Exclusive-Russia’s Sberbank to issue yuan bonds in 2023 if opportunity arises By Reuters

By Elena Fabrichnaya and Alexander Marrow

MOSCOW (Reuters) – Russia’s dominant lender Sberbank will issue bonds in this year if an opportunity arises and will continue borrowing in roubles to drive portfolio growth, the bank’s finance chief told Reuters.

In his first interview since becoming Sberbank’s head of finance last year, Taras Skvortsov said the bank’s yuan deposit portfolio, which has grown 1-1/2 times since the start of the year, was currently more appealing than bond issues, which require active demand, good liquidity and attractive prices.

“So far there is good demand for deposits in yuan, especially from private clients, who are transferring their savings from dollars and euros to deposits in Chinese currency.” he said.

“But the situation is changing and it is possible that a window of opportunity will appear before the end of this year, then we will issue yuan bonds.”

The yuan’s role in Russia’s financial system and transactions has increased sharply since Western sanctions over Moscow’s actions in Ukraine have limited access to dollar and euro markets.

But strict currency controls still limit the yuan’s global reach and Russia’s central bank has warned that the rise of China’s yuan in Russia is not uniform, creating temporary imbalances and difficulties with foreign exchange liquidity.

Russian energy and commodities firms, such as Rusal, Polyus and Rosneft, have led the way in yuan-denominated issues. Russian firms placed bonds worth 1.7 billion yuan ($237.5 million) in May.

Skvortsov said volatility and the small volumes on the market were affecting Sberbank’s plans for now. The bank has issued 140 billion roubles ($1.7 billion) worth of rouble-denominated bonds this year, he said, and would continue to do so at the right price.

DIVIDEND PROMISE

Sberbank expects its profits this year to exceed 2021’s record 1.25 trillion roubles ($14.9 billion). Skvortsov said Russia’s economy growing faster than expectations would drive this. The central bank estimates banking sector profits could exceed $23.75 billion.

The International Monetary Fund in April raised its 2023 Russian GDP forecast to growth of 0.7% from 0.3%, but lowered its 2024 forecast to 1.3% from 2.1%. The head of Sberbank rival VTB last week told Reuters Russia’s economy had adapted to sanctions.

Sberbank’s record first-quarter profit of 357.2 billion roubles featured no one-time revenues, meaning profits should grow as the business does, Skvortsov said.

“If there are no new requirements from the regulator and the situation in the economy stays as it is now, then of course, on the coming years’ horizon we also see the opportunity for Sberbank to generate high profit and, as a consequence, direct part of this profit to dividends,” Skvortsov said.

Major companies’ dividend payments have driven Russia’s stock market in recent weeks. Sberbank and many others did not pay dividends in 2022, but the bank is paying out a record 565 billion roubles this year, using 2022 profits and part of those in 2021.

Skvortsov said he did not expect any changes to Sberbank’s dividend policy of paying dividends once a year, the most optimal solution, given high volatility on the Russian market.

($1 = 7.1580 Chinese yuan renminbi)

($1 = 84.2205 roubles)