Russia’s Sberbank plans to pay out a record-high dividend. The Russian state alone is to receive the equivalent of around 3.6 billion dollars.
Russia receives a record dividend payment from its Sberbank. (Photo: dpa)
Photo: Karl-Josef Hildenbrand
Russia’s Sberbank plans to pay out a record-high dividend this spring. The Russian state treasury alone is to receive the equivalent of around 3.6 billion dollars in this way.
The dividend planned by Sberbank corresponds to about 200 percent of its net profit of 270.5 billion rubles. In previous years, the bank had only distributed 40 to 56 percent of its profits to shareholders, like the Financial Times reported. The unusual fact that the bank plans to pay out roughly twice as much to its shareholders as it made profits is due to its unusually low dividend last year.
Sberbank’s unusually high dividend payout was made possible by its record net profit in 2021, which it did not distribute as a dividend last spring on the recommendation of the Central Bank of Russia. At that time, the Russian authorities were trying to maintain the country’s financial stability after Western sanctions.
Compared to 2021, the results of Sberbank 2022 again decreased by about 80 percent. “But the bank has exercised its right to pay dividends from its retained earnings,” said Timur Nigmatullin, an analyst at Russian investment firm Finam. “If you have the money, why not pay it out?” he added, citing the bank’s strong capital base.
Sberbank is able to make a big payout this year thanks to “consistency of business,” CEO Herman Oskarovich Gref said in a statement. The former Minister for Economic Development and Trade added: “Our dividends are not only an additional financial income for each private shareholder, of which we have 1.5 million, but also a significant contribution to the state budget.”
The dividend payment to the state “is a sizeable sum that will account for an additional percent of expected budgetary revenue this year,” quoted Sofya Donets, chief economist at Renaissance Capital, as quoted by the Financial Times. The payout is approaching the 300 billion rubles that the Russian government hopes to collect with a 5 percent special tax on big companies’ “excessive profits.”
Sberbank holds about half of Russia’s retail deposits, and about one in three retail customers does their banking with Sberbank. The bank’s quasi-monopoly status has also helped make it resilient. Sberbank’s net profit in 2022 was higher than that of the entire banking sector, which generated a total of only 200 billion rupees, as other credit institutions recorded some large losses.
In response to the dividend announcement, Sberbank’s shares rose 10 percent on Russia’s main exchange MOEX, but continue to trade around 40 percent below their pre-war levels. This is in contrast to the banks in Europe and the USA, which have been in the grip of an acute banking crisis since last week and have recorded massive price losses.