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Sberbank: An 8.7% Dividend Yield Looks Secured

Published Fri, 31 Jul 2020 09:02:06 -0400 on Seeking Alpha

Seeking AlphaEarnings Analysis | Financial | RussiaSberbank: An 8.7% Dividend Yield Looks SecuredJul. 31, 2020 9:02 AM ET|| About: Sberbank of Russia (SBRCY)by: Danil KolyakoDanil Kolyako Long only, value, long-term horizonSummarySberbank showed robust operational performance in Q2.
Rumors say that the bank may be allowed to write-off a $2 billion loan it received many years ago.
It's very likely that Sberbank will maintain its initial dividend recommendation.
Nonetheless, I keep a very cautious long-term outlook.
For the last few months, I was highly skeptical about Sberbank (OTCPK: SBRCY) amid the coronavirus pandemic. Nonetheless, the results of the last two quarters show that Sberbank has a much greater ability to ignore the negative impact of the coronavirus-related economic shock. Investors should not forget, though, that delayed negative effects of the coronavirus crisis aren't going anywhere, so 2021 is going to be even more intriguing for Sberbank rather than these last two quarters.
Q2 Results Overview
Net income decreased by 33.4% YoY to 166.7 billion rubles. The main positive contribution to the bank's results was a 21% QoQ reduction in allocations to reserves - to 129.5 billion rubles.

Source: Company data, Author's spreadsheet
Net interest income for the second quarter of 2020 amounted to 398.5 billion rubles, showing an increase of 13% over the same period last year.

Source: Company data, Author's spreadsheet
Net fee and commission income growth slowed to 2.8% YoY and amounted to 120 billion rubles.

Source: Company data, Author's spreadsheet
In the second quarter, Sberbank's loan portfolio decreased by 1.4% QoQ to over 22.85 trillion rubles. Compared to the previous year, the loan portfolio increased by 5.1%.
Retail loan portfolio amounted to 8.3 trillion rubles with a slowdown in growth to 0.9%. Sberbank attributed this to a decrease in activity during the period of quarantine... Read more