Sberbank releases Financial Highlights for 6M 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.
July 7, 2017
Key highlights for June, 2017:
- The Bank earned net profit of RUB55.1 bn in June
- The Bank issued maximum amount of loans from the beginning of the year: over RUB1,065 bn to corporate clients and more than RUB170 bn to retail clients
- The Bank paid RUB135 bn of dividends to the shareholders in June
- Corporate loans increased by 1.6% in real terms, retail loans - by 1.2%. The increase in corporate deposits and accounts came at 1.4% and 1.1% for retail clients` funds
Deputy Chairman of Sberbank Alexander Morozov stated:
“In June our portfolio showed accelerating growth with corporate loans up 1.6% in real terms and retail loans 1.2%. This together with the continuing strong emphasis on costs allowed us to post a healthy ROE (22%) and ROA (3.1%). We maintained our conservative risk management approach and in June decided to increase provision coverage for a large international group of related borrowers to 100%”.
Comments for 6M 2017:
Net interest income increased by 6.3% compared to 6M 2016 and came at RUB579.6 bn, mainly due to the decrease in interest rates on clients` funds and an increase in the retail loan portfolio.
Fee and commission income was up by 11.9% to RUB162.8 bn, continued to be driven by bank cards operations, including acquiring, as well as the income from bank insurance.
Operating income before provisions increased by 20.4% compared to 6M 2016, significantly exceeding operating expenses growth for the same period (5.1%). The increase in operating expenses was driven by 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 mid-2016. Operating expenses in June, 2017 were lower by 6.3% compared to June last year. Cost-to-Income ratio came at 29.3% for 6M 2017, an improvement of 4.2 pp, compared to 6M 2016.
Total provision charges amounted to RUB33.7 bn in June. Provision charges amounted to RUB153.0 bn for 6M 2017, up by 6.0% compared to 6M 2016. The increase was driven by ruble devaluation relative to USD that required to form additional reserves for FX loans and to fully provision exposure of a large borrower – international retailer. Loan-loss provisions are 2.5 times the overdue loans as of July 1, 2017.
Net profit before income tax came at RUB416.0 bn. Net profit totaled RUB317.0 bn, including RUB55.1 bn in June.
Total assets in June increased by RUB0.5 trln, or by 2.2%, to RUB22.0 trln as a result of both FX revaluation on Ruble weakening and growth of the loan and the securities portfolios.
The corporate loan issuance in June exceeded RUB1,065 bn, a maximum among monthly issuances excluding seasonally strong year-ends. Issuances from the beginning of the year reached RUB4.5 trln, which is 11% greater than in 6M2016. The corporate loan portfolio in June increased by 3.2% or by RUB356 bn, while in real terms by 1.6%.
June saw the highest value of loans issued to retail clients this year – more than RUB170 bn. Issuances from the beginning of the year reached RUB850 bn, which was by 20% greater than in 6M2016. The retail loan portfolio increased by 1.2%, or by RUB53 bn, in June.
The share of overdue loans in total loans came at 2.8% in June and remained substantially lower than the banking sector’s average (6.6% as of June 1, 2017).
Securities portfolio was up by 5.1% to RUB2.4 trln in June mainly as a result of purchases of corporate bonds and OFZ bonds.
Corporate deposits and accounts were up by 3.7% in June, or by RUB193 bn, while in real terms the growth was 1.4%.
Retail deposits and accounts increased by 2.1% in June, or by RUB234 bn, while in real terms the growth was 1.1% and was fully provided with an inflow of funds in the national currency.
Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) reached RUB2,354 bn as of July 1, 2017 under preliminary calculations. The decrease in Core Tier 1 and Tier 1 capital in June resulted from dividends payment for 2016 in the amount of RUB135 bn as per decision by the General Shareholder Meeting. Total capital also decreased to RUB3,341 bn as of July 1, 2017.
Risk-weighted assets increased by RUB472 bn and came at RUB23.8 trln in June mainly driven by corporate loans.
Capital adequacy ratios as of July 1, 2017 under preliminary calculations were:
- N1.1 – 9.9% (minimum adequacy level, required by the Central Bank of Russia at 4.5%)
- N1.2 – 9.9% (minimum adequacy level, required by the Central Bank of Russia at 6.0%)
- N1.0 – 14.1% (minimum adequacy level, required by the Central Bank of Russia at 8.0%).