SBER.L Regulatory News (SBER)

Sberbank releases Financial Highlights for 11M 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.

December 06, 2019

Key highlights for November 2019:

Deputy Chairman of Sberbank Alexander Morozov stated:

"Net interest income accelerated in November, driven by lower cost of funding and growth of the loan portfolio. "Green day" campaign was a strong highlight of November, with 7 million clients participating and 760K loan applications submitted. As a result, the Bank granted RUB323 bn of retail loans in November. The campaign had also positive implications for the Group's non-interest income. We are well positioned to deliver our targets for 2019 and optimistic on the Strategy 2020 expectations.

Comments for 11M 2019:

Net interest income increased by 0.3% and exceeded RUB1.1 trln. The dynamics was affected by increased cost of client funding at the end of 2018 and the beginning of the current year. However, cost of liabilities keeps on declining due to Sberbank's initiatives, which is in line with our expectations.

Fee and commission income growth accelerated further started in summer to 14.9% led by transactional business. Brokerage services are among the fastest growing segments: the number of brokerage accounts opened with Sberbank exceeded 1 million with market share over 27%. Net fee and commission income for 11M 2019 was up by 9.6% to RUB418.8 bn. The dynamics is affected by accounting for the loyalty program costs and fees paid to payment systems as the Bank started accruing these expenses evenly from the beginning of the year.

Operating expenses increased by 9.1%. As compared to 11M 2018, OpEx dynamics was affected by annual wage increase in July as well as VAT rate increase from January 1, 2019 and transfer of employees from Sberbank Technologies JSC to Sberbank PJSC over the second half of 2018. Cost-to-income ratio for 11M 2019 came at 31.9%.

Total provision charge including the fair value revaluation and impairments related to purchased or originated credit-impaired assets amounted to RUB14.6 bn in November and RUB118.0 bn year to date, which is half the amount booked for 11M 2018. This decrease was due to the opposite directions of FX rate dynamics for comparable periods as well as restructuring of the Agrokor debt completed in June 2019. As of December 1, loan-loss provisions were 2.9 times that of the overdue loans.

Net profit before tax grew by 8.3% to over RUB1 trn for 11M 2019. Net profit increased by 7.3% to RUB814.1 bn.

Total assets were barely changed in November and stood at RUB27.9 trn. In the meantime, the Bank continued lending expansion in November, which led combined loan portfolio up by 1.3%.

The Bank granted RUB1.6 trn in loans to corporate clients, which is the highest issuance over the past two years. Year to date, the Bank originated RUB10.8 trn in loans to corporate clients. Corporate loan portfolio grew by 1.2% or RUB154 bn in November.  

Loan issuance to retail clients was the highest for the year in November at RUB323 bn and exceeded RUB3 trn year to date. Retail loan portfolio expanded by 1.4% in November to RUB7.2 trn.

The share of overdue loans improved from 2.24% to 2.21% led by the corporate segment.

Securities portfolio increased by 3.5% in November on purchases of CBR bonds along with sovereign Eurobonds and exceeded RUB3.3 trn as of December 1.

Combined client deposits and accounts increased by 2.1% for 11M2019 excluding the impact of FX revaluation: retail accounts were up by 1.8%, while corporate accounts added 2.6%. Retail accounts grew by 0.1%, while corporate accounts decreased by 0.7% for the month.

In November, Sberbank issued RUB15 bn of two-year exchange-traded bonds with a historically low coupon rate of 6.4% p.a. At the same time, November saw an expiration of EUR1 bn Eurobond of 2014 year with a coupon rate of 3.352% p.a. Both developments are positive for the net interest income.

Core Tier 1 and Tier 1 capital remained virtually unchanged in November. Earnings for the period of April-November 2019 will be accounted for in capital calculation as soon as annual audit is completed. Total capital increased by RUB64 bn or 1.4% in November, driven mainly by net profit for the period.

Risk-weighted assets increased in November by RUB177 bn, due to the loan portfolio expansion.

* preliminary calculations

Sberbank Financial Highlights for 11M 2019 (under RAS, non-consolidated)