Sberbank  / Statement/Miscellaneous

28.05.2015 10:00

Dissemination of a Regulatory Announcement, transmitted by EquityStory.RS, LLC - a company of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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Sberbank publishes Interim Condensed Consolidated Financial Statements in accordance with International Financial Reporting Standards (IFRS) as at 31 March 2015 and for the three months then ended
Sberbank (hereafter 'the Group') has released its interim condensed consolidated IFRS financial statements (hereafter 'the Financial Statements') as at 31 March 2015 and for the three months ended 31 March 2015, with review report by Ernst & Young Vneshaudit.
Income Statement highlights:

- Net profit for the three months ended 31 March 2015 reached RUB 30.6 bn (or RUB 1.42 per ordinary share) compared to RUB 72.9 bn (or RUB 3.41 per ordinary share) for Q1, 2014. The decline in net profit was mainly driven by growth of interest expenses outpacing growth of interest income, and provision charge for loan impairment.
- Net interest income for Q1, 2015 declined by 16.4% to RUB 200.3 bn,     compared to RUB 239.6 bn for Q1, 2014.

- Net interest margin for Q1, 2015 declined by 200 basis points as     compared to Q1, 2014 to 3.7% p.a.

- Net fee and commission income for Q1, 2015 increased by 14.7% to RUB 69.5 bn, compared to RUB 60.6 bn for Q1, 2014.
- The Group's operating income before provision charge for impairment of debt financial assets for Q1, 2015 increased by 4.0% to RUB 304.9 bn     compared to RUB 293.2 bn for Q1, 2014.

- Operating expenses for Q1, 2015 increased by 14.7% year-on-year while Cost to Income ratio increased to 45.8% versus 41.5% for Q1, 2014.
- Net provision charge for loan impairment for Q1, 2015 amounted to RUB 114.9 bn, translating to Cost of risk of 250 basis points.
Statement of financial position highlights:

- As of 31 March 2015, the Group's total assets reached RUB 24,245.9 bn showing a 3.8% decline compared to the 2014 year end, the main driver of the decline being a decrease in cash and equivalents and loans to     customers.

- For Q1, 2015, net loans and advances to customers decreased by 2.2% to RUB 17,363.7 bn compared to RUB 17,756.6 bn at 2014 year end.
- The proportion of gross non-performing loans in Group's total gross loans increased to 3.9% as of 31 March 2015 (31 December 2014: 3.2%).
- Customer deposits increased by 1.6% to RUB 15,815.7 bn compared to RUB 15,562.9 bn at the 2014 year end, with individual deposits being the     main driver of the growth.

- The Group's Equity increased for Q1, 2015 by 3.8% to RUB 2,096.9 bn, with net gains on revaluation of securities available-for-sale and     net profit being the major drivers.

- The total capital adequacy ratio (Basel I) improved by 60 basis points for Q1, 2015 to 12.7%. The core capital adequacy ratio increased by 40     basis points to 9.0%.

Financial and Operating Review:

Interest income for Q1, 2015 increased by 35.7% year-on-year to RUB 561.9 bn. The increase is attributable to higher interest rates on corporate loans and higher volume of interest earning assets.
Interest expenses (including deposit insurance expenses) for Q1, 2015 increased by 107.1% year-on-year to RUB 361.6 bn with cost of corporate deposits and cost of borrowings from banks (primarily from the Central Bank of Russia) being the main drivers. The average cost of term corporate deposits in Q1, 2015 increased to 8.5% p.a. versus 5.4% p.a. in Q1, 2014 due to the increased market rates following turbulence in the Russian financial market. The interest expenses on borrowings from banks (primarily from the Central Bank of Russia) increased in Q1, 2015 by 254.3% year-on-year because of their larger volumes and higher costs due to CBR key rate hike. At the same time cost of retail deposits was the largest component of interest expenses as retail deposits remained the core source of funds for the Group. In Q1, 2015, the cost of term retail deposits increased to 6.1% p.a. compared to 5.3% p.a. in Q1, 2014.
Net interest income for Q1, 2015 totaled RUB 200.3 bn, a 16.4% decrease year-on-year. The decrease is caused by the growth of interest expenses which outpaced increase in interest income following the funding cost hike. As a result, net interest margin declined by 200 basis points to 3.7% p.a. in Q1, 2015. Net interest income remains the main component of the Group's operating income accounting for 65.7% of total operating income before provision charges for impairment of debt financial assets.
The Group's net fee and commission income for Q1, 2015 totaled RUB 69.5 bn, a 14.7% increase year-on-year. Income from cash and settlement transactions of individuals and legal entities and acquiring were the key driver for the growth further supported by commission income from operations in foreign currencies.

Total operating income before provision charge for impairment of debt financial instruments for Q1, 2015 reached RUB 304.9 bn compared to RUB 293.2 for Q1, 2014, an 4.0% increase year-on-year despite a 16% reduction in net interest income. The growth was supported primarily by the growth of net fee and commission income and gains from foreign exchange.
Net provision charge for loan impairment for Q1, 2015 totaled RUB 114.9 bn compared to RUB 77.1 bn for Q1, 2014 translating into Cost of risk of 250 basis points versus 220 basis points for Q1, 2014. The main drivers of the provision charge growth were general deterioration of the loan quality in view of slowdown of the Russian economy and creation of provisions on Ukrainian borrowers due to further deterioration of the Ukrainian economy.
The Group's operating expenses for Q1, 2015 increased by 14.7% year-on-year to RUB 139.7 bn. The growth of operating expenses is justified by increased staff costs following the retail business expansion in 2014 and increase in operating expenses of foreign subsidiaries due to depreciation of the Russian rouble. The Group's cost to income ratio for Q1, 2015 increased to 45.8% versus 41.5% for Q1, 2014.

The Group's net profit for Q1, 2015 reached RUB 30.6 bn versus RUB 72.9 bn for Q1, 2014, a 58.0% decrease year-on-year. The decrease in net profit for Q1, 2015 as compared to Q1, 2014 is explained mostly by the outpacing growth of interest expense compared to slower growth of interest income and an increase in net provision charge for loan impairment.
As of 31 March 2015, the Group's total assets reached RUB 24,245.9 bn, a 3.8% decrease since 31 December 2014.

In Q1, 2015, the Group's gross loan portfolio before provision for loan impairment decreased by 1.7%. Gross loans to corporate clients decreased by 1.7% to RUB 13,551.2 bn; loans to individuals decreased by 1.8% to RUB 4,761.1 bn. Almost all the loan products decreased in Q1, 2015 due to muted demand for borrowings and lower approval rates owing to stricter risk management policies.

The proportion of non-performing loans (NPL), defined as loans for which payment of principal and/or interest is overdue by more than 90 days, in the total loan portfolio (the NPL ratio) increased for Q1, 2015 to 3.9% as at 31 March 2015 compared to 3.2% at the 2014 year end. The NPL coverage ratio (total provisions for loan impairment to non-performing loans) slightly decreased to 1.33 for Q1, 2015.

Provision for loan impairment increased for Q1, 2015 by 9.1% reaching RUB 948.6 bn. As of 31 March 2015, the proportion of provisions for loan impairment to total gross loans was 5.2% compared with 4.7% at 2014 year end.

As of 31 March 2015, the Group's total liabilities amounted to RUB 22,149.0 bn, a 4.5% decrease in Q1, 2015 while retail deposits totaled RUB 9,514.7 bn (2.0% increase compared to the 2014 year end). Retail deposits remain the core source of the Group's funding, accounting for 43.0% of the Group's total liabilities. Corporate deposits increased to RUB 6,301.0 bn as at 31 March 2015 showing a 1.1% growth in Q1, 2015, while their share in total liabilities was 28.4%.

As of 31 March 2015, the Group's amounts due to banks totaled 2,407.3 bn, a 33.9% decrease since the beginning of 2015. The improved liquidity position of the Group in Q1, 2015 allowed a RUB 1,132.3 bn reduction of its exposure to the Central Bank of Russia, being the most expensive source of the Group's funding.

Loan to deposit ratio improved in Q1, 2015 to 106.3% as compared to 2014 year end (110.8%) following the increase in customer deposits on the back of loan portfolio contraction.

The Group's equity amounted to RUB 2,096.9 bn as at 31 March 2015, a 3.8% increase for Q1, 2015. As at 31 March 2015, the Group's total capital adequacy ratio as per Basel I reached 12.7%, well above the 8% minimum requirement, and the Tier 1 ratio was 9.0%. The improvement of the capital adequacy ratios as of 31 March 2015 is mostly explained by an increase in capital due to gains on revaluation of securities available-for-sale and net profit earned in Q1, 2015 supported by reduction of risk weighted assets.

Sberbank Group's Financial Highlights for the three months ended 31 March 2015


28.05.2015 The EquityStory.RS, LLC Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de

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Language:           English
Company:            Sberbank
                    19 Vavilova St.
                    117997 Moscow
                    Russia
Phone:              +7-495-957-57-21
Fax:                
E-mail:             media@sberbank.ru
Internet:           www.sberbank.ru
ISIN: US80585Y3080, RU0009029540, RU0009029557, US80585Y4070 Listed: Open Market (Entry Standard) in Frankfurt ; London,                     MICEX, RTS
Category Code:      MSC
TIDM:               SBER
Sequence Number:    2688
Time of Receipt:    May 28, 2015 09:28:57
 
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