Daily analyst comments

On November 25, Sberbank published its 10M 2008 financials audited to RAS. In the reporting period, the bank’s total loan portfolio grew by 26.8% to RUB 5.2 trillion. The company’s main resource base, i.e. customer accounts, rose by 19.1% to more than RUB 4.7 trillion despite a more than 3% outflow of deposits in October. The company’s 10M 08 net profit equaled RUB 113 billion, which is close to the year-earlier indicator.

The financial report clearly shows Sberbank’s ability to function normally amid the ongoing financial crisis. The bank’s total loan portfolio grew at a quicker pace, up RUB 150 billion in October versus a RUB 105 billion upturn in 9M 2008. The company’s October net profit equaled RUB 10.1 billion, a slight decrease from the FY 2008 average monthly indicator or RUB 11.4 billion.

Among a few negative aspects, we note a 3% deposit outflow in October. However, the bank’s official spokesperson says that the outflow of deposits ceased in early November. Moreover, many other banks lost a much bigger slice of their deposits in October, about 10% on average.

In view of the unfavorable economic environment, we are positive about the financial results published by Sberbank. In line with our estimates, despite the looming financial crisis, the bank will be able to raise its market share in key business segments. As before, one of the main risks for the bank is a potential decline in the quality of its loan portfolio and the demands of its social obligation to ensure the normal functioning of the financial system and strategic sectors of the economy. Our target prices for Sberbank commons and prefs are USD 3.31 and USD 1.17 per share, respectively.