Sberbank releases Financial Highlights for 8M 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.
September 07, 2018
Key highlights for August 2018:
- The Bank earned RUB71,5 bn in net profit in August;
- The amount of loans issued to retail clients in August hit a record over RUB300 bn;
- Loan portfolio added RUB0.4 trln in August or +2.3% m/m;
- Net fee and commission income grew 24.8% as compared to 8M 2017.
Deputy Chairman of Sberbank Alexander Morozov stated:
“Sustainable financial performance and audited net profit for 1H2018 led to an increase in core capital adequacy by 1.3 p.p. to 11.9%, despite strong asset growth. At the same time, the Bank improved the structure of its working assets by increasing the share of retail loans, and optimized the structure of its funding.”
Comments for 8M 2018:
Net interest income increased by 6.0% compared to 8M 2017 and totaled RUB833.6 bn. Growth drivers remained unchanged: increasing working assets and lower cost of client funds.
Net fee and commission income grew by 24.8% to RUB278.4 bn. The largest contributors to fee income growth were operations with bank cards and acquiring (+34.5% y/y), settlement transactions (+21.3% y/y) and fees from insurance products (+53.6%y/y).
Operating expenses increased by 5.5% y/y, which was slower than growth in operating income before provisions (+12.2% y/y); the dynamics in operating expenses in part were supported by a more even accrual of expenses throughout the year. In light of the goal to improve efficiency of IT projects in the Agile-format, the Bank launched an internal reorganization to move employees from its subsidiary Sberbank Technologies JSC to Sberbank PJSC. This process would be finalized by the end of the year without causing any changes to the headcount of Sberbank Group.
Cost-to-income ratio for 8M 2018 improved to 28.0% as compared to 29.8% for the same period a year ago.
Provision charges for 8M 2018 amounted to RUB213.6 bn, which was 5.8% lower as compared to the same period a year ago. The Bank formed RUB41.3 bn in provisions in August, mainly due to a weaker RUB. As of September 1, 2018, loan-loss provisions were 2.5 times the overdue loans.
Net profit before income tax came at RUB667 bn for 8M 2018, while net profit totaled RUB540.7 bn, including RUB71.5 bn earned in August.
Total assets increased by 1.6% in August to RUB25.2 trln, on the back of loan portfolio expansion as well as revaluation led by a weaker RUB.
The Bank lent RUB0.9 trln to corporate clients in August, and RUB8.6 trln year to date, which was by a quarter more than the amount lent in the same period a year ago. Corporate loan portfolio added 2.2% in August to RUB13.2 trln, including the impact of FX revaluation. For 8M2018 the portfolio expanded by 10.1%. Sberbank’s market share in the corporate lending increased by 1.5 pp over January-July to 33.9%.
The Bank granted RUB304 bn in retail loans in August, which is the largest amount ever granted in one month. As a result, the amount of loans issued year to date exceeded RUB2 trln in August, whereas such result last year was achieved only by December. Retail loan portfolio expanded by 2.5% in August to RUB5.8 trln, or and 17.0% year to date. Sberbank market share in retail lending increased by 1.0 pp to 41.4%.The share of overdue loans in total loan portfolio remained unchanged at 2.4%, which is substantially below the banking sector’s average (8.5% excl. Sberbank as of August 1, 2018).
Securities portfolio decreased by 1.2% to RUB2.8 trln in August, mainly due to partial repayment of CBR bonds and OFZs.
Client deposits and accounts increased by RUB289 bn in August to RUB19.0 trln. This was mainly due to funding from corporate clines which increased by 3.8% for a month. Retail deposits and accounts were up by 0.4% per month. Year to date, client funding increased by 7.0% in August.
Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) totaled RUB3,188 bn as of September 1, 2018, under preliminary calculations. The increase in Core Tier 1 and Tier 1 capital was mainly due to inclusion of audited net profit for 1H2018. Total capital amounted to RUB3,926 bn. Net profit was the primary source of capital growth in August.
Risk-weighted assets increased by RUB0.65 trln to RUB26.8 trln, mainly due to portfolio expansion led by weaker RUB.
Capital adequacy ratios as of September 1, 2018 under preliminary calculations were:
- N1.1 – 11.9% (minimum adequacy level, required by the Central Bank of Russia at 4.5%)
- N1.2 – 11.9% (minimum adequacy level, required by the Central Bank of Russia at 6.0%)
- N1.0 – 14.6% (minimum adequacy level, required by the Central Bank of Russia at 8.0%).