Sberbank / Key word(s): Miscellaneous/Monthly Figures
07.08.2015 09:50

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Sberbank releases Financial Highlights for 7M, 2015 (under RAS; non-consolidated)

Please note that the numbers are calculated in accordance with Sberbank's internal methodology.

August 7, 2015

Key highlights for July, 2015:

- Corporate loan portfolio increased by 2.8% m-o-m; retail loan portfolio     grew by 0.6% m-o-m

- Retail deposits and accounts increased by 3% m-o-m and 10% ytd that allowed to lower the share of the CBR funding in total liabilities to 7.9% and reduce the net Loan-to-Deposit ratio by 1.1 p.p. to 99.2% in     July

- Financial efficiency demonstrates further improvement: Cost-to-Income     ratio decreased to 34.6% in July

Deputy Chairman of Sberbank Alexander Morozov stated: "In July, the bank generated the highest pre-tax profit of RUB31.8 bn since the beginning of the year. The gradual recovery in net interest income along with sustainable program of cost optimization allow the bank to reduce the impact of negative external factors on the business."
Analysis of the Statement of Financial Position and Statement of Profit or Loss for 7M, 2015, as compared to the same period a year earlier (including comments):

- Interest income increased by 25.5% y-o-y, interest expenses increased by 84.3% y-o-y. Net interest income decreased by 20.1% y-o-y
- Noncredit commission income grew by 17.4% y-o-y, net fee and commission     income increased by 2.5% y-o-y

- Operating income before total provisions decreased by 12.7% y-o-y
- Total provision charge was RUB220.7 bn vs. RUB162.5 bn charge for 7M,     2014

- Operating expenses decreased by 0.1% y-o-y (please, see the comment)
- Net profit before income tax reached RUB127.8 bn vs. RUB280.6 bn for     7M, 2014

- Net profit totaled RUB92.5 bn vs. RUB222.1 bn for 7M, 2014
Comments:

Net interest income came at RUB393.9 bn, down by 20.1% compared to that for 7M, 2014. The pace of net interest income growth in 2015 is catching up to 2014 rate.

- Interest income increased by RUB223.1 bn, or 25.5%, driven mostly by     loan portfolio growth and improving yield.

- Interest expenses increased by RUB322.4 bn, or 84.3%, due to the increase in market interest rates and inflow of funds. The strongest impact on interest expense for 7M, 2015 came from the CBR funding and client deposits. Slowdown in interest expenses growth continues due to gradual decrease in the CBR's key interest rate since the beginning of     2015.

Net fee and commission income came at RUB151.8 bn, up by 2.5%. The low growth rate is explained by the decline in commission income from corporate lending and insurance due to lending slowdown. Noncredit commission income increased by 17.4%. Transactions with bank cards and acquiring remain the main drivers of commission income growth. Furthermore, there was a significant increase in income from cash settlements and bank guaranties.
Net income from FX revaluation and trading operations on capital markets amounted to RUB36.2 bn for 7M, 2015. The income growth in July was driven mostly by FX revaluation due to significant ruble devaluation.
Operating expenses decreased by 0.1% y-o-y for 7M, 2015 due to the Bank's cost optimization program. Effective 2015 the Bank started to apply the accrual method in accounting for employee compensation expenses in order to smoothen the expenses distribution across the year. For comparison purposes the same accounting principle was applied to staff costs for 2014. Excluding the accrual effect in accounting for employee compensation expenses for the same period of 2014, operating expenses increased by 3.8%.
Total provision charges amounted to RUB220.7 bn for 7M, 2015 vs. RUB162.5 bn a year earlier. Amount of provisions in July (RUB44.8 bn) was due by ruble devaluation relative to key foreign currencies that required to form additional reserves for FX loans with no deterioration of credit quality. The Bank continues to practice a conservative approach in loan-loss provisioning based on requirements of the Central Bank of Russia. Coverage ratio remained strong: loan-loss provisions are 2.0 times the overdue loans.

Net profit before income tax came at RUB31.8 bn in July and RUB127.8 bn for 7M, 2015 vs. RUB280.6 bn a year earlier. At the same time, in July the income tax surcharge for the 2nd quarter and advance payment of tax payable in the 3rd quarter were reflected in the Bank's costs. Increase in tax liabilities was associated with different accounting of securities denominated in foreign currencies in financial and tax accounting. Net profit for 7M, 2015 totaled RUB92.5 bn vs. RUB222.1 bn for 7M, 2014.
Assets increased by 1.0% in July to reach RUB20.7 trln driven by positive revaluation of FX component due to ruble devaluation.
The Bank lent about RUB520 bln to corporate clients in July. Loan issues from the beginning of the year exceeded RUB2.8 trln. For the first time since the beginning of the year the volume of new monthly issues exceeded the volume of redemptions. Total corporate loan portfolio in July increased by RUB303 bln, or by 2.8%, to RUB11.2 trln.
The Bank continues to grow its retail lending volumes. The Bank lent over RUB120 bn to retail clients in July, from the beginning of the year was over RUB640 bln. Total retail loan portfolio increased by RUB25 bln, or 0.6%, in July to reach the level of the beginning of the year, RUB4.07 trln. The share of mortgages continues to increase to reach 51.5%.
Overdue loans increased by 0.2p.p. to 3.04% of total loans in July. Nonetheless the level of overdue loans at Sberbank is half the level of the banking sector's average.

Securities portfolio was down by RUB26 bn in July, or by 1.5%, due to redemptions and repayments of OFZ bonds. The portfolio ending balance was RUB1.68 trln as of August 1, 2015.

Retail deposits and accounts increased by RUB272 bn in July, or up by 3.0%. Overall retail deposits and accounts portfolio reached RUB9.4 trln as of August 1, 2015. Since the beginning of the year retail funds increased by RUB0.9 trln, or by 10.1%, while the portfolio was down by 0.4% during the same period last year.

Corporate funding increased by RUB192 bn in July, or by 3.8%, due to term deposits. Overall corporate clients' funding reached RUB5.2 trln as of August 1, 2015.

Inflow of clients' funding allowed the Bank to optimize its funding structure and lower the average cost of funding sources by means of reducing the volume of the CBR funding. The share of the CBR funding (excluding the subordinated loan) in the Bank liabilities was down to 7.9% in July from 8.3% a month earlier.

Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) reached RUB1,708 bn as of August 1, 2015 under preliminary calculations. Total capital amounted to RUB2,531 bn on the same date, up by RUB10 bn in July due to net profit.
Risk-weighted assets increased by RUB912 bn in July mainly due to higher FX rates applicable to FX denominated assets since July 1, 2015 in accordance with the Central Bank letter #211-T on forbearance measures.
Capital adequacy ratios under preliminary calculations as of August 1, 2015 were:

- N1.1 - 8.24% (minimum adequacy level, required by the Central Bank of     Russia at 5.0%)

- N1.2 - 8.24% (minimum adequacy level, required by the Central Bank of     Russia at 6.0%)

- N1.0 - 12.17% (minimum adequacy level, required by the Central Bank of Russia at 10.0%, considering Deposit Insurance Regulation).
Sberbank 7M 2015 Financial Highlights (under RAS, non-consolidated)

07.08.2015 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
 
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