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Sberbank targets high-teens ROE, above-market retail loan growth in 2017

PAO Sberbank of Russia expects its return on equity to be in the high teens in 2017, the bank said in a forecast presentation for the upcoming year.

The lender expects corporate and retail lending in the entire Russian banking sector to grow by 5% to 7% in 2017, while corporate and retail deposits will expand by 6% to 8% and 7% to 9%, respectively. The bank expects its own corporate loan portfolio to grow in line with the market and its retail loan growth to slightly outperform the sector average. Deposit growth is expected to match the market trends.

Sberbank also said it sees its net interest margin remaining stable year over year and the cost of risk reaching between 160 basis points and 180 basis points, compared with around 200 basis points in the second quarter of 2016. The bank's operating expenses will grow slower than inflation, estimated at 5% under the baseline scenario.

The lender's baseline economic scenario for 2017 also envisages oil prices at between $50 and $55 per barrel and the Russian central bank's main rate falling to 8.5% from 10% at present. The lender also forecasts 1.2% GDP growth in 2017 and expects Western sanctions to continue throughout the year.