Sberbank - Annual Report 2010 - 2 Operating Environment of the Group

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# 2 Operating Environment of the Group

The Russian Federation continues economic reforms and development of its legal, tax and regulatory frameworks. The recent developments of the Russian government are focused on modernization of the Russian economy in order to improve its productivity and quality, increase the proportion of industries producing knowledge based high-value-added products and services. The future stability of the Russian economy is largely dependent upon these reforms and developments and the effectiveness of economic, financial and monetary measures undertaken by the government.

In 2010, the Russian Government continued to take measures to support the Russian economy in order to overcome the consequences of the global financial crisis commenced in 2008. Gradual economic recovery was accompanied by financial stabilization and declining unemployment. Starting from the second quarter of 2010 corporate clients began to show higher demand for loans. A gradual increase of household income in 2010 also gave rise to stronger demand for credits from individuals.

Liquidity of the Russian financial sector returned to the pre-crisis level which brought strong competition for quality borrowers among financial institutions and declining interest rates on loans as a result. Despite the economic recovery there continues to be uncertainty regarding further economic growth in Russia, access to capital markets and cost of capital, which could negatively affect the Group's future financial position, results of its operations and its business prospects. As the Russian economy is vulnerable to global economic slowdowns, there still remain the risks of fluctuations on the Russian financial markets.

While the management of the Group believes it is taking appropriate measures to support the sustainability of the Group's business in the current circumstances, unexpected deterioration in the areas described above could negatively affect the Group's results and financial position in a manner not currently determinable.

## History

- Recommend Page
- Notes
- 1 Introduction
- Statement of Cash Flows
- Statement of Changes in Equity

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