OREANDA-NEWS. October 18, 2010. Sberbank CEO German Gref said hat the bank's net profit for 9M10 has already exceeded RUB100bn, and will likely reach USD4-5bn for FY10. No further elaboration was provided, reported the press-centre of OTKRITIE Financial Corporation.

View: We view the statement as a significant positive for the stock. Previously, management guided for RUB100-120bn of net profit for FY10, while our own forecast under IFRS is RUB117bn (USD3.9bn). Sberbank generated RUB64bn of net profit in 1H10. We think there are two main reasons for higher profit forecasts by management: strong results on the securities portfolio in 3Q10 (which as of 1H10 amounted to RUB1.8trn - c.USD60bn), and a less conservative provisioning policy as the lending market showed more visible signs of recovery.

Valuation and Action: Our net profit forecast for 2010E is at the low end of the new management guidance, hence there is upside risk to it. Sberbank currently trades at a 2010E P/E of 17.5x. At the higher end of the management guidance, the implied P/E multiple would be 13.1x, which is roughly in line with EM peers. We reiterate our BUY recommendation for Sberbank.