Sberbank releases Financial Highlights for 4M 2017 (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 from January 1, 2017 and the numbers for 2016 were restated in accordance with the new methodology for comparability purposes.

May 10, 2017

Key highlights for April, 2017:

- The Bank earned net profit of RUB52.1 bn in April

- Corporate loan portfolio increased by 1.3%, retail loan portfolio - by 0.9%

- Corporate deposits were up by 1.1%, retail deposits - by 0.7%

Deputy Chairman of Sberbank Alexander Morozov stated:

'In April, we saw a revival of demand, reflected in the growth of lending to both corporate and retail clients. The growth of volumes along with strict cost control contributes to the further improvement of the Bank's efficiency and profitability metrics. According to the results of 4 months of 2017, Return on Assets came at 2.93% Return on Equity - at 21.5%, and Cost to Income ratio was less than 30%'.

Comments for 4M 2017:

Net interest income increased by 5.0% compared to 4M 2016 and came at RUB376.9 bn, mainly due to decrease in interest rates on clients' funds.

Fee and commission income was up by 10.5% to RUB104.9 bn, mainly driven by bank card operations, including acquiring, and income from bank insurance.

In April the Bank gained from a one-off sale of Visa shares. The gain was reflected in Securities trading line. This supported operating income before provisions, which was up by 19.5% for 4M 2017.

Operating expense was up by 11.7% to RUB153.0 bn. The increase was driven by two factors: methodology changes (effective 2017 the Bank is using accrual method in costs accounting to spread them more evenly across the year) and wage indexation in 2Q-3Q 2016. Operating expenses were up just by 0.3% in April, compared to April last year. Cost-to-Income ratio came at 29.9% for 4M 2017, better than for 4M 2016 (32.0%).

Total provision charges amounted to RUB43.3 bn, largely due to additional loan-loss provisions for a large borrower - international retailer. Provision charges amounted to RUB92.1 bn for 4M 2017, down by 17.6% compared to 4M 2016 due to portfolio quality stabilization. Loan-loss provisions are 2.7 times the overdue loans as of May 1, 2017.

Net profit before income tax came at RUB267.0 bn. Net profit totaled RUB207.1 bn, including RUB52.1 bn in April.

Total assets in April increased by 1.1% to RUB21.5 trln mainly due to credit portfolio and securities portfolio growth. FX effect on the growth of balance sheet items was insignificant.

Disbursements of corporate loans amounted to about RUB800 bn in April and more than RUB2.6 trln from the beginning of the year. The corporate loan portfolio was up by 1.3% to RUB11.05 trln in April.

The Bank lent over RUB150 bn to retail clients in April, or RUB0.5 trln from the beginning of the year. Retail loan portfolio increased by 0.9% and exceeded RUB4.4 trln. The mortgage loans remained the main growth driver - their share in total retail loans was up to 57.8%.

The share of overdue loans in total loans decreased by 0.02 p.p. to 2.59% in April, which is substantially lower than the banking sector's average (7.0% as of April 1, 2017).

Securities portfolio was up by 4.3% to RUB2.14 trln in April as a result of purchases of government and corporate bonds including European commercial papers.

Retail deposits in April increased by RU75 bn, or by 0.7%. Corporate deposits and accounts were up by RUB54 bn, or by 1.1%. Total customer funds ending balance was RUB16.5 trln as of May 1, 2017.

Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) reached RUB2,498 bn as of May 1, 2017 under preliminary calculations. Total capital amounted to RUB3,380 bn as of May 1, 2017, up mainly due to earned net profit.

Risk-weighted assets decreased by RUB22 bn and came at RUB22.3 trln in April.

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

- N1.1 - 11.2% (minimum adequacy level, required by the Central Bank of Russia at 4.5%)

- N1.2 - 11.2% (minimum adequacy level, required by the Central Bank of Russia at 6.0%)

- N1.0 - 15.1% (minimum adequacy level, required by the Central Bank of Russia at 8.0%).

Sberbank 4M 2017 Financial Highlights (under RAS, non-consolidated)