Sberbank releases Financial Highlights for 10M 2016 (under RAS; non-consolidated)
Please note that the numbers are calculated in accordance with Sberbank`s internal methodology.
November 8, 2016
Key highlights for October, 2016:
- The Bank earned net profit of RUB53.1 bn
- Total capital adequacy ratio increased by 0.2p.p. to 12.9%
Deputy Chairman of Sberbank Alexander Morozov stated:
“The Bank continues to focus on increasing efficiency and profitability. After substituting state funding with clients` funds we kept working on improving the structure of clients’ funding with cheaper sources.”
Comments for 10M 2016:
Net interest income came at RUB925.7 bn: Interest income increased by 5.1%, mostly driven by the increase in volume of working assets; Interest expense came down by 21.8% due to improving liabilities structure with cheaper funding and decrease in market rates compared to 10M 2015.
Fee and commission income was up by 22.0% to RUB253.8 bn compared to 10M 2015 mainly driven by transactional business with bank cards and acquiring. Income from bank insurance and settlements also contributed to Fee and commission income.
Operating expense increased by 12.3%, which was significantly slower than pre-provision operating income growth (32.6%). Despite continuing wages indexation the increase in operating expenses was slow. The Bank continues to increase efficiency and implement cost-cutting program. Cost-to-Income ratio decreased from 39.0% for 10M 2015 to 33.1% for 10M 2016.
Total provision charge amounted to RUB30.4 bn in September. Total provision charge for 10M 2016 amounted to RUB249 bn, or 74% of 10M 2015 figure. Significant impact on provisions during 10M 2016 was the strengthening of the Ruble against major foreign currencies. The Bank continues to form loan-loss provisions in-line with the requirements of the Central Bank of Russia.
Net profit before income tax came at RUB545.0 bn. Net profit totaled RUB429.8 bn.
Total comprehensive income which includes the income from revaluation of financial assets available-for-sale and held-to-maturity, amounted to RUB481.2 bn.
Total assets in October decreased by 1.6% to RUB21.6 trln. The decrease in assets by 6.6% since the beginning of the year is explained by the reduction of excessive liquidity by means of forgoing more expensive sources of clients’ funding. Additional factor was negative revaluation of the foreign currency denominated assets on the back of Ruble appreciation.
The Bank lent over RUB820 bn to corporate clients in October. Corporate loan issues from the beginning of the year were over RUB7 trln, which was 1.4X more than for 10M 2015. The loan portfolio ending balance decrease in nominal terms was largely influenced by revaluation of earlier issued foreign currency denominated loans on the back of Ruble strengthening. The Ruble denominated corporate loan portfolio increased by RUB36 bn, or by 0.5%, in October.
The Bank lent about RUB130 bn to retail clients in October, of which RUB60 bn were mortgage loans. Retail loan issues from the beginning of the year were RUB1.24 trln, which was 1.3X greater than for 10M 2015. Total retail loan portfolio increased by RUB14 bn in October to reach RUB4.3 trln as of November 1, 2016.
The share of overdue loans of total loans was down to 2.9% in October from 3.3% in the beginning of the year, which is substantially lower than the banking sector’s average (6.9% as of October 1, 2016).
Securities portfolio was down by RUB127 bn in October due to redemptions of European Commercial Papers and sale of corporate bonds and OFZ bonds with duration over 10 years. The portfolio ending balance was RUB2.2 trln as of November 1, 2016.
Retail deposits and accounts in October slightly decreased (by 0.2%) on Ruble appreciation and reduction of savings certificates ending balance. In real terms, though, there was an inflow of deposits both in Rubles, U.S. dollars and Euros. Retail deposits and accounts ending balance was RUB11.0 trln as of November 1, 2016.
Corporate deposits and accounts were down by RUB286 bn, or by 5.0%, in October. The Bank manages the cost of corporate funding in order to optimize the funding structure and improve net interest income of the Bank. Corporate deposits and accounts ending balance was RUB5.5 trln as of November 1, 2016.
Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) reached RUB2,050 bn as of November 1, 2016 under preliminary calculations. Total capital amounted to RUB2,978 bn as of November 1, 2016, up by RUB45 bn mainly due to earned net profit.
Risk-weighted assets decreased by RUB93 bn in October mainly due to the decrease of the securities portfolio.
Capital adequacy ratios as of November 1, 2016 under preliminary calculations were:
- N1.1 – 8.9% (minimum adequacy level, required by the Central Bank of Russia at 4.5%)
- N1.2 – 8.9% (minimum adequacy level, required by the Central Bank of Russia at 6.0%)
- N1.0 – 12.9% (minimum adequacy level, required by the Central Bank of Russia at 8.0%).