Opinion from Financial Times

If a currency reflects a country’s economic health, Russia’s banks should be in intensive care. Yet the country’s largest retail lender, Sberbank, is trumpeting a return on equity that western counterparts can only dream of. 

The rouble has dropped 20 per cent against the dollar in the past four months. Russia’s central bank lifted its key interest rate by 3.5 percentage points to 12 per cent last month. That suggests western sanctions are biting. 

Or maybe not? Retail banks are often seen as proxies for domestic financial conditions. Sberbank has more than half of the Russian mortgage market and a similar share of lending to smaller companies. 

All is well here, if Sberbank’s chief executive Herman Gref can be believed. He reports that the bank’s return on equity year-to-date to the end of August is 25 per cent, compared with 24 per cent through to May. 

Sberbank has two factors in its favour. First, last year was tough, fostering flattering comparisons. High loan provisions in 2022, about Rbs224bn ($3.1bn) slashed profits back then. The return on equity was mid-single digits. Second, Sberbank dominates Russian retail and corporate banking.

Read full report: https://www.ft.com/content/381e259c-8574-4cd8-a04a-0fdec6aaad28