Sberbank / Key word(s): Statement/Miscellaneous
09.11.2015 14:52

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Sberbank releases Financial Highlights for 10M 2015 (under RAS; non-consolidated)

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

November 9, 2015

Key highlights for October, 2015:

- Net income totaled RUB33.9 bn in October - the highest monthly result     since September of last year.

- The Bank continues to lower the average cost of funding by reducing the share of the CBR's funding in total liabilities by 1.2pp to 3.9%
Deputy Chairman of Sberbank Alexander Morozov stated: "We are expecting acceleration in the net interest income recovery as working assets mix improves and seasonal more expensive deposits from the beginning of the year mature."

Analysis of the Statement of Financial Position and Statement of Profit or Loss for 10M 2015, as compared to the same period a year earlier:
- Interest income increased by 23.7% y-o-y, interest expenses increased by 72.7% y-o-y. Net interest income decreased by 15.3% y-o-y
- Noncredit commission income grew by 19.0% y-o-y, net fee and commission     income increased by 5.7% y-o-y

- Operating income before total provisions decreased by 13.0% y-o-y
- Total provision charge was RUB333.6 bn vs. RUB311.4 bn charge for 10M     2014

  - Operating expenses decreased by 1.4% y-o-y 

- Net profit before income tax reached RUB211.2 bn vs. RUB371.0 bn for     10M 2014

- Net profit totaled RUB178.3 bn vs. RUB293.9 bn for 10M 2014
Comments:

Net interest income came at RUB604.8 bn, down by 15.3% compared to that for 10M 2014. The lag in the pace of net interest income growth in 2015 relative to 2014 is contracting: 27.9% (for 3M), 22.5% (for 6M), 16.3% (for 9M) и 15.3% (for 10M).

- Interest income increased by RUB304.4 bn, or 23.7%, driven mostly by corporate loan portfolio growth and improving yield, as well as retail     loan portfolio growth.

- Interest expenses increased by RUB414.0 bn, or 72.7%, due to the increase in market interest rates and inflow of funds. Interest expenses growth continues to subside as a result of the gradual decrease in the CBR's key interest rate: in the January-October period     the key rate was cut five times.

Furthermore, starting from 4Q2015 the Bank applies the method of monthly accrual on the deposit insurance expense in order to even the effect on the financial results (previously, the deposit insurance expense was paid in the last month of each quarter). Consequently, the comparison of 10M2015 interest expenses to those of 10M2014 would not be correct. The deposit insurance expense in October was RUB3.1 bn.

The growth of interest expenses for 10M2014 would have been 71.9% if applied the accrual method to deposit insurance expenses accounting.
Net fee and commission income came at RUB231.5 bn, up by 5.7%. The Bank continued to demonstrate growth of net fees and commission income despite the decline in commission income from corporate lending and banking insurance. Noncredit commission income increased by 19.0%, driven by transactional business with bank cards and acquiring.
Net income from FX revaluation and trading operations on capital markets amounted to RUB41.5 bn for 10M 2015 compared to RUB73.1 bn for 10M 2014.
Operating expenses decreased by 1.4% y-o-y for 10M 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 1.2%.
Total provision charges amounted to RUB333.6 bn for 10M 2015 vs. RUB311.4 bn a year earlier. In October amount of provision charge came at RUB29.9 bn, which is lower than the average monthly number for the previous 9 months (RUB33.7 bn). The Bank continues to form loan-loss provisions in-line with the requirements of the Central Bank of Russia. Loan-loss provisions are 1.9 times the overdue loans.

Net profit before income tax came at RUB211.2 bn for 10M 2015 vs. RUB371.0 bn a year earlier. Net income reached RUB178.3 bn for 10M2015 compared to 293.9 bn for 10M2014.

Assets decreased by 1.7% in October to RUB21.6 trln driven by negative revaluation of FX component due to ruble appreciation relative to key hard currencies. Major contraction was in cash equivalents, funds placed with other banks and corporate loans.

The Bank lent over RUB0.7 trln to corporate clients in October. Loan issues from the beginning of the year reached about RUB5.0 trln. Total corporate loan portfolio in October decreased by RUB174 bn to RUB11.6 trln.
The Bank lent over RUB105 bn to retail clients in October, from the beginning of the year was about RUB960 bn. Total retail loan portfolio increased by RUB10 bn, or 0.2%, in October to exceed RUB4.1 trln. The share of mortgages in total retail portfolio continued to increase to reach 52.7% as of November 1, 2015.

Overdue loans increased by 0.4p.p. to 3.3% of total loans in October affected by one large corporate loan in part becoming overdue (the Bank had already created provisions for it in the previous periods). The level of overdue loans at Sberbank remains substantially lower than the level of the banking sector's average.

Securities portfolio was up by RUB68 bn in October, or by 3.8%, due to purchases of state bonds (Eurobonds and OFZ bonds), corporate bonds and bonds of financial institutions. The portfolio ending balance was RUB1.8 trln as of November 1, 2015.

Retail deposits and accounts increased by RUB30 bn in October, or up by 0.3% primarily due to savings certificates. Overall retail deposits and accounts portfolio reached RUB9.8 trln as of November 1, 2015. Since the beginning of the year retail funds increased by RUB1.281 trln, or by 15.1%, whereas the portfolio was up by 1.7% during the same period last year.
After a significant inflow in the past four months corporate funding decreased by RUB97 bn in October, or by 1.6%, due to outflow of ruble funds from deposits and current accounts. Overall corporate clients' funding increased by RUB869 bn, or 17.2%, during 10M 2015 to RUB5.9 trln.
Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) reached RUB1,785 bn as of November 1, 2015 under preliminary calculations. Total capital amounted to RUB2,623 bn on the same date, up by RUB47 bn in October primarily due to October net profit and revaluation of securities.

Risk weighted assets increased by RUB396 bn in October.
Capital adequacy ratios under preliminary calculations as of November 1, 2015 were:

- N1.1 - 8.43% (minimum adequacy level, required by the Central Bank of     Russia at 5.0%)

- N1.2 - 8.43% (minimum adequacy level, required by the Central Bank of     Russia at 6.0%)

- N1.0 - 12.34% (minimum adequacy level, required by the Central Bank of Russia at 10.0%, considering Deposit Insurance Regulation).
Sberbank 10M 2015 Financial Highlights (under RAS, non-consolidated)

09.11.2015 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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