President of Russia Vladimir Putin: Mr Gref, I know that Sberbank’s performance can be described as acceptable or even good. Let us talk about this.
Sberbank CEO and Chairman of the Board German Gref: We have reported to our Supervisory Board on the performance of the Sberbank Group in 2017 based on international financial reporting standards, including not only Russian companies of the group, but also its foreign assets.
Our net profit for 2017 increased by over one-third compared to the year before. All of our indicators, including financial performance, are good. We also did well in terms of expenditure last year. First of all, we increased investment in technology by over 20 percent last year, whereas our overall spending in both absolute and nominal figures decreased year on year, for the first time in the bank’s history. The reduction of expenditure is a major source of our profits.
We are extremely interested in increasing our profits, which are the main and, in fact, only source for increasing capital. We have not yet achieved the level of Tier 1 capital that would take us to the international level in the group of comparable banks.
Nevertheless, our dividend payments will be considerable this year. We have not yet determined the precise amount, but the dividends will be really good. In principle, we have come to an agreement with the Finance Ministry regarding a gradual increase in dividend payments, which should bring our capital adequacy to a target level of 12.5 percent.
In this way, we will be able to make large tax payments, and secondly, we will also make serious payments to the budget and pay good dividends to our minority shareholders. At the same time, we will increase our capital in a natural way to ensure the bank’s stability.
As for lending to the economy, last year was generally fairly good. I know that you are usually interested in two categories of loans: first, everything that concerns the people, that is, mortgage loans. Last year we halved the time needed to issue a mortgage loan compared to 2016. Last year saw a sharp decline in interest rates, which of course, substantially increased the demand for mortgages.
Today, we are granting loans at 7.5 percent interest rates under different preferential programmes – for young families and the like. Now we have started granting Government-subsidised loans and I hope that the loans under this programme will exceed 200 billion rubles.
Vladimir Putin: Do you know that some experts are concerned over a big growth of consumer loans?
German Gref: Mr President, we are closely watching this as well. As for mortgages, we see…
Vladimir Putin: No, this is not mortgage loans.
German Gref: Mortgage loans have doubled – this is absolutely safe, nothing to worry about.
As for consumer loans, we compared them with ours in 2008 and those in developing countries and do not see any signs of a bubble in the consumer lending market.
If we take the share of revenues made by households that is used to service loans, the situation is not critical yet. We must watch this very closely, this is true, but in our estimate the problem will not become urgent for the next two years.
As for small business, a major step was taken last year when we made a decision that the opening of an account and all transactions will be free for all businesses during the first year. We developed a special product – Easy Start – and a vast number of entrepreneurs began opening accounts and using our services.
On the whole we “lost” 35,000–40,000 rubles on each customer but in reality, we see that this support is needed at the start and considering fee revenues, we will stand to gain from this during the second and third years and will eventually recoup this money one way or another during the next three years.
Plus, last year together with the Government we made several important steps. First, the opportunity to open an account online, without visiting the bank. The Central Bank has changed the relevant legislation and we did all we could to put this into practice. Second, in cooperation with the Taxation Service, we changed the rules – now legal entities can register without visiting registration bodies.
Thus, today entrepreneurs can visit us, register their companies and open accounts with four clicks on the screen. De facto, the best international practice is three clicks.
The Government has now submitted to the State Duma a law cancelling the registration fee for small companies. In this case we well also need three clicks. In other words, Russia has the opportunity to use the world’s best practices. We think this is a very important step forward for small business – it removes the barriers for using financial services and registration.
Last year, we expanded the number of loan recipients considerably. In 2017 we granted 1.3 trillion rubles to small and medium-sized companies and out loan portfolio exceeded the pre-crisis level for the first time.
Vladimir Putin: What was the growth compared to last year?
German Gref: Thirty percent over 2016.
Vladimir Putin: This is decent growth. Good.
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