OREANDA-NEWS. On April 27, 2009 Sberbank has posted its consolidated IFRS financial statements for 2008 including a PricewaterhouseCoopers auditor’s report, reported the press-centre of Sberbank.

Sberbank Group’s net profit for 2008 totaled RUB 97.7 bn, which is an 8.3% decrease against the previous year. At the same time, operating income before loan impairment provisioning grew by 27% year-on-year and reached RUB 449.5 bn. The main drivers of this growth were a significant increase of interest income from loans, a rise in interest margin from operations with clients and an increase of fee income.

Net interest income grew by 50% year-on-year with interest income (+44.6%) showing higher growth rates than interest expenses (+37.5%). The growth was driven by expanded volumes of loan operations with clients and rise in interest rates on loans. Interest spread, the difference between interest income on working assets and the cost of funds, increased by 1.1pp in 2H 2008. 

Fee income of the Group showed stable growth, with a 32.1% increase year-on-year.

The reduction in the Group’s net profit for 2008 is mostly influenced by a 5.5 times increase in provisioning for loan impairment compared to 2007. The fastest growth of provisions (+40.8%) was in the 4Q 2008. 

Another significant factor which had negative effect on the Group’s net profit for 2008 was  losses on operations with securities in the amount of RUB37.3 bn, which were influenced by the decline in the global and Russian financial markets. These losses were generated mostly by unrealized revaluation losses on securities in the 3Q and 4Q 2008. For the purpose of these consolidated financial statements the management of the Sberbank Group decided not to adopt the amendment “Reclassification of financial assets” issued to IAS 39 “Financial Instruments: Recognition and  Measurement” and IFRS 7 “Financial Instruments: Disclosures”.

Administrative and operating expenses for 2008 increased by 13.2% year-on-year, including a 12.3% staff costs growth for the same period. Sberbank Group’s operating income shows higher growth rates than operating expenses, with the cost to income ratio standing at 49.3% compared to 55.4% for 2007.

The Group made early adoption of the revised IAS 1, “Presentation of Financial Statements”, in its consolidated financial statements for the year ended 31 December 2008, and for the first time prepared the consolidated statement of comprehensive income, which includes, in addition to traditional components of income statement, components of income and expenses recorded directly in equity, specifically, gains on property revaluation, losses on investment securities available for sale. For 2008 comprehensive income totaled RUB 124.6 bn, a 16.2% increase year-on-year.    

As of 31 December 2008 Sberbank Group’s total assets under IFRS reached RUB 6 736.5 bn, which represents a 36.7% growth for 2008. The Group’s loan portfolio (before provisions and excluding loans to banks) expanded by 31%.

As a result of the deterioration in economic environment in the Russian Federation in 2H 2008, the  Group’s loan portfolio quality has changed. As of 31 December 2008 the proportion of non-performing loans in total loans (NPL ratio) was 1.79% (2007: 1.50%). The ratio of loan impairment provisions to non-performing loans (coverage ratio) demonstrated growth in 2008 as a result of faster growth of provisions compared to non-performing loans.

For 2008 shareholders’ equity grew by 17.7% to RUB750.2 bn. As of 31 December 2008 total capital adequacy ratio (Tier 1 and Tier 2) was 18.9% under Basel 1 requirements  (2007: 14.5%). The increase is primarily attributable to the receipt of subordinated debt in 4Q 2008 from the Central Bank of Russia totaling RUB 500 bn.