Sberbank reports 3Q 2017 Net Profit of RUB 224.1 bn, or RUB 10.33 per ordinary share, under International Financial Reporting Standards (IFRS)
15 November 2017, Moscow
Sberbank (hereafter "the Group") has released its interim condensed consolidated IFRS financial statements (hereafter "the Financial Statements") as at and for the 9 months ended 30 September 2017, with review report by AO PricewaterhouseCoopers Audit.
Alexander Morozov, Deputy Chairman of the Executive Board, CFO, commented: "Increased lending activity and strong focus on fee and commission income on the back of improving macro-economic environment resulted in a solid quarter for the Group. Active asset and liability management allowed us to optimise our funding costs, sustain asset yields and thus report an improved margin.
The Group started reporting its capital position under Basel III standard resulting in a common equity Tier 1 capital adequacy ratio of 11.0% at the end of the quarter."
The 3Q 2017 Financial Highlights:
- The Group net profit reached RUB224.1 bn
- The Group earnings per ordinary share (EPS) came at RUB 10.33, up by 62.4% compared to 3Q 2016
- The Group annualized return on assets (ROA) reached 3.4%, up from 2.1% in 3Q 2016
- The Group gross loan portfolio increased by 2.5% during the quarter to RUB19.5 trn, with corporate loans up by 1.8% to RUB14.1 trn, and retail loans - by 4.2% to RUB5.4 trn, with the mortgages portfolio increasing by 4.5% during the quarter
- The Group net fee and commission income came at RUB100.9 bn, up by 13.9% relative to 3Q 2016
- The Group Cost-to-Income ratio improved to 32.0% from 37.3% in 3Q 2016
- The Group started reporting capital position under Basel III standard: common equity Tier 1 capital adequacy ratio came at 11.0% at the end of the quarter, while total capital adequacy ratio - at 12.7%
Selected Financial Results
|
RUB bn, unless stated otherwise
|
3Q
2017
|
2Q
2017
|
3Q 2016
|
3Q17/
2Q17
% change
|
3Q17/
3Q16
% change
|
9M 2017
|
9M
2016
|
9M17/
9M16
% change
|
|
|
Net interest income
|
375.0
|
357.6
|
342.8
|
4.9%
|
9.4%
|
1 069.2
|
1 007.6
|
6.1%
|
|
Net fee and commission income
|
100.9
|
94.9
|
88.6
|
6.3%
|
13.9%
|
276.2
|
251.7
|
9.7%
|
|
Other non-interest income[1]
|
22.1
|
28.9
|
3.6
|
(23.5%)
|
513.9%
|
56.5
|
(3.9)
|
--
|
|
Total revenues
|
498.0
|
481.4
|
435.0
|
3.4%
|
14.5%
|
1 401.9
|
1 255.4
|
11.7%
|
|
Net provision charge for impairment of debt financial assets
|
(58.2)
|
(89.1)
|
(101.7)
|
(34.7%)
|
(42.8%)
|
(214.6)
|
(282.1)
|
(23.9%)
|
|
Operating expenses
|
(160.4)
|
(161.2)
|
(163.0)
|
(0.5%)
|
(1.6%)
|
(468.9)
|
(475.6)
|
(1.4%)
|
|
Net profit
|
224.1
|
185.6
|
137.0
|
20.7%
|
63.6%
|
576.3
|
400.1
|
44.0%
|
|
Earnings per ordinary share, RUB
|
10.33
|
8.36
|
6.36
|
23.6%
|
62.4%
|
26.48
|
18.46
|
43.4%
|
|
Total comprehensive income
|
226.0
|
217.7
|
130.6
|
3.8%
|
73.0%
|
581.9
|
404.4
|
43.9%
|
|
Book value per share*, RUB
|
144.6
|
134.6
|
126.6
|
7.4%
|
14.2%
|
144.6
|
126.6
|
14.2%
|
|
Ratios
|
|
|
|
|
|
|
|
Return on equity
|
28.4%
|
24.8%
|
20.5%
|
|
|
25.5%
|
20.9%
|
|
|
Return on assets
|
3.4%
|
2.9%
|
2.1%
|
|
|
3.0%
|
2.0%
|
|
|
Net interest margin
|
6.1%
|
6.0%
|
5.8%
|
|
|
6.0%
|
5.6%
|
|
|
Cost of risk
|
120 bp
|
191 bp
|
213 bp
|
|
|
152 bp
|
195 bp
|
|
|
Cost-to-income ratio
|
32.0%
|
33.5%
|
37.3%
|
|
|
33.3%
|
37.5%
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
* Total equity / total numbers of shares outstanding (ordinary + preferred). Unaudited
Net interest income reached RUB375.0 bn in 3Q 2017, up by 9.4% from the year-ago period:
- Interest income (up 0.7% to RUB595.5 bn compared to 3Q 2016) dynamics were explained by more upbeat lending volumes;
- Interest expenses including deposit insurance expenses decreased by 11.2% from 3Q 2016 to RUB220.5 bn;
- Furthermore, despite the declining interest rate environment, the yield on working assets remained unchanged during the quarter at 9.7%;
- The cost of liabilities decreased by 10 basis points to 4.1% in 3Q 2017 relative to 2Q 2017.
The Group 3Q 2017 net fee and commission income came at RUB100.9 bn, up by 13.9% from the year-ago period. The main drivers of this growth as compared to the same period a year ago were banking cards operations net of applicable expenses that increased by 19.6% in 3Q 2017 from 3Q 2016.
Net provision charge for loan impairment for 3Q 2017 totaled RUB57.8 bn compared to RUB102.1 bn for 3Q 2016. This translated into the cost of risk of 120 basis points for the quarter versus 213 basis points a year ago.
- The cost of risk for corporate loans amounted to 140 basis points in 3Q 2017;
- The cost of risk for retail loans amounted to 68 basis points in 3Q 2017.
The Group operating expenses for 3Q 2017 decreased to RUB160.4 bn, down by 1.6% from the same period a year ago as a result of cost discipline across main lines of the operating expenses.
Selected Balance Sheet Results
|
RUB bn, unless stated otherwise
|
30/09/17
|
30/06/17
|
31/12/16
|
9M-6M 2017
% change
|
9M17-12M16
% change
|
|
Total gross loans, of which:
|
19 498.0
|
19 030.7
|
18 664.7
|
2.5%
|
4.5%
|
|
Corporate loans
|
14 074.1
|
13 827.3
|
13 633.0
|
1.8%
|
3.2%
|
|
Retail loans
|
5 423.9
|
5 203.4
|
5 031.7
|
4.2%
|
7.8%
|
|
Restructured loans
|
1 188.1
|
1 286.0
|
1 209.1
|
(7.6%)
|
(1.7%)
|
|
Securities portfolio
|
3 164.9
|
3 124.1
|
2 717.5
|
1.3%
|
16.5%
|
|
Assets
|
26 220.2
|
25 754.7
|
25 368.5
|
1.8%
|
3.4%
|
|
Total customer deposits, of which:
|
19 161.5
|
18 914.1
|
18 684.8
|
1.3%
|
2.6%
|
|
Retail deposits
|
12 798.9
|
12 816.5
|
12 449.6
|
(0.1%)
|
2.8%
|
|
Corporate deposits
|
6 362.6
|
6 097.6
|
6 235.2
|
4.3%
|
2.0%
|
|
Ratios
|
|
|
|
|
|
|
Net loans-to-deposits ratio
|
92.4%
|
91.0%
|
90.6%
|
|
|
|
NPL ratio
|
4.6%
|
4.6%
|
4.4%
|
|
|
|
NPL coverage ratio
|
157.2%
|
159.7%
|
157.3%
|
|
|
|
Restructured-to-gross loans
|
6.1%
|
6.8%
|
6.5%
|
|
|
|
Total provision coverage of total NPLs + restructured non-NPLs
|
80.6%
|
77.1%
|
74.6%
|
|
|
Total gross loans increased by 2.5% to RUB19.5 trn in 3Q 2017 as compared to 2Q 2017, supported by both corporate loan portfolio increase (up by 1.8% during the quarter) and continuing retail loan demand. Mortgages were up by 4.5%, consumer unsecured loan portfolio was up by 3.2%, while credit cards and overdrafts portfolio was up by 6.4% during the quarter.
Total customer deposits demonstrated an increase of 1.3% in 3Q 2017 as compared to 2Q 2017 driven by the inflow of funds from legal entities of 4.3%. The liquidity situation continued to be excellent. The net loans-to-deposits ratio improved to 92.4% within the targeted range of 90-100%.
Total NPL[2] ratio remained unchanged during the quarter at 4.6%. The coverage level of the NPL portfolio came at 157.2% of total NPLs during the quarter.
The share of restructured loan portfolio of total gross loan portfolio came down to 6.1% in 3Q 2017 from 6.8% in 2Q 2017 as a result of regular work with distressed assets. The provision coverage of total NPLs combined with restructured non-NPLs improved to 80.6% in 3Q 2017, up from 77.1% in 2Q 2017.
Selected Equity Position Results
|
Under Basel III
RUB bn, unless stated otherwise
|
30/09/17
|
31/12/16
|
9M17-12M16
% change
|
|
Total Tier 1 capital
|
3 187.2
|
2 765.9
|
15.2%
|
|
Total capital
|
3 662.7
|
3 241.8
|
13.0%
|
|
Risk-weighted assets
|
28 862.9
|
27 028.3
|
6.8%
|
|
Credit risk
|
25 246.9
|
23 443.0
|
7.7%
|
|
Operational risk
|
2 736.0
|
2 736.0
|
unch
|
|
Market risk
|
880.0
|
849.3
|
3.6%
|
|
Ratios
|
|
|
|
|
Common equity Tier 1 capital adequacy ratio
|
11.0%
|
10.2%
|
|
|
Total capital adequacy ratio
|
12.7%
|
12.0%
|
|
The Group total equity increased by 15.8% to RUB3.3 trn during 9M 2017.
The Group started reporting capital ratios under Basel III standard effective 3Q 2017. The Group's total capital increased by 13.0% to RUB3.7 trn during 9M 2017 mainly as a result of retained net profit.
The Group's risk-weighted assets increased by 6.8% to RUB28.9 trn during 9M 2017, driven primarily by loan demand. The common equity Tier 1 capital adequacy ratio increased by 80 basis points to 11.0% during 9M 2017. The total capital adequacy ratio (Basel III) increased by 70 basis points to 12.7% during 9M 2017.
[1] Other non-interest income consists of Net gains from trading securities; Net gains from securities designated as at fair value through profit or loss; Net gains from investment securities available-for-sale; Impairment of investment securities available-for-sale; Net gains / (losses) gains from trading in foreign currencies, operations with foreign currency derivatives and foreign exchange translation; Net gains / (losses) from operations with precious metals, precious metals derivatives and precious metals accounts translation; Net gains / (losses) from operations with other derivatives; Impairment of premises, equipment and intangible assets; Goodwill impairment; Net gains on initial recognition of financial instruments, loans restructuring and sale of loans; Net charge for other provisions; Revenue of non-core business activities; Cost of sales and other expenses of non-core business activities; Net premiums from insurance and pension fund operations; Net claims, benefits, change in contract liabilities and acquisition costs on insurance and pension fund operations; Other net operating income.
.