Sberbank releases Financial Highlights for 1Q 2018 (under RAS; non-consolidated)

Please note that the numbers are calculated in accordance with Sberbank's internal methodology. Effective January 1, 2018 the methodology has been updated. For comparison purposes the numbers for 2017 have been calculated in accordance with the updated methodology.

April 6, 2018

Key highlights for March 2018:

• In March, the Bank earned RUB66.8 bn in net profit;
• In March, the Bank issued RUB250 bn in loans to retail customers, the second largest amount ever issued after December 2017;
• Overdue loans declined by RUB8.9 bn in March;
• Cost-to-income ratio improved to 30.1% in 1Q 2018 as compared to 1Q 2017.

Deputy Chairman of Sberbank Alexander Morozov stated:

"Retail segment was the main driver to financial performance improvement. Retail loan portfolio growth continues, supported mainly by mortgages (+5% year-to-date). Income from operations with bank cards, which accounts for a half of fee and commission income, increased by 26.6%."

Comments for 1Q 2018:

Net interest income increased by 7.2% compared to 1Q 2017 and totaled RUB301.3 bn. The increase was due to expanding working assets and lower cost of client funds.

Net fee and commission income grew by 18.4% to RUB90.8 bn, with main drivers being the same: operations with bank cards and acquiring (+26.6%), settlement transactions (+17.7%) and fees from insurance products (+34.1%).

Operating expenses were up by 8.9%, thus lagging behind the increase in operating income before provisions (+9.6%). The transition to a more even dispersion of accrued expenses throughout the year will continue till the end of 2018. Cost-to-income ratio improved by 0.2 p.p. from 1Q 2017 to 30.1% for 1Q 2018.

Provision charges amounted to RUB38.8 bn, down by 20.6% as compared to 1Q 2017. As of April 1, 2018, loan-loss provisions were 2.5 times the overdue loans.

Net profit before income tax came at RUB246.6 bn for 1Q 2018, while net profit totaled RUB195.9 bn, including RUB66.8 bn in March.

Total assets increased by 1.2% in March to RUB23.4 trln, mainly due to growth of loan portfolio and nostro accounts.

The Bank granted RUB1.1 trln in loans to corporate clients in March, and RUB3.1 trln for the quarter, which is 1.7 times the amount issued in 1Q 2017. Corporate loan portfolio increased by 0.6% to RUB12.0 trln.

The Bank lent RUB250 bn to retail clients in March, which is the second largest amount ever issued in one month after December 2017. Loans issued in 1Q 2018 exceeded RUB650 bn, or 1.8-times the loans issued for the quarter a year ago. Retail loan portfolio amounted to RUB5.15 trln, up by 1.9% in March 2018.

Bad debt recovery process for both corporate and retail customers helped to reduce overdue loans by RUB8.9 bn in March. Therefore the share of overdue loans in total loan portfolio decreased from 2.5% to 2.4% in March. This is substantially below an average for the banking sector (8.7% excl. Sberbank as of March 1, 2018).

Securities portfolio decreased marginally by 0.1% to RUB2.55 trln.

Corporate deposits and accounts in March increased by 2.9% to RUB5.7 trln. Retail deposits and accounts added 0.3% to RUB12.0 trln. Combined client funding increased by RUB196 bn or 1.1% to RUB17.7 trln.

Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) totaled RUB3,084 bn as of April 1, 2018, according to preliminary calculations. Growth in core Tier 1 and Tier 1 capital in March was attributed to the inclusion of audited net profit for 2H 2017 once the audit of full-year financial results for 2017 was completed.

Total capital amounted to RUB3,881 bn. Net profit was the primary source of capital growth in March.

Risk-weighted assets increased by RUB0.3 trln to RUB24.1 trln, mainly due to lending growth.  

Capital adequacy ratios for Sberbank stand-alone as of April 1, 2018, according to preliminary calculations, were:

• N1.1 - 12.8% (minimum adequacy level, required by the Central Bank of Russia at 4.5%)
• N1.2 - 12.8% (minimum adequacy level, required by the Central Bank of Russia at 6.0%)
• N1.0 - 16.1% (minimum adequacy level, required by the Central Bank of Russia at 8.0%).

Sberbank 1Q 2018 Financial Highlights (under RAS, non-consolidated)