Russia's largest bank sets records as profits surge 166 percent

Russia's corporations painted an accurate reflection of the state of their country's economy Thursday with banks booming while commodities companies suffered.

Sberbank was the standout winner with the state-controlled lender - the largest in Russia by assets - seeing net profit reaching 145.4 billion rubles ($2.2 billion) in the second quarter of this year. This was a 166.3 percent increase compared to the same period last year and a new record, according to Reuters.

"Despite still declining Russian GDP (gross domestic product) dynamics in the first half of 2016 we have seen some signs of stabilization, such as the oil prices rising and the ruble strengthening, resulting in expectations of returning to positive GDP growth forecasted for the second half of 2016," Herman Gref, president and chairman of the executive board, said in a press release.


Dimitar Dilkoff | AFP | Getty Images

This comes amid reports that Sberbank has benefited from an increasing amount of worried savers shifting their cash to the bank, seen as a safer haven, amid the deteriorating financial conditions in the country. The bank is currently under financial limitations in credit markets due to international sanctions.

The group also reported that its quarterly annualized return on equity (ROE) reached 22.8 percent, up from 10.3 percent in 2Q 2015. ROE is a profitability ratio that many investors look at to measure the amount of a bank's income that is returned as shareholder equity. Sberbank's lofty rate currently dwarfs many other lenders in the European region.

The Russian Micex-listed shares of Sberbank were up 0.5 percent by midday Thursday but have seen a rally of 31 percent already this year. Meanwhile, Russia's VTB bank saw its shares slip 0.46 percent despite posting a return to profit for the seven months ending 31 July 2016.

The lender - another that's part-owned by the Russian government - saw net profit of 17.8 billion rubles during the period, versus a net loss of 15.0 billion rubles last year.

But there were still warning signs for the economy that contracted by 3.7 percent in 2015 and will see a decline in real GDP of 1.2 percent this year, according to International Monetary Fund.

Commodities still play a big part for Russia and it won't be heartened by the warning Thursday from Vladislav Soloviev, the CEO of Moscow-based aluminum producer Rusal.

"Looking forward to the second half of the year, we believe that the aluminum industry will remain under pressure," he said in a press release.

The adjusted earnings before interest, tax, depreciation and amortization (EBITDA) fell to $344 million for the three months to June, it said, from $568 million a year earlier. This was a 40 percent fall. Its reported profit for the whole first half of the year saw an even greater fall. It's half-year net profit came in at 261 million versus a profit of $879 million for the same period last year, a plunge of 70 percent.