OREANDA-NEWS. February 10, 2014. Please note that the numbers are calculated in accordance with Sberbank`s internal methodology. Also note that the effect of subsequent events is excluded from the numbers as of January 1, 2014.

Income Statement Highlights for 1M 2014 (as compared to 1M 2013):
Net interest income grew by 24.9% y-o-y
Net fee and commission income grew by 26.3% y-o-y
Non-credit commission income grew by 24.5% y-o-y
Operating income before total provisions increased by 26.0% y-o-y
Total provision charge was RUB28.5 bn vs. a RUB11.5 bn charge in 1M 2013
Operating expenses were up by 11.6% y-o-y
Profit before tax amounted to RUB38.4 bn vs. RUB39.2 bn for 1M 2013
Net profit amounted to RUB31.6 bn vs. RUB31.8 bn for 1M 2013

Net interest income came at RUB72.2 bn, up 24.9% compared to 1M 2013:

Interest income increased by RUB22.3 bn driven by loan portfolio growth (both retail and corporate).

Interest expenses grew by RUB7.9 bn, more than a half of what was attributed to retail deposit expenses.

Net fee and commission income amounted to RUB16.8 bn. The growth rate of this item remains high: 26.3% compared to 1M 2013. The bank increases the F&C income primarily due to Noncredit commission, which was highly contributed by transactions with bank cards and acquiring. The Noncredit commission growth rate has been accelerated since September 2013. Noncredit commission income for 1M 2014 was 24.5% higher than for 1M 2013.

Net income from trading operations amounted to RUB0.7 bn, which is better than last year.

In common Operating income before provisions increased by 26.0% y-o-y and amounted to RUB90.4 bn.

Operating expenses for 1M 2014 increased by 11.6% in comparison to expenses for 1M 2013. C/I ratio for 1M 2014 was 26.0% vs. 29.3% for 1M 2013, however this ratio on a month horizon is not representative enough due to variation of generated income and expenses. Nevertheless the improvement trend in C/I ratio is maintained by the Bank’s cost optimization program.

Total provision charges amounted to RUB28.5 bn for 1M 2014 vs. RUB11.5 bn charge a year earlier. The growth in provision charges can be explained by the growth of the total loan portfolio, as well as the significant depreciation of the Ruble against the major foreign currencies in 1M 2014, what also caused a significant increase in provisions for foreign currency loans. Working in the time of current macroeconomic uncertainty, the Bank continues to maintain a conservative approach to provision forming for possible losses, based on the requirements of the CBR. Sberbank maintains an adequate level of the Coverage ratio: 2.2 times.

Sberbank’s Financial results for 1M 2014 are comparable with the results for 1M 2013: Profit before tax amounted to RUB38.4 bn, Net profit was RUB31.6 bn.

Assets increased by RUB353 bn in January, or 2.2%, and amounted RUB16.7 trn. The main growth drivers were corporate loans, securities and interbank loans.

The Bank lent more than RUB600 bn to corporate clients in January, which is a record volume for Januaries. As a result Corporate loan portfolio increased by 4.2% up to RUB8.9 trn.

About RUB90 bn were lent to retail clients in January. Retail loan portfolio grew by RUB3.1 bn, or 0.1%, in January and exceeded RUB3.3 trn. In January there were seasonal repayment of consumer loans, while the continued strong growth in mortgage lending.

With the loan portfolio growth the Bank retained its quality at a good level: overdue loans was 2.27% as of February 1, 2014.

Securities portfolio increased by RUB73 bn, or 3.7%, in January mainly due to investment in Russia eurobonds and corporate bonds. Partially the increase was associated with reflection peculiarities of REPO-operations.

Amount of Cash, that the Bank highly maintained during New Year holidays, decreased by RUB157 bn as of February 1, 2014.

The clients’ funds remain the core source of funding the Bank’s operations, it was 68% of the Bank’s Balance as of February 1, 2014:

Retail deposits and accounts decreased by RUB322 bn, or 4.0%, and amounted to RUB7.7 trn in January.

Outflow in Januaries is the traditional beginning for the year: almost all the outflow came throw the bank cards in the New Year holidays. In addition, the deposits volume decrease in January 2014 was the result of a record deposits growth in December 2013, when clients got pensions-payments for the two months at once: for December 2013 and January 2014.

Corporate deposits and accounts demonstrated seasonal growth (+RUB458 bn or +14.7%) and amounted to about RUB3.6 trn.

Effective from January 1, 2014 are changes to capital level calculation under CBR regulation No 395-P and instruction No 139-I.The new methodology underlines three levels of capital – core tier 1, tier 1 and total – and corresponding capital adequacy ratios: N1.1, N1.2 and N1.0. The amounts of core tier 1 and tier 1 capital as of February 1, 2014 for Sberbank were the same, since Sberbank does not have instruments of additional capital, and under preliminary calculations reached RUB1,347 bn. Total capital amounted to RUB2,051 bn.

Compared to amount of total capital calculated under the previous methodology (under CBR regulation No. 215-P) as of January 1, 2014, total capital increased by RUB48 bn as a result of net profit contribution as well as change in calculation methodology.

Capital adequacy ratios under preliminary calculations and not accounting for net profit for 2013 to be included in capital post audit were:

N1.1  – 8.2% (minimum adequacy level, required by the Central Bank of Russia at 5.0%)
N1.2 – 8.2% (minimum required level at 5.5%)
N1.0 – 12.6% (minimum required level with Deposit insurance agency requirement at 11%).