WOOD Flash – Sberbank: war chest, for a price
In this flash note, we quantify Sberbank’s resilience in light of the changes in its balance sheet structure, capital and loan portfolio, and the trends in the Russian credit market. We use the YE13 and YE19 financials to gauge the point-in-time strength of the bank against swings in the COR and the NIM. We also try to interpret how the Russian loan market has changed over the past six years, in both corporate and consumer books. Sber has proven to be much more resilient and stronger – to our mind, there is no doubt about this. According to our ballpark calculations, as long as Russia Inc. stays in one piece, a net loss looks very unlikely, in our view. By the same token, Sber is still planning to distribute 50% of its 2019 net income as dividends, despite the ongoing turmoil globally. However, this peace of mind comes at a price and, arguably, Sber is not the most depressed stock out there, trading at a reasonable 1x 2019 book. We rate the commons a BUY, with a RUB 286/share PT. The bank trades at 0.9x P/TBV and 4.5x P/E on our current 2020E estimates.Sberbank Russia is an open joint stock commercial bank. Co.'s principal business activity is corporate and retail banking. This includes, but is not limited to, deposit taking and commercial lending in freely convertible currencies, local currencies of countries where the subsidiary banks operate and in Russian Roubles, support of clients' export/import transactions, foreign exchange, securities trading, and trading in derivative financial instruments. Co.'s operations are conducted in both Russian and international markets. As of Dec 31 2014, Co. had total assets of RUB25.20 trillion.
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