President of Russia Vladimir Putin: Mr Gref, I would like to hear about the bank’s work, it is our country’s biggest financial institution after all. You are heavily involved in work with the economy and households. I know too that your principle shareholder, the Central Bank, is ready at any moment to give you support, if of course Sberbank is in need of such support.
President and Chairman of the Board of Sberbank German Gref: Thank you very much for this support, Mr President. I know that last year, the State Duma acted very quickly to pass the law making it possible to support Sberbank with a subsidised loan of 600 billion rubles from the Central Bank.
Given the difficulties in December and January, we did think that developments could take quite a dramatic turn this year, but we have assessed the situation now and decided not to take up the offered support – we do not need this subsidised loan.
This year, we will not need any extra funding but have enough resources to get through this difficult period on our own. Our task is not to ask for money from the state authorities, but to help the country, and so we will get through the year without support. Unless, of course, an emergency comes up, we will not require any assistance.
We ended last year with a profit – a net profit of 290 billion rubles according to international financial accounting standards. This is 17-percent down on the previous year, but we were obliged to create big reserves in the fourth quarter, unfortunately, due to the situation in Ukraine in part, and of course also because of a number of difficulties here in Russia.
We published our results for the first quarter of this year yesterday, as according to Russian accounting standards for now, and by this measure we have a net profit of 26 billion, though we had forecast a loss, to be honest, and at best set the goal of breaking even. Fortunately, developments were not as dramatic as we thought.
Vladimir Putin: If you have a profit, the situation is not a dramatic one, you could say.
German Gref: Yes, but it is four times less than what we earned in 2014.
Vladimir Putin: By the way, how much have you already given out in loans for Ukraine?
German Gref: Around $4 billion.
Vladimir Putin: You have lent four billion dollars to your Ukrainian clients?
German Gref: Yes, we have a small portfolio of loans to the Ukrainian government and of course we also have many partners in Ukraine, Ukrainian companies, small businesses, and we have a small portfolio of loans to individuals. The bulk of our lending has been to businesses, big companies and small and medium-sized businesses.
Vladimir Putin: Are the loans being serviced?
German Gref: Unfortunately, the situation is such that around half of the loans are not being serviced, although our bank in Ukraine is the best on the market, I would say, in terms of its portfolio. Overall, it meets all of the Ukrainian regulator’s requirements, and we are coping with the situation so far, though it is not easy at the moment.
Vladimir Putin: Are you looking at the possibility of a capital injection?
German Gref: Not as yet, but if the situation continues to worsen, the issue could come up.
Vladimir Putin: How is your work with Russian households going?
German Gref: Mr President, the first two months of this year were quite difficult. We saw a more than four-fold drop in applications for consumer loans and a more than two-fold decrease in applications for housing mortgages.
I think though, that a very important decision was made to support the mortgage market. We are now able to offer mortgages for new housing construction at a rate of 11.9 percent. Demand for mortgage loans has increased over the first two weeks and stands at a figure slightly lower than the same period in 2014. This is not a bad result overall. The interest rate on mortgage loans on the secondary housing market is currently at 14 percent, and our portfolio in this area is showing quite good growth too. Last year, our portfolio increased by 44 percent. This year, to our regret, we account for 53 percent of the market and nearly 70 percent on the market for new loans.
We have lowered the interest rate on consumer
loans by two or three percentage points since April 1. We are seeing signs of livening up on the market, with consumer loan applications up by around 20
percent since April 1. This shows the people’s demand for loans is starting to recover. Overall, these are just the first signs, but they are quite positive
signs that a recovery is underway.
Vladimir Putin: What about your work with the various sectors in the real economy?
German Gref: The situation is not as positive here, unfortunately. First, our lending to legal entities fell by around two percent points in the first three months. This is better than we thought. We had predicted that our portfolio would decrease by around 6–7 percent points. The situation here has followed the same general pattern in that there was a sharp drop in February, but that was also when the interest rates were very high. The first applications started coming in February, and in March, we saw that the market was livening up, and now, in April, we see that companies have a lot more appetite for risk and projects.
The interest rate is still quite high, of course, but the inflation figures have been coming down in April and the ruble’s exchange rate is strengthening. The feeling now is that so long as no negative events happen, lending should recover more or less by the middle of the year.
As for the situation in the specific sectors, the biggest difficulties are in the machine-building sector. We need to look at what we can do to help in this respect because the machine-building companies – our clients – are in a very difficult position at present.
Vladimir Putin: You need to make more active use of the instruments the Government has proposed. It is not enough to propose measures; we need to make active use of them. Let’s discuss this in more detail now.
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