SBER.L Regulatory News (SBER)

Sberbank releases Financial Highlights for 2M 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).

The effect of subsequent events is excluded from the numbers as of January 1, 2019.March 7, 2019 

Key highlights for February 2019:

Deputy Chairman of Sberbank Alexander Morozov stated:

"February performance was in line with our expectations. The inflow to client deposits in the amount of RUB250 bn fully offset the January outflow and supported business expansion. Net fee and commission income saw momentum ongoing in February and covered almost 80% of operating expenses. Cost to income remained on the decline, printing below 29%."

Comments for 2m 2019:

Net interest income remained unchanged as compared to 2m 2018. Interest income grew by 11.0% for the period on the back of business expansion. In the meantime, interest expenses increased due to higher market cost and volume of funding.

Net fee and commission income was up by 14.1% from 2m 2018. The largest contributors to fee income growth were operations with bank cards, settlement transactions and bank guarantees. Starting from 2019 the Bank changed the methodology to smoothen accounting for bank card annual service fees.

Operating expenses increased by 6.4% as compared to 2m 2018, with cost-to-income ratio improving from 29.1% to 28.9%. OpEx dynamics in 1H2019 will remain affected by staff reshuffling from Sberbank Technologies JSC to Sberbank PJSC that took place in the second half of 2018, as well as VAT rate increase.

Provision charges totaled RUB16.3 bn in February and RUB24.0 bn for 2m 2019. As of March 1, loan-loss provisions were 2.5 times that of the overdue loans.

Net profit before income tax grew by 7.0% to RUB174.1 bn for 2M 2019, while net profit increased by 11.4% to RUB143.8 bn.

Total assets increased by 1.5% in February to RUB27.2 trln.

The Bank lent more than RUB1,1 trln to corporate clients in February. Corporate loan portfolio remained unchanged compared to January, contracting marginally to RUB13.2 trln due to repayments of FX-denominated loans, while the ruble-denominated portfolio remained unchanged.

The Bank lent RUB230 bn to retail clients in February. Retail loan portfolio increased by 1.2% exceeding RUB6.3 trln.

Overdue loans increased by RUB16.8 bn in February mainly led by corporate segment. The share of overdue loans in total loan portfolio stood at 2.6%, which is substantially lower than the banking sector's average (9.0% excl. Sberbank as of February 1, 2019).

Securities portfolio grew in February by 7.4% to RUB3.0 trln, largely due to purchases of CBR bonds.

Retail deposits and accounts increased by 1.5% in February. Retail deposits added 2.0%, thus offsetting the outflow in January in real terms. Corporate accounts were up by 0.5% for the month.

Core Tier 1 and Tier 1 capital were unchanged in February and amounted to RUB3.1 trln. Core Tier 1 and Tier 1 exclude net profit for the second half of 2018 from capital calculation as long as it remains unaudited.

Total capital was up by RUB35 bn to exceed RUB4.2 bn, mainly as a function of earned net profit for the period and repayment of subordinated debt in the amount of USD1 bn.

Risk-weighted assets increased by RUB195 bn, mainly due to retail lending and settlements with the international payment systems.

Core Tier 1 and Tier 1 capital adequacy ratios slightly decreased.

* preliminary calculations

Sberbank Financial Highlights for 2M 2019 (under RAS, non-consolidated)