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Excerpts from the transcript of the meeting with CEO and Chairman of the Board of Sberbank German Gref

President of Russia Vladimir Putin: Mr Gref, how successful have you been in bringing down interest rates? This is something we have discussed a lot of late.

CEO and Chairman of The Board of Sberbank German Gref: Mr President, let me start with a few words about the current situation on the market and how things stand with interest rates. The liquidity situation has stabilised over recent months and interest rates are now starting to fall.

Vladimir Putin: As I understood it, you did not really have any particular liquidity problems.

German Gref: There was a very big liquidity deficit at the end of last year, and this prompted everyone to raise their deposit rates. The start of this year was very difficult too. 

Vladimir Putin: But enough time has gone by since then.

German Gref: Yes, rates on deposits began to fall starting from around the second quarter, and, starting from March, we have twice reduced our rates on loans to individuals and legal entities.

Vladimir Putin: What is the average interest rate now?

German Gref: Mr President, it’s hard to talk in terms of an average rate.

Vladimir Putin: Yes, I understand this. I realise that different creditors have different rates, but even so.

German Gref: If we take individuals, mortgage loans, say, the average interest rate would be 12% at the moment.

Vladimir Putin: On the subject of mortgages, is the volume of mortgage loans growing?

German Gref: This year has seen big growth in mortgage loans, a lot more than last year. Our mortgage loan portfolio has now reached a figure of 1.7 trillion rubles. We accord practically every second mortgage loan in the country. Our share of the market already comes to 49%, which is quite a lot. We have issued around 1.5 times more loans over the first six months of this year than we did last year. 

We are carrying out two programmes, one of which is a mortgage loan programme for young families. The down payment is 10% and the average interest rate is 10.5%. If the family has two or more children we lower the interest rate by another half of a percentage point.

There has been very lively demand for mortgage loans this year. Last year, 25–30% of homes were sold using mortgage loans, but this year the figure is already more than 45%. In other words, every second home is sold using a mortgage loan today. So of course, if inflation continues to fall and the liquidity situation remains normal, we hope to be able to lower interest rates further before the end of the year, above all for population groups such as young families.

We have signed agreements with around 60% of the regions, under which loans for teachers, doctors and young professionals are subsidised separately by the regions and we offer them the lowest possible interest rates. This is another very significant measure that is helping to develop mortgage loans, especially in rural areas.

Vladimir Putin: So, you are essentially working on the basis of agreements with the regional authorities, working on a joint basis.

German Gref: Yes, that’s the case. We began this work during the economic crisis, when we signed our first agreement with Udmurtia, then with Tatarstan, and now we have such agreements with the majority of the regions. This system is developing well. 

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German Gref: Mr President, we will complete implementation of our five-year development strategy this coming autumn. In October, we will present our new five-year strategy to the supervisory board, and will be ready to report on the previous strategy’s results.

Let me give you a few figures. The bank’s assets have more than tripled over these five years. At the start of 2008 our assets came to 4.9 trillion rubles, and we expect a figure of around 17 trillion rubles at the end of this year. Our profit increased by 250%, and our investment in new technology has roughly tripled over this period.

We have substantially transformed the bank’s entire technical core over these five years, investing huge money in new technology and reformatting our branches. But we see that we are disastrously short of time and money to be able to keep up with our competitors and the most modern banks working on the Western markets.

We essentially reached the development strategy’s financial targets a year ahead of time and today account for 10% of Russian assets on the international markets. We earned 14.5 billion rubles on the international markets over the first six months of this year, and we hope to make around $900 million in net profits on markets abroad by the end of this year. This is quite a lot of money.

Seeing as we are such a big bank, the cornerstone of our policy, as we decided it five years ago, was to gradually increase our presence on international markets and support our companies in the markets in which they are already solidly established. We are present in 20 countries now, and as far as the results of our work abroad go, this year is the first time that we will receive a return on our investments abroad.

Vladimir Putin: Good, my congratulations.

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