Sberbank releases Financial Highlights for 8M 2019 (under RAS; non-consolidated)

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

Also note that some changes became effective in the Russian accounting standards in 2019 as part of convergence with IFRS, including transition to IFRS 9. 

September 06, 2019 

Key highlights for August 2019:

• The Bank earned RUB73.6 bn in August. Return on Equity (ROE) came at 22.1% for 8M 2019.
• Retail loan portfolio grew by 1.7%, while corporate portfolio adjusted for FX revaluation was up by 0.7%.
• Cost-to-income ratio for 8M 2019 came at 30.8%.

Deputy Chairman of Sberbank Alexander Morozov stated:

"The Bank's focus on lending expansion led to the most remarkable results thus far this year: corporate loan issuances exceeded RUB1 trn and over RUB100 bn loans were granted in mortgages. The Bank keeps putting efforts to stimulate fee income growth and improve efficiency of the Group."

Comments for 8M 2019:

Net interest income totaled RUB822.3 bn. As compared to 8M 2018, the dynamics was affected by increased cost of client funding in the beginning of the year as well as lower yield on money-market operations as a result of payment of dividends.  Monthly dynamics of net interest income remains affected by adoption of IFRS 9.

Fee and commission income grew by 12.2% driven by transactional business. Net fee and commission income for 8M 2019 amounted to RUB292.3 bn. Growth is affected by specifics of accounting for the loyalty program costs given that the Bank started accruing these expenses evenly from the beginning of the year as part of RAS convergence with IFRS. The impact will largely be absorbed by the year end. August growth in net fees and commission income accelerated to 17.6% year over year.

Operating expenses increased by 8.2%. As compared to 8M 2018, OpEx dynamics was affected by annual wage increase effective in July as well as VAT rate increase from January 1, 2019 and staff reshuffling from Sberbank Technologies JSC to Sberbank PJSC over the second half of 2018. August OpEx growth slowed to 2.1% year over year. Cost-to-income ratio for 8M 2019 came at 30.8%.

Provision charges amounted to RUB26.5 bn in August, partly reflecting the impact from ruble weakening. Revaluation of loans at fair value totaled RUB9.7 bn in August.

Provision charges allocated year to date were RUB83.6 bn, which is well below those for the similar period a year ago. This was caused by opposite directions of the FX rate dynamics for comparable periods as well as restructuring of the Agrokor debt completed in June 2019. As of September 1, loan-loss provisions were 2.8 times that of the overdue loans.

Net profit before tax grew by 11.4% to RUB742.5 bn as compared to 8M 2018. Net profit increased by 9.7% to RUB593.2 bn.

Total assets increased by 1.2% in August on the back of lending expansion and exceeded RUB28.0 trn as of September 1. Asset growth in real terms was 0.2%.

The Bank lent RUB1.04 trn to corporate clients for the month and RUB6.6 trn year to date. Portfolio growth in real terms in August by 0.7% or RUB92 bn was so far the best year to date.

Loan issuances to retail clients in August totaled RUB290 bn, which was the largest monthly issuance in 2019.  Retail loan issuance exceeded RUB2 trn year to date. Retail loan portfolio expanded by 1.7% in August to RUB6.9 trn, which corresponds to almost 35% of the total loan look.

The share of overdue loans improved by 0.1 pp to 2.24% led by the corporate segment.

Securities portfolio decreased by 2.1% in August on repayment of CBR bonds and stood at RUB3.4 trn as of September 1.

Deposits and accounts of corporate and retail clients decreased in real terms in August by 0.2%, while they were up by 2.5% year to date in real terms. Retail funds outflow in August was largely due to seasonality.

Core Tier 1 and Tier 1 capital were merely unchanged in August. Total capital growth was supported by earnings.

Risk-weighted assets increased in August by RUB489 bn, led by loan portfolio expansion partly due to ruble devaluation.

* preliminary calculations

Sberbank Financial Highlights for 8M 2019 (under RAS, non-consolidated)