Sberbank releases Financial Highlights for 1M 2016 (under RAS; non-consolidated)

Please note that the numbers are calculated in accordance with Sberbank's internal methodology. There were some amendments to the methodology and the numbers for 2016 were restated in accordance with the new methodology for comparability purposes. Also note that the effect of subsequent events is excluded from the numbers as of January 1, 2017.

February 7, 2017

Key highlights for January, 2017:

- The Bank earned net profit of RUB57.9 bn

- The Bank lent RUB100 bn to retail clients, which was the largest amount of loans issued in the month of January

- Seasonal deposit outflow in January was minimal in real terms over the last several years

Deputy Chairman of Sberbank Alexander Morozov stated:

'Despite seasonally muted client activity in January, Sberbank completed the month with a strong financial result and minor seasonal outflow of retail funds. This creates a solid foundation for further growth of our business'

Comments for January, 2017:

Net interest income increased by 12.5% compared to 1M 2016 and came at RUB95.9 bn. Lower interest rates on clients deposits and accounts had positive impact on Net interest income.

Fee and commission income was up by 16.2% compared to 1M 2016 mainly driven by bank cards operations and cash settlements.

Operating expense came at RUB29.0 bn. Effective 2017 the Bank is using accrual method in costs accounting to spread them more evenly across the year. Furthermore, operating expenses increased in 1M 2017 relative to 1M 2016 due to the wage indexation in 2Q-3Q 2016. Cost-to-Income ratio came at 23.2% for 1M 2017.

Total provision charges amounted to RUB20.2 bn, or 3-fold less than for 1M 2016, when ruble depreciation and the loan portfolio growth had a significant impact on the reserves. The Bank formed loan-loss provisions in-line with the requirements of the Central Bank of Russia. Loan-loss provisions are 2.6 times the overdue loans.

Net profit before income tax came at RUB75.9 bn. Net profit totaled RUB57.9 bn. Total comprehensive income which includes the income from revaluation of financial assets available-for-sale, amounted to RUB64.3 bn.

Total assets in January decreased by 1.5% to RUB21.7 trln in part from the reduction of cash at the branches and ATMs after the extended New Year holiday season.

The Bank lent more than RUB450 bn to corporate clients in January. The loan portfolio ending balance decreased due to higher volumes of loan repayments.

The Bank lent over RUB100 bn to retail clients in January, which was the highest amount yet lent in the month of January. Total retail loan portfolio remained almost unchanged. The share of mortgage loans of total retail loans exceeded 57%.

The share of overdue loans of total loans was up by 10bp reaching 2.6% in January, which is substantially lower than the banking sector's average (6.4% as of January 1, 2017). The increase was mainly explained by the contraction of the loan portfolio.

Securities portfolio dynamics was driven by positive revaluation of the Ruble denominated portion of the portfolio on market performance as well as negative revaluation of the FX currency denominated portion of the portfolio on Ruble appreciation. The portfolio ending balance was RUB2.1 trln as of February 1, 2017.

Retail deposits and accounts in January decreased by RUB89 bn, which is less than by 1%. The seasonal for January outflow of funds was from banking cards accounts during the holiday period. Retail deposits and accounts ending balance was RUB11.4 trln as of February 1, 2017.

Corporate deposits and accounts were down by RUB30 bn, or by 0.6%. Corporate deposits and accounts ending balance was RUB5.4 trln as of February 1, 2017.

Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) reached RUB2,320 bn as of February 1, 2017 under preliminary calculations. Total capital amounted to RUB3,228 bn as of February 1, 2017, up mainly due to earned net profit and revaluation of the securities portfolio.

Risk-weighted assets increased by RUB128 bn in January mainly due to interbank loans to reach RUB23.1 trln.

Capital adequacy ratios as of February 1, 2017 under preliminary calculations were:

- N1.1 - 10.1% (minimum adequacy level, required by the Central Bank of Russia at 4.5%)

- N1.2 - 10.1% (minimum adequacy level, required by the Central Bank of Russia at 6.0%)

- N1.0 - 14.0% (minimum adequacy level, required by the Central Bank of Russia at 8.0%).

Sberbank 1M 2017 Financial Highlights (under RAS, non-consolidated)