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UPDATE 1-Sberbank posts 10% profit fall, hit by bad debt provisions | Reuters

Russia’s largest bank Sberbank missed its pre-pandemic profit target with a 10% decline in 2020 net profit but said that efforts to contain costs supported profitability.

The coronavirus crisis and a sharp drop in the price of oil, Russia’s key export, have pressured the banking sector and prompted lenders to make extra provisions against bad loans in the face of economic contraction and a weaker rouble.

Sberbank on Thursday reported that 2020 net profit shrank to 760.3 billion roubles ($10.29 billion) as provisions against bad loans surged to 412 billion roubles from 92.6 billion roubles a year earlier.

“A year ago we could hardly imagine the challenges we would encounter in 2020: the pandemic, the drop in oil prices, interruption in operations of certain segments of the economy,” Sberbank CEO German Gref said in a statement.

The bank said fourth-quarter net profit declined 4.9% year on year to 201.7 billion roubles.

“Sber was able to quickly restore the business once the (coronavirus) restrictions were lifted,” Gref said. “The launch of a massive cost optimisation programme helped to support profitability and as a result achieve 16% return on equity.” ($1 = 73.8600 roubles) (Reporting by Andrey Ostroukh Additional reporting by Katya Golubkova Editing by David Goodman)

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