Sberbank releases 11M 2010 Financial Highlights (under RAS; non-consolidated)

Dec 15, 2010

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

15 December 2010

Income Statement Highlights for 11M 2010 (as compared to 11M 2009)

  • Net interest income increased by 0.2% y-o-y
  • Net fee and commission income rose by 12.7% y-o-y
  • Provision charge amounted to RUB112.8 bn vs. RUB343.5 bn for 11M 2009
  • Operating income before provisions decreased by 6.4% y-o-y
  • Operating income after provisions grew 1.9 times y-o-y
  • Operating expenses were up by 16.1% y-o-y
  • Profit before tax amounted to RUB189.7 bn vs. RUB24.3 bn for 11M 2009
  • Net profit totaled RUB152.5 bn vs. RUB18.5 bn for 11M 2009 

 Net interest income remained virtually unchanged y-o-y for 11M 2010. Growth was held back by lower income from lending to corporate clients on the back of falling market rates and a bulk of early repayments late 2009-early 2010.

The decline in interest income in the corporate segment was offset by higher income on securities portfolio and retail lending as well as decreased interest expense due to lower corporate funding costs and reduced outstanding amounts due to other banks.

Net fee and commission income grew 12.7% y-o-y, supported by growth from almost all fee-generating services. Net gain from trading operations increased by 33% y-o-y, mainly reflecting gains from operations with securities. 

Operating income before provisions fell by 6.4% 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 16.1% y-o-y mainly due to higher staff costs which increased in line with planned wage adjustments for this year as well as general and administrative expenses related to business expansion.  Cost to income ratio, adjusted for the effect of the asset sale at fair value in March 2010, stood at 38.7%.

Stabilization of the credit quality of the Bank’s loan portfolio led to lower provisioning charges.  For 11 months of 2010, the Bank channeled RUB112.8 bn into provisions, including a RUB99.7 bn provision charge for loan impairment.  This stands in favorable contrast to the provisions of RUB343.5 and RUB322.3 bn, respectively, allocated for the same period a year ago.

Operating income after provisions grew 1.9 times y-o-y.  Profit before tax totaled RUB189.7 bn and net profit came in at RUB152.5 bn. Both numbers are several times higher the year-ago levels.

For 11M 2010, assets increased by 15.5% to RUB8,210 bn.

In November, assets expanded by RUB246 bn, on the back of growth in all major items: retail and corporate loans, securities portfolios and amounts due from other banks.

Corporate loan portfolio increased by RUB96 bn in November to RUB4,672 bn. The Bank granted over RUB380 bn loans to Russian companies for the month and more than RUB3.7 trln loans for 11M 2010. Growth momentum in retail lending proved sustainable in November: Retail loan book added RUB13 bn to RUB1,273 bn. The Bank provided about RUB70 bn in retail loans in November and more than UB630 bn for 11M 2010.

Credit quality of the loan portfolio improved remarkably in November, with the overdue loans down m-o-m from 5.7% to 5.2% of the total, which was owed to enhanced credit quality of the corporate loans. The Bank maintained high coverage of credit risks, increasing loan-loss provisions to RUB689 bn as of 1 December, or 2.2 times the overdue loans.

Securities portfolio increased by RUB43 bn in November to RUB1,857 bn, led by investments in corporate bonds as an alternative to lending to the real economy.  As of 1 December, the share of corporate bonds edged up to 19%, while the share of government bonds decreased to 69%.

Retail deposits remained the Bank’s major source of funding. Retail inflows added RUB96 bn to RUB4,514 bn, while corporate funds increased by RUB109 bn to RUB1,869 bn as of 1 December. The Bank also expanded its funding base via other instruments to facilitate increasing lending activity. Thus, the Bank issued LPNs of CHF400 mln in November. Furthermore, starting from June, the Bank has been actively developing trading finance, borrowing from major international financial institutions to meet credit needs of its customers: For these purposes the Bank raised about USD300 bn in November and more than USD1.6 bn in June-November.

Regulatory capital (under CBR regulation No. 215-P) increased by RUB26 bn in October to RUB1,226 bn, with net profit remaining the main source of funding.  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 December 2010.

Sberbank’s Financial Highlights for 11M 2010 (in accordance with RAS; non-consolidated)