SBER.L Regulatory News (SBER)

Moscow, April 5 2019 - Sberbank releases Financial Highlights for 1Q 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).

Key highlights for March 2019:

Deputy Chairman of Sberbank Alexander Morozov stated:

"Our net profit for the quarter increased by 11%, return on equity reached 22.4% and that on assets at 3.3%. The Bank is finalizing adjustment to the new interest-rate environment through optimization of the credit portfolio mix and cost of funding."

Comments for 1Q 2019:

Net interest income decreased by 0.8% as compared to 1Q 2018 and totaled RUB299.0 bn. Interest income grew by 11.4% on the back of business expansion. In the meantime, interest expenses increased by 31.2% due to higher cost of funding and growth of its volume.

Net fee and commission income was up by 9.4% to RUB98.9 bn as compared 1Q 2018. The largest contributors to fee income growth were operations with bank cards and settlement transactions. As part of convergence with IFRS, the Bank changed its methodology of expense recognition on 'Spasibo' loyalty program. This changed the timing of accounting for expenses and led to a one-off increase in the first quarter but will be leveled off on a full-year horizon.

Provision charges totaled RUB1.5 bn in March and RUB25.5 bn in 1Q 2019. As of April 1, loan-loss provisions were 2.6 times that of the overdue loans. Impairment of loans at fair value amounted to RUB2.9 bn in 1Q 2019.

Operating expenses increased by 5.9% as compared to 1Q 2018. 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 from January 1, 2019. Cost-to-income ratio came at 31.4%.

Net profit before income tax grew by 5.9% to RUB261.1 bn for 1Q 2019, while net profit increased by 11.4% to RUB218.2 bn.

Total assets increased by 0.3% in March to over RUB27.2 trln. Ruble strengthening had a slight impact on the balance sheet items.

The Bank lent RUB676 bn to corporate clients in March and RUB2.5 trln in 1Q 2019. Corporate loan portfolio decreased by 0.4% in real terms to RUB13.1 trln.

Loan issuance to retail clients exceeded RUB260 bn in March and amounted to RUB0.7 trln for the quarter. Retail loan portfolio increased in March by 1.4% to RUB6.4 trln.

Overdue loans decreased in March by RUB22.9 bn due to the corporate segment. The share of overdue loans in corporate portfolio decreased from 2.53% to 2.36%, while overdues in the total portfolio were down from 2.56% to 2.45%, which is substantially lower than the banking sector's average (9.1% excl. Sberbank as of March 1, 2019).

Securities portfolio grew in March by 5.2% in excess of RUB3.1 trln, largely due to purchases of CBR bonds and OFZs.

Client deposits and accounts barely changed in March. Retail funding increased by 0.2% and corporate funding was up by 0.1% in real terms.

The Bank placed exchange traded bonds in the amount of RUB40 bn in March.

Core Tier 1 and Tier 1 capital increased by 12.1% in March to RUB3.5 trln, as the net profit for the second half of 2018 was included in capital calculation further to the full-year audit.

Total capital was up by RUB81 bn to exceed RUB4.3 bn.

Risk-weighted assets increased by RUB44 bn driven by retail lending expansion.

Core Tier 1 and Tier 1 capital adequacy ratios exceeded 12% in March.

* preliminary calculations

 Sberbank Financial Highlights for 1Q 2019 (under RAS, non-consolidated)