OREANDA-NEWS. June 09, 2014. Please note that the numbers are calculated in accordance with Sberbank`s internal methodology.

Income Statement Highlights for January-May 2014 (as compared to January-May 2013):
Net interest income increased by 25.1% y-o-y
Net fee and commission income grew by 24.7% y-o-y
Noncredit commission income grew by 26.9% y-o-y
Operating income before total provisions increased by 25.1% y-o-y
Total provision charge was RUB119.2 bn vs. RUB42.8 bn charge in January-May 2013
Operating expenses were up by 13.0% y-o-y

Net profit amounted to RUB155.3 bn. Please note that comparison to Net profit for the same period of 2013 is incorrect due to adjustments that reflect new CBR regulation on deferred tax assets and liabilities. Excluding the effect of the one-off change in accounting, net profit would have amounted to RUB165.7 bn vs. RUB156.8 bn in January-May 2013.

Net interest income came at RUB348.9 bn, up by 25.1% compared to January-May 2013:

Interest income increased by RUB119.0 bn driven by both corporate and retail loan portfolio growth;

Interest expenses grew by RUB49.1 bn, mostly due to customer deposits growth and increase in CBR funding costs.

Net fee and commission income amounted to RUB102.9 bn; up by 24.7% y-o-y compared to January-May 2013, contributed primarily by noncredit commission income that was up by 26.9%, mostly driven by bank cards and acquiring. Cash settlements also contribute significantly. Slowdown in Fee and commission income growth in May was caused by seasonality, similar to last year’s dynamics.

Net income from trading operations amounted to RUB8.9 bn vs. RUB9.9 bn for January-May 2013. The dynamics is mostly associated with a reduction of income on the securities market due to the general market situation. Net income on conversion operations increased 2.3 times, and amounted to RUB15.7 bn.

Operating income before provisions that is generated by core operations of the Bank, increased by more than a quarter to reach RUB472.1 bn.

Operating expenses increased by 13.0%. C/I ratio for January-May 2014 improved to 34.3% vs. 37.9% a year earlier. The improvement in C/I ratio is maintained by the Bank’s cost optimization program. Pre-provision operating income growth significantly exceeds operating expenses growth (25.1% vs. 13.0%).

Total provision charges amounted to RUB119.2 bn vs. RUB42.8 bn charge a year earlier. The Bank continues to practice a conservative approach in loan-loss provisioning based on requirements of the Central Bank of Russia. Coverage ratio remained strong: loan-loss provisions are 2.1 times the overdue loans.

Profit before tax for 5M 2014 totaled RUB191.0 bn. As per new CBR regulation No 409-P1 Sberbank in May made an accounting reporting change: the Balance Sheet reflects deferred tax liability. As a result, the income tax was increased by the amount of the deterred tax of RUB10.4 bn, which was a one-off negative on the net profit. This amount represents the increase in income tax to be paid in future reporting periods to the Russian Federal budget. Consequently, the net profit for January-May 2014 amounted to RUB155.3 bn, 1% less than the net profit for the corresponding period last year. Excluding the effect of the one-off, the net profit for January-May 2014 would have reached RUB165.7 bn, or 5.7% more than the net profit for the corresponding period last year.

Assets increased by RUB106 bn in May, or 0.6%, to reach nearly RUB17.5 trn. The main growth driver was retail lending. Negative revaluation of foreign currency loans influenced corporate loan portfolio.

The assets growth YTD came at RUB1,126 bn, or 6.9% due to both corporate (+9.6%) and retail (+8.6%) portfolios growth.

The Bank lent over RUB480 bn to corporate clients in May; RUB170 bn were lent to retail clients. Total loan portfolio increased by RUB86.9 bn, or 0.7% in May and exceeded RUB13.0 trn as of 1 June, 2014.

The Bank retains quality of its loan portfolio at a good level: overdue loans remained 2.5% as of June 1, 2014.

Securities portfolio increased by RUB83 bn, or 4.5% in May due to purchases of OFZ bonds.

The clients’ funds remain the core source of funding for the Bank’s operations: the deposits and accounts increased by RUB591 bn, or 5.3% YTD, the portfolio came at RUB11.8 trn as of June 1, 2014. The growth in May was driven by corporate term deposits that increased by RUB98 bn, or 5.0%.

Core Tier 1 and Tier 1 capital2 (equal since Sberbank does not have instruments of additional capital) reached RUB1,559 bn as of June 1, 2014 under preliminary calculations. Total capital amounted to RUB2,221 bn on the same date. Total capital increased in May as a result of net profit contribution, revaluation of available-for-sale securities and revaluation of subordinated debt.

Capital adequacy ratios under preliminary calculations as of June 1, 2014 were:

N1.1 – 9.0% (minimum adequacy level, required by the Central Bank of Russia at 5.0%)

N1.2 – 9.0% (minimum adequacy level, required by the Central Bank of Russia at 5.5%)

N1.0 – 12.7% (minimum adequacy level, required by the Central Bank of Russia at 10.0%, considering Deposit Insurance Regulation).

Sberbank 5M 2014 Financial Highlights (under RAS, unconsolidated)

1 Effective from November 25, 2013 is new CBR regulation No 409-P on accounting for deferred tax assets and liabilities.
2 Effective from January 1, 2014 are changes to capital level calculation under CBR regulation No 395-P and instruction No 139-I.