DGAP-News: Sberbank of Russia PJSC (spons. ADRs)

DGAP-News: Sberbank: Sberbank releases Financial Highlights for 11M 2015 (under RAS; non-consolidated)

Sberbank / Key word(s): Statement/Miscellaneous

07.12.2015 08:44

Dissemination of a Corporate News, transmitted by EquityStory.RS, LLC - a company of EQS Group AG. The issuer / publisher is solely responsible for the content of this announcement.

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Sberbank releases Financial Highlights for 11M 2015 (under RAS; non-consolidated)

Please note that the numbers are calculated in accordance with Sberbank's internal methodology.

December 7, 2015

Key highlights for November, 2015:

- The inflow of clients' funds in November came at more than RUB500 bn (+3.2% m-o-m)

- The CBR funding decreased by RUB243 bn and its share in total liabilities reduced from 3.9% to 2.7%

- Loan portfolio grew by RUB275 bn (+1.8%) in November

- The Bank optimized its liquid assets, which should positively affect net interest margin: amounts due to banks decreased by RUB144 bn, securities portfolio increased by RUB173 bn

- Net income exceeded RUB200 bn YTD

Deputy Chairman of Sberbank Alexander Morozov stated: "The Bank significantly improved its Balance sheet structure and maintained a high level of net profit in November despite the negative factors of provisioning for FX loans due to ruble devaluation and accounting specifics of SWAP transactions."

Analysis of the Statement of Financial Position and Statement of Profit or Loss for 11M 2015, as compared to the same period a year earlier:

- Interest income increased by 22.3% y-o-y, interest expenses increased by 68.5% y-o-y. Net interest income decreased by 14.7% y-o-y

- Noncredit commission income grew by 19.6% y-o-y, net fee and commission income increased by 6.6% y-o-y

- Operating income before total provisions decreased by 13.2% y-o-y

- Total provision charge was RUB370.2 bn vs. RUB377.8 bn charge for 11M 2014

- Operating expenses decreased by 1.4% y-o-y

- Net profit before income tax reached RUB239.4 bn vs. RUB382.2 bn for 11M 2014

- Net profit totaled RUB202.4 bn vs. RUB295.0 bn for 11M 2014

Comments:

Net interest income came at RUB676.5 bn, down by 14.7% compared to that for 11M 2014. The Bank continues to recover the volumes of net interest income: the lag in the pace of net interest income growth in 2015 relative to 2014 is contracting: 27.9% (for 3M), 14.7% (for 11M).

- Interest income increased by RUB318.8 bn, or 22.3%, driven by improving yields on corporate portfolio as well as clients' and other banks' loan portfolio growth.

- Interest expenses increased by RUB435.4 bn, or 68.5%, due to the increase in market interest rates and inflow of funds. Interest expenses growth continues to subside as a result of the gradual decrease in the CBR's key interest rate.

Furthermore, starting from 4Q2015 the Bank applies the method of monthly accrual on the deposit insurance expense in order to even the effect on the financial results (previously, the deposit insurance expense was paid in the last month of each quarter). Consequently, the comparison of 11M2015 interest expenses to those of 11M2014 would not be correct. The deposit insurance expense in October-November was RUB6.1 bn.

Net fee and commission income came at RUB255.7 bn, up by 6.6%. The Bank continued to demonstrate growth of net fees and commission income despite the decline in commission income from corporate lending and banking insurance. Noncredit commission income increased by 19.6%, accelerated by the end of a year and mostly driven by transactional business with bank cards.

Net income from FX revaluation and trading operations on capital markets amounted to RUB43.9 bn for 11M 2015 compared to RUB67.4 bn for 11M 2014. Ruble appreciation against EURO on November 30th led to the Bank's net profit decrease as a result of the specifics in accounting for SWAP transactions under RAS: while the Balance sheet items are reported at the official rate of the Central Bank, the off-balance sheet items are booked at the end of day market exchange rate. The negative revaluation effect is reversed the following day.

Operating expenses decreased by 1.4% y-o-y for 11M 2015 due to the Bank's cost optimization program. Effective 2015 the Bank started to apply the accrual method in accounting for employee compensation expenses in order to smoothen the expenses distribution across the year. For comparison purposes the same accounting principle was applied to staff costs for 2014.

Excluding the accrual effect in accounting for employee compensation expenses for the same period of 2014, operating expenses decreased by 0.2%.

Total provision charges amounted to RUB370.2 bn for 11M 2015 vs. RUB377.8 bn a year earlier. In November amount of provision charge came at RUB36.6 bn. This increase vs. October was driven by ruble devaluation relative to USD that required to form additional reserves for FX loans. The Bank continues to form loan-loss provisions in-line with the requirements of the Central Bank of Russia. Loan-loss provisions are 1.8 times the overdue loans.

Net profit before income tax came at RUB239.4 bn for 11M 2015 vs. RUB382.2 bn a year earlier. Net income reached RUB202.4 bn for 11M2015 compared to 295.0 bn for 11M2014.

Assets increased by 0.9% in November to RUB21.8 trln. Most notable was growth of corporate loans and the securities portfolio, while there was a decrease in funds placed with other commercial banks.

The Bank lent about RUB0.6 trln to corporate clients in November. Loan issues from the beginning of the year reached about RUB5.5 trln. Total corporate loan portfolio in November increased by RUB264 bn, or by 2.3%, to RUB11.8 trln.

The Bank lent about RUB110 bn to retail clients in November, from the beginning of the year was about RUB1.070 trln. Total retail loan portfolio increased by RUB11 bn, or 0.3%, in November to exceed RUB4.1 trln. The share of mortgages in total retail portfolio continued to increase to reach 53% as of December 1, 2015.

Overdue loans increased by 0.1p.p. to 3.4% of total loans in November. The level of overdue loans at Sberbank remains substantially lower than the level of the banking sector's average.

Securities portfolio was up by RUB173 bn in November, or by 9.4%, due to purchases of the Eurobonds of the Russian Federation and corporate bonds. The portfolio ending balance exceeded RUB2.0 trln as of December 1, 2015.

Retail deposits and accounts increased by RUB156 bn in November, or up by 1.6%, due to both deposits and savings certificates. Overall retail deposits and accounts portfolio reached about RUB10.0 trln as of December 1, 2015. Since the beginning of the year retail funds increased by RUB1.437 trln, or by 16.9%, whereas the portfolio was up by 3.5% during the same period last year.

Corporate funding increased by RUB351 bn in November, or by 5.9%, due to inflow of ruble funds from deposits and current accounts. Furthermore, ending balances in FX have decreased in November. Overall corporate clients' funding increased by RUB1.221 trln, or 24.1%, during 11M 2015 to RUB6.3 trln.

Significant inflow of ruble funding from clients in November allowed to reduce the volume of funds borrowed from the Central Bank. Their share (excluding the subordinated loan) in total liabilities fell to 2.7% in November from 3.9% (as of 1/1/2015 the share was 15.2%), which altogether allowed to lower the average cost of funding.

Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) reached RUB1.774 trln as of December 1, 2015 under preliminary calculations. Total capital amounted to RUB2.642 trln on the same date, up by RUB19 bn in November primarily due to net profit.

Risk weighted assets increased by RUB427 bn in November.

Capital adequacy ratios under preliminary calculations as of December 1, 2015 were:

- N1.1 - 8.2% (minimum adequacy level, required by the Central Bank of Russia at 5.0%)

- N1.2 - 8.2% (minimum adequacy level, required by the Central Bank of Russia at 6.0%)

- N1.0 - 12.1% (minimum adequacy level, required by the Central Bank of Russia at 10.0%, considering Deposit Insurance Regulation).

Sberbank 11M 2015 Financial Highlights (under RAS, non-consolidated)

07.12.2015 The EquityStory.RS, LLC Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de

--------------------------------------------------------------------------- Language: English Company: Sberbank 19 Vavilova St. 117997 Moscow Russia Phone: +7-495-957-57-21 Fax: E-mail: media@sberbank.ru Internet: www.sberbank.ru ISIN: US80585Y3080, RU0009029540, RU0009029557, US80585Y4070 Listed: Open Market (Entry Standard) in Frankfurt ; London, MICEX, RTS End of Announcement EquityStory.RS, LLC News-Service ---------------------------------------------------------------------------