April 30, 2019 / 8:06 AM / 23 days ago

UPDATE 1-Sberbank's earnings hit record but profitability declines

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MOSCOW, April 30 (Reuters) - Sberbank made yet another record high net profit in the first quarter of 2019 despite a decline in return on equity, the key measure of profitability, Russia’s largest lender said on Tuesday.

Sberbank’s net profit rose 6.8 percent year-on-year to a record 226.6 billion roubles ($3.51 billion), the bank’s earnings under the International Financial Reporting Standards (IFRS) showed.

Sberbank outperformed rivals during Russia’s 2014-16 recession and the economy’s ensuing slow recovery, and it has recommended paying out a record high dividend on its 2018 profit.

Sberbank’s return on equity, however, declined to 22.9 percent in January-March from 24.2 percent in the same period a year ago.

Sberbank’s shares dropped 1.3 percent to 226 roubles per piece as of 0737 GMT, underperforming the benchmark MOEX index that was down 0.4 percent on the day.

Alexander Morozov, deputy chairman of Sberbank’s executive board and chief financial officer, said that the bank’s return on equity declined due to a slowdown in net interest income.

Sberbank said its net interest income rose 1.2 percent year on year to 337.5 billion roubles in the first quarter but declined 4.8 percent in quarter-on-quarter terms.

“We do not see any reason to revise the Group’s guidance for 2019,” Morozov said.

Sberbank’s provisions against bad losses declined to 17.3 billion roubles in the first quarter from 20.1 billion roubles a year ago.

Negative revaluation of loans at fair value due to a change in the credit quality of borrowers increased to 28.2 billion roubles from 1.1 billion roubles in the first quarter of 2018, Sberbank said.

$1 = 64.6240 roubles Reporting by Andrey Ostroukh, Katya Golubkova and Tatiana Voronova; editing by Jason Neely and Louise Heavens

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