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MOSCOW (Reuters) -Russia's dominant lender Sberbank on Friday reported an 11.3% increase in first-quarter net profit to 397.4 billion roubles ($4.32 billion) and sharply raised its retail loan growth forecast for the year.
Sberbank made record profits of 1.5 trillion roubles in 2023, a more than five-fold increase on the previous year, as Russia's banking sector recovered from the impact of financial sanctions over Russia's actions in Ukraine.
The state-owned bank, which dominates Russia's banking sector with around 110 million retail clients, this week announced plans to make a record annual dividend payment of more than $8 billion.
Sberbank is majority-owned by the state and those dividends make a sizeable contribution to Russia's budget revenues, ultimately enabling the government to continue heavy spending, in particular on what it calls its "special military operation" in Ukraine.
"We are observing strong growth for the start of the year in retail clients' funds (2.4%), which forms a solid base for the development of the business in the future," CEO German Gref said in a statement.
The bank raised its forecast for the Russian banking sector's retail lending in 2024 to 9%-11% and said it expected its loans to grow faster than the market. It had previously estimated growth at 4-6%.
The growth will be driven by consumer and credit card lending, the bank said, with high rates maintaining pressure on mortgage loans. Sberbank holds a retail lending market share of 47.2%.
The bank's return on equity dropped to 24.2% from 25% a year ago. Net interest income surged 24.4% to 700 billion roubles.
Gref has placed artificial intelligence and digital transformation at the heart of the bank's strategy. Sberbank on Friday said AI was being used in 85% of the bank's processes.
Sberbank is investing more than 450 billion roubles in IT in 2024-2026 and expects profit generated from AI in that period to amount to about 800 billion roubles.
($1 = 91.9400 roubles)
(Reporting by Alexander Marrow in London and Elena Fabrichnaya in Moscow; editing by Jason Neely and Tomasz Janowski)
