Sberbank

Sberbank / Key word(s): Monthly Figures/Miscellaneous
06.02.2015 08:44

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Sberbank releases Financial Highlights for 1M 2015 (under RAS; non-consolidated)

Please note that the numbers are calculated in accordance with Sberbank's internal methodology. Also note that the effect of subsequent events is excluded from the numbers as of January 1, 2015.

February 6, 2015

Income Statement Highlights for 1M 2015 (as compared to 1M 2014):
- Net interest income decreased by 33.6% y-o-y. Interest income increased by 34.3% y-o-y, but interest expenses increased by 131.7% y-o-y on more expensive cost of funding from the CBR and corporate deposits
- Noncredit commission income grew by 9.5% y-o-y, net fee and commission     income decreased by 7.8% y-o-y

- Operating income before total provisions decreased by 2.9% y-o-y
- Total provision charge was RUB54.9 bn vs. RUB28.5 bn charge for 1M 2014
  - Operating expenses were down by 1.6% y-o-y

- Net profit before income tax reached RUB9.8 bn vs. RUB38.4 bn for 1M     2014

- Net profit totaled RUB3.7 bn vs. RUB31.6 bn for 1M 2014. Significant increase in cost of the CBR's funding and cost of corporate deposits, as well as creation of provisions for impairment were the main drivers     for the decline in Net profit.

Net interest income came at RUB47.9 bn, down by 33.6% compared to that for 1M 2014:

- Interest expenses increased by RUB66.4 bn, due to inflow of funds as well as increases of market interest rates. The strongest effect on interest expense came from the short-term CBR funding that was immediately repriced in-full upon the increase in the key interest rate. The cost of short-term corporate funding was another burden to interest expense. In order to optimize its funding structure as well as lower the average cost of funding, Sberbank reduced its CBR funding by RUB787 bn in January. The share of the CBR funding (excluding the subordinated debt) in total liabilities was reduced from 15.2% to 10.9% in January. The recent decrease in the key interest rate by the CBR, effective February 2, 2015, would have a positive effect on the cost of     funding.

- Interest income increased by RUB42.1 bn y-o-y compared to January 2014 driven by corporate and retail loan portfolio growth. Overall the assets yield repricing occurs at a slower pace relative to growth in liabilities costs since their duration is longer. Furthermore, Sberbank kept a substantial amount of cash reserves that did not generate     interest income during New Year holidays.

Net fee and commission income came at RUB15.5 bn in January, down by 7.8% y-o-y. Negative growth was driven by commission income from corporate lending as well as insurance products as lending overall slowed down. Noncredit commission income that was up by 9.5% as nearly all products lines performed well, particularly bank cards transactions, bank guaranties, trade finance deals and documentary operations.
Net income from FX revaluation and trading operations on capital markets amounted to RUB23.1 in January. The main driver was provisioning for FX loans against ruble devaluation relative to key foreign currencies, even when these loans demonstrated no quality deterioration. As per open currency position Regulation, provisions related to revaluation of FX loans are reported as currency assets and liabilities to manage open currency position. Revaluation of this provisions as well as other FX assets and liabilities are reported as conversion income. As a result, the growth in income from trading operations was greater due to increase in provision charges for FX loans.

Operating expenses decreased by 1.6% y-o-y in January. Sberbank continues to realize its cost optimization program.

Total provision charges amounted to RUB54.9 bn vs. RUB28.5 bn charge in January last year. Similarly to 4Q2014, ruble devaluation relative to key foreign currencies required to form additional provisions for FX loans at no deterioration of credit quality.

The Bank continues to practice a conservative approach in loan-loss provisioning based on requirements of the Central Bank of Russia. Coverage ratio remained strong: loan-loss provisions are 2.2 times the overdue loans.

Net profit before income tax came at RUB9.8 bn in January vs. RUB38.4 bn a year earlier. Net profit totaled RUB3.7 bn vs. RUB31.6 bn for 1M 2014. The amount of income tax paid was based on the 3Q2014 income.
Assets increased by 2.8% in January to reach RUB22.4 trln. The increase was attributed to positive revaluation of FX component on ruble devaluation.
The Bank lent about RUB320 bln to corporate clients in January. Total corporate loan portfolio increased by RUB797 bn in January driven by positive revaluation of previously issued FX loans to reach RUB12.5 trln.
The Bank lent over RUB70 bn to retail clients in January, 70% of the issues were mortgages. Retail loan portfolio decreased by RUB9.9 bn in January primarily due to consumer unsecured loans; mortgages portfolio continued to grow. Overall total retail loan portfolio reached about RUB4.1 trln as of February 1, 2015.

The reduction in lending volumes in January were explained by several factors, including seasonality and drop in demand for loans as market interest rates increased and a sizable portion of consumer demand was already realized in December 2014.

Overdue loans came at 2.3% of total loans (as of February 1, 2015), up by 30bp in January. Corporate overdues reached 2.2%, while retail - 2.6%.
Securities portfolio was down by RUB43.6 bn in January, or by 2.3%, from redemption of corporate bonds as well as accounting reporting specifics of REPO transactions. The portfolio ending balance was RUB1.87 trln as of February 1, 2015.

Corporate funding increased by RUB519 bn in January, or up by 10.2%, due to inflow of FX funding and revaluation of clients' FX funds. Overall corporate deposits and accounts portfolio reached RUB5.6 trln as of February 1, 2015.

Retail deposits and accounts increased by RUB98 bn in January, or up by 1.1%, from inflows of savings certificates and FX funds, as well as from sizable revaluation of FX deposits. Seasonal outflow of ruble retail deposits in January was not as strong as was in January 2014. Overall retail deposits and accounts portfolio reached RUB8.6 trln as of February 1, 2015.

Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) reached RUB1,631 bn as of February 1, 2015 under preliminary calculations. Total capital amounted to RUB2,211 bn on the same date. Total capital decreased by RUB67 bn in January due to continued adoption of Basel 3 methodology in capital calculation under Regulation 395-P. Another factor that influenced capital decrease was amortization of CBR subordinated debt and partial write-off of subordinated loans that did not meet Basel 3 requirements.

Risk weighted assets increased by 5% in January primarily from substantial devaluation of ruble.

Capital adequacy ratios under preliminary calculations as of February 1, 2015 were:

- N1.1 - 7.8% (minimum adequacy level, required by the Central Bank of     Russia at 5.0%)

- N1.2 - 7.8% (minimum adequacy level, required by the Central Bank of     Russia at 6.0%)

- N1.0 - 10.6% (minimum adequacy level, required by the Central Bank of Russia at 10.0%, considering Deposit Insurance Regulation).
Sberbank 1M 2015 Financial Highlights (under RAS, non-consolidated)

06.02.2015 The EquityStory.RS, LLC Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de

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Language:     English
Company:      Sberbank
              19 Vavilova St.
              117997 Moscow
              Russia
Phone:        +7-495-957-57-21
Fax:          
E-mail:       media@sberbank.ru
Internet:     www.sberbank.ru
ISIN: US80585Y3080, RU0009029540, RU0009029557, US80585Y4070 Listed: Frankfurt in Open Market (Entry Standard) ; London, MICEX,               RTS
 
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