Sberbank has published its financial results for the first quarter of 2025, reporting a record net profit of RUB436bn ($4.7bn) and a return on equity of 24%, Renaissance Capital reported on April 29.

The company continues to demonstrate a high net interest margin and operational efficiency while also strengthening its capital adequacy, which is critical under current conditions.

“We maintain a BUY rating on Sberbank’s ordinary shares with a 12-month target price of RUB370, which, including dividends, implies a total return of around 29% from the current price,” Rencap said in a note.

The loan portfolio decreased by 1.0% in the first quarter of 2025 (with a uniform decline across both retail and corporate portfolios), in line with the Central Bank of Russia (CBR)’s policy of cooling an overheated economy by bringing down lending activity.

Customer deposits grew by 1.5% (mainly driven by retail clients) which are taking advantage of the sky high banking interest rates. Despite this, the net interest margin remained high in the first quarter of 2025 at an estimated 5.9%, supported in part by a one-off effect from a change in the methodology for calculating subsidies under preferential mortgage programmes, Rencap said.

The share of non-performing loans (NPLs) rose by 0.4 percentage points to 2.9%, while the cost of risk (CoR) remained at the same level as in the second half of 2024 (1.2%).

Record net profit update

Net interest income in the first quarter of 2025 rose 19% year on year, while net fee and commission income increased by 10%. Alongside sustained high operational efficiency (cost-to-income ratio of 27%), this drove a 10% y/y rise in net profit to a record RUB436bn (return on equity excluding perpetual bonds [RoE] – 24%).

Sberbank reaffirmed its 2025 forecast, which targets a full-year RoE above 22%.

“We expect that despite a notable slowdown in loan portfolio growth, Sberbank will achieve a new record net profit in 2025, earning more than RUB1.6tn, which, all else equal, would also imply an increase in dividend payouts,” Rencap said.

The group’s total capital adequacy ratio (N20.0) rose by 0.7 percentage points to 14.0% at the end of the first quarter 2025. The previously recommended dividend payment for 2024, approved by the Supervisory Board at RUB34.84 per share (AGM on June 30, record date on July 18), will temporarily reduce capital adequacy by about 1.5 percentage points, according to Rencap estimates.

“This still implies a comfortable buffer above regulatory minimums, even considering all expected regulatory tightening. We maintain a BUY rating on Sberbank’s ordinary shares with a 12-month target price of RUB370, implying a total return of around 29% from the current price, including dividends for 2024,” Rencap said.