Sberbank releases Financial Highlights for 5 months of 2020 (under RAS; non-consolidated)

Jun 05, 2020

The numbers are calculated in accordance with Sberbank`s internal methodology.

Please note that some minor changes became effective in Sberbank’s internal methodology starting from January 1, 2020. Therefore, the numbers for 2019 have been recalculated to make them comparable.

                                                                                                                                                   June 5, 2020

Key highlights for May 2020:

  • The Bank earned RUB45.1 bn in net profit;
  • The Bank granted over RUB1 trn in loans, including RUB825 bn to corporate clients and RUB197 bn to retail clients;
  • By the end of May, Sberbank restructured loans to corporate clients under the state initiatives and own standard programs as well as individual solutions, for the total outstanding balance exceeding RUB1 trn, and approved restructurings to retail clients in the amount over RUB115 bn;
  • Allocations for deposit insurance declined in May, following the rate cut by the Agency of deposit insurance as part of support measures for bank. The amount of savings for 5 months totaled RUB12.3 bn.

Deputy Chairman of Sberbank Alexander Morozov stated:

“In May, the economy continued to adapt to the new challenges, with consumer activity rising to over 87% in the last week of May from 74% in April as compared to respective periods of 2019. Sberbank is vigorously supporting people and companies through both its own and state programs, primarily for mortgages and small and medium businesses. In spite of the first positive signals, the Bank is consistent with conservative approach to provisioning on credit risk. Return on capital for the first 5 months came in at 14.4%”.

Comments for 5M 2020:

Net interest income increased by 11.1% as compared to 5M 2019 and amounted to RUB571.1 bn. The increase was driven mainly by lower cost of funding and the effect of reduced allocations for deposit insurance from the beginning of the year. Following the rate change decision by the Agency of deposit insurance, the Bank recalculated its deposit insurance allocations for the first 4 months and applied the new lower rate on allocations in May.

Net fee and commission income was up by 3.8% to RUB184.8 bn, due to increased volumes of settlement transactions and client transactions on financial markets. Bank card operations recovered somewhat in May as compared to April, while insurance product sales declined.  

The Bank recognized a combined loss on corporate and retail loan modification in May in the amount of RUB12.5 bn on the back of restructurings under the state initiatives and the Bank’s own programs. 

Operating expenses amounted to RUB232.7 bn for 5M 2020, up by 3.1% yoy. The deceleration in cost growth was caused by the launch of cost optimization program to increase business in response to the crisis and pandemic spread as well as the slowdown in business activity following the introduction of non-working days in spring. Positive trend for cost-to-income ratio remained intact for 5M 2020: 26.8% vs 31.3% a year ago.

Total credit risk charge including fair-value revaluation amounted to RUB63.4 bn in May. For 5M 2020 provisions totaled RUB305.5 bn vs RUB25.9 bn a year ago, which owed to the COVID-19 related global distress.  Loan-loss provisions increased in May from 3.15 to 3.20 times the overdue loans.

Net profit before income tax for 5M 2020 was RUB330.8 bn.

Net profit amounted to RUB275.3 bn. Low profit tax rate in May was due to the advance payment approach and negative FX effect on the taxable base for 1Q2020.

Total assets reduced by 1.2%, mainly due to the negative FX revaluation. Adjusted for this negative effect, assets were down by 0.4% and amounted to RUB29.4 trn as of June 1, 2020.

The Bank lent RU825 bn to corporate clients in May and RUB4.9 trn year to date, which was 21% higher than a year ago. The Bank approved RUB41.1 bn in loans for the ‘0% Payroll Loan’ state program since its launch, and started lending at 2% under the new Russian government’s program from June 1. Corporate loan portfolio contracted by 0.1% in real terms to about RUB14.2 trn.  

Loan issuance to retail clients in May amounted to RUB197 bn, which was 18% more than in April. As a result, retail loan portfolio increased by 0.3% or RUB19.4 bn and exceeded RUB7.4 trn. Mortgages were the main driver.

The share of overdues in the total loan portfolio increased in May from 2.15% to 2.22%, which owed both to retail and corporate loans.

The outstanding securities portfolio balance decreased by 2.0% to RUB3.5 trn in May, mainly due to redemption of CBR bonds.

Client funding declined by 0.2% in May excluding FX revaluation. Retail funding was down by 0.9% in real terms due to the ruble deposits, while FX deposits in US dollar equivalent rose 1.3%.  Corporate accounts increased by 1.0% in real terms driven both by ruble and FX accounts. Year to date, client funding increased by 0.2% in real terms and by 3.5% in nominal terms.  

Core Tier 1 and Tier 1 capital remained virtually unchanged at RUB3,991 bn. Total capital in May increased by RU67 bn, due to the net profit for the period and positive revaluation of the securities portfolio.

The risk-weighted assets increased in May by RUB368 bn or 1.2%, mainly due to macro add-ons applicable to newly issued retail loans and closing of repo transaction with corporate bonds.

Capital, RUB bn

1 June '20*

1 May'20

1 June'20*/

 1 May’20

1 Jan’20  

1 June'20*/

 1 Jan’20

Core Tier 1 capital N1.1

3,991

3,989

0.04%

3,300

20.9%

Tier 1 capital N1.2

3,991

3,989

0.04%

3,300

20.9%

Total capital N1.0

4,743

4,676

1.4%

4,568

3.8%

Capital adequacy ratios, %

Core Tier 1 capital N1.1, min 4.5%

13.06%

13.22%

-0.15 pp

10.51%

2.55 pp

Tier 1 capital N1.2, min 6.0%

13.06%

13.22%

-0.15 pp

10.51%

2.55 pp

Total capital N1.0, min 8.0%

15.49%

15.46%

0.03 pp

14.52%

0.97 pp

Risk-weighted assets, RUB bn

30,618

30,250

1.2%

31,470

-2.7%

* preliminary calculations

Sberbank Financial Highlights for 5M2020 (under RAS, non-consolidated)