OREANDA-NEWS. Net interest income increased by 6.4% compared to 7M 2016 and came at RUB683.6 bn, mainly due to the decrease in interest rates on clients’ funds and an increase in the retail loan portfolio. Positive impact was also provided by the change in the currency mix of the loan portfolio towards ruble loans.

Fee and commission income was up by 14.7% to RUB194.0 bn, continued to be driven by bank cards operations, including acquiring, as well as the income from bank insurance.

Operating income before provisions increased by 18.5% compared to 7M 2016, significantly exceeding operating expenses growth for the same period (7.9%). The increase in operating expenses was driven by methodology changes (effective 2017 the Bank is using accrual method in costs accounting to spread them more evenly across the year) and wage indexation in mid-2016. Cost-to-Income ratio came at 29.8% for 7M 2017, an improvement of 2.9 pp, compared to 7M 2016.

Total provision charges amounted to RUB51.2 bn in July. Provision charges amounted to RUB204.2 bn for 7M 2017, up by 6.5% compared to 7M 2016. The increase in July was partly driven by continuing ruble devaluation in July that required to form additional reserves for FX loans. Loan-loss provisions are 2.5 times the overdue loans as of August 1, 2017.

Net profit before income tax came at RUB465.8 bn. Net profit totaled RUB372.8 bn, including RUB55.9 bn in July. The Bank made actual calculations of the income tax for the 2nd quarter in July, as a result of which the effective tax rate was normalized.

Total assets in July increased by RUB449 bn or by 2.0% to RUB22.4 trln. Increase in customers’ credit portfolio and securities portfolio were the main drivers of assets’ growth. FX effect on balance sheet items had additional impact on growth assets.

The Bank continued to increase lending volumes. Disbursements of corporate loans amounted to over RUB1,230 bn in July, which is close to the seasonally strong year-ends. Issuances from the beginning of the year reached RUB5.7 trln, which is 21% higher than in 7M2016. The corporate loan portfolio in July increased by 2.5% or by RUB290 bn, while in real terms it went up by 2.2%.

The Bank lent more than RUB170 bn to retail clients in July. Issuances from the beginning of the year came at over RUB1 trln, which is 23% higher than in 7M2016. Total retail loan portfolio increased by 1.2% or by RUB53 bn in July due to mortgage loans, consumer loans and credit cards.

The share of overdue loans in total loans came at 2.7% and remained substantially lower than the banking sector’s average (6.5% as of July 1, 2017).

Securities portfolio was up by 1.9% or by RUB45 bn in July mostly due to purchases of OFZs.

Corporate deposits and accountswere up by 1.6% or by RUB83 bn in July. Retail deposits and accounts in April increased by 0.2% or by RUB24 bn. The balance of customer accounts amounted to RUB17.1 trln as of August 1

Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) reached RUB2,355 bn as of August 1, 2017 under preliminary calculations. Total capital amounted to RUB3,398 bn as of August 1, 2017, up mainly due to earned net profit.

Risk-weighted assets increased by RUB217 bn to RUB24.0 trln in July mainly driven by corporate loans.

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

N1.1 – 9.8% (minimum adequacy level, required by the Central Bank of Russia at 4.5%)

N1.2 – 9.8% (minimum adequacy level, required by the Central Bank of Russia at 6.0%)

N1.0 – 14.2% (minimum adequacy level, required by the Central Bank of Russia at 8.0%).

Sberbank 7M 2017 Financial Highlights (under RAS, non-consolidated)