sberbank 2017 guidance · sberbank 2017 guidance the most protracted crisis in the recent history...

14TH DECEMBER 2016

SBERBANK

2017 GUIDANCE

ALTAI MOUNTAINS, RUSSIA

SBERBANK 2017 GUIDANCE

SBERBANK MACRO VIEW 2017

2


THE MOST PROTRACTED CRISIS IN

THE RECENT HISTORY

Accumulated structural disproportions

Slumping oil prices From $100/bbl in 2013 to ~$40+/bbl in 2016

SanctionsCapital, technologies, risks of tougher sanctions

3 квартала 4 квартала 8 кварталов

-6

-4

-2

0

2

4

6

Q1 '1996 Q1 2000 Q1 2004 Q1 2008 Q1 2012 Q1 2016

3 quarters 4 quarters 8 quarters

GDP GROWTH, QOQ, SEASONALLY ADJUSTED

3


CAN ONLY GO UP NOW, BUT HOW FAST?

The economy will grow from now on

HOW FAST?

OIL AND RUBLE ELECTIONSSANCTIONS

Low prices are no longer the main impediment to growth

Prices are unlikely to fall

The economy has adapted

The real exchange rate dropped by 15%

It is not likely that the sanctions against Russia will be expanded

Trump wants to soften the policy

Inside Europe, there is no unity on the issue of sanctions

Presidential elections in Russia inMarch 2018

Pre-election expenses is an additional impetus

However, the resources are limited

GDP growth =1.5% a year GDP growth =3.5% a year

OR

The next time the GDP

will double in 50 yearsThe next time the GDP

will double in 20 years

ONE GENERATIONTWO GENERATIONS

Without structural reforms Reforms + technological breakthrough

4


By 2018, oil prices will grow to USD60-65 per barrel and will remain on that level for a long time

Forecast of Henry Groppe:

Sou

rce:

Gro

pp

e, L

on

g &

Lit

tell

, Min

istr

y o

f E

con

om

ic D

evel

op

men

t, C

BR

, CM

E o

f Sb

erb

ank

Meanwhile, the official scenarios are more pessimistic Sberbank scenario is a compromise

WHAT TO EXPECT FROM OIL PRICES?

80 111 112 109 99

52 40 50 64 59 64 65

84 100 109

138

0

20

40

60

80

100

120

140

2010 2012 2014 2016 2018 2020 2022 2024

99 52 40 50 64 59

40

-

20

40

60

80

100

2014 2015 2016 2017 2018

Генри Гропп МЭР и ЦБHenry Groppe Min of Economy& CBR

99 52 40 50 64 59

4150 55 55

-

20

40

60

80

100

2014 2015 2016 2017 2018 2019

Генри Гропп ЦМИ СбербанкHenry Groppe Sberbank, CMR

5


• Moderate pre-election increase of state spending in 2017

• Sanctions and counter-sanctions will continue

• Gradual but limited oil price recovery

BASELINE SCENARIO: IN 2017-2019, OIL PRICES WILL

BE AT $50-55/BARREL

Economy: Sluggish growth Inflation: Gradual slowdown Rate: We do not expect any shocks

Pre-election spending will support growth in 2017

Inflation is decreasing slowly due to budget deficit and indexation

Moderately hard monetary policy: Key rate ~3.5% in real terms

Sourc

e:

Sta

te S

tatistics S

erv

ice,

CB

R,

Haver,

Centr

e f

or

Macro

econom

ic R

esearc

h o

f S

berb

ank

-3,7

-0,5

1,2 1,0 1,2

-9,6

-3,6

1,3 1,1 1,2

-14

-12

-10

-8

-6

-4

-2

0

2

4

6

2015 2016 2017 2018 2019

GDP growth Consumption growth

12,9

5,85,0 4,5 4,0

11,010,0

8,58,0

7,5

0

2

4

6

8

10

12

14

2015 2016 2017 2018 2019

Inflation (year-end)

Key rate (year-end)

52 4150

55 55

6167 64 62 64

0

10

20

30

40

50

60

70

80

90

2015 2016 2017 2018 2019

Oil price USD rate

6


CONSUMER DEMAND WILL CONTINUE TO REBOUND

Low oil prices are no longer the main impediment to growth

2016 saw prices hover around $40 per barrel

The prices are unlikely to fall further, while any price increase would support GDP growth

The economy has adapted to ruble's free floating exchange rate

Since 2014, ruble's real exchange rate has devalued by 15%

Consumption will return to growth…

... but will stagnate

Real wages are growing due to shrinking labor resources

In 2015, the working-age population decreased by 1.2 mn people

Pre-election indexation of wages

Currently wage growth in the economy is contained by the budget sector

Wages will continue to grow

due to demographic factors and elections

Now the household income is declining despite wage growth

At first, the pensions were indexed at 4%

The second indexation will be replaced by RUB5,000 compensation

Pre-election pension indexation

Compensation — at the start of the year

Indexation in the second half-year

The income will be supported by the indexation of pensions

The propensity to save will continue to decline

1,4

-9,6

-3,6

1,3 1,1 1,2

-12

-10

-8

-6

-4

-2

0

2

4

2014 2015 2016 2017 2018 2019

Real wages Real earnings Consumption

Growth rate for wages, income and consumption, % YoY

-2

8

18

янв.12 янв.14 янв.16

Savings ratio Without seasonal fluctuationJan 2012Jan 2012 Jan 2014 Jan 2016

It has practically returned to normal levels

Sourc

e:

Haver,

Rossta

t, C

entr

e f

or

Macro

econom

ic R

esearc

h o

f S

berb

ank

7


The equipment impedes output growth for only 18% of the enterprises.

91% of companies believe that they have enough capacity for the next 6 months.

Main impediment for companies is weak demand and uncertainty

Survey of company executives, Rosstat

5000

7000

9000

11000

13000

янв.11 июл.12 янв.14 июл.15Jan 11Jan 11 Jul 15

Jul 12Jan 14Jul 12

-12

-7

-2

3

8

янв.12 янв.14 янв.16Jan 12Jan 12 Jan 14 Jan 16

INVESTMENT DEMAND REMAINS LOW

The import of investment goods has started to grow

Construction is recoveringBut there will be no boom: Companies do

not see any point in investments

Imports of machines and

equipment, US$ bn

Growth rate for

construction, % YoY

Investments will return to growth…

... but will stagnate

Sourc

e:

Haver,

Rossta

t, C

entr

e f

or

Macro

econom

ic R

esearc

h o

f S

berb

ank

6,4

12,6

2,84,6

-2,8

-11,3

-4,3

1,1

-15

-10

-5

0

5

10

15

Q1 '2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017

Investment growth rate, % YoY

8


Moderately tight: Real rate 3-4%

CBR will decrease the rate: The inflation is slowing down, while the growth remainssluggish

Yet the rate decrease will be smoothUp to ~3.5% in real terms in 2017 and ~2.5% in real terms mid-term

4% by the end of 2017

Inflationary expectationsof the population, business community and authorities

Consumption growth (wage growth, decline of savings rate)

Budget policy(indexation and deficit)

External factors

Recession but no deflation

THE INFLATION WILL SLOW DOWN, BUT

THE POLICY WILL REMAIN TIGHT

Current

situation

Inflationary pressure

Bank of Russia's policy

THE GOAL

is hard to achieve

0

1

2

3

янв.14 янв.15 янв.16

Инфляция %мм без сезонности

Sourc

e:

CB

R, H

aver,

Centr

e f

or

Macro

econom

ic R

esearc

h o

f S

berb

ank

5.8 4

0

5

10

15

20

янв.14 янв.15 янв.16 янв.17

Inflation % MoM, seasonally adjusted

Jan 14 Jan 15 Jan 16

Jan 14 Jan 15 Jan 16 Jan 17

9


WHAT CAN HAPPEN DIFFERENTLY?

Bank’s scenario

Positively

Negatively

Sharp fall in oil prices due to hard landing in

China

Accelerated inflation caused by external

factors

Capital outflow from emerging markets

Weakening exchange rate due to further

worsening of relations

Oil price growthQuick slowdown of

inflationQuick decrease of the

key interest rateRouble strengthening caused by geopolitics

10


Oil prices: $50-55-55 (‘17-’18-’19)

Pre-election spending growth

Oil prices: $25-25-25 (‘17-’18-’19)

Or a 50% quota on oil exports

Oil prices: $60-60-60 (‘17-’18-’19)

Sectoral sanctions lifted

SBERBANK 3 SCENARIOS

Economic growth Inflation RUB/US$

Basic scenario Pessimistic Optimistic

Sourc

e:

Rossta

t, C

BR

, H

aver,

CM

R S

berb

ank

61 68 64 62 64

85 87 89

5657

58

0

10

20

30

40

50

60

70

80

90

100

2015 2016 2017 2018 2019

Базовый Песимизм Оптимизм

12,9 5,8 5,0 4,5 4,0

7,2

5,5

4,54,94,5

4,0

0

2

4

6

8

10

12

14

2015 2016 2017 2018 2019

Базовый Песимизм ОптимизмBasic Pessimistic Optimistic

-3,7-0,5

1,2 1,0 1,2

-1,5

0,2

0,7

21,5 1,4

-4

-3

-2

-1

0

1

2

3

2015 2016 2017 2018 2019

Базовый Песимизм ОптимизмBasic Pessimistic Optimistic Basic Pessimistic Optimistic

11


Area EffectRisk

ChinaFalling market and yuan, hard landing

Commodity prices, trade

EurozoneGreece, banks (DB, Italy), migration

Growth of the global economy

GeopoliticsUkraine and Syria, change in U.S. policy

Sanctions, capital outflow, growth of the global economy

BLACK SWANS

Already happened

Ukraine 2014BrexitTurkeyU.S. elections

Will happen

?

RISK ZONES AND BLACK SWANS

12


The only man I know who behaves sensibly is my tailor; he takes my measurements anew each time he sees me.

The rest go on with their old measurements and expect me to fit them.

George Bernard Shaw


ON TRACK FOR 2016

14


ON TRACK FOR 2016

EFFICIENCY

PROFITABILITY

BALANCE SHEET

AND CAPITAL

INITIAL21 Jan 2016

1Q IFRS25 May 2016

2Q IFRS25 Aug 2016

3Q IFRS15 Nov 2016

Efficiency Ratio <43.7% Around 40% - -

NIM (average) >4.4% >5% - -

Fees & Commissions

GrowthHigh teens

Mid-to-high-

teens- Low-to-mid teens

Cost of Risk c.250-300 bps c.200-250 bps Around 200 bps -

ROE Low-to-mid-teensMid-to-high-

teensHigh teens -

Loans

Growth

CorporateIn line with the

sector- - -

RetailBetter than the

sector

In line with the

sector

Slightly better

than the sector-

Deposits

Growth

CorporateIn line with the

sector- - Below the sector

RetailIn line with the

sector-

Slightly better

than

the sector

Better than

the sector

Core Tier 1 CAR under

Basel 1 for the Group>9% Around 10% Over 10.5% >11%

15


SBERBANK GUIDANCE 2017

16


BALANCE SHEET FORECAST

CORPORATE LOANS RETAIL LOANS CORPORATE DEPOSITS RETAIL DEPOSITS

Nominal growth dynamics

In line with the

sector

SECTOR

SBERBANK Slightly better

than the sector

In line with the

sector

In line with the

sector

5-7% 5-7% 6-8% 7-9%

17


SBERBANK GUIDANCE 2017

EFFICIENCY

PROFITABILITY

CAPITAL

Efficiency Ratio Mid to high 30-s

OPEX Growth Lower than inflation

NIM (average) Stable y-o-y

Fees & Commissions Growth High-teens

Cost of Risk 150-170 bps

ROE High teens

Core Tier 1 CAR under Basel 1 for the Group Around 12%

Core Tier 1 CAR under Basel 2 for the Group Over 10%

GUIDANCE

2017

18


Q & A

sberbank 2017 guidance · sberbank 2017 guidance the most protracted crisis in the recent history...

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