27 Sep 2010 15:21

Sberbank to decide by end 2010 on dissolving loan provisions in 2011-2012

MOSCOW. Sept 27 (Interfax) - Sberbank plans by the end of this year to reach a decision on dissolving provisions for loan impairment in the course of 2011-2012, German Gref, the bank's chief, said in an interview with Interfax.

"We are engaged in preparing the business plan for next year that includes plans for the three-year period. By the end of the year, we will have an idea about what volume of reserves we can release in connection with the collection of a portion of overdue loans," he said.

"A massive release of reserves is unlikely in 2010," Gref said. "We see no reason for optimism this year. For ourselves, we are planning to begin releasing the reserves next year and in 2012," he said.

Sberbank has a fairly conservative policy. "Our reserves cover problem loans more than 200%. We believe that is absolutely justified in the current situation. We must have adequate reserves of durability and confidence in the event of all possible fluctuations," he said.

Sberbank had reserved 677.1 billion rubles as of the end of the first half of 2010, according to the bank's IFRS financials.

It added 56 billion rubles to reserves in the second quarter, 3% more than in the first. The reserves increased to 12.5% of the total loan portfolio as of the end of the first half, up from 11.7% at the end of the first quarter.

However, it added just 110.3 billion rubles to reserves in the first half, 42.4% less than the 191.5 billion rubles added to reserves in the first half last year.

Sberbank began reducing the reserve increases in the fourth quarter of 2009.