Sberbank releases Financial Highlights for 10M 2017 (under RAS; non-consolidated)

Please note that the numbers are calculated in accordance with Sberbank's internal methodology. There were some amendments to the methodology from January 1, 2017 and the numbers for 2016 were restated in accordance with the new methodology for comparability purposes.

November 8, 2017

Key highlights for October 2017:

• In October, the Bank earned net profit of RUB64.0 bn
• The amount of retail loans issued in October hit a record of RUB227 bn
• In October, the Bank issued exchange-traded bonds worth of RUB40 bn, its largest issue on record.

Deputy Chairman of Sberbank Alexander Morozov stated:

"The Bank has increased issuances of retail loans by almost a third in the current year. For a single month in October, the Bank issued retail loans for the amount of RUB227 bn, including RUB124 bn in mortgages. This enhances the structure of the working assets, supporting revenue growth and forming a solid foundation that enables the Bank to achieve long-term strategic goals".

Comments for 10M 2017:

Net interest income increased by 7.4% compared to 10M 2016 and came at RUB998 bn, which was mainly due to the decrease in interest rates on clients' funds and growth of the retail loan portfolio.

Net fee and commission income was up by 14.6% to RUB287 bn, driven largely by operations with bank cards and bank insurance, which grew 28% and 25%, respectively.

Operating income before provisions increased by 16.1% compared to 10M 2016, outpacing operating expenses for the same period by a significant margin of 10.6 p.p. Growth in operating expenses by 5.5% owed to introduction of accrual approach to spread costs more evenly through the year starting from 2017 along with wage indexation. Excluding payroll costs, operating expenses fell 1.5% or RUB2.6 bn as compared to 10M 2016, thus evidencing cost containment incentives run in the Bank. Cost-to-Income ratio stood at 30.1% for 10M 2017, an improvement of 3.0 pp as compared to 10M 2016.

Provision charges totaled RUB13 bn in October and amounted to RUB261 bn for 10M 2017, which is 6.2% higher as compared to 10M 2016. As of November 1, 2017, the loan-loss provisions are 2.6 times the overdue loans.

Net profit before income tax came at RUB699 bn. Net profit totaled RUB560 bn, including RUB64.0 bn in October.

Total assets increased 0.8% and exceeded RUB22.5 trln in October, driven mainly by customer loan portfolio growth.

The Bank granted over RUB0.8 trln in loans to corporate clients in October or total over RUB8.5 trln from the beginning of the year, which is 21% higher than in 10M2016. Corporate loan portfolio increased by 0.4% to over RUB11.9 trln in October.

The Bank granted RUB227 bn in loans to retail clients in October, which was the largest ever issued for a month. Mortgage lending was the key driver, where issuance reached RUB124 bn in October. The total amount of retail loans granted for 10M 2017 was over RUB1.6 trln, or 31% more than in 10M2016. Retail loan portfolio expanded 2.0% to RUB4.74 trln in October.

The share of overdue loans as percentage of total remained unchanged at 2.6% in October. The indicator is substantially lower than the sector average (8.7% excl. Sberbank as of October 1, 2017).

Securities portfolio remained virtually unchanged in October and stood at RUB2.45 trln as of November 1. The portfolio consists of 54% government securities, including those issued by the Bank of Russia, and 39% corporate bonds.

Customer deposits and accounts increased by 0.6% in October, led by the corporate segment (up 2.5%). As of November 1, the balance of customer funds exceeded RUB17.0 trln and accounted for 88% of liabilities.

In October, Sberbank issued exchange-traded bonds worth RUB40 bln for 3 years and 2 months. The bid book was more than twice oversubscribed. More than three-fourths of the issuance was acquired by individuals.

Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) reached RUB2,685 bn as of November 1, 2017 under preliminary calculations.

Total capital amounted to RUB3,612 bn for this date and retained earnings were the main source of capital increase.

Risk-weighted assets added RUB308 bn in October to RUB24.7 trln, which was mainly due to credit portfolio.

Capital adequacy ratios as of November 1, 2017 under preliminary calculations were:

• N1.1 - 10.9% (minimum adequacy level, required by the Central Bank of Russia at 4.5%)
• N1.2 - 10.9% (minimum adequacy level, required by the Central Bank of Russia at 6.0%)
• N1.0 - 14.6% (minimum adequacy level, required by the Central Bank of Russia at 8.0%).

Sberbank 10M 2017 Financial Highlights (under RAS, non-consolidated)