Few Dividends Among Big Banks

VedomostiVTB paid the most in dividends of any Russian bank — nearly $200 million.

Dividends do not seem to be a priority for the country's 30 largest banks, with only 11 of the 19 that made a profit last year sending some of their earnings back to shareholders.

In relative terms, Bank St. Petersburg paid the largest dividend among stand-alone lenders, while in absolute terms, the biggest payout was from state-run VTB, according to data from lenders ranked by the Central Bank as the 30 largest.

VTB paid a full-year dividend of 6.1 billion rubles ($198 million) on profit of 23.75 billion rubles ($770 million). Its larger state rival, Sberbank, was just behind in profit, earning 21.7 billion rubles for the year, although its dividend was only 2.17 billion rubles.

In absolute terms, the combined dividends from Russia's two largest banks are declining. In 2008, Sberbank and VTB paid a total of 14 billion rubles, while a year earlier their joint payout to shareholders was 19.5 billion rubles.

VTB's retail subsidiary, VTB 24, paid 95 percent of profit in dividends. Another subsidiary, VTB Severo-Zapad, did not pay a full-year dividend, although its 2.2 billion ruble first-half payout ultimately exceeded the bank's 2009 profit of 1.26 billion rubles.

Excluding VTB's subsidiaries, Bank St. Petersburg paid the largest share of profit as dividends, with 78 percent. Of the combined 828.9 million rubles, the vast majority — 795 million rubles — was paid to preferred shareholders.

But far from all of the banks with publicly traded stock decided to cheer their shareholders; MDM-Bank, Bank of Moscow and Rosbank decided not to pay dividends for last year.

State-run Rosselkhozbank complied with the federal government's request and paid 25 percent of its profit, or 382.5 million rubles, as a dividend. Bank of Moscow and AK Bars — close to the governments of Moscow and Tatarstan, respectively — passed on dividends.

Gazprombank and TransCreditBank, which have tight ties to state companies Gazprom and Russian Railways, paid around one-third and one-tenth of their annual profit, respectively.

Last year, most of the big private banks recorded a loss — including Alfa Bank, Binbank, Moscow Bank of Reconstruction and Development, Nomos-Bank, MDM-Bank, Petrokommerts, Promsvyazbank, Trust Bank and UralSib — and did not pay shareholders.

Svyaz-Bank, which was taken over by the state corporation Vneshekonombank, also did not pay. Rusbank will pay its preferred shareholders 330,000 rubles on a 2009 profit of 42.3 million rubles.

Loss-making subsidiaries of foreign banks did not pay dividends, while the profitable ones were split in their payouts. Raiffeisenbank sent owners one-third of its 1.5 billion rubles in profit, and UniCredit Bank paid more than three-fourths of its 5.5 billion rubles from 2009. Citibank, however, did not pay a dividend from its 6.9 billion rubles.

"The state is counting on dividends from state banks as a source of revenue," said Mark Rubinstein, a banking analyst at Metropol.

State-run lenders benefit from cheap money from the state, which in turn requires that they pay a dividend, whereas private banks are forced to reinvest their profit, said Mikhail Zak, head of the analytical department at Veles Capital.

Analysts also noted that 2009 was a rough year for the financial sector, with heavy write-offs and losses, and the lion's share of earnings had to be set aside to meet capital requirements.

See also:

Fifty Russian Hackers Arrested for Stealing $25.5M

Moscow Bank Connected to Chaika's Son Loses License

'Downshifter' Russia Is Losing Global Competition, Warns State Bank Chief