SB Bank posts softer net profit because of retail business

KOMMERSANT. SB Bank, the first among Russian banks that refused to operate in the retail segment, has so far been unable to compensate costs it incurred to roll out this project. Despite the refocus on small and mid-sized enterprises, the lending institution’s net profit dropped because of rising expenses. The SME lending project is no less capital-intensive than retail operations, experts point out.

Substantial expenses SB Bank made to roll out retail activities in 2007 depressed the lender’s net profit against the previous year. Be that as it may, even the subsequent refusal from retail business and the refocus on small and mid-sized enterprises will not save the bank from future expenses, experts believe.

In line with SB Bank’s FY07 IFRS financial statement published, net profit sank 17% y-o-y to Rub 416 mln compared to Rub 501 mln in 2006. The main reason behind softer financial indicators was unjustifiably heavy expenses made to roll out retail business, which the bank decided not to go ahead with last autumn. As the bank’s report said, opex surged 71% y-o-y to Rub 618.9 mln in 2007. Meanwhile, over 50% of the expenses fell to payroll (Rub 324.7 mln). «Most often banks have to bear similar costs when dealing with private clients» — Troika Dialog’s Ekaterina Sidorova pointed out.