Sberbank releases 10M 2010 Financial Highlights (under RAS; non-consolidated)

Nov 16, 2010

Please note that the numbers are calculated in accordance with Sberbank’s internal methodology

16 November 2010

Income Statement Highlights for 10M 2010 (as compared to 10M 2009)

  • Net interest income decreased by 0.3% y-o-y
  • Net fee and commission income rose by 12.5% y-o-y
  • Provision charge amounted to RUB109.8 bn vs. RUB305.0 bn for 10M 2009
  • Operating income before provisions decreased by 6.5% y-o-y
  • Operating income after provisions grew 1.9 times y-o-y
  • Operating expenses were up by 14.8% y-o-y
  • Profit before tax amounted to RUB160.0 bn vs. RUB22.1 bn for 10M 2009
  • Net profit totaled RUB126.2 bn vs. RUB17.1 bn for 10M 2009 

Net interest income edged down by 0.3% y-o-y for 10M 2010 due to decreased income from lending to corporate clients as a result of lower market rates and the bulk of early repayments in the second half of 2009 and first half of 2010.

The decline in interest income in the corporate segment was partially offset by higher income on securities portfolio and retail lending. Furthermore, there was a noticeable decrease in interest expense (- 4.5% y-o-y), which was a function of lower cost of corporate funds and reduced outstanding amounts due to other banks.

Net fee and commission income grew 12.5% y-o-y. This growth stemmed from almost all fee-generating services. Net gain from trading operations surged by 79% y-o-y, mainly reflecting gains from operations with securities. 

Operating income before provisions fell by 6.5% y-o-y which was the result of costs incurred from the sale of assets at fair value to the Bank’s subsidiary in March 2010 (see ‘Sberbank releases 1Q 2010 Financial Highlights’).

Operating expenses were up by 14.8% y-o-y mainly due to higher staff costs which increased in line with planned wage adjustments for this year. Cost to income ratio, adjusted for the effect of the asset sale at fair value in March 2010, stood at 38.6%.

Stabilization of the credit quality of the Bank’s loan portfolio led to lower provisioning charges.  For 10 months of 2010, the Bank channeled RUB109.8 bn into provisions, which stands in favorable contrast to RUB305.0 bn allocated for the same period a year ago.

Operating income after provisions grew 1.9 times y-o-y.  Profit before tax totaled RUB160.0 bn and net profit came in at RUB126.2 bn. Both numbers are several times higher the year-ago levels.

For 10M 2010, assets increased by 12.1% to RUB7,965 bn.

In October, assets remained virtually unchanged as growth in the Bank’s loan and securities portfolios came along with reduction in amounts due from other banks.

Corporate loan portfolio expanded by RUB75 bn in October to RUB4,576 bn. The Bank granted over RUB350 bn loans to Russian companies for the month and more than RUB3.3 trln loans for 10M 2010. Growth momentum in retail lending proved sustainable in October: Retail loan book added RUB14 bn to RUB1,260 bn.

Credit quality of the loan portfolio remained stable in October, with the overdue loans flat m-o-m at 5.7% of the total. The Bank maintained high coverage of credit risks, increasing loan-loss provisions to RUB685 bn as of 1 November, which is more than twice in excess of overdue loans.

Securities portfolio increased by RUB69 bn in October to RUB1,814 bn, led by investments in federal (OFZ) and corporate bonds. As of 1 November, government bonds comprised 70% of the securities portfolio, corporate bonds – 18%.

Retail fund inflows continued in October, remaining the Bank’s key source of funding. Retail deposits and accounts grew by RUB86 bn to RUB4,418 bn as of 1 November. In the meantime, corporate funds contracted by RUB146 bn to RUB1,760 bn, thus reversing the increase of the previous month. This dynamics was dictated by current accounts transactions of big corporate customers.

Regulatory capital (under CBR regulation No. 215-P) increased by RUB18 bn in October to RUB1,200 bn, with net profit remaining the main source of growth.  The Bank’s regulatory capital declined from the start of the year after repayment of a RUB200 bn tranche of the RUB500 bn subordinated loan to the Central Bank of Russia in May 2010.

Capital adequacy ratio stood at 18% as of 1 November 2010.

Sberbank’s Financial Highlights for 10M 2010  (in accordance with RAS; non-consolidated)