Sberbank releases Financial Highlights for 8M 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.
Key highlights for August, 2017:
- In August, the Bank earned net profit of RUB60.6 bn
- The Bank granted over RUB1 trln in loans to corporate clients every of the past three months. In August, the issuance amounted to RUB1.2 trln
- The Bank issued about RUB200 bn retail loans – the largest amount since early 2015
Deputy Chairman of Sberbank Alexander Morozov stated:
“The Bank posted healthy loan growth during the summer – the newly issued loans exceeded RUB4 trln, while average monthly growth rate of the portfolio was 2.2%, forming a solid foundation for further growth in profitability”.
Comments for 8M 2017:
Net interest income increased by 6.7% compared to 8M 2016 and came at RUB787 bn, mainly due to the decrease in interest rates on clients` funds and an increase in the retail loan portfolio. A positive impact also came from a shift in the loan portfolio currency mix towards ruble loans.
Fee and commission income was up by 13.7% to RUB223 bn, driven, as previously, by operations with bank cards, including acquiring, as well as bank insurance.
Operating income before provisions increased by 17.1% compared to 8M 2016, significantly outpacing operating expenses for the same period (up 6.7%). Growth in operating expenses owed to introduction of accrual approach to spread costs more evenly through the year starting from 2017 along with wage indexation in mid-2016. Excluding payroll costs, operating expenses fell 0.4% for 8M 2017, thus providing evidence cost containment incentives. Cost-to-Income ratio stood at 29.8% for 8M 2017, an improvement of 2.9 pp as compared to 8M 2016.
Provision charges totaled RUB23 bn in August and amounted to RUB227 bn for 8M 2017, which is 7.4% higher as compared to 8M 2016. As of September 1, 2017, the loan-loss provisions are 2.5 times the overdue loans.
Net profit before income tax came at RUB538 bn. Net profit totaled RUB433 bn, including RUB60.6 bn in August.
Total assets kept unchanged at RUB22.4 trln in August. The increase in portfolio of loans to corporate and retail clients was offset by reduced lending to banks, primarily non-resident banks.
The Bank granted over RUB1 trln in loans to corporate clients every of the past three months. In August, the issuance amounted to RUB1.2 trln, or total of RUB6.9 trln from the beginning of the year, which is 29% higher than in 8M2016. Corporate loan portfolio expanded by 1.9% in August.
The Bank granted about RUB200 bn in August to retail clients – the highest since the crisis of December 2014. The total amount of retail loans issued for 8M 2017 was over RUB1.2 trln, which is 24% more than in 8M2016. Retail loan portfolio grew 1.6% in August.
Loan demand was encouraged largely by the Bank through decreases in lending rates. The rates on corporate and retail loans went down on average by 2 p.p. from the beginning of the year. In the meantime, the CBR cut the key rate by 1 p.p. for the same period. During the last week of August, the Bank granted mortgages at an average rate of 9.9%.
Overdue loans decreased by RUB3.9 bn in August. The share of overdue loans as percentage of total stood at 2.7% and thus substantially below the average for the sector (8.7% excl. Sberbank as of August 1, 2017). Ongoing improvement of the risk management system allows the Bank to deviate favorably from the sector average.
Securities portfolio remained virtually unchanged in August at RUB2.5 trln, which is comprised of 53% government securities and 41% corporate bonds.
Corporate deposits and accountsdecreased by 0.9% and retail deposits and accounts were down by 0.3% in August. The balance of customer accounts amounted to RUB17.0 trln as of September 1.
Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) reached RUB2,679 bn as of September 1, 2017 under preliminary calculations. The increase in Core Tier 1 and Tier 1 capital was due to audited 1H2017 net profit.
Total capital amounted to RUB3,472 bn as of September 1, 2017, with retained earnings being the main source of increase.
Risk-weighted assets increased by RUB168 bn to RUB24.5 trln in August mainly driven by corporate loans.
Capital adequacy ratios as of September 1, 2017 under preliminary calculations were:
- N1.1 – 10.9% (minimum adequacy level, required by the Central Bank of Russia at 4.5%)
- N1.2 – 10.9% (minimum adequacy level, required by the Central Bank of Russia at 6.0%)
- N1.0 – 14.2% (minimum adequacy level, required by the Central Bank of Russia at 8.0%).