The first Deputy of the Board of Sberbank in an interview with TASS spoke about the results of the first quarter.
— Sberbank has summed up the results of the first quarter, showing an increase compared to last year. What caused such results?
— Net profit of Sberbank group in accordance with IFRS in the first quarter of 2019 rose 6.8%, to 226,6 billion rubles. Overall we are pleased with the results, we have quite a good performance in the growth of the customer base, Commission income. The Bank for the quarter showed significant growth, we have fulfilled earnings targets, despite the continued pressure on business margins. One of the key drivers of reduction of interest margin proposed by the Bank have become quite high interest rates on deposits for individuals.
— Expect savings rates to decline in the near future?
— In determining the interest rates for loans and deposits we and the rest of the market follow the dynamics of Bank of Russia key rate component currently 7.75% per annum. Now the rate has stabilized, and the controller gives a signal about a possible decline in the second and third quarter of this year. I hope that the economy will develop in the baseline scenario. When the key corresponds to the rate of inflation, which is at about 4%, is always a good position both for the economy and for banks. In this situation, I believe, in the second half we can see a trend to lower rates on loans and deposits.
— How did the mortgage in the first quarter?
— Traditionally well developed mortgage. The mortgage portfolio for the first quarter in annual terms rose by 2.3%. But the share of issued mortgage through our service “Doclick” exceeded a quarter of the total volume issued by Sberbank of mortgage loans.
Why am I in your answer for a separate service “Doclick”? For the Bank this service is one of the most successful cases of going beyond the usual banking business. Today it is one of the largest Russian portals and real estate sales, helping people quickly and efficiently to solve the housing problem. It is important that “Domlec” not confined to only one mortgage. This marketplace, which includes a catalog of properties, a platform for conducting real estate transactions without a mortgage, commercial real estate, as well as online-maintenance of existing mortgage loans: advice, design or renewal of the insurance policy, request information, and sending the requested documents within 10 minutes to your email address.
In General the trends in the mortgage market, which we saw in the first quarter, will continue throughout 2019. For the year the expected growth of the mortgage portfolio at the level of 13.4% on the savings Bank and 16.4% of the market.
— What are the drivers of growth in the first quarter can be identified?
— Good growth rate showed the loan portfolios of individuals and small and medium business, increased for the first quarter by 3.62% and 1.88%, respectively.
Also in the beginning of the year actively started a movement for the self-employed. Sberbank became one of the first banks that have offered services for this category of citizens. Now for self-employed we have a rapid account opening and minimum rates, and in the second quarter of startup loans for them.
In General, the self-employed in Russia is a unique niche, not being individuals, they can pay taxes much less than normal individuals. Rate for calculating tax on income of self-employed from sales of products and services to individuals 4%, individual entrepreneurs and organizations — 6%. Such rate is a “tax privilege” and significantly lower personal income tax, amounting to 13%.
In order to become “self-employed” and the new product “My business”, it should be remembered that the threshold income must not exceed 2.4 million rubles a year.
We believe that this direction will be in demand.
— What loans for self employed will differ from loans to small businesses and entrepreneurs?
— The risk profile for them, we estimate, and it is not significantly different from, say, an individual entrepreneur or a person working in a private firm. Think the Bank has something to offer to this category of entrepreneurs.
— The Central Bank has raised the savings Bank the task of developing the network in rural areas. How did you manage to cope with this problem in the first quarter?
— Supervisory Board of the Bank approved the concept, which does not mean reducing our presence in the regions. We have allocated about 5 billion roubles for the reconstruction of all branches in the remote villages. This amount is calculated for five years. It is important for us, because the availability of financial services in rural areas should not suffer. In addition, the savings Bank creates an interesting project in which clients in remote localities can withdraw cash at point of sale through POS-terminals. We have already tested the technology in a pilot project and saw that it works well. Until the end of 2019 3 thousand sales points in the regions of Russia can withdraw cash on the card of Sberbank. This will improve the availability of financial services in rural areas.
— This service is for cash withdrawals from Bank cards in retail outlets requires technical updates to existing devices?
In current devices it is already possible to do this. Now the service of the savings Bank is only available to holders of our cards, and only in those stores that caters to the savings Bank, — in this case, the Bank can process the transaction without sending it to the payment system and thus not depending on it. For POS terminals require additional configuration software, but it is not connected in any way with the equipment itself, and nothing drastic change is not required. In terms of box office the necessary improvements cash (software) to correct the accounting for and reporting service “purchase results” in the accounting and tax accounting in the company (sales and service outlets).
— Previously voiced the maximum withdrawal amount of funds therefore in the amount of 5000 rubles. Are there any plans of increasing it?
— Here we don’t take Moscow or other major cities where we have ATMs and you can pay via POS-terminal. We are talking about a rural area where there are ATMs and branches of banks, but the person needs to withdraw money. According to our estimates, mentioned amount covers more than 90% of the requests in the regions.
— Have you found the consensus with the regulator concerning the participation of Sberbank in the system fast payments (SBP)?
— We are in dialogue with the regulator, now there is talk about the conditions of our cooperation. I think that in the foreseeable future, the dialogue will be positively completed. We are moving in this direction.
— What tariff will suit fork savings Bank under SBP?
— The existing system of instant transfers of the savings Bank is not free for us, it requires a significant investment in hardware, in software, in training people. We constantly are improving and will continue to do so. Question about the business model of the SBP right now is under discussion with the regulator. You need to understand that every initiative needs to stand up a sustainable business model when individuals receive high quality of service and the banking sector retains the ability to earn an income and thus to further develop the technology. While there is no clear pricing, the Bank is difficult to promote a product.
— Some banks have not yet introduced to the Commission in the framework of SBP…
Banks participating in the faster payments system of the Central Bank, yet does not charge a fee for these services, however it is not excluded that will soon be introduced to the Commission, this possibility is actively discussed in the banking sector.
In turn, we are interested in the tariffs on the market were formed in a competitive environment.
— What will happen to the existing savings Bank system of payments?
— It will exist in parallel with the SBP, we intend to develop it further. At the end of the first quarter, we launched a translation from the Russian Federation, the CIS, and now transfers are growing exponentially, and by the end of the year we expect significant growth.
— With regard to another sensitive for banks topic — reduce fees for acquiring in retail outlets. Found here final compromise with all participants of the discussion?
— All market participants are interested in further growth of cashless circulation, and here we must be very careful with regulation. The existing business model (equipment must be purchased and served by banks) are allowed to take first place in the world in the penetration of contactless cards and payments, Google Pay, Apple Pay, and the payment of travel and to achieve the current results in increasing non-cash payments (according to Sberbank over the last ten years, cashless transactions grew from 3% to 41%).
The European business model, the situation is different: shops pays less but buys equipment, pays for its installation and maintenance that does not lead to the development of modern payment technologies. The experience of Europe shows that such a shift in the General population may be substantially more expensive.
— Still, what compromise at the moment, you see?
— I’m definitely confident an agreement will be reached. While I think one option may be the use of acquiring in new directions, such as the purchase of cars, apartments, notaries and so on. In principle, this will allow you to have financial resources for further development of the system by reducing the fee, but by increasing overall volume of services.
In the beginning of the year you announced plans to launch a platform for crowdingin. When will it start operating?
We launched it in February in a pilot regime conducted the first transaction. Plan to launch in commercial operation in may this year. Although we have not yet made a great start, but happy with the results of the pilot project.
Earlier, Gref said that Sberbank will gradually cancel the Commission for transfers within the Bank in Russia. When this process can be completed and a fee will disappear completely?
— While it is difficult to say when the process will be finished, but it is. It is important to keep a balance of quality service to customers and business for the Bank. We gradually begin to introduce free transfers for different categories of customers. Earlier this year we launched a campaign under which we will indemnify the several commissions, including the Commission for transfers within the Bank bonus points “Thank you” for various categories of clients under salary projects. This service is demanded by clients that frequently move between regions.
But still I would like to understand, when the savings Bank will completely waive commissions on such transactions?
— We are moving in this direction, a fundamental decision was made last year, but the exact date is difficult to call.
Sberbank participates in the development of a roadmap towards the development of “cross-cutting” digital technology. At what stage is the discussion?
We are the winner of the open contest of Rosatom for the right to conclude the state contract on performance of works on development of the roadmap towards the development of the “through” digital technology “Neurotechnology and artificial intelligence”. Currently, the development of this roadmap for artificial intelligence (AI), and we have quite good progress. It is important for us to not only share their experiences but also to be a moderator of this interesting and relevant discussion. We have completed the preparation of a road map and will soon pass it on to the customer. The presentation is scheduled in the second half.
— What about the development and use of technology within the Bank?
— To date technology, AI can be regarded as relatively Mature from the point of view of their practical applicability — there were few areas of applications where AI is not used: it works with natural language, speech Analytics, computer vision, aid decision-making, as well as advanced methods (such as automated machine learning, AutoML). The Bank embeds AI in all our processes, today there is not one field where it has not been used. The Bank is now being implemented at the same time, more than 300 initiatives based on artificial intelligence and machine learning, and each year this number will only increase.
Last year launched a program Transformation AI, and now we see its positive results. The Bank uses AI to improve customer experience in their products, its application in the processes gives rise to the speed of 4-10 times and a significant cost reduction. In the framework of the Transformation AI in 2018, the Bank increasingly focused on creating the necessary conditions such as provisioning infrastructure, data, models, processes. In 2019 our main priority — improving products, customer experience and receiving financial benefits from initiatives using AI Transformation.
One such large-scale deployments of AI technologies is the use of machine learning and neural network frameworks in the task of corporate lending. Last year we also launched the project “Credit in 7 minutes”, where through the use of technology AI is significantly improved as the treatment process and decision-making procedures in lending to legal entities. the “Smart products” are changing the loan process. As a result of these changes, enterprise customers can get a loan in 7 minutes.
— How many people will quit at the end of such large-scale implementations of AI?
One of the most common misconceptions that artificial intelligence will replace humans and will perform its function — to make decisions, to analyze changes in the current situation, to think, etc. Artificial intelligence helps to make more efficient what people already do, but ideas are always created by the person, and artificial intelligence only can help to implement them.
According to estimates by the World Economic Forum, the development of artificial intelligence will facilitate the creation of more than 58 million jobs worldwide by 2022. Today, for example, Sberbank is experiencing staff shortages in a number of ways. And in order to help people to gain new skills, and to the Bank to get quality professionals, we have a large number of programs of retraining. Therefore, the question of finding his new career move largely comes down to the human desire to be retrained, to evolve, to adapt.
Interviewed By Rita Shpilevskaya
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