INTERVIEW: Exec says Sberbank lending to largest firms to rise 3–4% in 2019
MOSCOW, Feb 13 (PRIME) -- Russia’s top bank Sberbank plans to raise lending to small, medium, and large businesses by 13–15% in 2019, while lending to the largest clients will rise by 3–4%, Deputy CEO Anatoly Popov told PRIME on Wednesday.
“We don’t see great dynamics in lending to the largest clients, because only a few large projects enter the market. This is partially because of the high interest rates that chill the whole market. In general, we expect an increase of 3–4% in the segment of Sberbank’s largest clients,” he said.
But loans to the other companies will rise faster -- the portfolio of loans to small and medium businesses is to grow by 11%, which is almost 9 percentage points lower than in 2018 due to higher interest rates and Sberbank’s already large market share and its dislike of excessive credit risks, he said.
“We already have a high market share, it stands at 36%, and we expect it to rise to about 38% by the end of next year. Our risk is lower than market average by more than two times: we have only 5% of loans that are overdue by more than 90 days compared with market average of about 12–12.5%. And as the market share grows, we are moving into this category,” he said, adding that Sberbank expects its corporate loan portfolio to rise 5–7% in 2019, in line with the market.
The bank also reduced the share of foreign currency corporate loans by 6 percentage points in 2018 to 31%, and expects the share to contract steadily if there are no shocks similar to the events of April 2018. The largest clients account for 90% of all foreign-currency loans, he said.
Sberbank almost completely stopped provision of foreign currency loans to the companies with ruble revenue. Only companies that have an understandable source of foreign currency revenue may count on a foreign currency loan, he said.
NEW STREAM GROUP, ANTIPINSKY REFINERY
Popov said that a 29 billion ruble loan to the Afipsky and Antipinsky refineries controlled by New Stream Group issued last December to help them restart operations is the largest bad loan in the portfolio of the bank, and that restructuring is necessary.
“The tax maneuver and inefficient management by owners led the companies to the danger zone…It is obvious that it needs (restructuring). But the bank is looking for an active solution,” Popov said.
The refineries would need no additional loans to replenish working capital. The bank ensured their continuous operations as suspension and a later resumption of operation would mean larger spending, he said.
Sberbank also plans to use the golden share in the Antipinsky refinery to protect position and money of the bank to the highest degree possible, he said.
DEBTS OF UTAIR
Banks-creditors discuss possible ways of solving the debt problems of troubled airline Utair, he said.
In 2015, the airline borrowed 38.6 billion rubles from a syndicate of 11 banks. The carrier also owns 17.4 billion rubles to Sberbank. In December 2018, the company defaulted on a 1 billion ruble interest on one of the syndicated loans. The carrier said that it planned to restructure the loans before mid-2019.
“We are in constant discussions, there is a large dispute going on around the topic. Last year, companies faced serious problems in the sector after a surge in the prices for jet fuel. The sector has obvious problems, and the sector’s regulator should address them instead of waiting for a situation like we had with Transaero to happen. From my point of view, the situation is unstable, let’s call it that,” Popov said.
The banks are discussing their possibilities of solving the problem, and Sberbank is in the wait-and-see mode, he said.
Sberbank plans to double the offer of investment bonds to 60 billion rubles in 2019 from 27 billion rubles placed in 2018.
“Our advantage is that we have a very good base of well to do clients. It is rather easy for us to place these bonds. We plan to expand them as we see good demand from clients because these bonds have good yields. So I am sure that there will be more issues,” he said.
Sberbank plans to start sales of OFZ federal bonds for households through the Sberbank Investor mobile app this year, he said.
Sberbank also expects initial public offerings (IPOs) of Russian companies to restart in 2019.
“Geopolitics will remain the key factor that defines the condition of the stock market, but we are optimistic about the prospects of the current year. Several Russian issuers are now using our help to prepare for a possibility to enter the public stock market. We don’t rule out the first Russian IPO after a long pause this year,” Popov said.
He also said that there is a high chance that Sberbank will fulfill its strategy for 2020, and it will start working on a new strategy next year.
In 2017, the bank announced plans to raise its net profit calculated under International Financial Reporting Standards (IFRS) to 1 trillion rubles and dividends to 50% of the net profit by 2020 given the tier-1 capital adequacy ratio of 12.5%.
(65.7147 rubles – U.S. $1)