OREANDA-NEWS.  August 13, 2012. Income Statement Highlights for 7M 2012 (as compared to 7M 2011):

Net interest income grew 26.3% y-o-y
Net fee and commission income grew 18.2% y-o-y
Operating income before total provisions increased by 26.6% y-o-y
Total provision charge was RUB23.5 bn vs. provision release of RUB28.8 bn for 7M 2011
Operating expenses were up by 21.6% y-o-y
Profit before tax amounted to RUB265.0 bn vs. RUB250.1 bn for 7M 2011
Net profit totaled RUB212.4 bn vs. RUB201.2 bn for 7M 2011

Net interest income grew 26.3% y-o-y for 7M 2012:

Interest income increased by RUB135 bn due to growth of corporate and retail lending;

Interest expenses increased by RUB61 bn, owing to increased fund-raising and higher interest rates on corporate funds and interbank market.

Net fee and commission income grew by RUB16.6 bn, or 18.2% y-o-y, due to expansion of fee-generating services. Fees from plastic cards and acquiring operations gained nearly RUB12 bn.

Net gains from operations on financial markets amounted to RUB16.7 bn for 7M 2012, driven by gains from conversion operations.

For the reporting period, the Bank continued to make charges for provisions, which totaled RUB23.5 bn YTD.

Operating expenses increased by 21.6% y-o-y for 7M 2012. The main drivers of the increase were planned expenses related to investments, and spending, associated with the realization of the Bank’s Strategic Transformation Plan. Operating income before provisions growth continued to outpace growth in operating expenses, which improved cost-to-income ratio to 41.1% for 7M 2012 from 42.8% for 7M 2011.

Profit before tax totaled RUB265.0 bn and net profit amounted to RUB212.4  bn for 7M 2012. Both figures exceeded those for the same period a year ago.

The Bank’s assets expanded by16.4%, to reach RUB12.2 trln. In July, assets increased by 3.0%, primarily due to growth of the loan portfolio, investment portfolio, and amounts placed with other banks. 

The Bank lent over RUB500 bn to corporate clients for the month and over RUB3 trln YTD, which was 1.2X more than that for 7M 2011. Corporate loan portfolio increased by 1.4% in July to RUB6.9 trln.

Retail customers were granted about RUB150 bn in July, or about RUB1.1 trln YTD, which was 1.8X greater than for 7M 2011. Retail loan portfolio added 2.9% in July to reach RUB2.3 trln. 

Quality of the loan portfolio improved in July as a result of quality work with distressed assets. Share of overdue loans declined from 3.03% to 2.99% of total loans. Coverage ratio remained strong, with loan-loss provisions at RUB631 bn, or 2.3 times the overdue loans, as of August 1, 2012.

Investment portfolio increased by RUB63 bn, or 4.1%, in July primarily due purchases of government securities and corporate bonds. The Bank acquired bonds primarily of high-quality companies.

Retail deposits in July declined by 0.2%. That said, YTD retail deposits and accounts, - the major source of funding of the Bank’s operating activities, - increased by 6.7%, or RUB382 bn.

Corporate deposits and accounts declined by 1.9%. Corporate deposits and accounts, however, increased by 14.0%, or over RUB303 bn, YTD.

The Bank raised 750 mln USD as part of its MTN program.

Regulatory capital (under CBR regulation No. 215-P) increased by nearly RUB30 bn in July to RUB1615 bn. The main source of the increase in regulatory capital was net income generated by the Bank. Furthermore, since August 1, 2012, the calculation of regulatory capital starts to include financial results from derivatives, which positively affected Sberbank’s capital.

Capital adequacy ratio was at 13.1% as of August 1, 2012. The 0.6p.p. decline in July in the ratio was related to changes in the calculation methodology imposed by the Central Bank. To be more specific, since August 1, 2012, the calculation of risk-weighted-assets accounts for the following:

Operational risk is now fully accounted for (previously - was partially accounted for);

Criteria for higher-risk weights are now applied to the full list of transactions (previously - to only transactions, signed after October 1, 2011).