Sberbank of Russia (SBER) Earnings Call Transcript & Summary

Good afternoon, dear investors and shareholders. Thank you for joining us to our conference call. We are going to talk in detail about the first half year of 2025 and financial performance. On the call, we have Taras Skvortsov, Vice President and CFO of Sber. We're going to start with a presentation and then a Q&A session. [Operator Instructions] Before we begin, please note that the conference call is being recorded today, on July 29, 2025. The call may include executive forecasts and expectations, which may differ from the actual metrics going forward. For more information on the risks, please see the disclaimer on the second slide of our presentation. Thank you. And now I give the floor to Taras.

Good afternoon, dear analysts, journalists and Sber investors. Thank you for joining us on the call. Today, we are summing up the results of Sber Group's activities for Q2 and for 6 months of 2025. In the first half of 2021, Sber's net profit increased by 5.3% to RUB 859 billion with a return on equity of 23.7%. In Q2, the group earned RUB 422.9 billion of net profit. Since the beginning of the year, we have increased the number of our active individual clients to 111.2 million people. The number of users of the SberSpasibo Loyalty Program increased to 96.9 million. Over 104 million people today trust the Sber ID service. The number of corporate clients reached 3.4 million companies. The number of participants in the corporate loyalty program is also growing since the beginning of the year, 140,000 new clients have joined it. And today, more than 800,000 companies use them. The slowdown of the Russian economy is becoming more and more prominent. We have noticed the growth rate of business turnover slow down from 11% in early 2025 in January to 1.5% in June. This trend is more marked in construction and industry. On the other hand, the growth rate of household income remained high, and in Q2, it was supported by welfare payments. Meanwhile, the salary pool growth rate remains around 17%, which is a rather high level. High rates continue to support the savings model. The growing rate of consumer spending in real terms decreased in Q2 to 1.8% in real terms from almost 5% in Q4 2024. In total, the tight one-fee policy and restrictions imposed by the regulator have a restraining effect on demand and, consequently, on inflation. And the Bank of Russia revised its inflation forecast down to 6% to 7%. Given these trends, we have maintained our GDP guidance for 2025, but we expect growth to be closer to the lower bound of the range between 1.5% and 2%. We have also revised our inflation forecast down to 6.5% to 7.5%. As for our financial performance in Q2, net interest income stood at RUB 841.8 billion. It gained 18% year-over-year due to the loan portfolio mostly formed in 2024. In the second quarter of '25, demand for loans from the corporate segment was mainly generated by large and largest clients. During this period, the corporate loan portfolio increased in real terms by 2.2% and reached RUB 27.9 trillion. Our market share was 32.4%. Sector-wise, the highest demand was concentrated in the housing and oil and gas industries. The average return of the corporate portfolio increased by 20 basis points in Q2 to 17.6%, and the share of the portfolio at floating rates was 75%. Given the high rates and marginal economy growth, we have somewhat revised our forecast for corporate lending growth overall for the year to the range between 7% and 9%. As part of this growth, we plan to maintain the rate and our target is to maintain our market share. The cost of risk of the corporate portfolio reached the expected level, the higher level of 110 basis points in Q2, while the overall cost of risk for the half year amounted to 0.5%, which is within our expected range. Retail lending in Q2 demonstrated diverging dynamics. The mortgage portfolio increased by 2.8% in Q2 and reached RUB 11.4 trillion. We continue to reduce the rates for the market rates mortgage, much more so than the Bank of Russia key rate reduction. And in May, we also abolished fees and commissions for developers. The main growth driver is preferential government programs. The share of loans disbursed under such programs exceeded 80%. However, the volume of disbursements decreased by 35% year-over-year. Demand for consumer loans continued to weaken amid higher rates and especially restrictions imposed by the regulator, which led to a decrease in the total portfolio volume by 5.1% year-to-date. And disbursements dropped by 70% year-over-year. As for credit cards, the portfolio increased by 1.8% of the reporting period, reaching RUB 2.5 trillion. The portfolio has grown by 6.7% year-to-date and Sber's market share added up to 53.9%. The car loan portfolio grew 0.8% over the quarter to RUB 588 billion. The cost of retail lending risk increased amid high rates in the economy, tighter regulation and a slowdown in the portfolio growth rate, reaching 2.7% in Q2, mainly due to unsecured loans. The cost of risk in mortgage was 1% -- or rather 0.7% in the first half year. Overall, external conditions almost halted the growth of retail lending so we have revised down the forecast for the retail lending sector in general. We expect the portfolio to remain almost unchanged throughout 2025. And mortgage lending, the high share of mortgage lending will allow Sber to slightly raise its market share in retail lending in general. In Q2, as expected, we saw a slight decline in the quality of our total loan portfolio. The share of Stage 3 loans increased by 40 basis points to 4.5%. In corporate lending, it increased by 20 bp to 3.8% and by 60 bp to 5.3% in retail lending. Such dynamics are due to the maturation of previously issued loans and lower portfolio growth rate since the beginning of 2025. The total cost of risk in Q2 increased by 47 basis points to 1.7%, amounting to 1.5% in the first half year. This is well within our expected range for 2025, which is why we have maintained our overall cost risk guidance for 2025 at 1.5%. The dynamics of funds due to individuals remained rather stable. During Q2, the volume increased by 5% in real terms to RUB 29.7 trillion. Sber's market share in the segment also increased by 0.4 percentage points, reaching 43.1%. The cost of funds raised from individuals increased -- continued to grow and increased by 83 basis points over the quarter to 11.8%. Along with the first signs of a slowdown in inflation, we began to gradually reduce deposit interest rates, and this came before the decision of the Bank of Russia on the key rate. This measure corresponds to the general trends in the banking market. We can consider it a normalization of the rate level since when deposit rates were at or above the key rate of the Central Bank, it was an obvious sign of market overheating. We forecast the growth of retail deposits in the sector to be slightly adjusted following the trend towards rate reduction. We expect a level of 16% to 18%, and Sber will grow in line with the sector. The volume of corporate clients funds in real terms decreased by 1.4% of the quarter to RUB 16.4 trillion along with the sector. Sberbank's market share stood at 18.5%. The average take rate decreased by 87 basis points over the quarter to 13.5%. We have revised our forecast for the growth of corporate client funds in the sector to the range of 2% to 4%, and Sber will grow in line with the sector. Net interest margin remains stable at 6.1% in Q2. The factors that supported the portfolio yield were, among other things, stronger ruble and portfolio turnover at higher rates. The cost of funding for corporate clients passed the tipping point, going down from 14.4% to 13.5%. As for the cost of funds of retail customers, we have passed the peak and expect it to decrease in the second half of the year. Therefore, we believe it possible to increase the margin forecast to more than 5.8%, which is much higher than the expected value. Net fee and commission income in the first half year went up by 1.2% to RUB 398 billion, while dropping by 6.9% year-over-year in Q2 2025. This was due to the high base of the previous year, supported by a number of factors. First is the onetime recognition of income in the corporate segment in 2024 with regard to trade finance transactions and the change in accounting of income from letters of credit in 2025. The second factor is cancellation of utility fees from July 1 of last year. So throughout the second quarter of last year, we used to take the bigger one, then it was canceled. Moreover, in Q2 of last year, we relaunched our SberSpasibo Loyalty Program, which for several months contains the level of expenses. And this year, we will invest in the loyalty program according to our rather ambitious program. Excluding these factors, the growth in the first half year exceeded 5% year-over-year. And in the second half of the year, these pressures will ease significantly. So we expect a fee and commission income growth rate according to our guidance of about 7% to 10%, closer to its lower bound. In the second quarter, operating expenses grew by 15.9% compared with the similar period of the previous year. Nevertheless, we managed to improve the operating expense ratio of 28.4%. The cost to income year-to-date was 20.7%. Artificial intelligence is used in key Sber processes contributing to higher operational efficiency and is already delivering the first results. For example, in the first half year, the financial effect for Sber for implementing GigaChat in its processes amounted to almost RUB 30 billion. The financial effect is mostly reflected in income that grows, thanks to unlocking our potential in customer service and greater productivity of relationship managers who leverage specialized AI assistance, copilots. An assistant based on the generative artificial intelligence of the GigaChat model became available to customers of Sberbank Online. The service advises customers, helps select relevant loan products and makes recommendations for improving their credit history as well as navigating taxes. The main effect in the B2B segment are personalized offers in SberBusiness Online and assistant in the smart management system for large and medium-sized businesses, relationship manager assistance for small and micro business customers, better preparation for meetings, search for potential transactions in the capital markets and smart tender aggregator service. In addition in Q2, Sber presented a new digital product called GigaAssistant, it was designed for small business customers, and the first 200,000 users of the SberBusiness Online bank can already test drive it. The personal AI assistant of an entrepreneur analyzes reports, identifies key indicators, monitors trends and makes opinions and, based on that, offers personalized recommendations. The assistant is able to plan a marketing campaign, develop a promotional strategy, draft a product description or an official letter as well as review documents and help to work out taxes and HR. So it can take over a lot of the tasks that in business, especially in small and micro business, you cannot do without. In Q2, we presented an updated GigaChat. The model can reason and explain its conclusions and the length of the process context was also increased to 262,000 tokens. And thanks to reinforcement learning, we were able to increase its accuracy and flexibility. These changes substantially expand GigaChat's scope and increase users' trust. Our AI model range now offers a new version of GigaCode 2.0. This is an updated AI assistant for developers that supports 35 program analogies and provides up to 40 prompts per second. The quality of the generator code has more than doubled, contributing to higher development productivity, and it is widely used in Sber today. Overall, operating income before provisions went up by 20.8% year-over-year in the first half year. Profit before tax increased by 8.4% year-over-year, and net profit grew 5.3% to RUB 859 billion, taking into account the higher income tax this year. So net income is lower than income before tax. Equity generated by the profit despite record high dividend payout of almost RUB 787 billion, still was able to rise by 3.4% since the start of the year to RUB 7.4 trillion. The capital adequacy ratio, N20.0, reached 14.6% at the end of the first half year. Therefore, even after the dividend payout, which will be recorded as -- in N20.0 in October, the capital adequacy level will remain above the target level of 13.3%, including the expected profit in Q3. I would like to conclude by focusing again on our revised 2025 forecast. We have revised downwards the growth rate for our portfolios slightly and increased our forecast for net interest margin over 5.8%. As for the growth of net fee and commission income, as for the cost of risk, operational efficiency as well as target returns into capital adequacy, our forecasts remain the same. Thank you. I will be happy to answer your questions.

[Operator Instructions] [ Urchem Permina from BCAS ] will have the first question, please.

My question was related to the net fee and commission income. You have kind of answered that when you said that the loyalty program supported the decrease of the net fee and commission income for the cards. So my second -- the second part of the question is more related to the future. The fees that you have for the cards you had -- you removed some of the commissions. You have increased limits as well. Can you comment on that? Are there any estimations on how it's going to affect your net fee and commission income in the next 2 quarters?

Thank you, [ Urchem ]. It is true that the fee and commission income is a priority. We have also driven the decrease of that income, and for some of the transactions, the fees and commissions were more leveled up. But given the strategy that you have mentioned, we changed the split of commission income for various products, and we look at the loyalty of our customers and their relations outside of the scope of the commission income. And sometimes our decreased commissions help to drastically improve the decision made by a customer to select our products and services. Obviously, that negatively affects the fee and commission income and some other -- for some other commissions, we have an increase given the market trends. When our fees were lower than the market, we leveled them up. But given that and given the loyalty program that we are investing in for year-on-year because we see that our customers respond positively to these loyalty programs, so we introduced new mechanics to spend the bonus points. And this obviously means that this net fee and commission income will be revised downwards. And that trend will continue in the next 2 quarters. It will slow down the growth of the commissions. And so yes, it is our investment in the loyalty of the customers.

Next question from Svetlana Aslanova.

Two questions, the first about the quality of the assets. In the last quarters, we have seen that the coverage of the problem debt with the provisions is going down. It's still higher than 100%. We understand perfectly well that there's collateral and other -- on the collateral that is used for the loans. But what is the optimal level of provisioning for the loans? Do I understand correctly that in retail, the major problems are caused by unsecured consumer loans? And if we are talking about the corporate segment, what segments, what loans are from your point of view, the most problematic ones? And when are you going to increase the provisions for them or enlarge the security for them?

Thank you very much for the question. These two questions are very relevant, I would say. First of all, the quality of our portfolio is one of our major priorities for 2025. We understand that the key rate is at record high level, and obviously, that dramatically affects the dynamics and our indicators as for the coverage ratio. I mean, we look at it from the point of view of the entire portfolio or entire business customer portfolio. There are a lot of components there. And you cannot really say that there's a silver bullet indicator that would be an anchor. We are fine-tuning it, given the situation we're in. It went down, thanks to the growth of the third stage loans. And as I have mentioned before, we try to provision beforehand. When we have a portfolio and when we have a borrower with a loan going into the next stage, we are using the provisions that we have created before and there's no need to do anything on top of that in a rushed manner. As for the reasons and the industries in the corporate segment, it's still the most problematic areas, the commercial real estate. It's a very old story. We understand there are major structural changes in the economy that is happening. And we appreciate the fact that the number of customers is going down there, less companies that rent offices and small and micro businesses and some selected industries like car dealerships and brick-and-mortar stores who rent this commercial real estate. These industries are under pressure today. And the provisioning for them is growing compared to the other positions in the portfolio. But a lot is being said about the coal industry. In the coal industry, the situation is better compared to some other industries. The customers there are stronger because they have other businesses. They have diversified business portfolio. And thanks to this combination, they understand how to secure the loans properly. And we do not need therefore to -- since we have a diverse security for the loans that they take, we don't need to create additional provisions. Another problematic sector is the residential buildings. If we take separate borrowers, we can see that the level of their reliability is more or less the same. The levels are acceptable, adequate. There are some unique cases, but still it's a pretty good portfolio. And in our reporting, you will see that 2/3 -- in the second quarter, 2/3 of the growth for the corporate customers was due to the residential construction companies. So it's pretty good there. As for the retail customers, the reason for the change in the portfolio quality is consumer loans, firstly, affected by the key rate hikes. Secondly, by the measures of the Central Bank kind of forbode the customers to take the loans because there were many restrictions. We see the report -- that reflected in our reports and reports of other banks, but we think that our portfolio, including the consumer loan portfolio, is either better than our competitors or on the level of the lower part of the best group of banks in the market. So currently, we think that the situation has peaked in terms of growth. And the growth of risk, cost of risk is not something that we expect. We expect the situation to stabilize. And we think that the cost of risk and the quality of the portfolio will improve, especially against the backdrop of the less tight monetary policy by the Central Bank.

Next question, Evgeniy Kipnis from Alfa-Bank.

I would like to talk about the blocked assets in accordance to Federal Law 222. And based on your announcements, this is the topic that is again on the agenda. Given the inputs from the Central Bank, do you expect the pool of assets to be comparable with the pool of assets that you planned to get at the end of the year? Or maybe the volume will be less than you expected?

Thank you for the question. It is true, and I mentioned that at some forums. The situation became a bit more -- a bit better for us. The Central Bank crystallized their requirements and restrictions, and we're currently in the stage of preparing the request to the Central Bank, and we're taking into account all the assets as part of this request. But overall, I can tell you that the volume will have to be agreed with the Central Bank, the regulator. So the volume has decreased doublefold compared to the volume that we expected to ensure in 2024. So you should not expect that to influence our indicators. I mean, we are continuing with our efforts in this -- to this end with the Central Bank, but you should not expect some major breakthroughs.

Next question from [ Igor Dyatlov ] from T Investments.

I have a couple of questions. We have asked questions about the quality of assets. As for the cost of risk, you think that it has already peaked. It will go down, the share of nonperforming loans, when do you think will it peak in this cycle? Will it be this year or by the end of the year? Maybe it will happen earlier. Another question about the quality of assets and about the restructured loans. The share of restructured loans has not been disclosed yet. Is there any information that can be disclosed? It would be very instructive to learn that information. The second question is about the interest margin. You have revised your guidance upwards for the interest margin. As far as I understand, if the margin is higher than the guidance, then the pressure from the liabilities will be reflected in the second quarter. And why will it happen amid the growing portfolio on the level of the sector? I mean the growth is not really that significant.

Thank you, [ Igor ]. I'll start from the first question. As for the third stages loans, this is the indicator that's goes automatically with a gap. Even if we create provisions, sometimes we -- if we do restructuring, sometimes the loans go to the NPL stage. So the cost of risk is the major indicator. So in the second half of the year, there will be a slight increase, but we will not see the major decrease in the quality of the portfolio. We do not have a major problem with the restructuring, the share of corporate client restructuring, if you look at the overall portfolio, remains the same for the last 18 months. So during the entire crisis on the capital markets and during the entire crisis for the customers, because it's hard for them to service the debt, the share of restructured debt remains the same. So we do not see major challenges here. As for the retail customers, there is a small increase in the share of the restructured loans, but it is mostly related to the new legislations. When customers can restructure loans according to the new regulations, they can do it now more freely and obviously, they take advantage of that. But it's still pretty low. It's still 2x lower than for the business customers. We do not disclose that information yet. I mean, you have the cost of risk indicators and other indicators. So I won't really discover -- I won't really give you any new figures. As for the margin, it is mostly pressured in the second half of the year by 2 factors. First is the dividend payout. It is a major amount for us, more than RUB 700 billion. Next week, basically, we're starting to pay it out and it's going to -- we're going to end the payout in the end of August. That's a lot of funds that we will need to channel to the customers. And it's based on the market rates, not the free rate. And the second factor is the decrease of the key rate. That always leads to lower margins for the banks. The quicker the decrease, the higher the pressure on the margin. Obviously, we have a plan on how to mitigate that for the entire period of key rate decrease. So we are pretty cautious in giving any forecast for the margins for 2025.

Another quick question about the restructured loans. Am I correct to understand we do not see the share yet? Or the cost of risk reflects their share?

Of course, any restructuring, if it has any indicators of the lower portfolio quality, it is reflected in the cost of risk. It reflects all the actions and all the information that we have for the customer, the collateral, the contracts. So obviously, the cost of risk reflects all of these things.

Next question from Dmitry Levskiy.

First of all, I would like to congratulate you with fantastic results in these challenging times. I would like to build on that question about the cost of risk. The ruble rate, how it affects the cost of risk? Recently, we have seen the weakening of the ruble. How it affects the cost of risk? And do Sber have an open FX position?

Thank you, Dmitry. In terms of impact, the change in the ruble exchange rate on the cost of risk, I would say is no. There is no great impact. Our FX portfolio is not a significant share of our corporate portfolio overall. It's not a big share. The borrowers that are there are very reliable. They are mostly exporters, and they have -- they are essentially a good borrowing group borrowing audience. Whatever the exchange rate of the ruble, whether it's weak or strong, if it is within the expected range, it does not produce a big effect on the cost of risk. There is an effect on the capital adequacy, but not the cost of risk. And the second question regarding the FX position. It was a long time ago, back in 2022, I think, that we closed our FX position for the ruble. Speaking overall about foreign currencies, with the market today, the exit of foreigners from the market and the lack of tools, lack of instruments has allowed us to fully close our position for separate foreign currencies, CNY or the dollar or euro. For certain currencies our position is much lower than the limit permitted by the regulating authorities. So in certain periods of time, with the great fluctuation of exchange rates, which we haven't observed for a while now, we have some marginal financial results when reevaluating foreign exchange -- foreign currency payers. But the sums are really marginal, about $1.5 billion for certain positions, but no more. So once again, the effect on our financial performance of this is not very big. Over the past months, we have done some hard work on this. We're planning to bring this down significantly before the end of the year for the dollar, yuan, et cetera.

The next one is from [Ilya] .

Congratulations on the great performance. My question is once again about the cost of risk. Judging by the maintained guidance and the peak that you passed in terms of the cost of risk, the baseline scenario for you, as I understand, is this comfortable economic situation? And I also think that with the previous guidance, you expected a higher trajectory of the Bank of Russia, the key rate. Is there any factor of the lowering key rate in this regard?

Thank you, Ilya. Indeed, the scenario that we expect, the baseline scenario is this soft and smooth cooling down of the economy. We see a very good robust level of demand among the population with a growing salary pool. And the lower key rate supports savings as we see it, especially given the good growth rate of household income, salaries and wages. So we believe that this kind of support will not allow bringing GDP below -- growth rate below 1%. As for the Bank of Russia trajectory, we did expect slightly higher key rate as of the end of 2025, In our baseline scenario, we see that the Bank of Russia is already two steps ahead and lowered the key rate. According to their forecast, we see that the rate may be capped at the current level, but the range -- the expected range is pretty significant. So in Q4, we expect it to have an impact on the economy at large, the banking sector, and it will be an important factor for 2026. As for our own performance, the cost of risk specifically, we do not see any major impact of the 1% to 2% reduction. Some people, some borrowers will feel more comfortable with this reduction. But this will only be felt in the 3-or-so months, remaining months of 2025. The companies have lived through most of the year with higher rates. We may see impact on the cash flow of companies. But to say that we are ready now to improve our guidance for the cost of risk because of the key rate, no. But next year, we will factor it in. We usually start in autumn to prepare for the next period, next year. And so we do believe it will have an impact in 2026.

Next question from Olga Naydenova, Sinara.

I have a question about lending quality. Is my understanding correct, the risk peak that you passed refers to the corporate and retail portfolio? Or with the corporate portfolio, we can expect a deterioration of the cost of risk still? And also since housing is the main driver of the corporate portfolio, could you elaborate a little bit on which projects in the segment you are lending to? Are there many projects or a few? Is this growth mainly from existing projects or new ones? Just a bit of color on that, the housing portfolio. And the second question is about the decrease of expenses for nonfinancial businesses. Is this in line with what Mr. Gref said last year about their profitability, their margin? Or what we saw in Q2 was mostly due to the one-off effect of something, of some fluctuation also?

Thank you for so many interesting questions. Let's start with the first one, the cost of risk in the retail business. Indeed, we believe that the peak of the cost of risk has been passed and we see lending recovering of the past few months. The portfolio was decreasing in early 2025 and it was a challenge for us. There were a few reasons behind it. But in the second quarter, the situation improved, and now in June and July, our guidance for August and September shows us that the demand is picking up. And we see positive dynamics not just for the economy at large but the quality of the portfolio specifically, because when people start borrowing, start taking out new loans, it means they -- their own financial performance is improving. So yes, it's largely positive. That's retail. As for the corporate segment, in the second quarter, the cost of risk was 1.7% for legal entities. I do not think we will surpass this level. It may be slightly higher in Q3 or Q4, but it will not be higher for the year in total. So 1.5% or around that value, that is what we expect. But as for Q2 specifically, that was, we believe, the highest value for the year unless there are some one-off effects. But we have good analytics on clients. We try to anticipate customer problems, customer needs. So yes, that's our expectation. And we do not think there will be anything that will radically change our opinion on specific customers on what to expect from them. We try to do the analysis properly in order to avoid such situations. Sber's share in the housing market is 55%, the housing lending market is 55%. So we are lending to all of the biggest developers. And companies usually take out loans not from one single bank but from several banks and this is Sber's competition, which is good. The bigger the customer, the more reliable the customer, the more banks want to lend to them, clearly. And so we're happy to be working with our partners in financing housing projects. Speaking of the top 10 of our customers in this segment, we do not expect any significant risks. We have analyzed their financial performance, their financial results, and they are more than satisfactory. Of course, there is certain decrease in the coverage by escrow accounts. When it comes to project finance, it went down from 70% to 65% of the quarter throughout the pool of developers, but that is a normal rate. Last year, we had extremely high values with the closure of family mortgages. But overall, 65% is a good number for us. We're happy about it. With any challenges, we always discuss them with the clients. Banks are also a part of the housing market, same as developers. So we are also interested in high-quality finance. We want housing to find its potential buyers as soon as possible. So we are invested in that regard along with the developers. The more clients buy or take out mortgages, the better our relations with the client. As for the future, the future of this market segment is really bright. The rate has been around 20%, give or take, and market rate mortgage was very limited. We've seen this in the news, these calculators of the excess money that customers have to pay. So there were very few people who wanted to invest in this and take out such loans on such terms. Usually, people would take out a loan when they understood that they would be able to repay the loan in a short period of time. Some deferred demand is forming. People still have a need to improve their living conditions for themselves, their families. So when the key rate decreases, this deferred demand will manifest itself in the market, and we will be giving out these loans at lower rates. It will be an incentive for the market of new houses and also already built houses. The developers have already survived a difficult period. I think it will only be improving from now on. The demand will be growing and the market will be feeling pretty well overall. And the last question about the nonfinancial businesses. Indeed, we have this goal. We've always had the goal of increasing their profitability, not just growing in terms of returns and market share, but also making money from it. We are not growing these businesses just to have them on our balance sheet. Obviously, we want them to generate profit. We see that their metrics are improving. They were improving in the first quarter and they're also improving year-over-year. This is part of our strategy. And we plan to disclose this trend, continue to disclose this trend throughout several quarters, at least 1 or 2 years, for as many of our nonfinancial businesses as possible. They're not going anywhere.

I think we have time for the last question from our analysts, [ Margarita Byarka ], Sovcombank.

Hello, can you hear me?

Yes.

Also congratulations on the great performance. I would like to go back to net fee and commission income and mostly focus on your guidance. What are the net fee and commission income factors that support your guidance for the growth in 2025 if in the first half year, the growth was only 1%? And we're also talking about the revision of card fees and the focus on customer loyalty.

This is a great question, Margarita. I could go into great detail on all the factors. But briefly, what is behind that optimistic guidance? We have this business plan for the year. According to that plan, the fees and commissions should grow by the value indicated in our guidance. It's not like we have some trump card at Sber that we can show the market. We have our plan, we have our targets. Any growth translates into the following year, and it's not just a one-off exercise. It has a prolonged effect. We have a transactional business that we are developing very actively. We have great plans to develop biometrics and other modes of payment. In the second half year, we will once again be actively working with customers on subscription. We already had a good base in 2024. And in Q2 this year, we saw it yield even better potential. And we're also working hard on promoting our points of sale among customers. There are different streams, different lines of work, but not a single one that would be this magic key that unlocks great growth rates. It is cumulative total. So given the robust base of 2024, we will be able to demonstrate good solid growth rates. So this is why we decided not to revise down our forecast for the fees and commissions.

Moving on to questions from journalists. The first question is from Anastasia , Interfax.

Right. I have one suggestion and a couple of questions. As for the suggestion, can you think about some common approach for disclosure of the result? Because we usually have like 9 links. And every time, it's a surprise because we don't know what link to actually use to see your results. And for us, it's very important to stay relevant. Now the questions. As far as I understand, based on your forecast, you still expect in 2025 to have the profit that will be higher than in 2024 and the possibility that you might decrease downwards, revise downwards the ROE. Is it there or you might increase it? And what about the sensitivity of Sber related to the key rate decrease? Because the 1 percentage point of the decrease of the key rate might decrease the NIM by RUB 5 billion.

Thank you very much for your feedback. We will work out to make sure that everything is user friendly for you. Now as for the questions. The net profit for 2024, our ROE indicator of 22% remain the same. It's in line with our strategy. I think there's a zero chance that we might revise this expectation downwards. We do not expect to increase it, though, because given the trends, a number of trends that we see the growth of the bond market, to get 22%, we need to increase the net profit that we plan to get 22%. It's a good challenge, but we think that we will be able to deliver. Will the returns be higher across the year? We'll see that, but 22% is going to be delivered. Does that mean that the net profit will be higher than 2024? Yes. That means that we have to earn more to get this 22% ROE because, I mean, without the increase of the net profit, we won't be able to deliver on the ROE ambition. As for the sensitivities of the decrease of the key rate, RUB 5 billion for 1 percentage point, that was our target level, I would say. Currently, our sensitivity is a bit higher. It's more than RUB 15 billion in annual terms. It depends on the scenario when the entire curve of the rates is going down in peril. But it does not happen like that. As the key rate goes down, the short-term rates go down, loan terms are not affected by that decrease of the key rate in such measure. The curve becomes flat, and that's obviously a positive thing for Sber, and for the entire banking sector. So this RUB 15 billion is something that we might lose by the end of the year? I don't think so. It depends on the decrease of the key rate dynamics, the step. We have revised our expectations upwards, by the way, in the first half of the year. The interest income is going up. We expect the NII to continue to be positive throughout the year. 80% of the income of Sber Group is basically net interest income, so high margin there. So we are going to focus on that. It's going to remain a priority.

Next question, [ Margarita ] from [ TAS ] Agency.

Our current expectations on the rate is 16%. That's also the -- I mean, might be in the range of 14%, 17%. We think it's going to be 16%.

We'll see at the meeting of the governors of the Bank of Russia.

Next question, [ Yelena Fabrice ].

Based on what the capital adequacy ratio will be insured? Unfortunately, the interpreter cannot hear the question.

As for the restructuring, on Friday, the Central Bank decreased the key rate. Now it's Tuesday. So there was no effect on restructuring. I mean it's just, what, 2 business days passed. I mean there will be some delay in the effects. If we are talking about the restructuring, if it's in line with the law, when a customer understands that they might get something from the restructuring, that's -- yes, that's understandable. But sometimes, it's -- these are the -- the company faces problems and finds solutions, strives to find solutions. It's a simple procedure for the customer and for the bank. And these trends, they have the effect with a certain lag. We might see the effect next quarter or the quarter after that. So currently, we do not see any effects. Now the question about the capital adequacy ratio. We do not have another source to ensure the capital adequacy ratio apart from the net profit. On the -- as of the 1st of July, if we talk about N20, it's 14.6%. 1.5 percentage points is going to be taken from it. As we pay out the dividends, it will go down to 13.1%. At the same time, in Q3, we plan to earn the net profit that we need to ensure the capital adequacy ratio for N20 is 0. And that is going to be the source of our own capital and will help us to ensure that we meet the 12.3% capital adequacy ratio requirements. By that, we mean that in Q3, the demand for loans will still remain subdued. We see some growth. But obviously, something that we've seen in -- that we saw in Q1 2024 where we could grow the portfolio by 5%, 7%, that is not going to happen. Yes, we are still pretty comfortable with 13.3% CAR, and we're going to be higher than the minimum that is required.

A couple of other questions from analysts. [ Julia Koshkinov ] from RBC Journalist.

Can you hear me?

Yes. Yes, go ahead.

Can you disclose the overall financial results of the businesses of the ecosystem of Sberbank in 2024 and in 2025 and how the key rate will affect the nonfinancial businesses of Sber?

Thank you, Julia. As for disclosure, I think that our disclosure is very transparent. We disclosed quite a lot of indicators for the net profit for the costs and for the type of expenses for the nonfinancial businesses. Any additional disclosures, I don't think that we are going to do them given the high sanctions risks. That's about the question, can you disclose more. As for the decrease of the key rate, yes, as the key rates go down, as the demand is recovering, it will have a positive impact on our nonfinancial businesses of the companies that are within Sber parameters and our partners. As I've said before, today, the consumer sector was less affected by this trend by the situation with the key rate. The major pressure was felt by the corporate segment. Their turnover, their transactions were affected. The retail situation was better. I mean, obviously, it will be easier for the entire economy to live with lower key rates.

Next question from [ Marina Anovo ], RBC Investments.

Two questions about the dollar rate, FX rate. What are your expectations? Unfortunately, interpreters cannot hear the question.

You can say that the strengthening of the ruble that we saw in the first half of the year positively impacted the inflation. The products that heavily depend on the dollar FX rate, given the inflation, the price tags increased slower than that for the products that were not dependent on the dollar rate. The FX rate -- dollar-ruble FX rate is mostly related to geopolitics and the announcements of President Trump that he has given in the recent days. So it's hard to predict what will be with this wave. Many analysts think that the ruble was too strong. We think that in the second half of the year, ruble is going to weaken. You can see that based on the market of derivatives. Our forecast that in 2025, overall, the ruble is going to cost around 90 -- $1 will be about RUB 90. We revised our expectations downwards because we thought it will amount to RUB 100 for $1. There are some fundamental factors that factor in the strengthening of the ruble, the imports -- the decrease of the imports of goods, so like cars. Yet the rate decrease might support the demand for these goods and might drive up the imports. So the key rate decrease might, given additional impetus to inflation decrease, so -- or might actually lead to higher inflation. This is why the Central Bank is very cautious making these steps because there's a myriad of factors that might affect the inflation. We also might see the situation with the utilities fees. Our inflation expectations is higher than the target that was delivered by the Central Bank because there are risks related to the ruble and to other factors. So yes, there are risks. We'll see what will happen in July and August. In summer, we traditionally see that the prices go down in October and November. Other factors come into play that shape the dynamics of the prices.

Last question, Tatiana Voronova, Front Media.

I hope you can hear me.

Yes. Yes, we can hear you all right.

One question -- I have 1 question and 2 questions related to the reporting. And if we are going to give suggestions today, then maybe you could give us more time to read the reports and presentations because you give us 2 hours for 70 pages. If you could give us another additional 30 minutes, that would be great. Now I will start with the questions that were built on previous questions. The analysts were asking about NII. Given the reports, we can see that in Q2, the NII for the retail customers was higher than the income from the corporate businesses. And that's if you look at the portfolio across the board. In the retail, the NII around 0. And why is that, I mean, growth-wise? Is it because there are more mortgages in the retail portfolio? And in the reporting, we can also see that the consolidated result for the non-core business improve because the revenues went up and the expenses went down. Does that mean that your unit economy across the ecosystem improved? Or we're talking about some other items in the reporting? Because the noncore businesses what are they? Like insurance, is it a noncore business or it's a core business? So it will be better for us to understand the general overall picture. Now the cost of risk increased, that's another question. The provision charge increased dramatically, yet the provisions for bad loans went down somewhat. Can you comment on that, please, as well?

Thank you very much, and thank you very much for the feedback. We will think about that. I mean, if you think that we don't have enough time, we will look into that. We will consider that suggestion. We will think about giving you more time to prepare. Right. As for the interest income for retail and corporate customers, we are mostly focusing on the interest margin overall because the dynamics for these indicators depend heavily on the elements, on what elements of the liabilities have been covered. I mean, do we use retail customers or corporate customers for that? And so the factors, one of the major factors is obviously the mortgage, if we take the portfolio. The major growth was delivered by the mortgage loans and it's supported by the state programs. The government decided to increase the rate by 1 percentage points for the state-sponsored mortgages, and that's affected the interest income for the retail customers. The situation might change further down the road. The deposit market is maybe the main element here in the banking sector that is growing. In real terms, we increased by 5%. That goes for the margins sort of the business growth -- nonfinancial businesses overall. We have talked about the factors during our disclosure. Insurance is not a core business. It's other businesses that are nonfinancial businesses. If you talk about our disclosure that we delivered before 2022, this was a disclosure with a breakdown by companies and financial and nonfinancial businesses. As for provisioning for reserves in the different stages, I answered this question at the beginning of the call, I think. I can repeat that we provision in advance. When the customer force into arrears or some other challenge happens, we do not have the need to make additional provisions because we had already done that in advance. The reserve to Stage 3 ratio is above 15%. However, with a big portion of the portfolio with loans, Stage 3 loans does not require any additional provisioning. So we do not provision for 100% or 90%, sometimes even lower than 50%. It's a normal situation. As the Stage 3 share grows, this metric can improve. So it's best to look at it from the point of view of the portfolio quality. The cost of risk is the most prominent indicator of it.

The very last question is from the subscribers of our telegram channel, Sber for investors. The question is this. Recently Sber started growing the ecosystem for delivery, entertainment, et cetera. And there's a lot of talk about AI. Is the ecosystem-based approach a priority for the company, a focus for it? Or the priority has now shifted towards AI?

All these lines of work are very much interrelated, AI for our different activities, SberChat, Kandinsky model, the different AI modalities that we've been developing are very important for us. You can ask GigaChat about something, and the answer of GigaChat can be converted into a podcast and listen to it rather than read it from your monitor. This is another modality that we've added. AI is like a second wind. What is financial business? It revolves largely around integration, the understanding of the client, the ability to attract and retain the client, the ability to understand what the client likes and dislikes. Doing it with legacy algorithms, manual tools is inefficient. AI opens up capabilities that were previously not available. It allows the company to have good relations with the client, develop these good relations across different services and channels and then summarize this experience and get a better understanding of the clients and their needs, their problems, and so become a better assistant to the clients, a better partner. That is precisely the strategy that was adopted back in 2023 as per the human-centric strategy, where we have a human being at the center of all things. And we strive to help them actualize their interests and their ambitions. So today, what we're doing, what we are planning to do is probably not 100% clear to our customers. But before the end of the year and next year, for sure, we will be releasing a lot of new and interesting things to the market so we expect to have fewer and fewer questions from our customers about these tools because they will be adopting these new tools and taking advantage of them. Thank you very much, dear analysts, dear journalists, dear subscribers. Thank you for the interesting questions. See you back in October with the report on the financial performance in Q3. Bye-bye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]