* Sberbank Q2 net profit up 16.3%, y/y
* Profit driven by retail loans, lower provisions
* Revises down corporate lending forecast
* Sberbank sells DenizBank, ends foreign expansion era
* Bank to focus on digital products at home - CEO (Adds details, quotes, background)
By Tatiana Voronova and Katya Golubkova
MOSCOW, July 31 (Reuters) - Sberbank has revised down its corporate lending growth forecast for this year after reporting a jump in second-quarter profits supported mainly by retail and small business lending.
Russia's largest bank is transforming itself under Chief Executive German Gref to a banking-to-online services company and has a number of joint projects with Russia's top internet company Yandex.
The bank reported a 16.3% jump in second-quarter net profit to 250.3 billion roubles ($3.95 billion), year-on-year, helped by higher interest income and lower provisions for bad loans.
Loans to companies fell 3.6% in the second quarter as demand from large clients slowed, highlighting a weak investment climate in Russia.
But loans to small and medium enterprises and retail lending rose by more than 5% and 4.2%, respectively.
Sberbank's deputy chief executive Alexander Morozov said that Sberbank's results were supported by expansion of the retail business, its focus on lending to small and medium companies as well as "sustainable growth in the number of digital users".
Morozov said the bank's corporate lending growth was expected to be below the market average this year, which it forecast at 3-5%.
He said retail lending was growing by 15-18% this year. Retail loans account for over 35% of Sberbank's total portfolio and the bank provides a significant chunk of consumer loans via the internet.
"Retail loans remain the only driver for the bank’s loan portfolio, while corporate loans declined... indicating that investment demand in Russia remains poor," analysts at brokerage Aton said in a note.
Sberbank shares were down 1% at 1600 GMT, giving it a market capitalisation of around $83.6 billion, second to Russia's top gas producer Gazprom with a market cap of about $88.5 billion, according to Refinitiv data.
As part of its focus on digital products and services, Sberbank has bought into media company Rambler and announced plans to invest up to $1 billion into a new joint platform for taxi services and food with another internet firm, Mail.Ru .
In a separate statement on Wednesday, Sberbank said it closed a deal to sell its Turkish business, DenizBank , once its biggest foreign asset, to Emirates NBD , marking the end of Sberbank's foreign expansion which it began before the 2014 western sanctions.
"The decision... is due to the sanction-related restrictions and a corresponding change in Sberbank’s international strategy that will allow us to concentrate on further development of our ecosystem in Russia," Gref said in the statement.
Sberbank still has some smaller businesses in a number of European countries.
Sberbank said its net interest income was up 1.2% in the second quarter, commission income was up 4.2% and provisions for non-performing loans were down to 9.2 billion roubles compared with 12 billion roubles a year ago.
The bank's return on equity, a measure of profitability, stood at 24.9% in the second quarter, up from 24.4% a year ago. ($1 = 63.4125 roubles) (Reporting by Tatiana Voronova; Writing by Tom Balmforth/Katya Golubkova; Editing by Maria Kiselyova/Louise Heavens/Jane Merriman)