SBER.L Regulatory News (SBER)

Sberbank / Miscellaneous - Medium Priority Sberbank: Sberbank releases Financial Highlights for 2016 excluding the effect of subsequent events (under RAS; non-consolidated) 13-Jan-2017 / 08:22 CET/CEST Dissemination of a Regulatory Announcement, transmitted by EquityStory.RS, LLC - a company of EQS Group AG. The issuer / publisher is solely responsible for the content of this announcement.

Sberbank releases Financial Highlights for 2016 excluding the effect of subsequent events (under RAS; non-consolidated)

Please note that the numbers are calculated in accordance with Sberbank's internal methodology. Also note that the effect of subsequent events is included in the numbers as of January 1, 2016 but excluded from the numbers as of January 1, 2017.

January 13, 2017

Key highlights for December, 2016:

- The Bank lent RUB1.43 trln in December, loan issues in 2016 exceeded RUB10.6 trln, which was a third greater than in 2015

- The Bank issued RUB86 bn of mortgage loans, RUB722 bn from the beginning of 2016. Total mortgage portfolio came at RUB2.47 trln by the end of 2016

- Retail funds increased by RUB348 bn (by RUB505 bn in real terms) in December

- The Bank reduced overdue loans by RUB67 bn in December

Deputy Chairman of Sberbank Alexander Morozov stated:

'Enhanced efficiency is our most important result for 2016: improving cost to income ratio to 35.7% and increasing the net fee and commission income to operating costs ratio to 62%. Taken together, this significantly reduces the Bank's sensitivity to a possible reduction in margins of the banking business and allows us to positively look towards 2017'

Comments for 2016:

Net interest income increased by 41.5% to exceed RUB1.1 trln: Interest income increased by 3.9%, driven by the increase in volume of working assets; Interest expense came down by 21.8% due to improving liabilities structure with cheaper funding and decrease in market rates compared to 2015.

Fee and commission income was up by 21.3% to RUB318.6 bn compared to 2015 mainly driven by acquiring and bank card operations, income from bank insurance and settlements.

Operating expenses increased by 9.5%, which was significantly slower than pre-provision operating income growth (25.8%). The operating expenses increase was moderate despite effect from wage indexation. The Bank continues to implement its efficiency increase and operating cost-cutting programs. There was certain increase in expenses in December due to seasonality. Cost-to-Income ratio decreased from 41.0% for 2015 to 35.7% for 2016.

Total provision charges amounted to RUB257.0 bn, or 64% of the 2015 figure. Significant impact on the reserves in December and for 2016 was due to the strengthening of the ruble against major foreign currencies. The Bank continues to form loan-loss provisions in-line with the requirements of the Central Bank of Russia.

Net profit before income tax came at RUB668.9 bn. Net profit excluding the effect of subsequent events totaled RUB517.0 bn. Sberbank is currently in the process of revaluating its property, the results of which will be included in the effect from subsequent events.

Total comprehensive income which includes the income from revaluation of financial assets available-for-sale, amounted to RUB576.8 bn.

Total assets in December increased by 1.2% to RUB22.0 trln despite negative revaluation of the foreign currency denominated assets on the back of Ruble appreciation.

The Bank lent RUB1,260 bn to corporate clients in December. Corporate loan issues from the beginning of 2016 amounted to over RUB9.1 trln, which was an increase of 35% to the previous year. The loan portfolio ending balance decreased by RUB535 bn due to revaluation of foreign currency denominated loans as well as early redemptions of some large clients' loans. The portfolio would have increased in December should the effect from these two factors be excluded.

The Bank lent over RUB170 bn to retail clients in December; retail loan issues from the beginning of 2016 were RUB1.55 trln, which was 28% greater than what was lent a year earlier. Total retail loan portfolio increased by RUB21 bn in December from mortgage loans to reach RUB4.34 trln.

Thanks to a number of measures undertaken at the Bank the volume of overdue loans in December came down by RUB67 bn. The share of overdue loans of total loans was down to 2.5% in December, which is lower than the level in the beginning of 2016 (3.3%), and is substantially lower than the banking sector's average (6.8% as of December 1, 2016).

Securities portfolio was down by RUB86 bn in December mainly due to redemptions of short-term European Commercial Papers of foreign banks as well as revaluation of foreign currency denominated portion of the portfolio on Ruble appreciation. The portfolio ending balance was about RUB2.05 trln as of January 1, 2017.

Retail deposits and accounts in December demonstrated a significant inflow of funds, up by RUB348 bn in nominal terms (in real terms by RUB505 bn). Retail deposits and accounts ending balance was RUB11.45 trln as of January 1, 2017.

Corporate deposits and accounts were down by RUB246 bn in nominal terms (in real terms by RUB52 bn) in December. Corporate deposits and accounts ending balance came at RUB5.4 trln as of January 1, 2017.

Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) reached RUB2,268 bn as of January 1, 2017. Total capital amounted to RUB3,143 bn as of January 1, 2017. Increase of total capital in December was driven by the earned net profit and optimization of investments in the subsidiaries.

Risk-weighted assets decreased by RUB487 bn in December mainly due to corporate loans and ended the year at RUB22.8 trln.

Capital adequacy ratios as of January 1, 2017 under preliminary calculations were:

- N1.1 - 10.0% (minimum adequacy level, required by the Central Bank of Russia at 4.5%)

- N1.2 - 10.0% (minimum adequacy level, required by the Central Bank of Russia at 6.0%)

- N1.0 - 13.8% (minimum adequacy level, required by the Central Bank of Russia at 8.0%).

Sberbank 2016 Financial Highlights (under RAS, non-consolidated, excluding subsequent events)

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