Sberbank releases Financial Highlights for 2018, excluding effect of subsequent events (under RAS, non-consolidated)

 

Please note that the numbers are calculated in accordance with Sberbank's internal methodology. Also note that the effect of subsequent events is included in the numbers as of January 1, 2018 but excluded from the numbers as of January 1, 2019.

 

January 15, 2019

Key highlights for December 2018:

• The Bank earned RUB52.2 bn in net profit in December;
• The Bank issued RUB1.6 trln in loans in December, including a record monthly loan volume of RUB324 bn issued to retail clients;
• Retail deposits added in December 5.3% or almost RUB660 bn;
• The Bank executed mortgage securitization worth RUB46 bn in December;
• Overdue loans declined by RUB34.5 bn in December.

Key highlights for 2018:

• The Bank earned RUB811 bn in net profit for 2018, excluding the effect of subsequent events;
• Total loans issued in 2018 amounted to RUB16.0 trln;
• Retail loan portfolio expanded for the year by 25.3% and corporate - by 13.2%;
• Retail deposits increased by 7.5% and corporate deposits and accounts were up by 23.7%.

Deputy Chairman of Sberbank Alexander Morozov stated:

"Net profit for 2018 excluding effect of subsequent events exceeded RUB800 bn, Return of Equity reached 22.6%, Cost to Income Ratio improved to 30.9% and Cost to Assets Ratio - to 2.3%. The results fit well Strategy 2020 financial targets." 

  

Comments for 2018:

Net interest income increased by 3.3% for the year to RUB1,253 bn driven mostly by working assets expansion.

Net fee and commission income grew by 19.5% to RUB429 bn. The largest contributors to fee income growth were operations with bank cards and acquiring, settlement transactions and fees from insurance product sales.

Growth in operating expenses slowed gradually through the year, as the Bank pursued the approach of a more even allocation of accrued expenses. As a result, operating expenses grew by 4.2% for the year, which was slower than growth in operating income before provisions (+10.0%). Cost-to-Income Ratio improved to 30.9% from 32.6% in 2017.

Provision charges for the year totaled RUB267 bn, which was 13.0% lower as compared to 2017. December provision charge amounted to RUB29.3 bn, which was for the most part related to FX-loans revaluation. In 2018, loan-loss provision coverage increased from 2.6 to 2.9 times the overdue loans.

Net profit before income tax came at RUB1,002 bn for 2018, while net profit excluding the effect of subsequent events totaled RUB811 bn, including RUB52.2 bn earned in December.

Total assets increased by 2.9% in December and by 16.1% for the year to RUB27.0 trln, mainly due to loan portfolio growth. Ruble devaluation in December and for the year overall affected the Bank's balance sheet. In real terms assets were up by 1.9% in December and by 11.6% for the year.

The Bank lent RUB1.3 trln to corporate clients in December and RUB12.8 trln for the year, which was 13% more than the amount lent in 2017. Corporate loan portfolio increased by 2.7% in December to RUB13.6 trln. Growth was led by ruble-lending, while FX-denominated portfolio contracted.   

The Bank granted RUB324 bn in retail loans in December, which was a monthly record. For the entire year, the Bank granted RUB3.2 trln in loans to retail clients, which was 1.5 times higher than in 2017. The outstanding balance of retail loans added 0.9% in December and grew by 25.3% for the year.

Mortgage portfolio increased by 25% for the year. The Bank executed securitization deal for mortgage loans worth RUB46 bn in December. The deal benefited capital management and increased a pool of liquid assets. Excluding the impact of the deal, portfolio of retail loans would have grown by 1.7% in December and by 26.2% for the year.

The Bank decreased its overdue loans by RUB34.5 bn in December led by the corporate segment. As a result, the share of overdue loans in total loan portfolio decreased for the year: by 0.16 p.p. to 1.85% for corporate and by 0.63 pp to 2.60% for retail portfolio. For the total loan portfolio, the share of overdues improved by 0.28 pp to 2.09%, which is substantially below the rest of Russian banks (8.0% as of December 1, 2018).

Securities portfolio decreased by 4.0% in December to RUB2.9 trln due to repayment of short-term bonds of the Bank of Russia.

Client deposits and accounts increased by 3.8% in December. For the year client funding increased by 12.7%, whereas retail deposits added 7.5% and corporate deposits were up by 23.7%. As of January 1, 2019, client deposits and accounts exceeded RUB20 trln.

The Bank made two issuances of exchange-traded bonds in December worth RUB27 bn. Overall in 2018 the Bank issued exchange-traded bonds in the amount of RUB182 bn. As of January 1, 2019 Sberbank had RUB276 bn outstanding exchange-traded bonds with maturities between 3 to 5 years.

Core Tier 1 and Tier 1 capital were down by RUB19 bn in December under preliminary calculations, led by growth in intangible assets: software developments within 2018 were accounted for in December. Total capital increased by RUB33 bn on the back of earned net profit. Core Tier 1 and Tier 1 do not include net profit for the second half of 2018 as long as it is unaudited.

Risk-weighted assets expanded by RUB780 bn led by loan portfolio growth and revaluation of FX-denominated balance-sheet lines. As a result, capital adequacy ratios decreased by 0.4 pp for Core Tier 1 / Tier 1 and by 0.3 pp for Total capital.  

Capital, RUB bn	1 Jan '19*	1 Dec '18	1 Jan'18	1 Jan '19 / 1 Dec'19	1 Jan '19 / 1 Jan'18
Core Tier 1 capital N1.1	3,169	3,188	2,638	-0.6%	20.1%
Tier 1 capital N1.2	3,169	3,188	2,638	-0.6%	20.1%
Total capital N1.0	4,260	4,227	3,668	0.8%	16.1%
Capital adequacy ratios, %
Core Tier 1 capital N1.1, min. 4,5%	11.0%	11.4%	10.7%	-0.4%	0.3%
Tier 1 capital N1.2, min. 6,0%	11.0%	11.4%	10.7%	-0.4%	0.3%
Total capital N1.0, min. 8,0%	14.8%	15.1%	14.9%	-0.3%	-0.1%
Risk-weighted assets, RUB bn	28,733	27,953	24,689	2.8%	16.4%

* preliminary calculations