Thank you. Good afternoon to you all.

Thank you for being with us for this call, which is dedicated to our results for 2017. We have with us our Senior Management team headed by our CEO and Chairman of the Management Board Mr.

Herman Gref. We have our CFO and Deputy Chairman of the Board, Alexander Morozov.

We have Senior Vice President and Chief Risk Officer, Alexander Vedyakhin. We will start the call with the traditional presentation of our results from Mr.

Herman Gref and then we will make a short Q&A session. After that we continue our call with some remarks from Alexander Vedyakhin on the risk management, and then continue with our detailed Q&A session.

With this, I’ll pass you to Mr. Herman Gref.

Good afternoon everybody. Thank you for joining us and many of us are now struggling with this Spring weather, normally the beast from the east and I would like to bring a little bit the beauty from the east of this press conference.

Last December, we met in London to discuss our strategy 2020. There haven’t been many changes since then, and I will focus on our 2017 results.

I will give my thoughts around six important topics. First, a few words about the micro and sector.

Even though the Russian economy grew by 1.5% the year was quite turbulent for the banking industry, three large Private Banks required a significant recognition from the Bank of Russia. This negatively effected profitability of this sector.

However, the financial results of profit making banks showed new record of RUB1.6 trillion. Last year, we earned a record net profit of RUB749 billion and achieved the highest return on equity in the last five years of 24.2%.

To achieve this result, we had to improve every area of our business. Our first priority was to stop contraction of the ruble.

We reduced interest rates for our key products, including more mortgages. Our mortgage portfolio grew by 16% and our market share increased by 1% to almost 56%.

This was supported by the rollout of our digital housing platform [indiscernible]. All our clients can now register their property rights online.

The number of monthly visitors exceeds 4 million. We have substantially improved our lending through pre-approved offerings.

Smart loans cover more than half of whole new loan issuances for small businesses. We are improving our corporate lending process 50% of all corporate views are improved and lend less than five days.

And I think it is very important result because historically we had a very long procedure and we have lost a lot of short credit and opportunity in this market. As a result, in 2017, we originated a record amount of loans both for corporate and retail clients and our loan portfolio grew by 6.6%.

Corporate loans increased by 4% and retail grew by 13.6%. On the funding side, we held back from price competition and managed to increase the share of current account through strong focus of transactional banking.

This helped to sustain and even improve our margin. A few words about retail.

The number of digital users online and text banking increased to 57 million or 67% of our active plan. Every fourth retail plan uses our digital services daily.

The ratio of daily to monthly active users has reached almost 30%. The volume of our flagship P2P transfer service reached almost RUB14 trillion or around 25% of total household income.

In the corporate sector, our innovative solution easy start for entrepreneurs has helped us to double the number of newly opened accounts from 7,000 to 14,000 every week. It is now possible to register a new business and open an account with Sberbank completely online, without a single visit to the bank.

I would house [ph] a million corporate clients use non-financial and government services on Sberbank’s online platforms. Our SME and banking card businesses continue to drive at high growth in net fee income.

Last year we added more than 400,000 equities turning up and become the largest acquirer bank in Europe according to the new [indiscernible] magazine report. 95% of all our terminal except MSC payment.

In addition, the year was marked by a threefold increase in retail investment products, life insurance, and asset management, risk management. Cost of risk decreased by 28 basis points to 1.5% and remain at the lower end of our guidance.

It was affected by extra provisions related to the folded loans of Eastern European retailer. I think that all of you understand this case.

But now we are working on the recovery of this loan and I think we are now our separation is much better than a few months ago and we will keep you updated. The NPL ratio decreased to 4.2% signaling that loan quality has stabilized.

Our advanced risk management systems helped us maintain a large gap in asset quality from the rest of the banking system. Last year, we said an ambition target to keep our OpEx growth within inflation, which was projected at 4%, and I can say that during the 2017 it was our main focus to increase our efficiency.

For the first time in 10 years, we posted an absolutely an absolute decline of our Ops by 0.7%. Adjusted for accounting changes, our operating cost grew by 2.5% in-line with a record low inflation.

Our cost income ratio decreased to 35% of the group. And if you can speak about Sberbank of Russia, standalone cost to income ratio reached 32%.

I can say it was a very important focus for us and we know that we promised that we will bring our good cost income ratio to 30% in three years, and we will focus our attention and this number is very strong. Our investments into digital transformation has started to pay off.

First of all, artificial intelligence. We have lot of artificial intelligence initiatives, which help us increase the productivity for call center and back office employees.

One quarter of retail deposits and a sort of loan applications are originated online. 90% of SME clients are serviced online, and cash collection, self-service through ATMs is gaining pace.

Our advanced automated monitoring and management tool, smart management systems or intellectual management system, how we called, which has already been implemented in retail business. Last year was started and ruled out to corporate business.

We see a lot of potential in further implement of our efficiencies through artificial intelligence. In March, we plan to improve the detailed items mentioned in transformational program at the management board meeting.

And if you have some of the questions, we have here the person who is responsible for this process in our bank, it is our CEO [ph] Alexander Vedyakhin. Also a few words about ecosystems.

We continue to gradually build our ecosystem. Last Spring, we acquired an 80% of [indiscernible] an online healthcare marketplace, which is used by more than 1 billion clients to date.

Last year, we launched our Sberbank telecom power in St. Petersburg and this year we are expanding it to Moscow.

Two days ago, we filed an application with Federal Antimonopoly service to get tools for a JV in e-commerce with Yandex. We aim growth with this by the end of the first half of 2018, we - after I present you all details of our join plans together with Yandex.

Our guidance. Few words about outlook for this year.

We have slightly improved our market dictations, which you can see in our presentation. The outlook for the Russian banking sector and the Sberbank’s performance remains largely unchanged with a slight uptick to our acceleration [ph].

Before I finish, I would like to thank all of you for your continued support which shows in our market cap. We consider this a sign of trust in our team.

Our strategy and our vision of future for our bank. This trust need to look to us and I would like to thank you for that all of you and thank you for your attention.

I would be pleased to take your questions.

We are ramping up the session with our CEO and I open the floor for our Chief Rick Officer Alexander Vedyakhin with some comments on our risk management.

Good afternoon ladies and gentlemen and as Mr. Chairman said, we have managed to have cost of risk at 1.5 and it is according to our guidelines.

Also, in the fourth quarter we had a significant methodology impact for provisioning. We have implemented for provisioning purposes PD models for segments from nonresidents companies and companies with Project profile.

Also, as a result of accumulated additional data bank has updated calibration of loss given default model. So, LCD model for corporates.

Change in the methodology lead to increased cost of risk for 2017 by 17 basis points. And we don't foresee any significant methodological changes in the models and provisions in 2018.

About IFRS 9, the total impact of IFRS 9 implementation is minus RUB90.9 billion on equity and for this we have two main reasons. Provisions and deferred tax assets related to these provisions.

As communicated during Investor Day in December 2017, we have estimated IFRS 9 provision impact of minus RUB107 billion or 8% increase versus standard 39 and for the date 31st of December 2017 we have managed to achieve almost the same figure minus RUB109 billion. All 7.6% increased versus standard 39.

The deferred tax has a positive impact in amount of RUB21.1 billion. Overall implementation of IFRS 9 has led to capital adequacy ratio decrease from 13% to 12.7%, and common equity tier 1-25 business points.

Also, we are happy to announce that we have started to apply IRB approach for a regulatory reporting purposes and capital adequacy ratio collusion on the rational accounting standards already in January 2018, which led to capital adequacy draught of 49 basis points. Moreover, due to optimization measures for the RWA under standardized approach we achieved additional improvement in capital adequacy of 39 basis points.

We plan to implement IRB approach and RW optimization in IFRS in 2018 targeting to achieve comparable effect on capital adequacy. Thank you very much.

Thank you. And we opening with this our normal traditional Q&A session.

So, we're ready to take your question guys.

Thank you, Mr. Gref.

It has been only a couple of months since you have presented your 2020 strategy. And a lot of those new exciting business ideas still ahead of you.

Can you imagine a scenario in which you personally are not around to see the strategy delivered in 2020? Under what circumstances would you not be able to see it through?

Thank you.

Thank you, very much for your questions. How much time do we have.

It is a long list of reasons, if you could excuse me. I am not the [indiscernible] it is a lot of reasons.

But I understand the context of your question and I can say that this year is very important for all of us because in Russia we will see a lot of changes, it is the year of election and I think that we can see the new strategy for our new President and our expectations about reforms in the country are very high, and I hope the reforms will be started this year. We can deliver our strategy and maybe more efficiently than we promised you a few months ago.

And this is the reason why we can deliver our strategy better than we planned. If we speak about a personal question, we know that my contract will be ended by the end of 2019 and frankly speaking it is not such a good time to discuss my new job after this date.

I think that we can speak about it next year, not earlier because I am not really able to speak about this question now. And I think the political situation and the market economic situation and the reform policy will be clear to the end of this year and then I think it will be best time for making my personal solution, what I will do after 2019.

To stay with Sberbank or think about something different, but for now, I can say that you will have my presence till the end of 2019 and next year it will be your solution, my shareholders I will be 100% open with and we will discuss my personal future and the future of Sberbank, but in any case, I think what I can promise you that we have such a strong team that these plans and the financial results will be delivered 100%. I have zero hesitations about it and I think that what we are doing now it is right strategy, and I am happy that we started with this very important period last year with your support, and thank you very much for that.

Thank you, very much.

Good evening Mr. Gref.

Thank you very much for the presentation. My question is actually a little bit on the bigger picture side trying to look a little bit beyond 2017 where we have seen a fairly big buildup in terms of the capital adequacy ratio, especially considering the headwinds on the regulatory side and we moved to Basel III.

And just like, relatively recently development has been the headlines on the discussed potential feel of your Turkish subsidiary DenizBank, which could potentially unlock more up to the 70 basis points of capital on our estimates. So, my question is, how does a potential transaction would actually change your thinking in terms of the capital return to the shareholders, including the dividend, special dividends or the buybacks if it of course comes through?

Thank you.

Excuse me, there are lot of buttons here and I can’t push the right button. Thank you very much Mikhail for your question.

It’s a good question. For us, frankly speaking I am not ready to discuss the deal, which is not beginning now, where I discussed this opportunity with our potential buyers, but it is too early to speak about the finish of this deal or to divide the future profit of this.

But if we, if your question is about my position, my personal position of - on the question, if the capital adequacy ratio will be higher than we predict virtually is it possible to increase our plan for dividend payments? My answer is, yes.

I think that we can discuss it, but now I think it is too early, if the deal will be closed and our capital adequacy ratio will be more than 11.5%, which we - 12.5%, which we discussed with you last quarter. I think that we can speak about - we can speak about increasing the dividends.

That’s clear. Thank you very much Mr.

Gref.

Yes, good evening. Chairman, Herman Gref thank you so much for the presentation and the opportunity to ask a question.

I would appreciate your comment on the recent departure of your Chief Transformation Officer Mr. Schlatmann and how that will affect your Agile strategy?

And also, if you could share what are the main priorities in this area for this year?

I think for your question and I can't announce the reason why we - why Schlatmann left because it was personal reasons, his personal reasons. For us, but during the last year made a lot of very important changes because he was - he is a very experienced person and we started a Agile result with this type of experience and for the first period of time his role was crucially important.

And then why transferred him because he runs his job very efficiently. But what I can say now that now we have a good and experienced people which can take over his functionality and I think that it will be not so painful for us.

And they know that now we have a core Chairman of our Block Chief Technology Officer, David Rafalovsky and David has unique experience also in Agile and he is a technical specialist. And I think that we can bring together with the new team and know we are good for the Block T, who has very good professionals to be professionals from the international market, and I think that we will increase our efforts from implementing - Agile now is not so important for us because it was the first stage of our confirmation.

Now we speak about develops. And the focus of our work and attention this year will be implementing develops and the end of the year I hope we can implement around 78% of the other tracks, which will work now in Agile to bring them to develops.

And it is very ambitious plan, but it is independent from the persons. I will focus myself this year.

I told you that I have three priorities. One of them it is technologies.

And I hope that we will deliver good results in all this technological transformation, including one of them, which we don't discuss with you during our Investor Day. It is AI transformation.

We started with this program on the beginning of this year and I hope that at the end of March, we can understand a little bit more detail what that means for Sberbank and we have spent a lot of time with our good partners from Silicon Valley, Microsoft, IBM, or Google, and what we understood that AI transformation it is a little bit different what we have done a few months ago and last years. It means that we must transform all our technological plans and all our transformation plans through the AI vision.

And it can bring us a lot of benefits. Thank you very much for your questions.

Good afternoon. I have a question on the mortgage market in Russia, during your opening comments you spent some time discussing both your very strong performance in mortgage lending last year, as well as what you are trying to achieve with DomClick, what I would be interested to know is, realistically how much we think the market share of 56% could grow given that I do believe this is becoming an increasingly competitive advantage.

So, what is the vision of DomClick and what if the competitive edge does lend you, where ultimately could we see your mortgage market share going?

Sam thank you very much for your question. One of the main opportunities for our business during the next years is because if you speak about penetration rate of mortgages it is - now it is around 7%, and we see very high potential to double this numbers during the next 3, 5 years.

And if you look at our product, I think the product is nice. We have a good competitive position and it will be a good question, a question about our appetite.

I think that this year we can increase our market share may be plus 1, 1.5 percentage, but we will have discussion in the operational market share for Sberbank and my vision is that maybe it will not be more than 60%. My colleagues tried to discuss with me this question, some of them were [indiscernible] the Financial Director Mr.

[indiscernible] maybe it can be 70%, but I think that my feeling is that 60% of the market share is more than enough and if you can stabilize our market share on the 60%, I think it will be, I will be happy and I think it will be according to the risk also it will be enough. If you speak about doubling the market I think, I’m not preferred to have what we call a red wolf [ph] you had the price war in the market and I think that market share between 55% and 60% will be optimal for us.

Thank you very much for the question.

Okay. Please last two questions.

Okay, thank you. My one question is, does the impact from the healing of financial factor by the Central Bank become more visible for Sberbank now?

And do you think it will become more visible in 2 years, 3 years from now, or the segment will only matter for you in the area of competition for depositors and not really matter anywhere else? And my second is a small clarification to question from VTB, did you understand correctly that in case of potential exit from Turkey you would think more in the direction of returns to shareholders than about reallocation of funds in yielding assets in the business?

Thank you.

Olga, thank you very much for your question. If you speak about the human dissector it is a good question, but it can be a long answer.

Some of the people who are saying now that the competition in the banking sector is now going down, and I’m not sure that it is true because the banks this year were capitalized during the last years. I can't say that we saw this bank is like competitors for Sberbank.

And now is the new banking groups, including this two new banking groups, I think the competition will be high. And this pressure of the margin will bring us to the competition in each area of our business.

And I think what we - it is positive for the sector and it will be a big challenge for the banks. That is why I told you that efficiency increases and it’s one of our main focuses.

The second, maybe not such a good consequence of this [indiscernible] around 70% of the state-owned banks, are the players in this market and I think it will be a good idea if the Central Bank and the state after the elections can prioritize some of the players. Because 70% is in my understanding it is too much.

If some of the banks can be prioritized during the next years 2, 3 next years, I think it will be the whole process can trade that you look very positive. Interstate will be struggling and the 70% of market share required acquired by state-owned banks but I think that it will not be such a good idea.

This is my, if you speak about such a big picture this is my position. About our [indiscernible] excuse me, what was the question?

Yes, the question was if the deal goes ahead, would return to shareholders be a preferable option for you or you would also think about the allocation of funds into the business or not?

Olga, I told you that we can't share now the profit, which we don't reach, which we didn't reach. It is not good rule.

I think that we can speak about it when the deal will be done. I told you that my abstract position.

When Mikhail asked me, I told you that it can be done, but I don't know, how long this would take, now frankly speaking, now I can say we have 50% or 70% chances to close the deal this year and I don't want to discuss a lot of the equation about the future profit or future cash flow if you didn't finish the deal, but I can say about my personal position, I told you by my answer to Mikhail’s question.

Thank you.

Thank you for this opportunity, good evening Herman Oskarovich. I have a small question on your dividend outlook for this year.

In some of your comments to media you have discussed the opportunity for base pay out of 35%, but given that your capital generation remains very strong and the IFRS 9 impact seems to be smaller than you originally anticipated, could we already see higher payout out of 2017 earnings?

Andrew, thank you very much for your questions. Also, the same positions, it is too early to discuss because we will have in April in our board meeting and we will discuss this question.

And I wouldn't like to announce our opposition before we will have this discussion.

Thank you. Understood.

Generally, I told you my position. We don't need too much capital.

And we would be happy to pay more dividends to our shareholders and now we try to speak about this motivation for the whole management team as at Directors Board. Because now the team is very motivated for the market cap growth, and I think that the whole team is motivated to do what we - all what we can deliver for, deliver quite good results, payment is good, dividends and doing all for happiness of our dear shareholders, and we will be happy if you will be happy also.

And thank you very much for real question.

Thank you very much.

Hi, again. My second question is actually directly related to the point which Alexander has been discussing right now and specifically in terms of the cost of risk outlook for 2018, looking at your cost of risk for 2017 I am actually taking out the two big one of namely the Agrokor related provisioning and also the one of logical change, I basically arrived to the cost of risk just under 100 basis points, 98 to be exact on my calculation.

So, the question is on how does a basically correspond to that 130-basis point cost of risk, which was still guiding for 2018 and whatever - just like in 2017 you have some one-off specific factors which should contribute to the higher number? Thank you.

Thank you, Mikhail. Really good question and I can answer this question with some statements.

First of all, observed long-term cost of risk of Russian banking system is around 2.0. And so, we're still in the emerging economy and we still have a really conservative approach to our provisioning and it is actually based on this year's stable results, and our conservative approach is really big caution for all our shareholders.

Second, as you really will know, one of the peers have recently provided 1.5% of the guidance for 2018, not to IFRS 9 making our risk estimates actually comparable to the markets. And we clearly hear your words and this question is, I think one of the most popular, and we can repeat actually that we clearly targeted cost of risk below 1.3, but we will consider any impossible changes in the guidance after half of the year results.

So, I think in the second half of the year we will be ready to discuss this topic one more time. Maybe Alexander could add something on top of this.

Good afternoon everybody. You know that our traditional position we fail to deliver, rather than to promise.

And with respect taking into account higher than predictable world, which released today, we preferred to little bit take time on our side and then turn back to the topic to play [indiscernible] and maybe adjust a just a little bit more when we have already done it. As you may notice in our guidance, our full-year forecast when we present our second quarter results this year.

But as you may notice on the page of our guidance we slightly amended already. So, it might be about 150 basis points of BCF.

That’s maximum I can say as of now. So, let’s say [indiscernible] topic when it presents second quarter results.

Thank you for your understanding.

And also, we have received interesting figures from one of the top consulting companies with the Forex as cost of risk for the Russian banking system, it is 2.28%, so actually it seems that we are almost 1% lower than the Forex for the Russian Banking System for 2018. So, thank you very much.

Thank you very much Alexander and Alexander. Thank you.

Thanks a lot.

Hi, it is Gabor Kemeny from Autonomous. Firstly, on your margin guidance you reiterated the 50-basis point drop for 2018 as your expectation, what makes you so cautious because in the fourth quarter you managed to maintain your margins at a comfortable - above 6% level and it still seems that you have a very decent room to reprice your deposits downwards.

And secondly, a follow-up on the provisioning guidance, do you include any recurring impact from IFRS 9 in your calculations? And do you expect any?

Okay, I will start with the margin and after that Alexander Vedyakhin will answer your second question to get to provisioning. When we get to the margin I have two draw your attention to the fact, but fourth quarter seasonally we have a little bit of an average margin for the year.

From that perspective, I would not confer margin this year with just a margin in the fourth quarter last year. So, it will be definitely low.

We should keep in mind let us say the pace of reduction of key interest rate, say for example Central Bank that as a result of reduction of overall prevailing interest rate environment in Russia is a little bit faster when we initially anticipated. So, what will definitely affect our net interest margin in the way with a number of customers, more when we expect may apply for repricing.

That is especially case for mortgages on retail side. Definitely we benefit as we a number of time mentioned to you from a reduction of the rate, we have positively exposed to potential reduction of interest rates, and I mentioned already that our sensitivity to 100 basis points since parallel shift is that almost RUB29, but at the same time we should keep in mind potential higher than expected risk operating price, especially on mortgages.

And so, on the conservative side, we again, as usual formulated our guidance in a way we did. So as of now, I have no arguments to amend it, to change it and so again [indiscernible] this potential amendment no later when we see results of the second quarter.

Number of changes here that happens and so I believe let’s say what we now have as a guidance is a realistic approach, realistic number, but if and when we have more information and more reasons to be a bit more of optimistic, definitely we will let you know immediately.

And about second question, I can answer that yes IFRS 9 is included in the 1.3 guidance for the cost of risk, but taking into account that we will have a heat on equity when we will be transferred to this IFRS to the standard the IFRS 9.

Yes. And is the IFRS 9 significant on a recurring basis?

Not really. I mean there is nothing special.

Okay. And just coming back to the margins, when you say you expect some headwinds from repricing your loan book, does this also mean that you are a little bit more constructive on the growth outlook?

I mean on the loan growth outlook?

On the loan growth outlook, we expect our mortgage double-digit growth, high teens. So, last year we were up by 16 percentage points.

I would expect some similar to that this year, no less from that. Well it is my less expectation as of now.

And it will be very supportive for revenue, very supportive for net interest income, but at the same time in terms of net interest margin, again we have to pass for the cycle of repricing, because the speed - the pace of reduction is the key interest rate and probably interest rate is faster when it is might be and should be to prevent the regulatory pricing. So, really when interest rates went down by almost two-times the markets it creates a lot of incentives for competitors to offer better pricing and so we are interested to preserve our customers who are keen to preserve a good portfolio on our balance sheet and definitely we will undertake all necessary steps to preserve our absolute interest income.

In absolute terms.

Very clear. Thank you.

Thank you. I will continue the set of questions.

Can we discuss your impact on your margin from the new states of today's mortgage program? How much impact do you expect from that one?

And also, how active is repricing on mortgages now? And how do you expect it to accelerate?

In other words, what part of your mortgage is refinance now and where this ratio can go into the next quarters? I will ask my second question after that.

Frankly speaking, we did not see all the details about in your current program, and so it is hard for me now to estimate an impact, but I think anyway it will be, on the one hand supportive, on the other hand I would not support noticeably higher growth rates in mortgages anyway because high double digits - high teens the growth rates is already aggressive, approach and so I think we've will division this guidance anyway. As for the pricing, we will update that when we have full first quarter results, because first quarter again fell now of the month of January that’s seasonal holiday in Russia, not represented here in February, but we can just finish and we are looking for numbers, so it is a little bit too early to speak about this year, and hence let’s come back to the topic and to aggressive and present first quarter results in late May.

Thank you.

Okay. Now - thank you for that.

Coming back to your margin outlook for full-year, I think on our numbers for the full-year margin to go down by 50 bips your quarterly margin should go down a lot like 26, 27 bips quarter-over-quarter every quarter. It’s now numbers, but it’s a very strong erosion.

So, if we can discuss your assumptions on the magnitude of asset yield erosion and cost of funding erosion separately? Sorry, if it’s a too detailed question, but I would appreciate this clarity?

Okay. We cannot fully accommodate erosion of our asset type margin by reducing our liabilities side a payable rate because we cannot pay less than zero on our current accounts and accounts is out contextually maturities.

So, yes, we can pay a little bit less on term deposits, but as for current accounts, uncertainty accounts according to Russian Civil Courts is the minimum we have to pay zero and so 0.1 percentage points. So, that’s why, again we have limited possibility to fully address the reduction of price on assets side, but again we will partly address it by focusing on high yield assets rest of all mortgages again mentioned the credit cards and small medium-sized business and that’s why their final results and net interest margin [indiscernible] will be to a noticeable extent function of our success in delivering superior products is a good quality to our small medium customers and increase of our market share on credit cards and mortgages.

Thank you. And my last question is about your change in methodology in provisioning the fourth quarter, I understand that this extra provisioning was related to IRB and if so can you give us a number one part of your portfolio was moved to IRB and remains to be moved to IRB later this year.

And do you think that other similar changes in methodology will have a similar impact on cost of risk later in the year? Thank you.

Olga, thank you very much for your question. Actually, we are most sought to say 58% of our assets to the IRB approach, based on the Russian accounting standards and as I said, we will implement IRB for ISRF to the year-end.

And your second question about significant impact of provisions, as far as I understood of IRB, this is actually not really significant. I mean there is nothing special, but that is correct, understood you.

Yes, thank you for IRB figure, my question is about IFRS, so what portion of your IFRS portfolio was moved already in IRB and that I guess definitely is the reason for the methodological change in provisioning.

Zero. On IFRS, zero, because actually we applied IRB approach only for our Russian reporting standards.

As for IFRS, we are going to gradually implement same approach for this year and to see full implementation in maximum annual accounts for the year 2018, so for this year. Maybe it is a little bit earlier, but what’s - we will do our best to possibly accommodate and show in the first quarter results with maximum annual results.

And actually, the changes in the methodology that we had in the fourth quarter is about provisioning, but not risk related assets. I mean in IFRS and as for risk-related assets we made some adjustments so to say new calculations for standardized approach also in Russian standards.

So, am I clear, that is actually - in the Russian standards we made two good deal so to say. Plus 49 business points, thanks to IRB and another 39 business points thanks to RW optimization and all-in-all it is 88 business points improvement in our capital adequacy according to the Russian standards.

As Alexander mentioned, and as I had said as well, in 2018 we are targeting to achieve comparable effects on capital adequacy for the - in terms of IFRS. Thank you.

Okay. My finally clarification is that if this extra provisioning due to change in methodology in the fourth quarter was not related to changes in models, what was the reason for this change in PD LGD and do you think there will be more similar or there can be more similar changes this year as in the fourth quarter?

Thank you.

Answering to your last question actually, no, we don't see any significant changes in the methodology in the provisioning methodology. This is, I would like to make this statement one more time, and in for 2018 for this year and about PD and LGD that we have changed for LGD we have collected new data, this is much better than the [indiscernible].

So, actually our models became better and for PD's as well. Previously for PD's we were using matrix, you know there is immigration matrix than based on the bracket we have customers will be great from one bracket to another with increasing cost provision.

Now, we have a good working PD model. So, we have this IT tools, we have data and we have improved our methodologies.

So that is absolutely a normal approach and so we have improved our risk management, I can say.

Thank you.

Yes, hello again, I have a couple of questions. First on your loan growth outlook, I see that you expect some deceleration in retail lending and this is despite the expected recovery in household income and also fallen interest rates, so I just wanted to hear your thoughts on what are you concerned that makes you more cautious on the segment outlook?

Second, is on your fee dynamics, we have seen a very nice acceleration in the year-on-year growth in the fourth quarter? And I just want to check if there were any one-offs?

For example, I noticed that fee expenses on your loyalty programs dropped by around 5 billion over the quarter. And just finally wanted a small clarification question on the capital outlook, this targeted impact from IRB implementation on the IFRS, as I understand is not included in your Tier 1 outlook that you provided for this year, just want to confirm that.

Okay. First of all, with regards to our outlook for the growth dynamics on the retail loans.

We expect the sector will continue to grow with a pace something like 10% to 12%, and so we will be in line with the sector in general, but at the same time we will be faster than the market in terms of mortgage, and so faster than the market in terms of credit cards. We will be in-line with the market insurance of car loans and with regards to PS loans as we are practically not present in this market segment will be below the market we consider PS lending is now risky.

And it is a risky spot, and hands we have marginal activities in PS lending for our subsidiary Sberbank of Russia. So, but on balance, I believe we will be in line with this sector or slightly better on the sector.

Due to mortgages. Mortgage and credit cards.

Secondly, fees and commission, you know what - we messed expectation first half of the year last year, and will be recovered and said, we put clear focus on that for all of our businesses and our prime job is defined as of now retail and small business. On the retail side, it is card separations reference and [indiscernible] so, everything related to payment ecosystem.

And so, looking forward we expect that cash management, trade finance, and say other additional fees and commissions from other customers’ initial segments will bring more. But again, we see as a main driver behind this and sure it would be small business and cart and the acquiring business.

And with regards to your last part of your question it was - our forecast includes IRB and not.

Actually, as we announced on the Investors Day, thanks to IRB approach for IFRS the good rate for improvement of our capital adequacy ratio for the 0.6 and also in 2018 and to another 1.4 in 2020, and actually those figures - because we really don't know yet we are just starting the procedure of the transferring to this IFRS side of the approach. So, this approach is not included in the forecast we have provided for you in these guidelines.

Thank you.

Thank you.

Good afternoon. Thank you for the call.

My question, I have a couple of things, first of all on your NIM, I like to just comment it from the funding cost side rather than the kind of loan yields angle. I noticed that in the fourth quarter you had a very strong drop in your corporate term deposit rates and I am wondering there were any particular drivers of this or whether you think there is the potential for the average rates that to fall any further?

And in terms of your retail term deposit rates. As I understand, there were increases towards year-end last year in terms of kind of year-end promotional offers.

I am wondering whether you think that that will feed into higher retail term deposit costs in the first half of this year? Thank you.

I would answer your question [indiscernible], we have some [indiscernible] to reduce our cost of term liabilities from corporates and from retail this year as I would like to remind you that the highest rates payable to customers will offer it approximately three years ago, and what was the last when it was possible to achieve rates on the retail deposits? Something like 8.5, even 9 percentage points and say on dollar sites more than 5 percentage points.

After that rates dropped seriously, and so now, first half of this year practically all of these term deposits, which were originated three years ago. And as a result, will be replaced by a much cheaper deposits and certain results, I believe we have some room from minority support the margin on levy with your site, but the pressure on that margin will come first to fall from asset side, repricing comes of loans first of all on long-term loans, mortgages.

I already mentioned. And so, one, we are limited on current accounts as I heard you mentioned.

Thanks very much Alexander. It is very clear.

And my second question is on your risk-related assets. I’m wondering why market risk weighted assets went up so much in the fourth quarter if you could give us any color on that.

And also, is there any impact on your risk-related assets from the sovereign rating upgrade to investment grade? Thank you.

We will get to the market risk, there is nothing special happened in the fourth quarter. Some changes in structure for portfolios, but we will address this first topic in more details when it presents first quarter results, just to clear completely.

To the top of my mind, I have, I can mention any specific single big reason behind what changed a combination of small drivers and some changes in portfolios, nothing special. And to your second part of your question, sorry.

Yes, it was just whether there is any impact in terms of risk rating due to the sovereign credit rating upgrade?

Yes. We expect let’s say in total yields, our risk-related for our government securities once we said in our balance we will be very supportive for the reduction of risk-related assets and as a result supportive for our capital adequacy ratio.

Great. Thanks very much Alexander.

I have just got a couple of additional questions. First of fall is on the other operating expenses, if I got it correctly there was still a decline in your other OpEx even adjusting for the D&A accounting change and hence this would be really helpful if you could give us some color on the how we should think about this line going forward whether the additional cost savings that will be achieved this year and going forward?

And my second question is, with regards to your other income, basically trading income and other operating income. There was a quite weak quarter in the fourth quarter of last year and also basically would appreciate your color on the weather, what we should expect from these lines during this year?

Thank you.

As I get to OpEx, as Mr. Gref repeated a number of times our ultimate target to further reduce our cost income ratio is 30, and hence it means that we have to do a lot with our income side and expense side as well.

It is tough, it is difficult, but definitely we will continue, and so I believe that we are looking forward to be on the cautious side. I would not expect us and would not put it into the models.

And you have a noticeable reduction of OpEx in absolute terms from what we have today, but we will do what we should do to prevent the growth. And as we promised on the three years’ time horizon in absolute our OpEx should be more or less constant and say more or less equal to what we have in year 2017.

It gets big around as we increase our investments in both OpEx and CapEx form into new technologies in IG [ph], and so on to marketing and since on we reduced our expenses related to other expenses and so we have changed the composition of our compensation benefits. Reduced [indiscernible] number, we at the same time pay decent compensation to available parts of our team.

With regards to the second part of your question, trading income now plays an important role in our overall revenue, and I do not expect the situation to be changed because you can see that trading has a product, a very important product line ratio for our customers, but at the same time we never expected something that we did not expected today what trading income to play a significant role because it’s quite unstable and difficult to forecast and to predict. On the other hand, I have to say what we focus on brokerage operations and brokerage operations specifically the retail customers, specifically the small medium businesses for our distant channels, but something we really want to increase.

What is in the area where our market share is below, our expectations below what we should have and we already increased our focus on that specific product, but anyway do not expect it will dramatically change the composition of our revenue line.

If I may follow up on a little bit on the other operating income, basically with regards to insurance do you expect a significant pickup in revenues and also should we start thinking about your new initiatives already this year for example your healthcare business as a kind of a significant revenue contributor, probably in terms of a growth rather than the nominal numbers.

With regards to insurance be increased by size. So, with the last year three-fold increase in the retail investment products on life insurance and asset management altogether, three times I think it is quite noticeable number, but I think what we are beginning as a development of reinsurance markets and market of asset management in the Russia and saw the growth to be expected here.

Well let’s say, I would answer your question. And with regards to DokDok [ph], please believe, please have patience and when it is about ecosystem, the most important focus at the initial stage was the scale, scale and market share.

So, yes, we have approximately 1 million customers today. It is a big number, it’s a substantial increase of number of customers for one year, but at the same time's still it is very beginning of the game and our prime focus today is the market share with regards to DokDok.

It is not the revenue and profit and loss that is market share. So, I would not expect any substantial noticeable revenues from our business, but this is a promise for revenues, hence for profit and loss as for tomorrow and after tomorrow.

So that’s our bet for the future.

Thank you very much. It’s very clear.

Can you hear me?

Yes, we can hear you. Ekaterina Belkina, Interfax.

I would like to clarify, did Sberbank do a preliminary valuation of how your balance sheet could be affected by the possible transfer of the different access to [indiscernible] Bank, because there is large amounts on the credit portfolio?

It is premature to speak about this. It is too early.

No decisions have been made to this effect. So, we can't really evaluate the effect of such transfers.

And the bank has not modeled anything? Has it?

How can you model a decision that has yet not been adopted? Okay.

Thank you.

Good morning. Good afternoon.

The analyst of VTB Capital said that the cost of provisioning and cost of risk were affected by the one-offs as the methodology review and I recall are there any risks that in 2018 that are going to be similar one-offs?

Yes, thank you very much this is a pet question, actually a favorite question. I think the answer to the question is simple, as of now we don't see any one-offs over the horizon that might have a similar effect to that of Agrokor or other material events could significantly deviate our financial target from the one that we have stated, but because we are developing in a market that we are, this is a developing market.

The risks are high, generally high and if something does crop up again we don't expect anything to, but we have the policy on provisioning conservative enough and that there is a cost of risk at 1.3 that we have mentioned allows us to look with confidence at any performance that might crop up. Thank you.

Hello. I have a question on DenizBank, it occupies a significant share of the international profits of Sberbank and yet you are talking about selling it, how do you think the international revenue of Sberbank is going to adjust?

Right now, you’re profitable due to DenizBank whereas the Sberbank, Europe is showing loss, what do you see going forward if you sell DenizBank, what do you see happening to your international profits?

Well you know those shares are those of the Sberbank Group. So, when we do guidance we do guidance for the group and not just several components like international business, so the outcome, the results of the group do incorporate the guidance that DenizBank or some other bank might leave or come to the group.

In this respect, we don't see any reasons to change on guidance for the group. At the same time, I would like to draw your attention to the results of Sberbank Europe, the Sberbank Europe was only affected materially by that one-off provision.

The famous European retailer case that everyone knows about and now the deal will close to sell the Ukrainian subsidiary. Ukraine was really a subsidiary of Volksbank International Sberbank Europe.

That did book a certain negative effect. Those two events did materially affect the performance of the Sberbank, Europe.

But we don't expect any similar one of negative effects on the balance sheet of Sberbank Europe. Thank you.

Could you tell us when that deal could be closed to sell DenizBank to the Dubai Group EBD?

Tatiana this is bring all right. You should wake, you really should wake up.

We are answering this question for the third time today. We do expect a continuation of the conversation with the Dubai Group in the second quarter, and we can't give an additional information about the prospects of closing this deal as of today.

We can't reveal this today. All our communications with respect to this deal are limited by the agreement with the counter party that precludes us from disclosing any details before any certain agreements have been reached.

Okay, could I ask you another question and I have woken up, how are loans serviced by the companies that are owned by the [indiscernible] assembly, I think Sberbank’s exposure to them is about $7 billion and what about the resolution of Bin [ph] Bank, have those loans been affected in any way by the recommendation of [ph] of Ben Bank?

Well that is a question for everyone to wake up I think, but we don't really comment on specific exposures to specific groups of clients, that is against our rules, and that is against banking traditions. In this respect, we think that the current level of provisioning that we have on the balance sheet of Sberbank with respect to our clients is quite adequate to the level of risk that we assume and that relates to all our questions by none.

So, the potential problems with the business of the [indiscernible] Assembly have been provisioned for.

Yes, thank you Alexander. We have woken up badly with Alexander together from this question.

We are not going to answer the first part of the question, and that asks about the potential problems, we are saying that all our provisions are fully compliant with the methodologies of the Central Bank and the requirements of the international standard and they adequately cover all the possible risks that we might run into, and that is concerned by the relevant auditing statements, but we cannot, we have no right to reveal any information with respect to any name specifically. Thank you.

We appreciate your understanding on this matter.

On the behalf of Sberbank, we would like to thank everyone who is present at this call. Everyone who votes in our favor with their money by purchasing our shares, as management and we apply all the efforts, we do everything that we should do to make sure that the strategy that you supported you and your shareholders, the analyst and investor community supported in December through the light of day and be implemented fully and in the shortest time possible.

Thank you very much. We wish you happy spring, hopefully all the cold receipts into history, and the events give us much more pleasant surprises than negative ones.

We will do everything in our power to see that happens exactly this way as everything else is related to Sberbank. Thank you, and goodbye.