Russia's largest bank Sberbank posted net profit of RUB33.9bn ($526mn) in October, up by 5% m/m and making the highest monthly profit since September 2014, the bank said on November 9.

In January-October overall, Sberbank's Russian Accounting Standard (RAS) net profit stood at RUB178.3bn, still down by -39% y/y.

The bank attributed October's net profit to lower cost of funding and transfers to reserves for bad loans, while expecting a faster recovery of net interest income due to improving structure of assets.

Transfers to reserves in October were RUB29.9bn, below the 2015 average RUB33.7bn, and bringing ten-month transfers to reserves to RUB333.6bn (up by 7% y/y).

Meanwhile, VTB bank on November 9 argued that technical factors support Sberbank's profit while operating results appear weak.

Net interest income increased 12.3% m/m "due mostly to technical factors as the bank switched to accrual basis from cash basis in its accounting for deposit insurance payments". Adjusting for this change, VTB estimated that net interest margin declined by 3bp m/m to 4.1%.

Net fees and commission income declined 18.6% m/m in October. "With non-core income down sharply, operating revenues were down 3.2% m/m, in spite of the positive effect from the accounting change," VTB writes.

The investment bank added that Sberbank's October's profit increase was also due to net tax gain of RUB 4.5bn compared with a tax expense of RUB 6.7bn in September.

VTB notes that risks of high taxation in the final months of 2015 exist as through October the corporate tax rate was only 15.6%, down from 23.6% for the same period of last year and well below the statutory rate of 20%.

"With provision expenses below the 2015 monthly average, a net corporate tax gain and a positive effect from a change in accounting all during October, the quality of the solid bottom line appears weak, in our view," VTB Bank concludes on Sberbank's operating results.