Sberbank reports 2017 Net Profit of RUB748.7 bn, or RUB34.58 per ordinary share, under International Financial Reporting Standards (IFRS)
February 28, 2018
Moscow, February 28, 2018 - Sberbank (hereafter "the Group") has released its Annual consolidated IFRS financial statements (hereafter "the Financial Statements") as at and for the 12 months ended 31 December 2017, with audit report by AO PricewaterhouseCoopers Audit.
The 2017 Financial Highlights:
- The Group net profit reached RUB748.7 bn, up by 38.2% compared to 2016.
- The Group earnings per share (EPS) came at RUB34.58, up by 38.3% compared to 2016.
- The Group annualized return on equity (ROE) reached 24.2% p.a., compared to 20.8% a year ago.
- The Group annualized return on assets (ROA) reached 2.9%, up from 2.1% a year ago.
- Net fee and commission income grew 12.9% y/y to RUB394.2 bn, driven by operations with bank cards.
- The Group gross loan portfolio increased by 6.6% in 2017 to RUB19.9 trn, with retail loans growing by 13.6% to RUB5.7 trn, led by mortgages portfolio growth of 16.0% for the year.
- The Group's common equity Tier 1 capital adequacy ratio under Basel III standard reached 11.4% by the end of the year, up 120 basis points.
The Q4 2017 Financial Highlights:
- Sberbank's net profit reached RUB172.4 bn, or RUB8.1 per ordinary share, for the quarter, up by 21.6% compared to Q4 2016.
- The quarterly cost of risk (CoR) came at 149 basis points, up by 29 bps compared to Q3 2017. CoR of the corporate portfolio increased by 44 bps to 184 basis points compared to Q3 2017, while CoR of the retail portfolio decreased by 10 bps to 58 basis points as compared to Q3 2017.
Selected Financial Results
RUB bn, unless stated otherwise
|
4Q 2017
|
3Q 2017
|
4Q 2016
|
4Q17/
3Q17,
% change
|
4Q17/
4Q16,
% change
|
12M 2017
|
12M 2016
|
12M17/
12M16,
% change
|
Net interest income
|
382.9
|
375.0
|
355.2
|
2.1%
|
7.8%
|
1,452.1
|
1,362.8
|
6.6%
|
Net fee and commission income
|
118.0
|
100.9
|
97.4
|
16.9%
|
21.1%
|
394.2
|
349.1
|
12.9%
|
Other non-interest income[1]
|
0.5
|
22.1
|
(10.5)
|
-97.7%
|
--
|
57.0
|
(14.4)
|
--
|
Total revenues
|
501.4
|
498.0
|
442.1
|
0.7%
|
13.4%
|
1,903.3
|
1,697.5
|
12.1%
|
Net provision charge for impairment of debt financial assets
|
(72.7)
|
(58.2)
|
(60.3)
|
24.9%
|
20.6%
|
(287.3)
|
(342.4)
|
-16.1%
|
Operating expenses
|
(203.9)
|
(160.4)
|
(202.0)
|
27.1%
|
0.9%
|
(672.8)
|
(677.6)
|
-0.7%
|
Net profit
|
172.4
|
224.1
|
141.8
|
-23.1%
|
21.6%
|
748.7
|
541.9
|
38.2%
|
Earnings per ordinary share, RUB
|
8.10
|
10.33
|
6.54
|
-21.6%
|
23.9%
|
34.58
|
25.00
|
38.3%
|
Total comprehensive income
|
168.6
|
226.0
|
88.0
|
-25.4%
|
91.6%
|
750.5
|
492.4
|
52.4%
|
Book value per share*, RUB
|
159.2
|
144.6
|
130.7
|
10.1%
|
21.8%
|
159.2
|
130.7
|
21.8%
|
Ratios
|
|
|
|
|
|
Return on equity
|
20.6%
|
28.4 %
|
20.4%
|
-7.8 pp
|
0.2 pp
|
24.2%
|
20.8%
|
3.4 pp
|
Return on assets
|
2.6%
|
3.4 %
|
2.2%
|
-0.8 pp
|
0.4 pp
|
2.9%
|
2.1%
|
0.8 pp
|
Net interest margin
|
6.1%
|
6.1 %
|
6.1%
|
unch
|
unch
|
6.0%
|
5.7%
|
0.3 pp
|
Cost of risk
|
149 bp
|
120 bp
|
122 bp
|
29 bp
|
27 bp
|
151 bp
|
177 bp
|
-26 bp
|
Cost-to-income ratio
|
40.6%
|
32.0 %
|
45.9%
|
8.6 pp
|
-5.3 pp
|
35.2%
|
39.7%
|
-4.5 pp
|
|
|
|
|
|
|
|
|
|
|
* Total equity / Total number of ordinary shares outstanding
Net interest income was RUB382.9 bn in Q4 2017, up by 7.8% y/y:
- Interest income (up 0.5% to RUB598.3 bn compared to Q4 2016) was supported by solid lending volumes.
- Interest expenses including deposit insurance expenses for Q4 2017 decreased by 10.3% from Q4 2016 to RUB215.4 bn.
During the quarter, yield on working assets decreased by 10 bps to 9.6% from Q3 2017, while the annualized yield on working assets was down 30 basis points to 9.7% from 2016, mostly affected by declining corporate yields that were down by 70 basis points during the year to 9.1% (or 20 bps in Q4 2017 as compared to Q3 2017).
Cost of liabilities decreased by 20 basis points to 3.9% in Q4 2017 compared to Q3 2017, driven mainly by corporate term deposits, cost of which came down by 50 basis points to 3.4%. Annualized cost of liabilities declined by 60 basis points to 4.1% as compared to 2016, due to declining cost of both corporate and retail term deposits (-60 bps to 3.7% and -80 bps to 5.2%, respectively).
The Group Q4 2017 net fee and commission income came at RUB118.0 bn, up by 21.1% from the year-ago period. The main drivers of this growth were operations with bank cards, which, net of applicable costs, increased by 32.8% in 4Q 2017 y/y.
Net provision charge for loan impairment for Q4 2017 totaled RUB73.2 bn compared to RUB57.7 bn for Q4 2016. This translated into the cost of risk of 149 basis points for the quarter (vs 122 basis points a year ago).
In Q4 2017, cost of risk was affected by methodology changes to the probability of default (PD) model and the loss given default (LGD) model on corporate loans to residents as a result additional accumulated track record of defaulted loans' recoveries as well as incorporation of PD model for project finance companies and non-resident customers. The net one-off effect in Q4 2017 amounted to additional provision charge of RUB32.3 bn.
The Group operating expenses for Q4 2017 came at RUB203.9 bn, up by just 0.9% from the same period a year ago, as a result of cost discipline across major lines.
As previously communicated, effective January 1, 2017 the Group (1) reconsidered useful life for some fixed assets to bring it in line with actual that translated into lower depreciation expense, and (2) classified costs related to text-messaging notifications to fee and commission expenses as compared to operating expenses in previous periods. Should the Bank not apply these amendments, operating expenses for the full year would have increased in-line with inflation.
Net fee and commission income coverage of operating expenses improved to 58% in Q4 2017 from 48% in Q4 2016.
Selected Balance Sheet Results
RUB bn, unless stated otherwise
|
31/12/17
|
30/09/17
|
31/12/16
|
12M-9M 2017
|
12M17-12M16
|
Total gross loans
|
19,891.2
|
19,498.0
|
18,664.7
|
2.0%
|
6.6%
|
Corporate loans
|
14,174.6
|
14,074.1
|
13,633.0
|
0.7%
|
4.0%
|
Retail loans
|
5,716.6
|
5,423.9
|
5,031.7
|
5.4%
|
13.6%
|
Restructured loans
|
1,182.0
|
1,188.1
|
1,209.1
|
-0.5%
|
-2.2%
|
Securities portfolio
|
3,289.4
|
3,164.9
|
2,717.5
|
3.9%
|
21.0%
|
Assets
|
27,112.2
|
26,220.2
|
25,368.5
|
3.4%
|
6.9%
|
Total deposits
|
19,814.2
|
19,161.5
|
18,684.8
|
3.4%
|
6.0%
|
Retail deposits
|
13,420.3
|
12,798.9
|
12,449.6
|
4.9%
|
7.8%
|
Corporate deposits
|
6,393.9
|
6,362.6
|
6,235.2
|
0.5%
|
2.5%
|
Ratios
|
|
|
|
|
|
Net loans-to-deposits ratio
|
91.6%
|
92.4%
|
90.6%
|
-0.8 pp
|
1.0 pp
|
NPL ratio
|
4.2%
|
4.6%
|
4.4%
|
-0.4 pp
|
-0.2 pp
|
NPL coverage ratio
|
167.8%
|
157.2%
|
157.3%
|
10.6 pp
|
10.5 pp
|
Restructured-to-gross loans
|
5.9%
|
6.1%
|
6.5%
|
-0.2 pp
|
-0.6 pp
|
Total provision coverage of total NPLs + restructured non-NPLs
|
83.1%
|
80.6%
|
74.6%
|
2.5 pp
|
8.5 pp
|
Total loans, gross, increased by 2.0% to RUB19,891.2 bn in Q4 2017 as compared to Q3 2017. The increase was due to growth in retail loans (up 5.4% q/q), which was led by robust mortgage portfolio growth (up 7.3% q/q). Corporate loan portfolio increased by 0.7% as compared to Q3 2017, marked by refinancing activity.
Client deposits portfolio increased by 3.4% in Q4 2017, with strong inflows of funds to corporate and retail deposits (+0.5% q/q and +4.9% q/q, respectively).
Total NPL[2] portfolio came down by 5.8% to RUB836.4 bn during Q4 2017. The NPL ratio decreased to 4.2% in Q4 2017 as compared to 4.6% in Q3 2017, while the coverage level of the NPL portfolio by provisions improved to 167.8% during the quarter.
The share of restructured loans of the total loan portfolio declined to 5.9% in Q4 2017 as compared to 6.1% in Q3 2017, which serves as evidence of regular work with distressed assets. The total provision coverage of NPLs combined with restructured non-NPLs reached 83.1% in Q4 2017, up from 80.6% in Q3 2017.
Capital Adequacy Ratio
Under Basel III
RUB bn, unless stated otherwise
|
31/12/17
|
30/09/17
|
31/12/16
|
12M-9M 2017
|
12M17-12M16
|
Total Tier 1 capital
|
3,360.6
|
3,187.2
|
2,765.9
|
5.4%
|
21.5%
|
Total capital
|
3,820.3
|
3,662.7
|
3,241.8
|
4.3%
|
17.8%
|
Risk-weighted assets
|
29,496.8
|
28,862.9
|
27,028.3
|
2.2%
|
9.1%
|
Credit risk
|
25,245.7
|
25,246.9
|
23,443.0
|
~unch
|
7.7%
|
Operational risk
|
3,092.8
|
2,736.0
|
2,736.0
|
13.0%
|
13.0%
|
Market risk
|
1,158.3
|
880.0
|
849.3
|
31.6%
|
36.4%
|
Ratios
|
|
|
|
|
|
Common equity Tier 1 capital adequacy ratio
|
11.4%
|
11.0%
|
10.2%
|
0.4 pp
|
1.2 pp
|
Total capital adequacy ratio
|
13.0%
|
12.7%
|
12.0%
|
0.3 pp
|
1.0 pp
|
The Group total equity increased by 5.2% to RUB3.4 trn in Q4 2017 relative to Q3 2017 primarily as a result of retained net profit.
The Group's total capital under Basel III standard increased by 4.3% to RUB3.8 trn in Q4 2017 mainly as a result of retained net profit.
The Group's risk-weighted assets increased by 2.2% to RUB29.5 trn during Q4 2017, driven largely by operational risk component on the back of calculation period shift (i.e. inclusion of income for 2017 in the rolling 3-year calculation period).
Common equity Tier 1 capital adequacy ratio increased by 40 basis points to 11.4% during Q4 2017.
Total capital adequacy ratio (Basel III) increased by 30 basis points to 13.0% in Q4 2017 as compared to Q3 2017.