Russia’s Sberbank will send $3.6bn to the state coffers this spring as part of a record dividend payout, even as its profits collapsed last year due to western sanctions imposed over Moscow’s invasion of Ukraine.
This marked a record in terms of share of profit paid out. In previous years, the bank distributed just 40-56 per cent of its profits to shareholders, whereas Friday’s recommendation equated to about 200 per cent of the bank’s 2022 net profit of Rbs270.5bn.
Though sanctions shredded profits last year, down 80 per cent in 2022 compared to 2021, Sberbank still found itself in a position to make a major payout thanks to the “durability of the business”, chief executive Herman Gref said in a statement.
Gref, a longtime economic confidant of president Vladimir Putin, added: “Our dividends are not only an additional financial income for each private shareholder, of whom we have 1.5mn, but also a significant contribution to the budget of the entire state.”
Russia’s budget deficit has soared due to increased defence spending, as well as the effect of sanctions on the country’s oil and gas revenues.
The payout to the state “is a substantial amount of money that will add an extra 1 per cent of expected budget revenues this year,” said Sofya Donets, chief economist at Renaissance Capital.
It neared the Rbs300bn the Russian government hoped to raise with a 5 per cent windfall tax it was set to slap on the “excessive profits” of its major businesses, Donets noted.
Gref has told friends he is opposed to the war and made a presentation warning the Russian president of disastrous economic consequences one month before the invasion last year.
But like all but a handful of officials and state company chiefs, the banker has chosen to stay in his post, privately insisting he has a responsibility to Sberbank’s customers and dismissing accusations the bank is helping fuel the Russian war machine, people who know him say.
Sberbank’s payout was possible thanks to its record net profit in 2021, which on the recommendation of the central bank, it did not distribute as dividends last spring. At the time, authorities were scrambling to maintain the country’s financial stability in the wake of western sanctions.
“Compared with 2021, Sberbank results for 2022 were weak. But the bank used its right to pay dividends from its retained earnings,” said Timur Nigmatullin, an analyst at the Russian investment company Finam. “If you have the money, why not pay?” he added, citing the bank’s high capital adequacy.
Sberbank’s quasi-monopoly status — it holds about half of Russian retail deposits, while about one in three people bank there — has also helped keep the bank robust.
Its 2022 net profit was greater than the profit in the banking sector, which as a whole made Rbs200bn as other lenders recorded huge losses.
In response to the dividend announcement, Sberbank shares on Russia’s main stock exchange MOEX rose 10 per cent, remaining 40 per cent below their prewar level.
Additional reporting by Max Seddon in Tel Aviv