By Elena Fabrichnaya and Alexander Marrow
MOSCOW (Reuters) - Russia's largest lender Sberbank reported on Thursday a record annual profit of 1.58 trillion roubles ($18.1 billion) after corporate and retail lending coped well with steadily increasing interest rates to 21%.
The central bank's high key rate has boosted banks' net interest margins, but is so high now that lending growth is starting to slow as companies cut back on investment and individuals prefer to hold funds on deposit.
Profit for 2024 rose 4.8% from the previous year, the bank said.
"The corporate loan portfolio grew by 19% year on year to over 27.7 billion roubles," CEO German Gref said in a statement. "The retail portfolio grew more moderately under pressure from high rates and stricter regulation and grew 12.7% for the year, amounting to 18.1 trillion roubles."
Net interest income for 2024 reached 3 trillion roubles, up 17% year on year. Return on equity (ROE) dropped by 1.3 percentage points to 24% for 2024 as a whole. In 2025, the bank sees ROE at above 22%.
Sberbank dominates Russia's banking sector with almost 110 million retail clients and more than 3 million corporate clients.
The sector's profits hit a record 4 trillion roubles last year, though the central bank has warned that profits will slip to 3-3.5 trillion roubles in 2025 as credit risks grow and margins are squeezed.
No. 2 lender VTB Bank this week reported record annual profit as well, but said it would not recommend a dividend as high rates and new regulation dampen this year's earnings outlook.
Gref said that global volatility meant he could not guarantee that state-owned Sberbank would pay dividends for the next three years, but said the bank would distribute 50% of net profit to shareholders as planned for 2024, offering a huge boost to Russia's budget revenue.
Sberbank casts itself as a technology company and has made hefty investments in areas like artificial intelligence (AI), as Russia seeks technological sovereignty in the face of sweeping Western sanctions over its actions in Ukraine.
Gref said 2024 marked an important milestone for Sberbank as it integrated AI into more of the bank's systems and said the bank was developing in technology areas faster than it could have imagined.
($1 = 87.5000 roubles)