Sberbank releases 4M 2010 Financial Highlights (under RAS; non-consolidated)
Please note that the numbers are calculated in accordance with Sberbank’s internal methodology. The numbers as of 1 January 2010 exclude the effect of events occurring after the balance sheet date.
19 May 2010
Income Statement Highlights for 4M 2010 (as compared to 4M 2009)
- Net interest income increased by 11.9% y-o-y
- Net fee and commission income rose by 15.5% y-o-y
- Provision charge amounted to RUB15.1 bn vs. RUB127.9 bn for 4M 2009
- Operating income before provisions decreased by 19.5% y-o-y
- Operating income after provisions grew 2.3-fold y-o-y
- Operating expenses increased by 13.9% y-o-y
- Profit before tax amounted to RUB69.9 bn vs. RUB1.8 bn for 4M 2009
- Net profit totaled RUB47.4 bn vs. RUB0.8 bn for 4M 2009
Operating income before provisions fell by 19.5% y-o-y which was attributable to a lower income from conversion operations (compared to extraordinary earnings a year ago due to gains from swap revaluation on the back of volatile foreign exchange) and costs associated with the asset sale at fair value to the subsidiary (see Sberbank releases 1Q 2010 Financial Highlights). Other revenue lines increased in 4M 2010, with interest income growing 11.9% y-o-y and net fee and commission up 15.5% y-o-y.
Operating expenses increased 13.9% y-o-y mainly driven by headcount costs. Cost to income ratio, adjusted for the effect of the asset sale at fair value in Mach, stood at 34.9%.
The Bank continued to create provisions sufficient to cover existing risks. The Bank allocated RUB15.1 bn in provisions for 4M 2010 in contrast to RUB127.9 bn for the same period a year ago, when the crisis was in full swing. Lower provisioning expense led to a 2.3-fold y-o-y increase in operating income after provisions and a robust bottom line for 4M 2010. Profit before tax amounted to RUB69.9 bn and net profit totaled RUB47.4 bn. Both numbers were ten times y-o-y higher.
In April, the Bank earned RUB24.5 bn before tax, a record high monthly profit so far this year. However, net profit amounted to RUB4.2 bn on a higher tax charge resultant from
- additional income tax payment on the profit earned in 1Q 2010
- record profit for 1Q 2010 used as the taxable base for advance tax payments in 2Q 2010
For 4M 2010, assets increased by 5.2% ytd to RUB7,478 bn.
The Bank extended lending to the ‘real economy’– providing about RUB1.1 trln ytd in loans to Russian companies, with about RUB850 bn loans granted in the regions. However, prepayments by large borrowers and the sale of some corporate loans to the Bank’s subsidiary in March offset new loan issues, leading to a 4.5% contraction of the corporate loan book to RUB4,059 bn in 4M 2010.
Retail loan portfolio posted a significant increase (by RUB11.2 bn or 1.0%) for the first time since September 2008 driven by both mortgage and consumer lending. Growth was marked across all regional banks. Starting from 19 April, Sberbank was the first among Russian banks to cancel commissions on retail loans and simultaneously cut lending rates on a range of retail products. The move had a positive impact on the loan book in the last week of April.
Customer deposits and accounts remained key source of funding and attracted new inflows for 4M 2010. Retail deposits added 5.4% or RUB204 bn ytd. Corporate accounts and deposits increased by 3.7% or RUB64 bn ytd.
The Bank kept on investing its excess liquidity into marketable securities. The securities portfolio increased 1.6-fold ytd to RUB1,654 bn mainly led by investments in government bonds (OFZ) and CBR bonds (OBR), which were up RUB503 bn, as well as purchases of sub-federal and corporate bonds (up RUB64 bn). This led to respective shifts in the portfolio structure with the share of state and sub-federal bonds increasing to 77% and the share of corporate bonds declined to 20%. Expansion of the securities’ portfolio helped the Bank to diversify its asset base and revenue streams.
As of 1 May 2010, overdue loans represented 5.5% of the Bank’s loan portfolio. The Bank continues to adhere to its conservative credit risk management. Loan-loss provisions increased to RUB607 bn and exceeded overdues by 2.1 times.
Regulatory capital (under CBR regulation No. 215-P) decreased 0.8% m-o-m to RUB 1,291 bn. This was the result of additional investing to the equity capital of subsidiaries in Ukraine (“SBERBANK OF RUSSIA” JSC) and Belarus (JSC “BPS-Bank”). Capital adequacy ratio stood at 21% as of 1 May 2010, according to preliminary estimates.
Sberbank’s Financial Highlights for 4M 2010 (in accordance with RAS; non-consolidated)