OREANDA-NEWS. Sberbank releases Financial Highlights for 7M, 2015 (under RAS; non-consolidated).

Net interest income came at RUB393.9 bn, down by 20.1% compared to that for 7M, 2014. The pace of net interest income growth in 2015 is catching up to 2014 rate.
* Interest income increased by RUB223.1 bn, or 25.5%, driven mostly by loan portfolio growth and improving yield.
* Interest expenses increased by RUB322.4 bn, or 84.3%, due to the increase in market interest rates and inflow of funds. The strongest impact on interest expense for 7M, 2015 came from the CBR funding and client deposits. Slowdown in interest expenses growth continues due to gradual decrease in the CBR's key interest rate since the beginning of 2015.

Net fee and commission income came at RUB151.8 bn, up by 2.5%. The low growth rate is explained by the decline in commission income from corporate lending and insurance due to lending slowdown.  Noncredit commission income increased by 17.4%. Transactions with bank cards and acquiring remain the main drivers of commission income growth. Furthermore, there was a significant increase in income from cash settlements and bank guaranties.

Net income from FX revaluation and trading operations on capital markets amounted to RUB36.2 bn for 7M, 2015. The income growth in July was driven mostly by FX revaluation due to significant ruble devaluation.

Operating expenses decreased by 0.1% y-o-y for 7M, 2015 due to the Bank`s cost optimization program. Effective 2015 the Bank started to apply the accrual method in accounting for employee compensation expenses in order to smoothen the expenses distribution across the year. For comparison purposes the same accounting principle was applied to staff costs for 2014. Excluding the accrual effect in accounting for employee compensation expenses for the same period of 2014, operating expenses increased by 3.8%.

Total provision charges amounted to RUB220.7 bn for 7M, 2015 vs. RUB162.5 bn a year earlier. Amount of provisions in July (RUB44.8 bn) was due by ruble devaluation relative to key foreign currencies that required to form additional reserves for FX loans with no deterioration of credit quality. 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 2.0 times the overdue loans.

Net profit before income tax came at RUB31.8 bn in July and RUB127.8 bn for 7M, 2015 vs. RUB280.6 bn a year earlier. At the same time, in July the income tax surcharge for the 2nd quarter and advance payment of tax payable in the 3rd quarter were reflected in the Bank`s costs. Increase in tax liabilities was associated with different accounting of securities denominated in foreign currencies in financial and tax accounting. Net profit for 7M, 2015 totaled RUB92.5 bn vs. RUB222.1 bn for 7M, 2014.