Sberbank releases Financial Highlights for 6 months of 2020 (under RAS; non-consolidated)

Jul 08, 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.

Key highlights for June 2020:

  • In June, the Bank earned RUB62.3 bn in net profit, ROE came in at 15.8% for the month;
  • The Bank granted RUB1.6 trn in loans, which was the largest monthly issuance year to date and included RUB1.3 trn loans to corporate clients and over RUB300 bn loans to retail clients;
  • Combined loan portfolio increased by 0.2% excluding the effect of FX revaluation, while retail loan portfolio expanded by 1.2% with growth both in mortgages (+1.3%) and consumer loans (+1.2%);
  • By the end of June, total exposure to corporate clients that had restructurings under state programs, Bank’s own programs and individual decisions, exceeded RUB2 trn;
  • Sberbank approved restructurings to retail clients in the amount of RUB140 bn as of the end of the reporting month;
  • Client accounts increased by 2.7% for the month.

Senior Vice President- CFO – Alexandra Buriko stated:

“In June, we saw a clear recovery in economic activity that helped to restore demand for loans among both businesses and retail clients. Positive dynamics in transactional business supported fees income growth. In the meantime, the inflow of applications for COVID-19 related restructurings has become noticeably lower. As a result, Sberbank earned RUB337.5 bn and delivered 14.7% return on capital for the first half of the year”.

Comments for 6M 2020:

Net interest income increased by 11.7% as compared to 6M 2019 and amounted to RUB687.2 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.

Net fee and commission income was up by 7.4% to RUB227.5 bn, mainly due to the 14.8% net income growth from cash and settlement transactions and a twofold income growth from brokerage services. Recovery in transactional activity in bank cards gathered momentum in June and a respective income was up by 21.8% yoy[1].

The Bank recognized a combined loss on corporate and retail loan modification in June in the amount of RUB14.2 bn on the back of restructurings under the state and its own programs.

Operating expenses amounted to RUB287.6 bn for 6M 2020, up by 4.6% yoy. Cost growth for the month came in at 11.9% yoy, which was a one-off related to resumed business activity after termination of the non-working period.

Positive trend for cost-to-income ratio remained intact for 6M 2020: 28.1% vs 31.7% a year ago.

Total credit risk charge including fair-value revaluation amounted to RUB35.2 bn in June. For 6M 2020 provisions totaled RUB340.7 bn vs RUB24.6 bn a year ago, which owed to the COVID-19 related global distress.  Loan-loss provisions remained unchanged in June at 3.2 times the overdue loans.

Net profit before income tax for 6M 2020 was RUB396.5 bn.

Net profit amounted to RUB337.5 bn. Low profit tax rate in June as well as in May was due to the advance payment approach and negative FX effect on the taxable base for 1Q 2020.

Total assets increased by 1.9% to RUB29.9 trn.

The Bank originated about RUB1.3 trn to corporate clients in June and RUB6.2 trn for 1H 2020, which was 28% higher than a year ago. Under the state program ‘2% Loan’ launched in June, the Bank approved loans for RUB157 bn. The outstanding balance of corporate loans was down by 0.3%, excluding the effect of FX revaluation, to about RUB14.1 trn.  

Loan issuance to retail clients in June exceeded RUB300 bn, which was 1.5 times the amount issued in May and 20% more than in June 2019. Mortgage origination hit a record for the year, including both state and Bank’s own subsidized mortgage programs. The outstanding balance of retail loans increased by 1.2% or RUB88 bn and exceeded RUB7.5 trn.

The share of overdues in the total loan portfolio remained unchanged at 2.22%.

The outstanding securities portfolio balance increased by 2.4% to RUB3.6 trn in June, mainly due to purchases of OFZs and corporate bonds.

Client funding increased by 2.7% in June. Retail funding was up by 3.0%, supported among other factors by direct state payments to families with kids. Corporate accounts increased by 2.1%.

Sberbank issued RUB20 bn of four-year exchange-traded bonds in June with a coupon rate of 5.65% p.a.

Core Tier 1 and Tier 1 capital remained virtually unchanged at RUB3,989 bn. Total capital declined in June by RUB119 bn, due to the exclusion of RUB150 bn CBR subordinated loan, which was transferred to the Ministry of Finance according to the Federal Law No 49 as of 18 March 2020.

The risk-weighted assets decreased by 4% or RUB1.3 trn in June. The main effect came from risk-weight reduction on corporate clients and investments in subsidiaries and affiliated companies due to the transition to a finalized approach in compliance with CBR regulation 199-I.

Capital, RUB bn

1 July '20*

1 June'20

1 July'20*/

 1 June’20

1 Jan’20  

1 July'20*/

 1 Jan’20

Core Tier 1 capital N1.1

3,989

3,991

-0.04%

3,300

20.89%

Tier 1 capital N1.2

3,989

3,991

-0.04%

3,300

20.89%

Total capital N1.0

4,627

4,746

-2.51%

4,568

1.30%

Capital adequacy ratios, %

Core Tier 1 capital N1.1, min 4.5%

13.66%

13.08%

0.58 pp

10.51%

3.15 pp

Tier 1 capital N1.2, min 6.0%

13.66%

13.08%

0.58 pp

10.51%

3.15 pp

Total capital N1.0, min 8.0%

15.80%

15.52%

0.28 pp

14.52%

1.29 pp

Risk-weighted assets, RUB bn

29,277

30,577

-4.25%

31,470

-6.97%

* preliminary calculations

Sberbank Financial Highlights for 6M2020 (under RAS, non-consolidated)
 

[1] Income growth from bank cards is adjusted for the effect from transition to the even recognition of annual service fees on bank cards, settlements with payment systems and loyalty program costs which was implemented gradually in 2019.