Sberbank (SBER)
Sberbank reports 2Q 2019 Net Profit of RUB250.3 bn under International
Financial Reporting Standards (IFRS)
31-Jul-2019 / 09:51 CET/CEST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Sberbank reports 2Q 2019 Net Profit of RUB250.3 bn under International
Financial Reporting Standards (IFRS)
Moscow, July 31, 2019 - Sberbank (hereafter "the Group") has released its
interim condensed IFRS financial statements (hereafter "the Financial
Statements") as at and for the 6 months ended 30 June 2019, with report on
review by AO PricewaterhouseCoopers Audit. All information is presented net of
Denizbank A.S. operations, unless stated otherwise.
Alexander Morozov, Deputy Chairman of the Executive Board, CFO, commented:
«Expansion of the retail business, focus on SME lending, a further increase in
efficiency driven by processes optimization and sustainable growth in the
number of digital users ensured a 23.9% return on equity in the first half of
2019. That forms a strong basis to achieve the targeted level of return on
equity for the whole year».
The 2Q 2019 Financial Highlights:
· The Group net profiti reached RUB250.3 bn for 2Q 2019 (+16.3% y/y), and
RUB476.9 bn for 6M 2019 (+11.6% y/y);
· The Group earnings per ordinary share (EPS) came at RUB10.70 per share, up
by 17.2% compared to 2Q 2018;
· The Group annualized return on equity (ROE)i reached 24.9%, while the
Group annualized return on assets (ROA) reached 3.4%;
· Retail loan portfolio was up by 4.2% in 2Q 2019 to more than RUB7 trn
reaching more than 35% of the total loan portfolio;
· Client deposits increased by 2.0% for the quarter exceeding RUB21 trn;
· The combined Cost of Risk (CoR) came at 14 bp including the effect of
provisions' release as part of completion of Agrokor debt restructuring;
· The quality of the Group loan portfolio improved: share of Stage 3 and
POCI loans came at 7.8%, showing a 0.1 pp decrease compared to 1Q 2019.
Selected Financial Results
RUB bn, unless 2Q 2Q 1Q 2Q 2Q 6 6 6
stated months months months
otherwise
2019 2018 2019 2019/ 2019/ 2019 2018 2019/
2Q 1Q 6
months
2018, 2019, 2018,
% % %
change change change
Net interest 353.1 349.0 337.5 1.2% 4.6% 690.6 682.5 1.2%
income
Net fee and 116.7 112.0 102.9 4.2% 13.4% 219.6 205.2 7.0%
commission
income
Other 14.6 (13.4) 39.8 -- (63.3%) 54.4 7.0 677.1%
non-interest
income /
(expense)ii
Operating 484.4 447.6 480.2 8.2% 0.9% 964.6 894.7 7.8%
income before
provisions***
Net charge (8.8) (35.8) (45.5) (75.4%) (80.7%) (54.3) (57.0) (4.7%)
related to
change in
asset quality:
Net credit (9.2) (12.0) (17.3) (23.3%) (46.8%) (26.5) (32.1) (17.4%)
loss allowance
charge for
debt financial
assets
Negative 0.4 (23.8) (28.2) -- -- (27.8) (24.9) 11.6%
revaluation of
loans at fair
value due to
change in
credit quality
Staff and (168.5) (151.7) (150.7) 11.1% 11.8% (319.2) (296.5) 7.7%
administrative
expenses
Net profit 245.9 208.3 226.1 18.1% 8.8% 472.0 433.4 8.9%
from
continuing
operations
Profit / 4.4 7.0 0.5 (37.1%) 780.0% 4.9 (6.0) --
(Loss) from
discontinued
operations
Net profit 250.3 215.3 226.6 16.3% 10.5% 476.9 427.4 11.6%
Earnings per 10.70 9.13 10.53 17.2% 1.6% 21.23 19.58 8.4%
ordinary share
from
continuing
operations,
RUB
Total 281.1 181.7 221.2 54.7% 27.1% 502.3 417.5 20.3%
comprehensive
income from
continuing
operations
attributable
to the
shareholders
of the Bank
Book value per 176.4 154.3 179.7 14.3% (1.8%) 176.3 154.3 14.3%
share *, RUB
Ratios based
on continuing
operations
Return on 24.9% 24.4% 22.9% -- -- 23.9% 24.3% --
equityi
Return on 3.4% 3.3% 3.1% -- -- 3.3% 3.4% --
assets
Net interest 5.18% 5.80% 4.98% -- -- 5.08% 5.75% --
margin
Net interest 5.41% 6.09% 5.27% -- -- 5.34% 6.06% --
margin**
Cost of risk 15 ?? 23 ?? 44 ?? -- -- 30 ?? 36 ?? --
(amortized
cost loans)
Cost of risk 14 ?? 72 ?? 96 ?? -- -- 55 ?? 62 ?? --
(amortized
cost and FV
loans)
Cost-to-income 34.6% 30.8% 31.7% -- -- 33.2% 31.7% --
ratio***
* Total equity attributable to shareholders of the Bank / Total numbers of
shares outstanding (ordinary + preferred)
** Net interest margin was recalculated as working assets adjusted for the
amount of provisions, created against Stage 3 loans
*** Operating income before provisions for debt financial assets, credit
related commitments and revaluation of loans at fair value due to change in
credit quality
Selected Balance Sheet Results
RUB bn, 30.06.2019 31.03.2019 31.12.2018 30.06.2019/ 30.06.2019/
unless 31.03.2019, 31.12.2018,
stated
otherwise
% change % change
Gross 20 617.6 20 823.9 21 082.3 (1.0%) (2.2%)
total
loans*:
Corporate 13 341.0 13 838.5 14 331.1 (3.6%) (6.9%)
loans*
Retail 7 276.6 6 985.4 6 751.2 4.2% 7.8%
loans*
Securities 4 343.1 4 058.3 3 749.5 7.0% 15.8%
portfolio
Assetsi 31 561.9 31 328.7 31 197.5 0.7% 1.2%
Total 21 808.0 21 379.3 20 897.3 2.0% 4.4%
deposits:
Retail 13 672.5 13 343.7 13 495.1 2.5% 1.3%
deposits
Corporate 8 135.5 8 035.6 7 402.2 1.2% 9.9%
deposits
Ratios
Net Loans 88.1% 90.5% 93.7% -- --
/ Deposits
ratio
(LDR)
Stage 3 + 7.8% 7.9% 8.1% -- --
POCI loans
/ total
gross
loans at
amortized
cost
Provision 90.7% 91.9% 90.4% -- --
coverage
of Stage 3
+ POCI
loans
* Before credit related commitments and combined loans at amortized cost and
at fair value
Net interest income came at RUB353.1 bn in 2Q 2019, up by 1.2% y/y.
Total interest income amounted to RUB605.5 bn, up by 13.1% in 2Q 2019 on the
background of the loan portfolio growth (at amortized cost and at fair value)
by 5.9% to RUB20.6 trn.
· Retail loan portfolio increased by 4.2% to RUB7.3 trn in 2Q 2019
· Consumer loan portfolio was up by 6.5% in 2Q 2019 supported by online
sales through the digital channels that comprised 50% of total origination
as of the end of the quarter.
· Mortgages grew by 2.5%. The platform DomClick substantially supports
mortgage lending and accounts for 25% of newly issued Sberbank loans.
DomClick holds the leading position among all the aggregators by number of
secondary market listings in Russia.
· Retail loan yield increased by 20 bp to 12.2% in 2Q 2019 on the back of
increase of consumer loans share in the total loan portfolio as well as
the effect of rates change for newly issued loans at the beginning of the
year.
· Corporate loan portfolio (at amortized cost and at fair value combined)
came down by 3.6% to RUB13.3 trn in 2Q 2019 mostly influenced by lower
demand for lending in the segment of large borrowers. However, there is an
accelerated growth in the small and medium business lending (more than 5%
for the quarter). Online lending for individual entrepreneurs was launched
in the 2Q 2019.
· Based on management accounts, Rouble loan portfolio decreased by 1.7%
during the quarter, FX portfolio, net of currency revaluation, was down by
2.3%.
· Corporate loan yield was up by 60 bp to 8.6% in 2Q 2019 as compared to
1Q 2019. The increase is mainly driven by the structural changes in the
loan portfolio in favor of Rouble lending as well as the focus on SME
segment.
Total interest expense, including deposit insurance expenses, increased by
35.5% to RUB252.4 bn in 2Q 2019 on the back of growth of interest bearing
liabilities by 13.6% and cost of funding increase by 70 bp y/y.
· Retail deposits grew by 2.5% to RUB13.7 trn, the average cost of retail
term deposits increased by 20 bp for the quarter.
· Corporate deposits were up by 1.2% to RUB8.1 trn, the average cost of term
deposits remained unchanged in the 2Q 2019.
In 2Q 2019 Sberbank redeemed Eurobonds and Rouble-denominated exchange-traded
bonds issued on the local market in the nominal amount of USD1 bn and RUB10 bn
respectively according to the schedule. Sberbank Group also placed bonds on
the Russian market in the amount of RUB20 bn. At the end of 2Q 2019, the
nominal volume of exchange-traded bonds, issued on the Russian market,
comprised RUB325.5 bn as well as USD2.5 bn and EUR1.0 bn on the international
market. The share of wholesale funding in total liabilities of the Bank
decreased below 1.2%.
The Group net fee and commission income for 2Q 2019 came at RUB116.7 bn, up by
4.2% y/y mainly driven by bank card fees from acquiring, commissions of
payment systems and other similar commissions, settlement transactions and
brokerage business. The slowdown in net fee and commission income growth in
the reporting quarter was explained by a one-off effect on the income from
documentary operations that elevated a comparative base of 2Q 2018. Excluding
this factor, the growth for the 2Q 2019 would have comprised 8.1%. From 1
January 2019 VAT from loyalty programs is included in net fee and commission
income, the comparative base is adjusted as well.
· Number of active retail clients reached about 93 mln. The "youth" segment
accounts for more than half of Sberbank's new clients (1.6 out of 3.1
million).
· The number of active retail users in digital channels exceeded 66 million,
while the number of daily active users (DAU) increased to 21.7 mln. DAU /
MAU (mobile app) improved by 5.1 pp to 39.1% in 2Q 2019.
· The number of cities with transport acquiring reached 80 by the end of 2Q
2019.
According to management accounts, operating income of insurance and pension
businesses increased by 14% in 1H 2019 based on both gross premiums written
and investment income.
The Group operating expenses (staff and administrative) for 2Q 2019 came at
RUB168.5 bn, up by 11.1% as compared to the same period a year ago and up by
7.7% for 6M 2019 y/y. The increase was explained by the change in
capitalization principles of expensing for in-house developed IT products in
light of optimization of operations of the Technology Block that took place in
July, 2018. Apart from that it was influenced by VAT rate increase from the
beginning of the year. Excluding these factors, operating expenses growth
would not exceed 4.5% for 6M 2019.
The Group Cost-to-Income ratio*** totaled 34.6%.
Net credit loss allowance charge for loans at amortized costs amounted to
RUB7.7 bn for 2 quarter 2019. The charge includes recovery of previously
created provisions against Agrokor's exposure due to completion of
restructuring. This translates into Cost of Risk at 15 bp for the loan book at
amortized cost. According to IFRS 9 a part of the loan portfolio is accounted
at fair value through profit or loss. Positive revaluation of loans at fair
value due to change in credit quality amounted to RUB0.4 bn in 2Q 2019.
Consequently, the combined Cost of Risk for loans at amortized cost and at
fair value in 2Q 2019 was 14 bp. Starting from 1Q19 we exclude FX-component
from provision charge/ recovery for FX-denominated loans at amortized cost as
well as from revaluation of FX-denominated loans at fair value. This FX
component was shown as foreign exchange translation (losses) / gains and
amounted to RUB7.3 bn for 2Q 2019.
The total provision coverage of Stage 3 and POCI loans decreased by 1.2 pp
compared to the previous quarter and comprised 90.7%. The share of Stage 3 and
POCI loans in total gross loans at amortized cost improved by 0.1 pp and came
at 7.8%.
Capital Adequacyi
Under Basel 30.06.2019 31.03.2019 31.12.2018 30.06.19 30.06.19
III (standardi (standardi (standardi (standar (standar
zed + IRB) zed + IRB) zed + IRB) dized + dized +
IRB)/ IRB)/
31.03.19 31.12.18
RUB bn, (standar (standar
unless stated dized + dized +
otherwise IRB), % IRB), %
change change
Total Tier 1 3 894.4 3 976.3 3 766.5 -2.1% 3.4%
capital
Total capital 4 006.2 4 080.2 3 950.6 -1.8% 1.4%
Risk-weighted 31 682.2 31 480.9 31 793.1 0.6% -0.3%
assets
Credit risk 27 218.0 27 108.5 27 477.4 0.4% -0.9%
Operational 3 339.9 3 339.9 3 339.9 0.0% 0.0%
risk
Market risk 1 124.3 1 032.5 975.8 8.9% 15.2%
Ratios
Common equity 12.29% 12.63% 11.85% -- --
Tier 1
capital
adequacy
ratio
Total capital 12.64% 12.96% 12.43% -- --
adequacy
ratio
The Group's total capital under Basel III came at RUB4.0 trn as of 30 June
2019, down by 1.8% as compared to 31 March 2019, mainly on the back of
dividends distribution in the 2Q 2019.
The Group's risk-weighted assets under IRB approach were up by 0.7% to RUB31.7
trn during 2Q 2019. The Group leverage ratio decreased by 30 bp to 11.5% in 2Q
2019.
Common equity Tier 1 capital adequacy ratio decreased by 34 bp and came at
12.29%, total capital adequacy ratio went down by 32 bp to 12.64% as of 30
June 2019.
i Including corresponding line from discontinued operations, that, effective
May 2018, Denizbank is classified as
ii Other non-interest income / (expense) includes: Net gains from
non-derivative financial instruments at fair value through profit or loss
excluding revaluation of loans at FV through P&L due to change in credit
quality; Net gains from financial instruments at fair value through other
comprehensive income; Impairment of investment securities available-for-sale
; Net gains / (losses) from derivatives, trading in foreign currencies,
foreign exchange and precious metals accounts translation; Impairment of
non-financial assets; Net gains on initial recognition of financial
instruments and on loans restructuring; Net recovery of / (charge for) other
provisions; Revenue of non-banking business activities; Cost of sales and
other expenses of non-banking business activities; Net premiums from
insurance and pension fund operations; Net claims related to insurance and
pension fund operations; Income from operating lease of equipment; Expenses
related to equipment leased out; Other net operating income
ii Active clients are calculated using the new revised methodology
DISCLAIMER
This document has been prepared by Sberbank of Russia (the "Bank") and has not
been independently verified. This press release does not constitute or form
part or all of, and should not be construed as, any offer of, or any
invitation to sell or issue, or any solicitation of any offer to purchase,
subscribe for, underwrite or otherwise acquire, or a recommendation regarding,
any shares or other securities representing shares in, or any other securities
of the Bank, or any member of the Bank's group, nor shall it or any part of it
nor the fact of its presentation or distribution form the basis of, or be
relied on in connection with, any contract or any commitment whatsoever or any
investment decision. The information in this press release is confidential and
is being provided to you solely for your information and may not be
reproduced, retransmitted or further distributed to any other person or
published, in whole or in part, for any purpose.
This press release doesn't constitute an offer of securities of the Bank for
sale in the United States. The Securities may not be offered or sold within
the United States, except pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the U.S. Securities Act of
1993 as amended.
This press release is only being distributed to and is only directed at (A)
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of Directive 2003/71/EC (as amended and together with any applicable
implementing measures in that member state, the "Prospectus Directive")
("Qualified Investors"); (B) in the United Kingdom, Qualified Investors who
are investment professionals falling within Article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order")
and/or high net worth companies, and other persons to whom it may lawfully be
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together being referred to as "relevant persons"). The shares, or other
securities representing shares, or any other securities of the Bank are only
available to, and any invitation, offer or agreement to subscribe, purchase or
otherwise acquire such securities will be engaged in only with, relevant
persons. Any person who is not a relevant person should not act or rely on
this press release or any of its contents.
This press release does not constitute any offer of, or any invitation to sell
or issue, or any solicitation of any offer to purchase, subscribe for,
underwrite or otherwise acquire any securities of the Bank within the Russian
Federation or in favor of the Russian entities or persons. Any foreign
securities representing shares of the Bank may not be offered or sold within
the Russian Federation, except as provided by the relevant Russian
legislation.
The information in this press release or in oral statements of the management
of the Bank may include forward-looking statements. Forward-looking statements
include all matters that are not historical facts, statements regarding the
Bank's intentions, beliefs or current expectations concerning, among other
things, the Bank's results of operations, financial condition, liquidity,
prospects, growth, targets, strategies, and the industry in which the Bank
operates. By their nature, forward-looking statements involve risks and
uncertainties, because they relate to events and depend on circumstances that
may or may not occur in the future. The Bank cautions you that forward-looking
statements are not guarantees of future performance and that its actual
results of operations, financial condition and liquidity and the development
of the industry in which the Bank operates may differ materially from those
made in or suggested by the forward looking statements contained in this press
release or in oral statements of the management of the Bank. In addition, even
if the Bank's results of operations, financial condition and liquidity and the
development of the industry in which the Bank operates are consistent with
forward-looking statements contained in this press release or made in oral
statements, those results or developments may not be indicative of results or
developments in future periods.
Sberbank assumes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information or for any
other reason.
The information and opinions contained in this press release or in oral
statements of the management of the Bank are provided as at the date of this
press release or as at the other date if indicated and are subject to change
without notice.
No reliance may be placed for any purpose whatsoever on the information
contained in this press release or oral statements of the management of the
Bank or on assumptions made as to its completeness.
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subsidiaries or any of their respective advisers, officers, employees or
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By attending or reviewing this press release, you acknowledge and agree to be
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Attachment
Document title: EN_Sberbank Financial Statements IFRS 2Q2019
Document: http://n.eqs.com/c/fncls.ssp?u=FJOPAXLXTU [1]
ISIN: US80585Y3080, RU0009029540, RU0009029557, US80585Y4070
Category Code: MSCH
TIDM: SBER
LEI Code: 549300WE6TAF5EEWQS81
OAM Categories: 2.2. Inside information
Sequence No.: 15213
EQS News ID: 849487
End of Announcement EQS News Service
1: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=f748c254375c5d8727e4f7d4d0d4bed3&application_id=849487&site_id=vwd&application_name=news
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July 31, 2019 03:51 ET (07:51 GMT)
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