Sberbank / Key word(s): Statement/Miscellaneous
07.09.2015 09:35

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Sberbank releases Financial Highlights for 8M 2015 (under RAS; non-consolidated)

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

September 7, 2015

Key highlights for August, 2015:

- Net income totaled RUB19.6 bn in August vs. RUB10.9 bn in July (x1.8).
- Corporate loan portfolio increased by 4.7% m-o-m; retail loan portfolio grew by 0.5% m-o-m mainly due to the mortgage portfolio growth.
- Corporate deposits and accounts increased by 10.8% in August due to the inflow of funds and revaluation of FX-denominated balances.
- The inflow of clients' funds allowed to continue optimization of the funding structure aiming to reduce average funding costs and decrease the share of the CBR funding in total liabilities. The share of the CBR funding in total liabilities decreased by 1 p.p. to 6.9%
- Financial efficiency demonstrates further improvement: Cost-to-Income ratio for 8M 2015 decreased to 39.5% vs. 40.7% for 7M 2015
Deputy Chairman of Sberbank Alexander Morozov stated: "The Bank continues to improve ROE, which exceeded 10% in August. Cost to Income Ratio reached a record low 32.3% in August due to the Bank's cost optimization program."
Analysis of the Statement of Financial Position and Statement of Profit or Loss for 8M 2015, as compared to the same period a year earlier (including comments):

- Interest income increased by 25.3% y-o-y, interest expenses increased by 80.5% y-o-y. Net interest income decreased by 17.6% y-o-y
- Noncredit commission income grew by 18.3% y-o-y, net fee and commission     income increased by 4.5% y-o-y

- Operating income before total provisions decreased by 10.8% y-o-y
- Total provision charge was RUB277.8 bn vs. RUB189.1 bn charge for 8M     2014

- Operating expenses decreased by 0.7% y-o-y (please, see the comment)
- Net profit before income tax reached RUB142.7 bn vs. RUB318.0 bn for 8M     2014

- Net profit totaled RUB112.0 bn vs. RUB252.6 bn for 8M 2014
Comments:

There was a significant ruble devaluation in August (RUB/USD devalued by 12.7%, RUB/EUR -16.1%), which positively affected FX-denominated balance items of the Bank.

Net interest income came at RUB468.3 bn, down by 17.6% compared to that for 8M 2015. The pace of net interest income growth in 2015 is catching up to 2014 rate: 20.1% for 7M 2015 and 17.6% for 8M 2015.
- Interest income increased by RUB225.1 bn, or 25.3%, driven mostly by corporate loan portfolio growth and improving yield, as well as retail     loan portfolio growth.

- Interest expenses increased by RUB355.1 bn, or 80.5%, due to the increase in market interest rates and inflow of funds. The strongest impact on interest expense for 8M 2015 came from client deposits and the CBR funding . 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 RUB177.9 bn, up by 4.5%. The low growth rate is explained by the decline in commission income from corporate lending and insurance due to lending slowdown. Noncredit commission income grew 18.3%, transactions with bank cards accounted for 70% of the increase.
Net income from FX revaluation and trading operations on capital markets amounted to RUB38.0 bn for 8M 2015.

Operating expenses decreased by 0.7% y-o-y for 8M 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 0.9%.
Total provision charges amounted to RUB277.8 bn for 8M 2015 vs. RUB189.1 bn a year earlier.

Amount of provision charge came at RUB57.1 bn, where more than one half was due to significant 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 times the overdue loans.

Net profit before income tax came at RUB19.6 bn in August and RUB112.0 bn for 8M 2015 vs. RUB252.6 bn a year earlier.

Assets increased by 4.6% in August to reach RUB21.6 trln driven by positive revaluation of FX component due to ruble devaluation.
The Bank lent over RUB0.5 trln to corporate clients in August. Loan issues for 8M 2015 were about RUB3.5 trln. Total corporate loan portfolio in August increased by RUB528 bln, or by 4.7%, to RUB11.8 trln, driven by both positive revaluation of FX loans, as well as new monthly issues exceeding the volume of redemptions.

The Bank continues to grow its retail lending volumes. The Bank lent about RUB110 bn to retail clients in August, from the beginning of the year - about RUB750 bln. Total retail loan portfolio increased by RUB19 bln, or 0.5%, in August to reach RUB4.1 trln. YTD growth came at 0.5%. The share of mortgages continues to increase to reach 51.8% as of September 1, compared to 47.8% as of January 1, 2015.

Overdue loans remained at 3.0% of total loans in August. The level of overdue loans at Sberbank is half the level of the banking sector's average.

Securities portfolio was up by RUB50 bn in August, or by 3.0%, on purchases of corporate bonds and Eurobonds. The portfolio ending balance exceeded RUB1.7 trln as of September 1, 2015.

Retail deposits and accounts increased by RUB277 bn in August, or up by 3.0%. Overall retail deposits and accounts portfolio reached RUB9.7 trln as of September 1, 2015. Since the beginning of the year retail funds increased by RUB1.1 trln, or by 13.4%, while the portfolio was up by less than 1% during the same period last year.

Corporate funding increased by RUB561 bn in August, or by 10.8%, due to both inflow of funding and positive revaluation of FX deposits on ruble devaluation. Overall corporate clients' funding reached RUB5.8 trln as of September 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 6.9% in August from 7.9% a month earlier (as of January 1, 2015 was 15.2%).
Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) reached RUB1,707 bn as of September 1, 2015 under preliminary calculations. Total capital amounted to RUB2,540 bn on the same date, up by RUB8 bn in August.

Risk-weighted assets increased by RUB567 bn in August mainly due to increase in total assets of the Bank. Capital adequacy ratios under preliminary calculations as of September 1, 2015 were:
- N1.1 - 8.17% (minimum adequacy level, required by the Central Bank of     Russia at 5.0%)

- N1.2 - 8.17% (minimum adequacy level, required by the Central Bank of     Russia at 6.0%)

- N1.0 - 12.12% (minimum adequacy level, required by the Central Bank of Russia at 10.0%, considering Deposit Insurance Regulation).
Sberbank 8M 2015 Financial Highlights (under RAS, non-consolidated)

07.09.2015 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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