Sberbank releases Financial Highlights for January 2010 (under RAS)

Feb 15, 2010

Please note that the numbers are calculated in accordance with Sberbank’s internal methodology pursuing internal accounting optimization and convergence with IFRS. The numbers as of 1 January 2010 exclude the effect of events occurring after the balance sheet date.

15 February 2010

Income Statement Highlights for January 2010 (as compared to January 2009)

  • Operating income before provisions fell by 37.8% y-o-y
  • Net interest income before provisions increased by 9.9% y-o-y
  • Net fee and commission income rose by 7.9% y-o-y
  • Provision charge amounted to RUB20.0 bn vs. RUB53.4 bn for January 2009
  • Operating income after provisions increased by 45.6% y-o-y
  • Operating expenses increased by 3.5% y-o-y
  • Profit before tax increased 2.3-fold to RUB12.1 bn vs. RUB5.3 bn for January 2009
  • Net profit grew 3.3-fold to RUB11.7 bn vs. RUB3.5 bn for January 2009 

Operating income before provisions fell by 37.8% or RUB26 bn y-o-y which was largely attributable to a reversal of the conversion gains booked in January 2009 due to revaluation of forex positions amidst volatility in the foreign currencies. Other lines in the operating income posted positive dynamics with net interest income up 9.9% y-o-y and net fee and commission income increasing 7.9% y-o-y. Operating expenses rose marginally by 3.5% y-o-y.

The Bank kept on creating provisions relevant to its credit risk exposure. In January 2010, the Bank allocated RUB20.0 bn in provisions, including provisions for loan-loss reserves of RUB16.0 bn.

Revenues from the core banking activity were sufficient both to form provisions and to increase earnings. Profit before tax came in at RUB12.1 bn in January 2010. Net profit totaled RUB11.7 bn in January 2010.

The Bank’s assets shrank by 1.7% y-o-y to RUB6,989 bn primarily due to a decrease in cash accounts which are typically held abundant during New Year holidays as well as a decline in the loan portfolio and reduced amounts placed with other banks.

Sberbank extended lending to the ‘real economy’– granting about RUB200.0 bn worth of loans to Russian companies in January, including about RUB150 bn in the regions. In the meantime, several Russian blue-chip companies repaid the Bank’s loans. Given that repayments exceeded new loan intakes, the corporate loan portfolio contracted by 0.4% in January to RUB4,231 bn.

Retail loan book decreased by 1.5% in January to RUB1,152 bn on the back of sluggish consumer demand and seasonality associated with fewer working days in January and massive loan repayments following the end-of-year remunerations in Russian companies. In January, the Bank resumed mortgage lending in foreign currency and lowered interest rates on certain retail loans for payroll clients.

Prudent risk management enables the Bank to sustain decent quality of its loan portfolio. As of 1 February 2010, overdue loans represented 4.5% of the Bank’s loan portfolio (4.6% excluding assignments). Loan-loss provisions increased from RUB589 bn to RUB608 bn for January, translating into 2.5-fold overdues’ coverage.

In January 2010, the Bank spent funds earlier held at CBR deposits to purchase state bonds (OBR and OFZ). The Bank’s securities portfolio grew 24% to over RUB1.3 trln. The Bank thus managed to diversify its asset base and revenue streams. Hence, the share of corporate bonds decreased from 28% at the end of 2009 to 24%, while government and sub-federal bonds increased from 70% to 75% and the share of equity investments held flat at 1%.

Following a significant retail deposit inflow in December 2009 (RUB232 bn or 6.5% m-o-m growth), retail deposits shrank 1.1% in January to RUB3,735 bn alongside seasonality. Corporate accounts and deposits contracted by 7.8% to 1,590 bn in January, with the decline attributed to seasonality. In spite of the outflow of funds from customer accounts, the Bank maintains a high liquidity position.

Sberbank’s regulatory capital (under CBR regulation No. 215-P) remained virtually unchanged m-o-m at RUB RUB 1,323 bn, according to preliminary estimates. Although the January earnings were transferred to the supplementary capital, the excess of supplementary over the core capital implied no change to the total regulatory capital.

Sberbank’s capital adequacy ratio stood around 23% as of 1 February 2010, according preliminary estimates.

Sberbank’s Financial Highlights for January 2010 (in accordance with RAS; non-consolidated)