30 Aug 2011 13:40
Sberbank / Half-yearly Results 30.08.2011 14:40 Dissemination of a UK Regulatory Announcement, transmitted byEquityStory.RS, LLC - a company of EquityStory AG.The issuer is solely responsible for the content of this announcement.--------------------------------------------------------------------------- Sberbank Group (hereafter 'the Group') has released its condensed interimconsolidated IFRS financial statements (hereafter 'the Financial Statements') asat 30 June 2011 and for the 6 months ended 30 June 2011, with an independentreview report by Ernst & Young (Download the 1H Results Presentation:http://www.sberbank.ru/common/_en/img/uploaded/files/info/Presentation_ENG_IH.pdf). Statement of financial position highlights: The Group continues to see loan demand picking up with 1H 2011 growth in thegross loan portfolio of 8.3%. The Group is also benefitting from an increasingshare of retail loans which are growing faster than corporate ones.The Group's statement of financial position has not been affected by the ongoingvolatility in Western European debt markets, as Sberbank has been decreasing itssecurities portfolio which is mainly in Russian sovereign and quasi-sovereign debtinstruments and has no exposure to European sovereign risk.Customer deposits, in particular retail deposits, remain the major source offunding for Sberbank, growing in 1H 2011 by 4.9%. Income Statement highlights: Net profit for 1H 2011 reached RUB 176.1 bn (or RUB 8.12 per ordinary share), analmost threefold increase on RUB 64.3 bn (or RUB 2.95 per ordinary share) for1H2010.The Group's revenues continued to be of high quality sourced from core bankingoperations, with net interest income and net fee and commission income accountingfor 92.1% of total operating income before provisions for loan impairment during1H 2011.The Group's net interest margin has stabilized since beginning 2011 in the rangebetween 6.2% and 6.5% averaging 6.4% for 1H2011.Despite higher operating expenses in 1H 2011, the Cost to Income ratio stays at anadequate level of 45.6% versus 40.2% in 1H 2010.The improving Russian economy and ongoing implementation of new risk managementand recovery procedures have positively affected loan quality, resulting inwrite-backs of provisions of RUB 22.2 bn. In particular, in 1H 2011 there were anumber of loans which were previously provisioned for as impaired ornon-performing, but were subsequently recovered /disposed off. As a result, thenon-performing loan ratio declined to 6.6%, while the non-performing loan coverageratio remained strong at 1.5x as of 30 June 2011.Return on equity improved and reached 33.2% in 1H 2011 on an annualized basis. Financial and Operating Review: Interest income increased in 1H 2011 by 0.6% year-on-year to RUB 401.9 bn. Theincrease was driven by the growth of interest earning assets but the effect ofthis growth was moderated by a decline of average yields on corporate loans whichreflected continued decline of market interest rates on loans. The yields onretail loans continued to improve, however, and reached 15.2% in 2Q 2011. Interest expenses decreased by 14.6% year-on-year to RUB 133.0 bn. The largestcomponent of interest expenses was interest on retail deposits which are a coresource of funds for the Group. The cost of retail deposits continued to decreasein line with market trends and Sberbank's pricing policy, leading to a loweroverall cost of funds for Sberbank. Net interest income for 1H 2011 totaled RUB 268.9 bn, a 10.2% increaseyear-on-year. This increase reflects change in the structure of interest earningassets and improved pricing on deposits. Net interest income remains the maincomponent of the Group's operating income, accounting for 74.4% of total operatingincome before provision charges for loan impairment. The Group's net fee and commission income totaled RUB 64.1 bn for 1H 2011, a 12.9%increase year-on-year. This growth was supported by a variety of fee-generatingoperations, especially operations with bank cards and distribution of insurancepolicies. Net gains on operations with securities, including gains on trading securities,securities at fair value and securities available for sale, totaled RUB 7.3 bn for1H 2011, a decline of 18.9% year-on-year. In addition to this, the group showeddecrease in fair value reserve for investment securities available for sale withinother comprehensive income of RUB 4.7 bn due to partial disposal of securitiesportfolio. Total operating income before provision for loan impairment for 1H 2011 was RUB361.6 bn, compared to RUB 319.3 bn for 1H 2010, a 13.2% year-on-year increase. Thegrowth in operating income was primarily driven by robust and improved netinterest income, well supported by net fee commission income and other operatingincome. Net recovery of previously recorded provision for loan impairment for 1H 2011totaled RUB 22.2 bn, compared with charges of RUB 110.3 bn in the 1H 2010. Thisreflects the better quality of the overall loan book as the Russian economy hasimproved and Sberbank has continued to attract demand from high-quality borrowers.Additionally, Sberbank has benefitted from its increased focus on managingimpaired and non-performing loans and achieving recoveries on a number ofindividual loans previously classified as impaired or non-performing. The Group's operating expenses grew in 1H 2011 by 28.4% year-on-year. The maindrivers of this growth was a planned increase in salaries, as the Group raised itsemployee compensation to make it more competitive relative to current marketlevels, and also incurred higher social security taxes and bonus accruals offhigher compensation budgets and profit levels. Other operating expenses increasedby 30.3% compared with the first half of 2010, due mainly to costs incurred inrelation to the Group's continuing implementation of its strategy, notably interms of new infrastructure projects, acquisitions, marketing and advertising. Asa result, the Group's cost to income ratio was 45.6% in 1H 2011 versus 40.2% in 1H2010. The Group's net profit in 1H 2011 totaled RUB 176.1 bn versus RUB 64.3 bn in 1H2010. The major reason for the near threefold increase was a higher operatingincome and a net recovery of loan impairment provisions in 1H 2011 instead of acharge in 1H 2010. Total comprehensive income for 1H 2011 doubled to RUB 166.6 bn compared with RUB87.7 bn for 1H 2010, with the increase almost entirely attributable to net profitgrowth.As at 30 June 2011, the Group's total assets reached RUB 9,078.9 bn, an increaseof 5.2% since 31 December 2010. The loan portfolio after provisioning for loan impairment increased by 10.2% in 1H2011. Loans to individuals before provisions for loan impairment grew by 11.2% toRUB 1,467.3 bn as of 30 June 2011, while loans to legal entities before provisionsat the same date increased 7.5% to RUB 5,239.6 bn. The Group continues to see loandemand picking up and is benefitting from an increased focus on retail loans whichare growing faster than corporate loans. The Group's loan quality improved with non-performing loans (NPL), defined asloans for which payment of principal and/or interest is overdue by more than 90days, decreasing from RUB 452.3 bn as at 31 December 2010 to RUB 445.2 bn as at 30June 2011. The proportion of non-performing loans in the total loan portfolio (theNPL ratio) dropped to 6.6% as at 30 June 2011 compared with 7.3% at the beginningof the year. As at 30 June 2011, the NPL coverage ratio (total provisions for loanimpairment to non-performing loans) was 1.5, a level which the Group considers ascomfortable. Provisions for loan impairment decreased by 6.1% reaching RUB 659.9bn as at 30 June 2011. The ratio of provisions for loan impairment to total grossloans reached 9.8% compared with 11.3% at the beginning of the year. The Group's securities portfolio declined by 17.3% to RUB 1,508.8 bn as at 30 June2011, mainly following the disposal / redemption of Bank of Russia bonds. As at 30June 2011, federal government bonds accounted for the largerst part of itssecurities portfolio with a 47.9% share. The proportion of corporate bonds in thetotal securities portfolio increased from 19.4% as at the beginning of the year to29.6% as at 30 June 2011. In absolute terms the portfolio of corporate bondsamounted to RUB 445.9 bn as at 30 June 2011, having grown 26.3% from the beginningof the year, mainly through purchases of corporate bonds issued by Russiancompanies, which the Group considers to be another form of corporate lending. As at 30 June 2011, the Group's total liabilities amounted to RUB 7,946.0 bn, a4.0% increase since 31 December 2010. The Group's liabilities structure remainedlargely stable throughout 1H 2011. Retail deposits, totaling RUB 5,089.7 bn as at30 June 2011, have remained the core source of the Group's funding, accounting for64.1% of the Group's total liabilities, and increased by 5.3% compared withyear-end 2010. Corporate deposits rose 3.9% to RUB 1,887.3 bn as at 30 June 2011compared with year-end 2010, and accounted for 23.8% of total liabilities. The Group's equity attributable to the Bank's shareholders amounted to RUB 1,129.0bn as at 30 June 2011, a 14.9% increase during the first half of 2011. As at 30June 2011, the Group's total capital adequacy ratio (Tier 1 and Tier 2) calculatedunder Basel 1 was 17.9%, well above the 8% minimum requirement, and the Tier 1ratio was 13.3%. Statement of financial position highlights:http://www.sberbank.ru/common/_en/img/uploaded/files/info/h_1H2011_en.pdf Contact:Public Relations E-mail: media@sberbank.ru Phones: (+7 495) 957-57-21Fax: (+7 495) 747-37-58 30.08.2011 EquityStory.RS, LLC's Distribution Services include RegulatoryAnnouncements, Financial/Corporate News and Press Releases.Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: EnglishCompany: Sberbank 19 Vavilova St. 117997 Moscow RussiaPhone: +7-495-957-57-21Fax: E-mail: media@sberbank.ruInternet: www.sberbank.ruISIN: US80585Y3080, RU0009029540, RU0009029557Listed: Frankfurt in Open Market (Entry Standard) ; MICEX, RTSCategory Code: IRLSE Ticker: SBERSequence Number: 888Time of Receipt: Aug 30, 2011 14:40:35 End of Announcement EquityStory.RS, LLC News-Service ---------------------------------------------------------------------------UK-Regulatory-announcement transmitted by DGAP - a company of EquityStory AG.The issuer is solely responsible for the content of this announcement.