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. Last Updated: 07/27/2016

Increasing Costs Dampen Sberbank's 1H Profits

Sberbank on Friday posted a 29.6 percent rise in first half net profits to 48 billion rubles ($1.9 billion) but higher costs kept the results below analysts' expectations.

State-controlled Sberbank's total assets grew 47.1 percent to 4.28 trillion rubles ($173 billion) as of July 1, according to international financial reporting standards.

Average expectations in a poll of six analysts were for growth in net profits of 57 percent to $2.1 billion.

Costs hit 49.8 billion rubles in the second quarter of the year, up roughly 40 percent over the first quarter, said David Nangle, banking analyst at Renaissance Capital.

"Everything else was on track. It was just those costs that caught us and I think everybody else by surprise," Nangle said.

The published results gave no indication of where those costs were coming from. A meeting with analysts is scheduled for Wednesday.

Of the bank's total assets, loans and advances to customers made up 2.87 trillion rubles ($116 billion), having grown 12.9 percent during the first six months of the year.

Total equity saw far more robust growth, shooting up 87 percent in the first six months of the year to reach 578 billion rubles ($23.3 billion).

Net interest income during the first half was 111 billion rubles, up from 90.1 billion in the same period a year earlier, while total operating profit came to 147 billion rubles, up from 117 billion.

With some 20,000 branches around the country, Sberbank saw total deposits from individuals and customer accounts grow 19 percent in the first half to 3.37 trillion rubles.