANGES

Sberbank is not sensitive to dynamics of the key rate, because it decreased borrowings from the central bank to a minimum, Morozov said.

The bank believes that the regulator is unlikely to cut the key rate soon due to the current economic difficulties, he said.

“Frankly speaking, as for the main part of the year, I believe that the rates will be flat or almost flat,” he said.

The Russian central bank raised the key rate to 17% in December 2014 on the back of the ruble devaluation, and gradually reduced it to 11% in August 2015. The next meeting over the key rate is scheduled for January 29.

NOT ALL ROSES

Alexander Vedyakhin, the director of the Sberbank’s risk management department, said that Sberbank expects that the quality of its retail portfolio and mortgage lending to deteriorate. Lending to construction companies may decrease if economic conditions worsen.

“Taking into account the possibility of a worsening economic situation, GDP may fall, we can expect some worsening of NPL (nonperforming loans) in our retail portfolio, but nonetheless the situation will be better then on the market in general,” he said.

“We may face the same difficulties in mortgage lending, at the market level.”

The situation in the construction and real estate segments also raises bankers’ concerns, Vedyakhin said.

“We are very prepared for the situation on the market… We do not feel comfortable, but we know what to do.”

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