Sberbank issues Condensed Interim Consolidated Financial Statements in accordance with IFRS for the 9 months ended 30 September 2010
Sberbank publishes its Condensed Interim Consolidated Financial Statements in accordance with IFRS as of 30 September 2010 and for the 9 months ended 30 September 2010, including independent review report by Ernst & Young.
Highlights of Sberbank Group’s (hereafter “the Group”) performance as of 30 September 2010 and for the 9 months 2010 are presented below (download the presentation):
- Net profit for 9 months 2010 totaled RUB 109.6 bn (or RUB 5.07 per ordinary share) as compared to RUB 10.3 bn (or RUB 0.45 per ordinary share) for the 9 months 2009;
- Total comprehensive income reached RUB 136.5 bn, compared to RUB 31.0 bn for the same period a year ago;
- Operating income before provision charge for loan impairment amounted to RUB 483.0 bn, a 1.4% growth from RUB 476.4 bn for the 9 months 2009;
- Annualized return on average equity was 17.3% demonstrating recovering profitability as compared to ROE 1.8% for the 9 months 2009;
- Cost to income ratio remains strong at 40.5% versus 34.2% for the 9 months 2009;
- Provision charge for loan impairment decreased by 50.2% year-on-year: from RUB 301.3 bn for the 9 months 2009 down to RUB 150.0 bn in 2010;
- Core capital adequacy ratio under Basel 1 was 11.6%, total capital was 16.9% as of 30 September 2010, well above the 8% minimum. Regulatory capital ratio (the CBR N1 ratio) was 18.0%.
Interest income for the 9 months 2010 declined by 3.4% year-on-year to RUB 589.9 bn. The decline was due to falling interest rates in the market on corporate loans and strong competition for good borrowers. The Group’s average yields on retail loans increased, however, as a result of diversification into products with higher margins.
Interest expense decreased by 2.4% to RUB 229.2 bn year-on-year, as interest rates for both retail and corporate deposits followed the general decline of interest rates in the market.
Net interest income for the 9 months 2010 declined by 4.0% year-on-year. The decline of net interest margin slowed down considerably in Q3 2010 when it reached 6.1% for the quarter as compared to 6.3% in Q2 2010. Importantly, net interest income increased by 1.0% in Q3 2010 versus Q2 2010 and reached RUB 116.7 bn for Q3 2010.
The Group’s fee and commission income for the 9 months 2010 totaled RUB 92.8 bn, a 23.7% increase year-on-year. Almost all kinds of fee-generating activities contributed to this growth, with commissions on cash and settlement operations remaining their principal component.
Net gains on operations with securities, including trading gains and gains from marking securities to market, for the 9 months 2010 reached RUB 21.1 bn which is 2.6 times the amount the year before. In addition to this, the Group showed in Other comprehensive income RUB 41.5 bn of revaluation gains on marking to market investment securities available for sale.
As a result, total operating income before provision charge for loan impairment for the 9 month 2010 grew by 1.4% year-on-year.
The Group’s operating expenses grew by 20.2% year on year. The major component of operating expenses are staff costs which increased by 21.3% as a result of planned increase of staff remuneration to the current market level. Growth of operating expenses was also due to planned implementation of infrastructure projects and business expansion.
Provision charge for loan impairment for the 9 months 2010 totaled RUB 150.0 bn, a 50.2% decrease year on year. The decrease came as a result of much slower growth of overdue loans against the backdrop of economic recovery in Russia.
The Group’s net profit for the 9 months 2010 totaled RUB 109.6 bn versus RUB 10.3 bn for the same period a year before. Earnings per share for the 9 months 2010 amounted to RUB 5.07 versus RUB 0.45 in 2009.
The Group’s total assets increased in 2010 by 13.0% and reached RUB 8,028.7 bn, the increase being attributable both to the expansion of lending and larger investments in securities.
Loan portfolio, net of provision for impairment, increased by 7.7% in 2010. The increase was driven by growing demand for both corporate and retail loans starting from Q2 2010. In Q3 2010 alone, gross corporate loans grew by 8.9% to RUB 4,601.8 bn as of 30 September 2010, and gross loans to individuals increased by 3.9% to RUB 1,259.7 bn. Since the beginning of 2010 gross corporate loans increased by 7.9% and retail loans by 7.0%.
Provisions for loan impairment grew in 2010 by 23.4% and reached RUB 715.2 bn as of 30 September 2010. This brought the ratio of provision for loan impairment to total gross loans to 12.2% compared to 10.7% as of 31 December 2009.
Non-performing loans comprise 8.6% of total loan portfolio, decreasing in Q3 2010 by 0.5 p.p. The ratio of total provisions for loan impairment to non-performing loans was 1.4 as of 30 September 2010, which the Group considers sufficient.
Securities portfolio grew by 68.9% during the 9 months 2010 and reached RUB 1,797.3 bn as of 30 September 2010. The growth is mostly attributable to larger investments in bonds of the Bank of Russia and Federal Government bonds which together comprised 64.1% of total securities as of 30 September 2010. The proportion of corporate bonds in the securities portfolio decreased from 25.4% as at the beginning of the year to 17.3% as of 30 September 2010. In absolute terms, however, investments in corporate bonds grew by 15.1% from the beginning of the year, mainly through purchases of corporate bonds issued by Russian companies which the Group considers another form of corporate lending. In 2010, the Group created a portfolio of investment securities held to maturity which totaled RUB 283.3 bn as of 30 September 2010.
The Group’s total liabilities amounted to RUB 7,113.5 bn, a 12.4% increase as compared to the beginning of the year. The Group’s liabilities’ structure remained stable throughout the 9 months 2010. Retail deposits amounting to RUB 4,352.7 bn as of 30 September 2010 remain the core of the Group’s funding. The increase in retail deposit balances compared to the beginning of the year was 14.9%. Gross loans to deposits ratio was 0.95 as of 30 September 2010 against 1.00 as of the beginning of the year.
As of 30 September 2010, the Group’s shareholders’ equity amounted to RUB 915.2 bn, a 17.5% increase from the beginning of the year. The Group’s total capital adequacy ratio as per Basel 1 Accord was 16.9% as of that date, the tier 1 ratio was 11.6%.