OREANDA-NEWS. May 06, 2010. Sberbank has lowered rates on term deposits effective immediately, Vedomosti reports. The cut is 0.25-1.5 percentage poitns across the board. The highest rate on retail deposit is 7.6% in rubles, reported the press-centre of OTKRITIE Financial Corporation.

View: The move is positive, but hardly surprising, given disinflation and the reduction of policy rates by CBR (now at 8.25%). About a month ago Sberbank already announced lower rates on retail loans. We this this will allow the bank to prevent significant erosion of its NIM - according to our model, it will narrow from 8.2% in 2009, to 7.4% average this year - still a high level. With lower deposit rates, the inflows of deposits to Sberbank will likely slow down, thus helping net interest income (15% 2010E growth YoY in our model, after 21% last year). We also think other banks will follow the market leader Sberbank in lowering their rates (which nevertheless are, on average, about 1.5 percentage points higher than these of Sberbank).

Valuation and Action: After yesterday's sell-off Sberbank trades at 2011E P/BV of 1.6x, which we view as very attractive level. We would be buying.