Sberbank releases Financial Highlights for 7M 2018 (under RAS; non-consolidated)
Please note that the numbers are calculated in accordance with Sberbank`s internal methodology. Effective January 1, 2018 the methodology has been updated. For comparison purposes the numbers for 2017 have been calculated in accordance with the updated methodology.
Key highlights for July 2018:
- The Bank earned RUB71,4 bn in net profit in July;
- The amount of loans issued to retail clients in July hit a record of RUB290 bn;
- Clients’ loan portfolio added RUB199 bn in July or +1.1% m/m;
- Net fee and commission income grew 25.7% as compared to 7M 2017.
Deputy Chairman of Sberbank Alexander Morozov stated:
“A steady growth in Sberbank’s operating income is driven by business performance which owes to a healthy client demand for banking services. This is largely favorable for efficiency metrics – annualized ROE reached 22.9%, while ROA came at 3.4%.”
Comments for 7M 2018:
Net interest income increased by 6.5% compared to 7M 2017 and totaled RUB727.6 bn. Growth drivers remain the same: increasing working assets and lower cost of client funds.
Net fee and commission income grew by 25.7% to RUB244.0 bn. The largest contributors to fee income growth are operations with bank cards and acquiring (+34.8%), settlement transactions (+21.4%) and fees from insurance products (+50.6%).
Operating expenses increased by 4.7%, which was slower than growth in operating income before provisions (+10.1%). The transition to a more even allocation of accrued expenses throughout the year is under way. Cost-to-income ratio for 7M 2018 improved to 28.3% as compared to 29.8% for the same period a year ago.
Provision charges for 7M 2018 amounted to RUB172.3 bn, which was 15.6% lower as compared to the same period a year ago. As of August 1, 2018, loan-loss provisions were 2.6 times the overdue loans.
Net profit before income tax came at RUB581.1 bn for 7M 2018, while net profit totaled RUB469.2 bn, including RUB71.4 bn earned in July.
Total assets increased by 0.5% in July to RUB24.9 trln, mainly driven by growth in corporate and retail loan portfolio as well as expansion of securities portfolio.
The Bank lent RUB1.0 trln to corporate clients in July, and RUB7.7 trln year to date, which is 35% higher than a year ago. Corporate loan portfolio increased by 0.6% in July and 7.7% year to date to over RUB12.9 trln. Sberbank market share in corporate lending in the first half of the year increased by 1.4 pp to 33.8%.
The Bank granted RUB290 bn in loans to retail clients in July. For 7M 2018 loan issues amounted to RUB1.75 trln, or 1.7-times the amount issued for 7M 2017. Retail loan portfolio expanded by 2.3% in July and 14.1% year to date to RUB5.6 trln. Sberbank market share in retail lending in the first half of the year increased by 0.8 pp to 41.3%.
The share of overdue loans in total loan portfolio increased by 0.1 pp to 2.4%, while remaining substantially below the banking sector’s average (8.5% excl. Sberbank as of July 1, 2018).
Securities portfolio expanded by 4.3% to RUB2.8 trln in July, mainly due to purchases of CBR bonds and OFZs.
Client deposits and accounts in July remained virtually unchanged. Corporate accounts and deposits increased in July by 0.3% to RUB6.4 trln, or by 12.8% year to date. Retail deposits and accounts decreased in July by 0.1% to RUB12.4 trln, which translates in 1.9% growth year to date.
The Bank issued RUB40 bn exchange-traded bonds with maturity of 4 year and 6 months and a coupon rate of 7.50%. Exchange-traded bonds issued thus far by Sberbank amount to RUB248.5 bn and have maturities from 3 to 5 years. Total bonds outstanding account for 4.1% of the Bank’s liabilities.
Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) totaled RUB2,779 bn as of August 1, 2018, under preliminary calculations. Total capital amounted to RUB3,847 bn. Net profit was the primary source of capital growth in July.
Risk-weighted assets increased by RUB0.3 trln to RUB26.2 trln, mainly due to growth in lending activity.
Capital adequacy ratios as of August 1, 2018 under preliminary calculations were:
- N1.1 – 10.6% (minimum adequacy level, required by the Central Bank of Russia at 4.5%)
- N1.2 – 10.6% (minimum adequacy level, required by the Central Bank of Russia at 6.0%)
- N1.0 – 14.7% (minimum adequacy level, required by the Central Bank of Russia at 8.0%).