Events

 
 
 

Prime Minister Vladimir Putin meets with Sberbank head German Gref

 
 
 

The prime minister and the Sberbank head discussed the bank's performance in the first six months of the year and its cooperation with small business, defence and agricultural enterprises. The prime minister said the average mortgage interest rate should be 8%.

Transcript of the beginning of the meeting:

Vladimir Putin: Mr Gref, last year Sberbank reported a record-high profit of 175 billion roubles. You can now sum up your operation in the first six months of 2011. I think the figures will be of interest not only for your clients, but also for potential investors, considering that you plan to sell 7.5% of the bank’s shares in September. So, what are your results for the first six months of 2011?

German Gref: We have not yet consolidated our results; we only have preliminary figures, which are very positive. We have increased our corporate loan portfolio by 9 percentage point in the first six months, and it now exceeds 5 trillion roubles. Our personal loan portfolio has increased by 10.5%. The aggregate growth of our loan portfolios is 19.5%.

In the first five months, we posted a net profit of 137 billion roubles, calculated according to Russian Accounting Standards, and expect it to exceed 160 billion for the first six months, which is nearly as much …

Vladimir Putin: It is nearly as much as for the whole of last year.

German Gref: Yes. At the same time, we pursue a very conservative reserve policy. At the moment, our reserves are more than 120% larger than non-performing loans. We continue working to resolve the problems that accumulated during the crisis and hope to report a year-end profit by rehabilitating distressed assets. Therefore, we have a positive view of our performance this year.

We are now working with investors, planning more meetings with them and road shows around the world this summer. We have impressive facts to show them. I hope that we will meet the investors’ expectations and achieve our privatisation goals, selling the 7.5% stake at a good profit on behalf of the government.

Mr Putin, I’d like to add that we are working hard to implement our small business programmes, about which you are always asking. In the first six months, our small business loan portfolio increased by 23%, a record-high growth in past years.

I have already reported that we have launched a loan programme that provides for issuing loans up to 2 million roubles to small businesses within two days. In the first six months of 2011, we have issued over 20,000 such loans and plan to spread to all other Russian regions by the end of the year. At this moment, this pattern is being used in about half of them. By the end of the year, about one-third of our small business loans will be issued under this programme.

A few days ago we decided to set up a department on small business development and draft a new concept for the provision of package financial services to small businesses. Yesterday we decided to appoint Sergei Borisov, former president of OPORA Russia, to head the new department.

We believe that this is our task as the country’s largest lender: we have 20,000 branches and can reach out to all Russian regions in terms of small business financing. This policy also meets our commercial goals because [small business] is a highly profitable segment and therefore one of our [development] priorities. But most importantly, we hope to overhaul the system of services for small business within 12-18 months.

Vladimir Putin: Excellent. Apart from working with private individuals, you also have a large portfolio of loans issued to defence and agricultural enterprises. How are your relations with these clients developing?

German Gref: There have been positive trends in terms of investment projects in agriculture this year. As for the geography of our loan portfolio, you can see that more regions are now using our loans. In the past, agricultural development was mostly reported in southern Russia: the Stavropol and Krasnodar territories and the central black-soil zone, but now we are seeing rapid development in the Voronezh Region and other regions closer to Moscow. Major investment has been channelled into three or four regions to finance the development of food processing industries and the purchase of land plots. Growth has been quite rapid this year.

There are several other successful large projects in Siberia, in particular in the Altai, unlike in past years. [We issued loans to finance] poultry and other meat processing (predominantly poultry meat) and the dairy business.

Our relations with defence enterprises have improved considerably. They were badly affected by the crisis, but the approval of increased state contracts has encouraged them to act more dynamically.

Most importantly, investment programmes are becoming more effective. We have introduced a new customer relationship management (CRM) system. In the past, we did not draw our client financing plans for six months ahead. But this year our plans stipulate about 2,000 deals with clients for a total value of 2.5 trillion roubles before the end of this year. And today we demonstrate a growing financing rate, including investments. Of course, it is so far smaller than it was before the crisis; the growth of investment has been insufficiently robust. But the main thing which we did not have in the past 18 months – and the growth of investment was rather weak in the first six months of this year – is that clients have resumed investment and we now have a large investment plan.

Vladimir Putin: What is the size of your Tier 1 capital?

German Gref: Our capital adequacy is 18%, which amounts to 1.2 trillion roubles of both Tier 1 and Tier 2 capital.

Vladimir Putin: Approaching one trillion?

German Gref: Yes, we are. I think that this year our portfolio, meaning all of our assets, will exceed 9 trillion roubles. Sberbank is ranked 15th in the world in capitalisation. This year it was included in two rankings of the world’s most reliable banks – we are one of the world’s 20 most reliable banks. This is the first time a Russian bank was included in the ranking list. Sberbank is also one of the world’s 100 most valuable brands. These two achievements are very important to us.

Vladimir Putin: Good. What mortgage rates do you offer?

German Gref: As I reported to you last time, we have extended the Three Eights programme – a mortgage loan issued within 8 days for 8 years at an 8% interest rate. We extended it until June 1, but two weeks ago we decided to extend it again, until October 1.

The inflation rate has slowed, it was rather low in June at 0.2%, and it did not grow at all in the past few weeks. This is why we have decided to keep the rate, although it is lower that the refinance rate. It is the lowest rate.

Vladimir Putin: 8%?

German Gref: Yes, 8%. We have extended it to more programmes. In the past, we offered that rate if a client made a 50% down payment for an apartment on the primary housing market, but now we also offer it for the purchase of pre-owned flats.

We are working actively on mortgage programmes and offer interesting terms for different client groups. We are considering a programme of mortgage loans for young professionals – we hope to approve it by autumn – aimed at encouraging them to stay in Russia, not to leave.

Our mortgage programmes that are implemented jointly with regional partners are proceeding quite well. We have signed agreements on target mortgages for young rural specialists, such as doctors and teachers, with 43 regions.

Vladimir Putin: Is the 8% rate the lowest you offer?

German Gref: Yes. Our highest interest rate is…

Vladimir Putin: And what is the average rate at Sberbank and across Russia?

German Gref: I think it is around 11.5%-12%.

Vladimir Putin: We must gradually reduce the average rate, to make 8% the average.

German Gref: This will, of course, depend on macroeconomics.

Vladimir Putin: I understand, but in general, the trend is very positive. Do try.

Адрес страницы в сети интернет: http://archive.government.ru/eng/docs/15822/