In the face of growing foreign
banking interest in Russia (see The gold
rush into Russia, RBI 588
Sberbank, the country’s
largest banking group, has posted very strong 2007 results, with
profit before tax at its retail banking arm up 73 percent to
RUB47.57 billion ($2 billion). Income from its fledgling plastic
cards operation rose 48 percent to RUB10.3 billion; deposits from
individuals rose 31 percent to RUB2.68 trillion.

Overall, Sberbank’s group profit after tax rose 28.6 percent to
RUB106.5 billion, with total assets increasing 42 percent to
RUR4.93 trillion. Group interest income increased 40 percent to
RUB428.7 billion while fee and commission income grew 32 percent to
RUB68.3 billion.

Sberbank – return on assets (%)

20,037 branches

For foreign banks such as Raiffeisen International, UniCredit, KBC,
HSBC, Barclays and Citi looking to break Sberbank’s dominant
position in the country, the bad news is that the group, 60.3
percent owned by the Russian government, increased its overall
branch network from 20,101 branches to 20,307.

Private sector rival Rosbank, now 50 percent plus one
share-controlled by France’s Société Générale, has 600 branches
while Austria’s Raiffeisen International, currently the sixth
largest bank in terms of assets, has 250 branches. Barclays bought
Expobank in March, a bank with 32 branches.

In 2007, Sberbank’s staff numbers rose 3 percent to 251,208, though
staff costs rose 36 percent to RUB118.4 billion, indicating that
the bank is facing wage inflation as Russia’s banking and wider
economy matures and it competes for experienced staff.

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Buoyant market environment

VTB, Russia’s second-largest banking group and 77.5 percent owned
by the state, saw its 2007 group net profit rise 28 percent to
$1.51 billion.
Total loans and advances were up 100 percent to $58.5 billion;
total customer deposits rose 86 percent to $37.1 billion – again
underlining the generally buoyant market environment in the

Russia, the world’s eighth-largest economy and Europe’s most
populous nation with 142 million people, is benefitting from
accelerated growth in its consumer banking sector, said a recent
report, Scenario 2020, published by Austria’s RZB Group in

It predicts that Russia GDP per capita will rise to 65 percent of
the EU-27 average by 2020; it also reckons there will be a further
reduction of the overall number of banks, from over 1,000 in 2007
to 700 by 2020, mainly through M&A activity.

The RZB report estimated that with GDP per capita at purchasing
power parities doubling from €9,890 ($15,393) in 2006 to around
€20,700 in 2020, the degree of financial intermediation (banking
assets as percentage of GDP) should more than double as well – from
an estimate of around 60 percent of GDP in 2007 to around 130
percent by the year 2020.

Sberbank – loans to individuals (RUBbn)