OREANDA-NEWS. April 20, 2010. Sberbank announced that it is cutting retail lending rates by 0.5-1 ppts, and abolishing some commissions. Thus, the effective rate on loans will drop by 2.5-3 ppts, reported the press-centre of OTKRITIE FC.

View: The decrease in interest rates was expected by the market since bank lending is still stagnant. Sberbank saw an even larger decline in its lending portfolio as its largest borrowers now have better access to bond markets.

As result, the bank's corporate portfolio has declined 3.2% in the first three months of 2010 on RAS (compared with YE09). We believe this will encourage another wave of lending rate cuts by other banks, and suggests margin pressure for most of them.

However, considering that the bank has strong capacity to manage its cost of funding, we believe that Sberbank's margins will decline less than those of other banks. On the other hand, conditions of lower interest rates should help the economy recover, which will be positive for banks in the longer run.