WOOD Flash – Sberbank: first look after new sanctions – stay on the sidelines

In this flash note, we make our first attempt to analyse how Sberbank’s investment case and valuation could change after the introduction of stricter sanctions on a number of targeted entities and individuals. We are not political analysts, but we believe that the chances are that we could move into a quiet period in terms of sanctions. This is not to say that we are ruling out new sanctions down the line, or arguing that Sber’s valuation can escape unscathed, as it is a Russia proxy. We believe that investors could be affected by binary factors related to the political backdrop even more, which could call for a higher risk premium on valuations. We would not overlook a higher cost of equity (COE) environment for Sber and emerging risks on the dividend story and cost of risk (CoR) on the back of its exposure to sanctioned companies. Our price target (PT) of RUB 280/share on the commons is not changing for the time being without changing the estimates at this point. We keep our rating at HOLD.