Sberbank of Russia ($SBER)

Good afternoon, shareholders, analysts and journalists. We're happy to welcome you to our conference call. We are happy that we're going to -- you spend another 1 hour with us. Today, we have been joined by Taras Skvortsov, Deputy Chairman of the Executive Board. He'll start by presenting our results. We have a small presentation. And after that, we'll be followed by the Q&A session. Some housekeeping details. Our call is being recorded on the 29th of April 2026. The speeches may contain information about the management plans and forecasts, which might be subject to some risks and might not match actual results in the future. For more details on the potential risks and terms, please refer to the disclaimer on the second slide of our presentation. And I will give the floor to Taras.

Thank you, Anastasia. Hello, guests, analysts, journalists and investors of Sber. Thank you for connecting to our conference call for the Q1 2026. We're going to some of the results for the first 3 months. Sber's net profit increased by 16.5%. We can start with that. It's an increase in the first quarter, and it reached RUB 507.9 billion, with a return on equity of 24.4%. The number of retail customers amounted to 110.4 million at the end of Q1, and the number of active corporate clients was about 3.5 million companies. The growth of customer engagement is ensured by user-friendly digital solutions and profitable offers from Sber. During the quarter, another 1.7 million people joined the SberSpasibo Loyalty Program and the number of users of this program is more than 100 million, and that's a stable number. And the number of users of the Common Sber ID account that they use to sign into websites and apps of Sber and its partners increased by 5.8 million and reached 122.4 million users who use the Sber ID as a trusted channel to sign-in our website and apps. Since the start of the year, Sber has launched a large-scale VAT rebate for merchant acquiring to help small businesses in reducing the tax burden. And in Q1, half of the fees and commissions paid by the customers were returned. That means 109,000 entrepreneurs received the rebate. In Q1, the situation in the Russian economy remained difficult. The GDP in January and February in 2026 decreased by 1.8% year-on-year against the backdrop of continued tight monetary conditions and external pressures. According to SberIndex operational data, we can see that the business turnover decreased by -- in Q1 for the first time since 2022 by 2.2% year-on-year, that's in real term. This is in nominal terms. In real terms, it's even worse. The most negative were the dynamics in the mining industry and in the manufacturing industry. In the retail and construction sectors, growth rates have significantly slowed down compared to the previous quarter. However, it's more than 0. There was a major slowdown in the consumption -- in the consumers market, and that really pushed the growth of the GDP before. But that's the real growth rate of consumer demand in Q1 2026, slowed down to 2.2% year-on-year. At the same time, in Q4 2025, the growth stood at 4.2%. So that was basically 2 times higher. This is, of course, due to the cooling of the demand for all types of goods, non-food stuffs that went down from 5.9% in Q4 to 1.4% in Q1 2026. We're talking about the food products that went from 2.3% to 1.3%. And only the demand for services remains relatively stable. It went down to 0.5% from 5.1% year-on-year to 4.6%. The consumer activity of the population has been declining despite a slight acceleration in the income growth rate that we see in Q1. The growth was 13.5% year-on-year compared to 12.9% in Q4 2025, which was achieved due to the dynamics of the remuneration, but that's more of the effect of the increase in the second half of 2025. And the 2026, we expect the growth rate of the salary funds to slow down. At the same time, the growth rate of social security payments and pensions went down significantly in Q1 compared to the previous year. Given the dynamics of the GDP and other macroeconomic indicators, we are somewhat downgraded in our forecast for GDP growth in 2026. It used to be 0.5% to 1% -- It used to be 1% to 1.5% year-on-year. And now we expect it to be 0.5% to 1%. It is slightly slower than we had in 2025, but it's still a positive growth. Despite the slowdown in the economic activity by the end of Q1, annualized inflation remains close to 6%, which was largely caused by the VAT increase and it went up to 3%. We expect, therefore, that by the end of 2026, the growth rate of consumer prices will be 6%, 6.5%, that's 0.5% higher than our previous forecast, which was 5%, 6%. We expect that as the growth inflationary risks remain, the Central Bank will maintain its cautious approach to easing the monitoring credit policy. And therefore, that by the end of the year -- by the end of 2026, the key rate will go down to 12%, 13% range. If we talk about the results, in Q1, the net fee and commission -- net interest income increased to 18.2% to RUB 984.3 billion, thanks to the growth of working assets in the second half of last year as well as in the first quarter of this year. In January and March 2026, the corporate loan portfolio increased by 2.3% to RUB 31.9 trillion, mainly thanks to the disbursements to largest clients in the oil and gas industry and expanded lending to the residential real estate industry. Our share in the corporate lending market in -- during the quarter increased to 0.4% to 33.2%. Our forecast for the growth of the customer funds market for 2026 remain unchanged. We expect that corporate funds -- we expect that we are going to grow across the sector. The cost of risk in the corporate portfolio in Q1 was 30 -- 0.32% and the quality of the corporate portfolio is stable. The most challenging situation is in the segments that are the most sensible to the key rates. We're talking about leasing, the small businesses, agriculture, the new sector in this area -- in this category and other sectors that faced the slowing down of the demand of the external market, meaning the metallurgy, forestry and all these industries are now experiencing difficulties. The retail lending portfolio increased by 2.5% during the quarter. It was quicker than the corporate lending growth, and it reached RUB 19.7 trillion. The main driver was the mortgage sector. We also saw some positive dynamics in credit cards and car loans. At the same time, the consumer lending is still under pressure, but we see some restoration of the demand as the key rate is going up. At the same time, the retail -- our share on the retail market for the first time is more than 50%. The cost of risk in retail was 2.5% -- 2.9% and compared to the same period of the previous year, we see a significant decrease in the cost of risk, thanks to the improved quality of the portfolio, went down to 0.43 percentage points compared to the previous year. At the same time, if you talk about Q4 of the previous year, there's a small increase that is more seasonal. Mortgage portfolio increased during the quarter by 3.5% to RUB 12.9 trillion. The growth rate slowed down slightly. In Q4 2025, it was 6.2%, thanks to record-breaking disbursements by the end of the year, in the anticipation of the changes in the family mortgage state supported program. The majority of loans issued in Q1 2026 came from the state support programs, that's around 70%. At the same time, against the backdrop of decline in interest rates, we see a certain increase in demand for unsubsidized mortgages. In Q1, it was 25%, that's plus 5 percentage points over the quarter. And the same time in March and April, it was more than 35%. So, the demand is going kind of back to the market program as opposed to the subsidized program. The consumer loan portfolio -- I'm sorry, our share in the housing lending market has grown to 57.4%, that's 0.7 percentage points since the start of the year. The consumer loan portfolio, RUB 3.5 trillion, decreased by 0.8% over the quarter. To develop the investment product lineup for clients, we are transitioning to regular issues of securitized products from 2026, and we're planning to securitize up to RUB 100 billion of consumer loans over the year, of which RUB 42 billion were already sold in March this year. We've seen a pretty good demand from our clients, and we see a win-win situation for everyone. After a seasonal decrease in the disbursements at the start of the year, we see some recovery in terms of the demand. At the same time, the risks for new disbursements remain at a constantly low level, compared to the situation we had 1 year ago or 2 years ago especially. Despite the decrease in the portfolio, the market is going down more -- in a more accelerated pace. Sber's share in the consumer loan market increased to 39.9%, that's a plus 0.9 percentage points for the quarter. The credit card portfolio grew by 1.4% in 3 months to RUB 2.6 trillion. Our market share in the credit cards amounted to 54.2%. Car loan portfolio increased by 4.9% to RUB 761 billion. Sber's share has been growing constantly in this market, and we increased it to 20.9%, that's a plus 0.7 percentage points for the quarter. It's still -- it's significantly lower than in the other markets. So we plan to actively grow our positions for this product. At the same time, we expect a slight slowdown in the retail lending market growth rates in 2026 compared to our previous forecast. We thought the growth would be around 9%, 11% across the market. But now we think -- we downgraded the forecast to 5% to 8% range. At the same time, our growth will be faster than the sector. We plan to aggressively increase the -- our share in the second quarter and further on down the line. The cumulative cost of risk, if we look at retail and corporate customers, remain practically unchanged and amounted to 1.25% in Q1 2026, that's 0.5 basis points higher than in Q1 2025. It was mainly due to the creation of the provisions for the retail loan portfolio. At the same time, the quality of the total loan portfolio improved slightly in Q1 2026. And we think that for a couple of quarters, the tendency was negative. We -- Now we see a change, a positive change. The share of Stage 3 loans, including initially impaired ones, decreased by 0.1 percentage points to 4.8%, mainly thanks to the Retail segment. Funds due to individuals increased. It was a pretty good increase, especially given the traditionally challenging seasonal period after December. At the same time, the deposits increased by 1.4% over the quarter and it reached RUB 33.9 trillion. Our market share increased to 44.8%. That's plus 0.5 percentage points in 1.5 months. The amount of corporate funds in Q1 remained stable, including thanks to the fact that in the end of the first quarter, our largest corporate clients made transfer of taxes for 2025, and therefore, the portfolio has not grown. At the same time, our market share increased to 18.6%. That's plus 3 percentage points. Our forecasts for the growth of the customer funds market for 2026 remain unchanged. We expect that corporate funds will grow by 10% to 12%. For the retail deposits, it will grow by 13% to 15% in both markets, but it will grow at the sector level. Net interest margin in Q1 increased, and it was 6.34%. It increased compared to Q1 2026, but we think that we will be in line with our forecast and expect the margin to be at least 5.9% on average in 2026. Well -- But we're showing a little bit better results, so the expectations are unchanged. Net fee and commission income increased by 0.6%, very small growth. That was RUB 204.5 billion. At the same time, we continue to develop payment scenarios available to our customers. The number of monthly users of Biometric payments has been steadily increasing, and now it increased by almost 30% year-on-year. 1.4 million people are using the service, and the turnover of payments increased to RUB 33.8 billion. That's plus 15% year-on-year. 2.6 million customers already use the service for paying for purchases, called Whoosh, and they make more than 16 million transactions monthly. Individual entrepreneurs can now make payments using the Whoosh service in SberBusiness app. Operating expenses increased by 15.8% year-on-year to RUB 303 billion. This growth is smaller than the operating income. So the operating costs to operating income improved to 26.7%. An important role to ensure the operational efficiency is done by the process analytics, process mining. Currently, Sber's digital monitoring system covers more than 200 processes in 2026. We plan to increase their number by more than 3 times to 900 scenarios. Equity increased by 6.2% to RUB 8.9 trillion since the start of the year, thanks to the net profit earned. The capital adequacy ratio, N20.0, by the end of Q1 stands at 14.4%. And at the end of 2026, we expect the N20.0 ratio to remain above the minimum level of 13.3%. That is the range that we have set for ourselves. And a stable position in terms of the profits that we earn, the balanced growth of loans, will help us to maintain a pretty good positions in the lending market. A meeting of the Supervisory Board of Sber was held recently, and the Board resolved to recommend that 50% of the IFRS net profit for 2025 will be allocated as dividends, that's RUB 850 billion, that's a record breaking amount of dividends, and I know that many investors and shareholders of Sber can't wait for the dividend payout, well, as in previous years. The final resolution will be made by the shareholders at the annual meeting of the shareholders on 30th of June, 2026, but I mean, I'm confident that the shareholders will support the recommendation of Supervisory Board. We'll continue to develop the Generative Artificial Intelligence technologies to strengthen Sber's competitiveness and increase its operating efficiency. AI integration covers all areas of our businesses. In March, we introduced a new version of the AI assistant based on the flagship GigaChat Ultra model. The assistant now generates answers twice as fast, has a long-term memory, and it can search for information on the internet right during a voice conversation with the user. We have placed the code and weights of GigaChat in the public domain, which will allow any company to launch a model on a closed circuit and accelerate the process of implementing AI in all industries of the Russian economy. As AI agents develop, we are rethinking the approach to interaction with our customers. Almost 14 million people use our AI assistant on 10 digital services every month to access the services of Sber's ecosystem, among other things. Our goal is to provide the user with a single intelligent assistant to help people in various life scenarios, to maximize the assistant benefits and lift the routine burdens. We're actively using AI agents in cybersecurity inside Sber. The multiagent Sber analyst system already handles about 70% of cyber incidents independently. The use of AI here has reduced the time for analyzing such events by more than 20 times and the time for responding to threats by 6 times. Generative AI is increasingly being used in medicine. In March, together with the government of the Moscow region, we launched the AIDA diagnostic AI assistant. It will help general practitioners to save time working with patients' medical records and test results. For corporate clients, we launched the GigaChat business platform, a fully Russian solution for creating personalized AI agents that will help companies to reduce the cost of working time on routine to 70%. Our solution allows our customers to speed up typical tasks by half and reduce operating expenses by more than 30%. The GigaChat business platform is available in a private cloud, which allows customers to implement AI solutions without the expensive construction of their own computing power. In March, the AI assistant for GigaCode developer was integrated into our various code platform. The assistant will help developers focus on strategic tasks and delegate routine to AI. Again, [ no ] routine. Today, GigaCode supports more than 35 programming languages and allows accelerating the development process by 25% on average. In conclusion, I would like to draw your attention once again to our expectations going forward into 2026. We revised the GDP growth forecast to 0.5% to 1% and increased the inflation forecast to 6% to 6.5%. And our expectation regarding Sber's key financial performance remains valid.

We will probably revisit them in the next quarter. But for now, they stand. Now, thank you for your attention. And I'm prepared to handle questions. Thank you very much, Taras. Going forward to the Q&A session. [Operator Instructions] The first question, Svetlana Aslanova.

My questions relate to your first quarter. What is your take on the 2 indicators for Sberbank going forward?

I'm afraid we cannot hear you.

How about right now? Can you hear me right now?

Yes. Right now is okay.

Right. Two questions on your perspective into the rest of 2026, perhaps maybe '27. First, net fees and commissions income. We have seen a less than pronounced growth in the first quarter. We understand that your projection stands. But how should we treat the growth of this indicator this year? In what terms do you see the growth in 2026? Is it going to accelerate? Is it going to decrease? And the second question, your net performance on the non-core assets, non-core activities. There's a high negative performance remaining in that area. What is your outlook for this year, and can we expect a decrease of this negative performance?

Well, as for the net fees and commissions, we are increasingly departing from this template approach to analyzing P&L as broken down by items. We are increasingly looking at our clients holistically. We have seen a fierce competition in the market for the clients in all kinds of services. In retail and corporate, many banks invest in loyalty, so we cannot really afford to lag behind here. We can't afford to let our competition have our clients. On the contrary, we are trying to offer better terms. And it is the inverse on the lending. With many banks, we see limitations in equity. So the levels of rates and the gap between the rates of Sber and other banks has pretty much disappeared. So the clients that used to be served by us while keeping some deposits elsewhere, given the problems with other banks, they come to us, and here we can earn more on the other side. And this is how we -- this is what we treat with great composure. So we see net fees and commissions growing slower. We will require more investments into loyalty. But we will be able to attract more clients into deposits and loans. And if we can do that, we will do that. We will see how the situation unfolds in fees and commissions in the second quarter. Very important to keep an eye on the key rate dynamic because right now, as I've said, the situation is grave in turnovers with companies. Consumption slowing down and inflation is slowing down as well. So all these factors nominally are affecting our fees and commissions on the whole. But if the key rate goes down below 12%, then the lending will pick up with much better alacrity, let's say. And we will be able to save on spending and start earning on our traditional incomes like acquiring, P2P transactions, et cetera. But if that does not come to pass, then in the second quarter we will look at the feasibility of the spreads again, and perhaps, we might focus more on the fees and commissions. As for the non-core activities, I don't really like this terminology of non-core activity because non-core, as you have put it, is the companies or assets that are treating late-stage problem assets. We have to dispose of those somehow, as for the non-financial business. Then the core businesses are the ecosystem businesses. We work with partners in part, and that should be treated as a regular spending to retain our clients. And here, calculating a standalone performance for them would not be a correct treatment. You should treat us as a group of companies. But if you look at the figure in the reporting, that is cleared of all the non-traditional transactions, and that really distorts the picture that we see. What we are going forward to is improving the indicators that you mentioned with every passing quarter. When they're going to breakeven, not an easy thing to say right now. In the 2027 strategy, we have been actively debating what the correct areas for investment are. Perhaps the decisions made on the 2027 strategy will affect that. On Managed Services, we have a positive financial performance, the operating performance, not on others, unfortunately, but we do think that they will break into profit rather soon. And again, I am inviting to treat the reporting holistically. The subsequent periods we will discuss as we present the 2027 strategy in November 2026. Thank you.

Let's take the next analyst, Evgeniy from Alfa-Bank.

Congratulations on the great performance. A question on the cost of risk. On the last call, following the 2025 performance, we discussed that the cost of risk in the corporate business was going to -- was likely to increase a bit. Having said that, on the first quarter, we see the cost of risk for the entities at 0.3%. For the banks that already disclosed their reports, it is a pretty similar figure. Since our previous call, there were 2 decreases of the key rates by the Central Bank. The events in the Middle East came to [ pass ], that improved the situation in our key exports markets, let's say. Let's put it this way. Would you be expecting an improvement for the better on the cost of risk for your corporates, given your projections at the start of the year?

Yes, Evgeniy, thank you very much. As for our expectations on the first quarter, we have been performing a bit better than our own expectations actually. I have said that some industries have seen issues, and we largely preventively built up our provisions. So the outfits that are deteriorating or perhaps restructuring, in the first quarter, we feel comfortable with our additional provisions. So there's no additional loan loss provisioning expenditure. [indiscernible] Yes. The cost of risk has increased a bit. It was a rebuild in the first quarter last year. And on some industries, specifically given the well-known events in the oil and gas and generally in the world, in the first quarter, that has not really affected the metrics because there's a certain lag. The raw materials income takes time to translate into the income. On the second quarter, the oil and gas specifically, perhaps excluding oil and gas downstream or midstream, that was generally not in jeopardy because companies were using their tax instruments and finances to improve the situation. But there's quite a bit of resilience in the system. So we did not see major problems coming to pass. On other industries, leasing, coal, forestry, small businesses, to a certain extent machine building, that relates to manufacturers of all kinds of techniques where we see deteriorating demand. Yes, those do give cause to worry. But GDP has slightly underperformed in the first quarter. Yet our expectation for the year is 1% of growth of GDP, and the remaining 3 quarters stand likely to recompense for the performance of the first quarter. So we think that for the 4 quarters of the year, we will make it fully cost of risk guidance we indicated at the outset of the year.

Olga Naydenova, Sinara.

Congratulations on the great performance. You are again building up your share of the corporate portfolio, and you are again building up your corporate portfolio again. What do you see happening with the demand on the side of the corporates? What has been going on with the rates? What do you think is going to happen with the corporate sector given the key rate dynamic going forward?

Yes. Thank you for the question. As for the Corporate segment, actually the growth of our market share is a bit peculiar because on some clients we have seen the key rate impact on a considerable decrease of the portfolio, and that translated into this peculiar dynamic of the portfolio. We expect a 10% growth over the year and 0.5% in the quarter. That is probably accounted for by some specialist transactions, things within 2% growth, that's a more or less normal growth. And on our counterparts in the sector, we see growth slightly even bigger than our own. I don't think you should read something very significant into these figures. The market figures might be adjusted because they are a bit distorted right now. We are looking forward towards the same 10% to 12% for the year and we will maintain our own market share. As for the key rate impact and the overall market curve situation, we have seen a certain uplift of this gap. In the fourth quarter last year, we have seen a great demand on the part of the corporates, and it actually exceeded the sector's capability to meet it when the rates were increasing. We don't see anything like this right now. We went back to the rates level and the spreads level that were pretty much the same that we are seeing -- that we saw over the course of last year. But bringing down the rates -- lending rates right now, and doing aggressive things, we don't see any need for that because the level of demand is not that huge right now, most of the companies are thinking about surviving and not about investing aggressively. And one of the drivers, among other things, that depresses the GDP is the significant decrease of investments, things that we were sustained by, supported by in '24 and '25, and this is the direct corollary of companies borrowing loans, especially investment loans, residential construction. Except for that, not many people borrow to invest. They are largely expecting the time when the key rate goes down enough and they see their interest burden go down. So we're going to hope that as last year, the second half is going to perform much better in this regard, and you may have noticed that we are building up a cushion on equity to pay out the dividends, and on the other hand, to meet this elevated demand. Because meeting the demand based on the last year's experience, we understand that if we don't prepare, nobody else will probably be able to pick up this meeting of demand.

I will read questions from our Telegram channel. We got a couple of questions. Could you please share your expectations on the change of the currency exchange market, as the Ministry of Finance has said that it will restore the purchase of the foreign currency?

Well, this announcement, like before the -- all the events in Iran, the stoppage on the foreign exchange market weakened the ruble after the oil prices hiked. This announcement of going back to the pro-budgetary rules and buying up foreign currency leads to the weakening of the ruble again. So as in the start of the year, we expect in the second half of this year the continuation of the trends of the ruble weakening. And we can say that for the last couple of months, ruble has been pretty stable. There was some attempt to push it down, but after the start of the war of the U.S. and Iran, and the growth of oil prices, the ruble rate went up. We expect the range of [ RUB 80, RUB 90 ] in the second half of the year. Maybe it will be achieved in the fourth quarter. It is related to the fact that big chunk of liquidity that will get -- thanks to the higher oil price, that we will get -- thanks to oil price -- higher oil prices will be purchased by Ministry of Finance, and that will increase the demand for the foreign currency. It's very hard. It's anyone's guess to really predict the ruble rate. The market is very unpredictable, and that means that all analysts, as well as our analysts, really cannot predict that because even a small transaction, even a small deal might derail the trend of the ruble going up or down.

Another question. In your presentation you talked about the AI development in Sber. What effect do you expect in 2026 on the profit? And how many initiatives have you launched?

This year, the effect -- the target is -- the effect is at least RUB 500 billion, within which we see the growing effect of GenAI. RUB 50 billion it was last year and this year we hope it to double its share from this RUB 0.5 trillion. As for the initiatives, basically we have no processes in Sber that would be left without AI impact. We implement it in all of our massive processes, internal as well as external processes, because it is in -- within this format, and only this format that you can deliver these services with the speed that customers expect, and you can scale operations and transactions quickly. And without this technology, you won't be able to do that. Hiring people with the same speed is just not possible. There's no people left. The unemployment levels are at historical low right now, despite all of the technologies, and AI, and all the other things, and automations. The unemployment rate will soon reach 2% -- will go down to 2%. That means that state-owned, as well as private companies have no resources to hire. So we have no other choice but to increase our efficiency and productiveness, performance, thanks to these technologies, and to grow business without hiring an additional workforce.

We're moving to questions from journalists. Margarita Shpilevskaya from TASS, you have the floor.

Can you hear me?

Yes, go ahead.

Do you maintain the plans for 2026 to improve the financial results compared to 2025 and how ambition -- ambitious is the plan of achieving RUB 2 trillion? And what are the expectations for the banking sector for 2026? As for the system, you said that, well, I mean, one of the plans for the ecosystem company is maybe you look at some IPOs. We have been expecting that for quite a while now.

Thank you very much for the question, Margarita. As for the financial results of 2026, you can see then in Q1, we increased by 16.1%, and the ROE is 2.4% higher than our target level. Now, obviously, to maintain 22% -- more than 22%, in the second half of the year, we have to increase our profit compared to 2025. As for RUB 2 trillion or some other great numbers, we will see the dynamics further down the line because we have to go on a quarter-by-quarter basis. There is a lot of events happening, especially at the international arena, and they can affect our activities and the Russian economy. We see potentially some discussions of additional taxes and some other things, and so therefore, right now, it is -- I mean, we're not going to give you any expectations, any numbers. When -- we always looked at ROE, i.e. we prioritize that. We didn't put any figures for the net profit in terms of our expectations. Every quarter we have to earn more in absolute terms to achieve a ROE of 22.5%. The dividend payout will be a very sensitive story because it will affect the interest margin and on the profits and on our other income items, we are preparing ourselves for paying out this record high dividends. I mean, for shareholders, it's great, but for us, it's a challenge, but I'm confident that we will address it properly. As for the companies of the ecosystem and IPOs and purchases, acquisitions, we will inform you about any acquisitions for sure. So make sure you monitor the news. We will tell you about the deals. And as you see that in the recent times, the number of deals has decreased dramatically. So I can say that there are no dramatic plans that we have. But if we have a pretty good offer to acquire a company to put in our ecosystem, we will of course look into that. As for the IPO, well, IPO market right now is under great pressure and there are no major multipliers in Russia. We see some multipliers in other countries. I mean, we can't even talk about the U.S., it's what -- 30 -- 130 other multipliers. But when the market cap of Sber is 4 times lower than its annual profits, so how can we talk about the value assessment -- the proper value assessment of a company. So we really don't need to go to the IPO, and we don't want to go to the IPO to get a small valuation. So we don't have any plans for that. But if the market is changing, and if we see that the Russian companies are assessed at fair value, then maybe it is a possibility that we will look into.

Next question from Elena Fabrichnaya from Reuters.

I would like to ask about the new tax on excessive profits. Can this affect Sberbank? After buying foreign currency in February and March, do you expect the growth of demand for the RMBs, or do you have enough liquidity?

Thank you very much. As for the taxes, we are monitoring the news like anyone else. We can see that the government is making some comments on analyzing the possibility and assessing at the pros and cons of such a decision. There are a lot of things to consider here. We already had experience that of having this higher tax a couple of years ago, and overall, the -- there was a 5% increase on the tax on profits. So basically, we have higher taxes as a standard mode of operation. At the same time, we understand that these initiatives and tools are related to the problems in the budget. But if we look into that in February, the frequency of these discussions were very high in March and April. These debates are and news are abated, so to speak, because I mean, we understand that the budget with higher oil prices is feeling better and there's no need to get the money from the sectors, from the businesses, because it restricts the investments in the economy, and it will affect further pressure. So that will be another negative step for the economy. As for the banking sector, we can see that despite pretty high profits in the sector, many banks have problems with capital. They are not far away from reaching the minimal levels, the buffer levels that the Central Bank requires. That means that getting part of the profit and part of their capital from them will exacerbate the situation, and it will negatively affect the banks' abilities to grow their portfolios and increase lending, and it will therefore affect the economy negatively again. So you have to consider pros and cons. You can have a short-term boost while paying with it -- while paying with the long-term negative consequences for it. So we -- I don't think it will be a one-off decision for one bank, some unique decision for a bank. I mean, obviously, we're going to follow the law, if this decision is made, we're going to comply. But it will affect the politics -- political dynamics on the international -- in the international arena, and it will affect -- it will be affected by the budget being filled up in line with the plans, thanks to the higher oil prices. And I mean, otherwise, it -- I mean, there's no need to get additional taxes. The Ministry of Finance is very -- has been very successful on bonds. RUB 290 billion was raised by the government from investors, and we're talking about not only banks, but others. There's a lot of demand. There's a great trust towards the bonds of the Ministry of Finance. And that's a good source for covering up the expenses. So I think right now, within this quarter, we won't see any major changes. I think by autumn, the decision will be finalized, and we will have a proper understanding of the budget of 2026. Maybe we will have some understanding of the budget for 2027. We will, of course, factor that in our expectations and as part of our 2029 strategy. But as you can see, despite all of the tax initiatives, Sberbank is -- has been delivering on its commitments and the indicators. So we will strive to maintain that commitment.

Two questions from Anastasia Savelyeva, Interfax.

I have a question. You said that you expect the FX rate to be on RUB 80 to RUB 90 range. It's for the first -- for the second quarter -- half of the year. What will we see by the end of the year? Now, the liquidity in RMBs, that Elena Fabrichnaya asked about, the Central Bank said that it might introduce some regulation, some buffer on the foreign currency liquidity. Will it deteriorate the situation even further with the yuan, with the Chinese currency liquidity? Do you see it as a problem? And another question. Do you think it will be a major shift for you to support Basel add-ons 2027, 2028? Some large bank said that these add-ons will cost around RUB 700 billion.

Yes. Thank you, Anastasia. As for the exchange rate, the yuan exchange rate, and your mandatory levels set by the CBR or the government, I don't really see any major one-off effect. As I've said, we do expect the ruble's exchange rate is going to weaken. RUB 80 to RUB 90 is the range on the whole for the second half of the year, with a trend probably continuing weakening of the ruble in the third, maybe fourth quarter. RUB 80 to RUB 85 in the third, RUB 85 to RUB 90 in the fourth quarter. For the currency liquidity, what I'd say is perhaps this. There were 2 or 3 transactions that probably accounted for this uptick of the yuan rates in the Russian market, and that's what led to the rates jacking up over the course of a couple of weeks. Since 2024, the rates were pretty much the same with a slight premium over the rates in yuan -- in China. And given the situation that came to pass about 2 weeks ago, we are going back to the same level. I don't think there's a need for any dramatic regulation to quash some kind of a major crisis. I think the measures that were adopted in late 2024, September, October, by the Central Bank, they improved the situation in the market. And over 18 months we led a pretty much comfortable life. It's just that several transactions accounted for a disbalance in the market. But the market corrected itself. I don't think the Central Bank is going to introduce anything new. If they do, we're going to look at the situation as it unfolds. As for the situation on the whole, we don't have any strategy to lend in the currency in a major way. And our currency portfolio is about 10%. And it shrank over the last couple of years. And we're not building it up at all. It is actually decreasing with every passing quarter. So I don't think this is going to be a problem for us in any way. The Central Bank does always announce its measures in advance, and hopefully they do the same this time, if they do. As for the capital adequacy cushions, additional ratios, our base scenario is for early 2028 and late 2027, and the minimum level, including all the cushions for us will be about 12%. 12%, as you will appreciate, is lower than our current band. So talking about any equity paucity, equity deficit is not for us to talk. I think the discussion is perhaps to be had by the banks whose adequacy ratio is below 12%. They need to build up the equity. And we can certainly afford to invest all our income after dividends into equity and use that to develop in the lending markets and maintain or perhaps even build up our market positions as we have been doing in the past couple of years, right within our own targets for earnings, margins and returns on equity. If the Central Bank introduces new policies, we will adapt and correct our own strategy. I think the strategy 2029 will introduce more clarity on the part of the Central Bank if new requirements come to pass. Macroprudential add-ons, macroprudential limits, because it's not just the adequacy add-ons, there are add-ons, industry specific, product specific, client category specific, high NPL, low NPL categories. All of this on the whole makes this very whole -- very complicated regulatory landscape that you need to treat again holistically. I think, come fall, more clarity will transpire, but our own buffer allows us to make up all the targets comfortably.

Perhaps the last question. We have been on air for longer than 1 hour. [ Zulfia -- Hamida Zulfia ], you have the floor. Right. Actually, we have a problem with the microphone on the part of [ Zulfia ]. Julia Koshkina.

Hello? Can you hear me?

Yes, we can hear you loud and clear.

VAT for card transactions, merchants. Merchants have been increasingly asking clients to pay in cash. That's the polls data. An increasing share of alternative transactions, settlements, and I'm talking about the non-cash transactions service. Could you clarify what is the status of reorganization under 292 Federal Law. The [ blocked ] assets transmission to a standalone legal entity, is that going to happen until the end of the year? And for the provisions, if you look at the provisions for the consumer loans and cards, credit cards, the report shows that in the first quarter the provisions were largely made not for the actual impaired assets, but for the expected impairment. Does that mean that Sber is expecting some further deterioration of the payments discipline on account of retail borrowers? If that is the case, what are the risks that you're seeing and what are the causes for those risks?

Yes. Thank you, Julia. Thank you for the questions. As for the cash, and the existing practices, we have certainly seen that. That is worrying us in a big way because the government is targeting a gray area economy, and that is where the cash is. It's not just the signals, it's the figures. Yes, there is some departure into cash. I would not say that this is a radical departure. We are using our own methods to assess the cash transactions and if the recent trends -- if the trends until recently were steady increase of non-cash things, in the past couple of months there was some decline in the non-cash and an increase in the cash transactions. I don't think you can read much trends into those data -- into that data. Servicing cash is much more expensive, so this is an increased burden on the economy. But we are giving all our analysis to the Central Bank and the government, and hopefully, we will see the necessary measures to prevent this trend from becoming stable. This is perhaps one of the corollaries of increased taxes. When you adopt decisions like that, you must account for all the consequences. Some of the consequences might be negative, as they have been for the budget. As for the reorganization and spinning out the blocked assets into a single entity, we are in a conversation with the Central Bank. If we make it until the end of the first half, you can't exclude that possibility, but some issues need to be ironed out because our counterparts in the CBR are requiring additional information. That's a normal conversation that we are having. We don't have a hard deadline except for -- by 2026, as the law requires, it must happen. As for the provisions on some loans, we should keep in mind that the quality of new disbursements last year, as this year, the quality is materially better than it was 18, 24 months ago. I think the coverage has been improving because the problem cases have been maturing from the previous periods, and that's the way it always happens. The coverage is a bit lagging in response versus the portfolio quality. You need to wait for the point where the share of the better quality loans in the portfolio becomes better. That's when the decrease is going to happen in the impairment coverage. I think over the course of 2026 you can expect this trend to happen, and in the first quarter that has not transpired yet because of this maturing effect for the previous vintages, for the earlier vintages.

And one question from our Telegram channel, from Evgeniy and Andrei. Does Sber have any plans to increase dividend payouts perhaps to 60% of earnings? And would Sber consider paying out dividends on a more frequent basis?

Well, we will discuss our dividend strategy and the rest of the parameters as we prepare the strategy for 2029. As for the size of the dividends, this is one of the parameters that is affecting our returns and our willingness to grow the business and our capability to grow the business. If the shareholders would like to collect the 100% of our earnings, we will not be able to grow it. If they leave more than 50% with us, we'll be able to grow more aggressively. So it's going be about the expectations on the market dynamics, and we should not harm the growth rates of the business in any way because larger payouts will give a certain plus in the moment. But over the longer term we'll be ceding our competitive advantages. So we'll need to weigh in -- weigh all the factors. A lot of things are going to depend on the dynamic of the key rates. And as I've said, the regulatory measures were additionally introduced over the past 2 years -- 2 or 3 years, because they have been constricting the growth of lending in a big way. We need to understand how the CBR is going to plan changes going forward. Is that going to be a tightening, loosening, et cetera? All of that needs to be weighed up. We will be doing that, and we will be trying to strike the balance, the optimal balance between growing the business on the one hand and paying out the dividends on the other hand. We always stuck to the strategy that we do not keep any additional cap equity. Everything that is enough to grow the business, everything above the comfortable capital adequacy, we are paying it out. If we think that we can pay out more, we will consider that this year. We are sticking to the 50% ratio every year. And every year we hit the 13.3% level of capital adequacy at the end of the third quarter. We are going to be trying to do the same thing in 2025, in 2026. Hopefully, we can discuss the changes at the Investor Day.

Okay. Thank you very much. Thank you very much for the active participants of our call. We are inviting you to our Annual General Meeting that will happen on the 30th of June. Our next meeting for the first half is going to be at the end of July. Thank you very much. Goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]