Russia’s Sberbank has unveiled record earnings for last year as it prepares for a $6bn secondary public offering.
Net profit at the bank surged 74 per cent to Rb315.9bn ($10.7bn). It also recorded a 28 per cent return on equity, up from 20.6 per cent in 2010, while its loan book grew by 35 per cent, outpacing the rest of the Russian banking sector.
The results would seem to give Sberbank a boost ahead of the roadshow for its public offering, which was pushed back from last autumn due to poor market conditions.
People with knowledge of the offering have said the bank could begin its roadshow as soon as mid-April, depending on the company’s share price.
Russia’s central bank, which plans to sell 7.6 per cent of Sberbank to local and foreign investors, has said it will wait for the stock to rise above Rb100. The shares closed down 2.2 per cent at Rb97.79 in Moscow on Wednesday.
Anton Karamzin, the bank’s chief financial officer, said the bank would wait if necessary. “There is no particular desperation or rush to make this deal,” he said. “But on the other hand we don’t want to sit on it forever. The main driver is good market conditions.”
Mr Karamzin said it was important “not to overemphasise the scale of the transactions”, noting it would be worth about five to six days of Sberbank’s daily trading volume.
But analysts disagreed, arguing that the marketing could lead to a repricing of Sberbank stock, which is considered cheap.
“If [the secondary offering] is properly executed, it could be huge from a marketing perspective as well as new fund knowledge and ownership of the Sberbank story,” said David Nangle of Renaissance Capital. “Sberbank is ready, its bankers are lined up, the markets seem ready [for a Sberbank offering]…You have to sell stock when you can, not when you want.”
The bank’s full-year earnings were slightly lower than analysts had predicted. But analysts said it was important to look at the results in comparison to European and US peers, few of which have been able to post such a high return on equity without leveraging their balance sheets. Sberbank reported a tier one capital ratio of 11.6 per cent.
The bank has started to expand outside Russia and the CIS through last year’s $660m acquisition of Volksbanken International– the east European arm of Austria’s Oesterreichische Volksbanken – which gives it a presence in eastern Europe.
Mr Karamzin said the relatively small deal was in line with the bank’s goal to “not disperse top management attention to nine different countries where the business in each and every one of them is very small”.
“Our objective is that we properly integrate and make our domestic competitive advantages that we enjoy here transferable. First quality, then volume.”
He said the bank was looking for opportunities in Turkey and Poland, as well as farther afield in China and India. Sberbank has already set up small representative offices in Beijing and New Delhi.
Mr Karamzin said Sberbank saw strong long-term growth in eastern Europe but would not look for firesale purchases in western Europe, noting that the region’s growth prospects in terms of margins and income were “absolutely of no interest” to the bank.
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