Sberbank (SBER )
Sberbank reports 2019 net profit of RUB 845.0 bn under international Financial
Reporting Standards (IFRS)
27-Feb-2020 / 10:02 MSK
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
*Sberbank reports 2019 net profit of RUB 845.0 bn under international Financial
Reporting Standards (IFRS)*
Moscow, February 27, 2020 - Sberbank (hereafter "the Group") has released its Annual
consolidated IFRS financial statements (hereafter "the Financial Statements") as at and
for the 12 months ended 31 December 2019, with audit report by AO
PricewaterhouseCoopers Audit. All information is presented net of Denizbank A.S.
operations, unless stated otherwise.
Herman Gref, Chairman of the Executive Board, CEO:
"The most important achievement for 2019 was the industrial launch of the new Sberbank
Digital Platform and the start of the large-scale migration of our products and
services to it. By creating a private Cloud, not only did we increased the level of
infrastructure utilization 4-fold, we also started offering Cloud solutions to our
clients. The Artificial Intelligence has already become our important business driver:
the economic effect of increasing AI use amounted to RUB42 bn last year.
Better customer experience allows us to widen our client base: the number of active
retail clients has grown by 3 mln over the year up to 96 mln people. We have 54 mln
monthly active digital users, and 24 mln daily active users. We have learned how to
convert a growing number of Sberbank Online clients into sales: more than a half of
consumer loans and over a third of mortgages are issued in digital channels.
We are focused on the extention of our digital sales experience to Ecosystem products.
Last year we defined an Ecosystem framework, adding new digital services to the
Sberbank Ecosystem, including food delivery, transportation, job classified and video
streaming.
We remain client centric and continually work to improve efficiency on the back of
technological development that allowed Sberbank to ensure a return on equity of more
than 20%."
*The 2019 Operational and Financial Highlights:*
- The number of *active retail clients* was up by 3 mln for the year and exceeded 96
mln;
- The number of *monthly active users* (MAU) of mobile App Sberbank Online was up by
11.71 mln for the year and exceeded 54 mln.
- The number of *daily active users* (DAU) of mobile App Sberbank Online increased on
about 10 mln for the year to 24.7; *DAU/MAU* improved by 10.5 pp for the year and
exceeded 45%;
- The number of Sberbank *active corporate clients* was up by more than 300 th for
the year and exceeded 2.5 mln with 45% share of sales in digital channels. MAU in
digital channels was up to 2.2 mln users;
- As of the end of 4Q 2019 more than 6 mln clients use Sberbank ID, a unified login
that provides an access to more than 40 Ecosystem partners, inc. Delivery Club, Okko,
Citimobil and other companies.
The Group's 2019 annual financial results were affected by Denizbank sale results
recognition took place in the 3Q 2019.
- The Group *net profit * including the effect from Denizbank sale amounted to
RUB845,0 bn (+1.6% y/y). The Group *net profit from continuing operations* was
RUB914.8 bn (+10.1% y/y);
- The Group *earnings per ordinary share *(EPS)including the effect from Denizbank
salewere RUB38.55 up by 1.0% y/y. The Group *earnings per ordinary share *(EPS)
*based on profit from continuing operations* came at RUB41.80 up by 9.6% compared to
2018;
- The Group annualized *return on equity* (ROE) including the effect from Denizbank
salecame at 20.5%. The Group annualized *return on equity *(ROE)*based on profit from
continuing operations* was 22.2%, while. The Group annualized *return on assets*
(ROA) including the effect from Denizbank sale totaled 2.7%, the Group annualized
*return on assets* (ROA) *based on profit from continuing operations *was 3.1%;
- The Group *net interest income *was up by 1.4% to RUB1 415.5 bn compared to 2018;
- The Group *net fee and commission income *was up by 13.6% to RUB497.9 bn compared
to 2018;
- The Group *gross loans*1 increased by 3.2% for the year to RUB21.7 trn for. Retail
loan portfolio grew by 16.8% to RUB7.9 trn, corporate loan portfolio decreased in
nominal terms by 3.2% to RUB13.9 trn, the growth in real terms (adjusted for FX
revaluation) is 2.8%.
- The Group *Cost-to-Income ratio*2 is 35.8% and up by 0.6pp y/y.
*The 4**Q 2**019 Financial Highlights:*
- The Group *net profit*3 reached RUB212.0 bn up by 20.3% compared to 4Q 2018; the
Group *earnings per ordinary share *(EPS) came at RUB9.9;
- The Group *net interest income *was up by 4.6% y/y to RUB371.0 bn;
- The Group *net fee and commission income *was up by 23.6% compared to 4Q 2018 to
RUB148.3 bn;
- The Group *gross loans*1 increased by 2.6% for the quarter to RUB21.7 trn for.
Retail loan portfolio grew by 3.2% to RUB7.9 trn, corporate loan portfolio also
increased by 2.2% to RUB13.9 trn, the growth adjusted for FX revaluation was 3.6%;
- The *quality of the Group loan portfolio* improved: share of Stage 3 and POCI loans
came at 7.5%, showing a 41 bp decrease compared to 3Q 2019.
*Selected Statement of Profit or Loss Results *
_RUB bn, *4Q* *4Q* *3Q* _4Q_ _4Q_ *12M* *12M* _12M_
unless stated
otherwise_
*2019* *2018* *2019* _2019/_ _2019/_ *2019* *2018* _2019/_
_4Q_ _3Q_ _12M_
_2018,_ _2019,_ _2018,_
_% _% _%
change_ change_ change_
Net interest 371.0 354.7 353.9 _4.6%_ _4.8%_ 1 415.5 1 396.5 _1.4%_
income
Net fee and 148.3 120.0 130.0 _23.6%_ _14.1%_ 497.9 438.1 _13.6%_
commission
income
Other 21.8 -0.9 23.2 _--_ _-6.0%_ 99.4 23.3 _326.6%_
non-interest
income/
(expense) 4
*Operating *541.1* *473.8* *507.1* _14.2%_ _6.7%_ *2 *1 _8.3%_
income before 012.8* 857.9*
provisions *2
Net charge -41.2 -36.2 -54.0 _13.8%_ _-23.7%_ -149.5 -154.1 _-3.0%_
related to
change in
asset quality:
_ Net credit _-35.5_ _-21.0_ _-30.6_ _69.0%_ _16.0%_ _-92.6_ _-96.8_ _-4.3%_
loss allowance
charge for
debt financial
assets_
_ Negative _-5.7_ _-15.2_ _-23.4_ _-62.5%_ _-75.6%_ _-56.9_ _-57.3_ _-0.7%_
revaluation of
loans at fair
value due to
change in
credit
quality_
Staff and -238.0 -206.0 -167.4 _15.5%_ _42.2%_ -724.6 -657.6 _10.2%_
administrative
expenses
*Net profit *212.0* *180.7* *230.8* _17.3%_ _-8.1%_ *914.8* *831.2* _10.1%_
from
continuing
operations*
Profit / ------- -4.5 -74.7 _-100.0%_ _-100.0%_ -69.8 0.5 _--_
(Loss) from
discontinued
operations
*Net profit* *212.0* *176.2* *156.1* _20.3%_ _35.8%_ *845.0* *831.7* _1.6%_
Earnings per 9.86 8.45 10.72 _16.7%_ _-8.0%_ 41.80 38.13 _9.6%_
ordinary share
from
continuing
operations,
RUB
Total 234.4 179.9 252.7 _30.3%_ _-7.2%_ 989.4 789.1 _25.4%_
comprehensive
income from
continuing
operations
attributable
to the
shareholders
of the Bank
*Ratios based on continuing operations*
Return on 19.4% 19.2% 22.4% --------- --------- 22.2% 23.1% --------
equity_based
on profit from
continuing
operations_
Return on 2.8% 2.6% 3.1% --------- --------- 3.1% 3.2% --------
assets _based
on profit from
continuing
operations_
Net interest 5.35% 5.42% 5.13% --------- --------- 5.16% 5.66% --------
margin
Net interest 5.52% 5.62% 5.30% --------- --------- 5.38% 5.92% --------
margin 5
Cost of risk 72 bp 39 bp 63 bp --------- --------- 49 bp 51 bp --------
(amortized
cost loans)
Cost of risk 80 bp 67 bp 106 bp --------- --------- 74 bp 78 bp --------
(amortized
cost and FV
loans)
Cost-to-income 43.4% 43.6% 32.8% --------- --------- 35.8% 35.2% --------
ratio 2
*Selected Statement of Financial Position Results*
_RUB bn, 31.12.2019 30.09.2019 31.12.2018 _3__1__.__12__.2019/ _3__1__.__12__.2019/
unless 30.__09__.2019,_ __31__.__12__.201__8
stated _% __change_ __,_
otherwise_ _% __change_
Gross 21 749.4 21 200.4 21 082.3 _2.6%_ _3.2%_
total
loans1:
_Corporate 13 865.4 13 562.2 14 331.1 _2.2%_ _-3.2%_
loans 1_
_Retail 7 884.0 7 638.2 _ 6 751.2 _3.2%_ _16.8%_
loans 1_ _
Securities 4 369.7 4 181.8 3 749.5 _4.5%_ _16.5%_
portfolio
Assets 3 29 958.9 30 254.2 31 197.5 _-1.0%_ _-4.0%_
Total 21 574.4 22 318.1 20 897.3 _-3.3%_ _3.2%_
deposits_:
_
_Retail _ 14 209.6 _ 13 717.5 _ 13 495.1 _3.6%_ _5.3%_
deposits_ _ _ _
_Corporate _ 7 364.8 _ 8 600.6 _ 7 402.2 _-14.4%_ _-0.5%_
deposits_ _ _ _
Book value 198.3 188.3 170.5 _5.3%_ _16.3%_
per
share6,
RUB
*Ratios*
Net Loans 94.4% 88.7% 93.7% -------------------- --------------------
/ Deposits
ratio
(LDR)
Stage 3 + 7.5% 7.9% 8.1% -------------------- --------------------
POCI loans
/ total
gross
loans at
amortized
cost
Provision 89.3% 88.0% 90.4% -------------------- --------------------
coverage
of Stage 3
+ POCI
loans
*Net interest income *came at RUB371.0 bn in 4Q 2019, up by 4.6% y/y.
*Interest income* increased by 5.8% y/y to RUB607.5 bn in 4Q 2019 on the back of both
the loan portfolio1 expansion by 3.2% y/y to RUB21.7 trn or 4.0% y/y adjusted for FX
revaluation as well as the increase in the yield of working assets by 10 bp to 8.8% in
4Q 2019 and optimization of the balance sheet structure.
? *Retail loan portfolio *increased by3.2% to RUB7.9 trn for the quarter. The share
of retail loans in total loan portfolio exceeded 36%.
? Consumer loan portfolio was up by 4.5% in 4Q 2019 supported by fast-growing
online sales that accounted for 56% of total origination at the end of the
reporting period vs. 44% a year ago. Consumer loan portfolio was up by 25.8% in
2019.
? Mortgage portfolio grew by 3.1% in 4Q 2019. The dynamics is significantly
affected by interest rates decrease as well as the time of the underwriting process
- 60% of mortgage approvals are executed for less than an hour. Mortgage portfolio
was up by 11.4% in 2019. The platform DomClick substantially supports mortgage
lending: the total number of listings on the platform doubled last year to reach 2
mln.
? Retail loan yield increased by 40 bp to 12.5% in 4Q 2019 driven by the increase
of the share of consumer loans in the total loan portfolio.
? *Corporate loan portfolio*1 showed a positive dynamic in all currencies and
increased by 2.2% to RUB13.9 bn for the quarter on the back of accelerated growth in
SME lending by 7.9% in 4Q 2019 and more than 20% for the year. Corporate loan yield
decreased by 30 bp to 7.8% in 4Q 2019.
*Interest expense*, including deposit insurance expenses, was up by 7.7% y/y in 4Q 2019
to RUB236.5 bn.
? *Retail deposits* grew by 3.6% compared to the previous quarter to RUB14.2 trn. The
average cost of retail term deposits decreased by 20 bp for the quarter. Share of
Ruble-denominated deposits exceeded 80%. Retail deposits were up by 5.3% for the
year.
? *Corporate deposits* declined by 14.4% to RUB7.4 trn. The average cost of term
deposits decreased by 20 bp in 4Q 2019 to 4.3%. Corporate deposits decreased by 0.5%
in 2019 while the FX-adjusted growth came at 4.6%.
? The growth of *current/settlement accounts* was up by 8.4% and their share in the
total corporate deposits exceeded 30%.
Sberbank Group issued bonds in the nominal amount of RUB392 bn on the Russian market by
the end of 2019. At the same time the Group repaid USD2.5 bn and EUR1.5 bn on the
wholesale market, thus the share of foreign funding in the Group's total liabilities
decreased to 1.0% in 2019, the carrying amount of which came at USD4.2 bn.
*Net LDR ratio* equaled to 94.4%, up by 5.7 pp compared to 3Q 2019.
The Group *net fee and commission income* came at RUB148.3 bn in 4Q 2019, up by more
than 23.6% y/y mainly driven by operations with banking cards and cash and settlements
transactions income. Starting from 1 January 2019 VAT for loyalty programs, which was
earlier recognized in operating expenses, is included into net fee and commission
income. The comparative base of the previous year was adjusted as well.
? More than 20% of public transport rides in Russia is payed for by bank cards. Among
other things this became possible due to development of Sberbank transport acquiring,
which covered more than 120 Russian cities at the end of the year.
According to management accounts, *operating income of insurance, pension and asset
management businesses* amounted to RUB126 bn in 12M 2019, up by 13% y/y.
Assets under management of the Wealth Management business increased by 22% from the
beginning of the year and achieved RUB1.5 trn.
*The Group operating expenses* (staff and administrative) were up by 15.5% y/y to
RUB238.0 bn in 4Q 2019 and by 10.2% y/y to RUB724.6 bn for 12M 2019. The operating
expenses dynamics was mainly affected by growth of IT costs, related to the industrial
launch and further development of the new technological platform.
The VAT rate increase from the beginning of 2019 also affected the cumulative operating
expenses dynamics. The Group *Cost-to-Income ratio*2 came at 43.4% in 4Q 2019 and 35.8%
for the full year.
*Net credit loss allowance charge* for loans at amortized costs amounted to RUB 35.5 bn
in 4Q 2019. The Cost of Risk for loans at amortized cost was 72 bps in 4Q 2019.
According to IFRS 9 part of the loan portfolio is accounted at fair value through
profit or loss. Negative revaluation of these loans due to change in credit quality
amounted to RUB5.7bn for the quarter. The combined Cost of Risk for loans at amortized
cost and at fair value was down by 26 bp to 80 bp in 4Q 2019. The FX component was
shown as foreign exchange translation (losses) / gains and amounted to RUB 12.7 bn in
4Q 2019.8
*The loan portfolio quality* improved in 2019. The share of impaired loans, including
the POCI loans, in total gross loan portfolio at amortized cost decreased by 0.4 pp to
7.5%. Total provision coverage of Stage 3 and POCI loans was up by 1.3 pp compared to
the previous quarter to 89.3% in 4Q 2019.
*Selected Capital Adequacy Results*3
(the data in the table is in accordance with standardized and IRB approaches applied to
the corresponding assets groups)
*Under Basel *31.12.2019* *30.09.2019* *31.12.2018* _31.12.2019/_ _31.12.2019/_
III*
RUB bn, _30.09.2019, _31.12.2018,
unless stated _ _
otherwise _% change_ _% change_
Total Tier 1 4 377.6 4 164.7 3 766.5 _5.1%_ _16.2%_
capital
Total capital 4 435.7 4 273.3 3 950.6 _3.8%_ _12.3%_
Risk-weighted 32 634.1 30 791.8 31 793.1 _6.0%_ _2.6%_
assets
_Credit risk_ _ 28 062.7 _ _ 26 428.6 _ _ 27 477.4 _ _6.2%_ _2.1%_
_Operational _ 3 486.8 _ _ 3 339.9 _ _ 3 339.9 _ _4.4%_ _4.4%_
risk_
_Market risk_ _ 1 084.6 _ _ 1 023.3 _ _ 975.8 _ _6.0%_ _11.1%_
*Ratios*
Common equity 13.41% 13.53% 11.85% _--_ _--_
Tier 1
capital
adequacy
ratio
Total capital 13.59% 13.88% 12.43% _--_ _--_
adequacy
ratio
Leverage 13.7% 13.0% 11.3% _--_ _--_
ratio
The Group's *total capital* under Basel III reached RUB4 435.7 bn as of 31/12/2019, up
by 3.8% as compared to previous quarter.
*The Group's risk-weighted assets* were up by 6.0% to RUB32 634.1 in 4Q 2019 due to
growth of operational risk by 4.4% on the back of calculation period shift as well as
increase in credit risk by 6.2%. The credit risk growth was influenced by introduction
macro-prudential add-ons for some loan segments. Nevertheless, in 1Q 2020 the Group got
the approval from the Bank of Russia of application for IRB implementation, which will
have positive impact on risk-weighted assets density.
The Group's *leverage ratio* increased by 70 bp to 13.7% in 4Q 2019.
*Common equity Tier 1 capital adequacy ratio *and *total capital adequacy ratio* showed
a slight decrease in 4Q by 12 bp to 13.41% and by 29 bp to 13.59% respectively on the
back of the Group's risk-weighted assets growth.
1 Before loan loss allowance and including loans at amortized cost and at fair value
2 Operating income before provisions for debt financial assets, credit related
commitments and revaluation of loans at fair value due to change in credit quality
3 Including corresponding line from discontinued operations, that, effective May 2018,
Denizbank is classified as
4 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; Net gains / (losses) from
derivatives, trading in foreign currencies, foreign exchange and precious metals
accounts translation; Net gains/ losses on initial recognition of financial instruments
and on loans restructuring; Net losses from revaluation of office premises; Impairment
of non-financial assets; 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
5 Net interest margin was recalculated as working assets adjusted for the amount of
provisions, created against Stage 3 loans
6Total equity attributable to shareholders of the Bank / Total numbers of shares
outstanding (ordinary + preferred)
7 Starting from 1Q19 the FX-component is excluded from provision charge / recovery for
FX-denominated loans at amortized cost as well as from revaluation of FX-denominated
loans at fair value.
*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) persons in
member states of the European Economic Area (other than the United Kingdom) who are
"qualified investors" within the meaning of Article 2(1)(e) 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
communicated, falling within Article 49(2)(a) to (d) of the Order; and (C) such other
persons as to whom this press release may be lawfully distributed and directed under
applicable laws (all such persons in (A) to (C) above 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.
No representation or warranty, express or implied, is given by the Bank, its
subsidiaries or any of their respective advisers, officers, employees or agents, as to
the accuracy of the information or opinions or for any loss howsoever arising, directly
or indirectly, from any use of this press release or its contents.
This press release is not directed to, or intended for distribution to or use by, any
person or entity that is a citizen or resident or located in any locality, state,
country or other jurisdiction where such distribution, publication, availability or use
would be contrary to law or regulation or which would require any registration or
licensing within such jurisdiction.
By attending or reviewing this press release, you acknowledge and agree to be bound by
the foregoing.
ISIN: US80585Y3080, RU0009029540, RU0009029557, US80585Y4070
Category Code: ACS
TIDM: SBER
LEI Code: 549300WE6TAF5EEWQS81
Sequence No.: 49207
EQS News ID: 984789
End of Announcement EQS News Service
(END) Dow Jones Newswires
February 27, 2020 02:02 ET (07:02 GMT)
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