Russia’s largest banking group,
Sberbank, has reported first-quarter net profit down 98 percent
year-on-year to RUB600 million ($18.7 million).

The bank, 60 percent owned by the Russian
state, said that the quality of its loan book deteriorated off the
back of a worsening economic environment both in Russia and
globally: non-performing loans (NPL) totalled RUB190.7 billion at
31 March 2009. The proportion of non-performing loans in the total
loan portfolio (NPL ratio) reached 3.48 percent at 31 March

“In line with the deteriorating economic
environment, the group increased its loan loss provision to RUB90.7
billion, a 46.5 percent increase against the fourth quarter of 2008
and a 12.1 times increase year on year,” Sberbank said in a

But despite the economic environment, the
group increased its overall lending volumes in the first quarter by
3.9 percent to RUB5.5 trillion. Loans to individuals decreased,
however, by 3.6 percent to RUB1.2 trillion due to a reduction in
demand for consumer loans by individuals, the bank said.

Operating income growth and the reduction in
operating expenses led to a decrease in the group’s cost-income
ratio to 36.8 percent for Q109 compared to 53.5 percent for