DJ Sberbank reports 2Q 2021 Net Profit of RUB325.3 bn under International Financial Reporting Standards (IFRS)
Sberbank (SBER) Sberbank reports 2Q 2021 Net Profit of RUB325.3 bn under International Financial Reporting Standards (IFRS) 29-Jul-2021 / 10:00 MSK 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 2021 Net Profit of RUB325.3 bn under International Financial Reporting Standards (IFRS) Moscow, July 29, 2021 - Sberbank (hereafter "the Group" or "Sber") has released its interim condensed IFRS financial statements (hereafter "the Financial Statements") as at and for the 6 months ended 30 June 2021, with report on review by AO PricewaterhouseCoopers Audit. Alexandra Buriko, CFO, stated: "The results of the first half of 2021 reflect the rapid recovery of the Russian economy and our leading position on the financial markets. We earned RUB629.8 bn in net profit and achieved a return on equity above 25%. In the second quarter, we saw high consumer and transactional activity and improved dynamics in corporate lending. The Sber Group operating income before provisions increased by 22.8% in the reporting quarter. We ramped up our banking business with a noticeable improvement in the asset quality of our loan portfolio. Retail lending remains the main driver: in the second quarter of 2021, the retail loan portfolio grew by 7% and exceeded RUB10 trn. Our payment business continued to accelerate: operating income in the first half of the year increased by 24.1% y/y due to the growth in the share of cashless turnover and transactional activity. Risk insurance and Wealth management segments also demonstrated high growth rates. Non-financial business scales fast on the back of unified elements usage and the core technological platform. The revenue of the segment tripled for the first half of the year and exceeded RUB74 bn. The business dynamics for the first half of the year have formed a solid ground for a more ambitious return on equity forecast of over 22%." Sber key financial and operating highlights for the reporting period - The Group net profit1 reached RUB629.8 bn for 1H 2021 (+119.3% y/y), and RUB325.3 bn for 2Q 2021 (+95.1% y/y); - The Group earnings per ordinary share (EPS) 1 came in at RUB28.54 for 1H 2021 (+113.3% y/y), and RUB14.34 for 2Q 2021 (+84.3% y/y); - The Group return on equity (ROE) 2 for 1H 2021 reached 25.3% (+12.8 pp y/y), for 2Q 2021 reached 25.8% (+11.5 pp y/ y); - The retail loan portfolio exceeded RUB10 trn, up by 7.0% for 2Q 2021, or up by 11.2% for 1H 2021; - The Group net fee and commission income increased by 30.9% y/y in 2Q 2021 to RUB157.1 bn, or to RUB291.4 bn for 1H 2021 (+18.3% y/y); - The asset quality of the loan portfolio improved substantially in 2Q 2021 in all key segments; - Revenues of the Non-financial business segment for 1H 2021 tripled y/y to RUB74.7 bn; - The new multi-category marketplace SberMegaMarket was launched in 2Q 2021; Sber ID and SberPay services became available to customers, as well as the option to purchase goods with SberSpasibo loyalty program bonuses; - The number of users of SberPrime subscriptions exceeded 1.5 mn. An upgraded subscription, SberPrime+, was launched in April. It combines both financial and non-financial services of Sber ecosystem. Sber key metrics of client activity 30.06.2021 30.06.2021 mn, unless stated otherwise 30.06.2021 31.03.2021 31.12.2021 / / 31.03.2021 31.12.2020 Number of active retail clients 101.5 100.6 100.5 0.9 0.9 Number of monthly active users (MAU) of mobile App Sberbank 68.9 67.2 65.3 1.7 3.6 Online Number of daily active users (DAU) of mobile App Sberbank Online 33.9 33.2 32.4 0.7 1.5 Number of active corporate clients 2.9 2.9 2.7 - 0.2 Number of monthly active corporate users (MAU) in digital 2.4 2.4 2.3 - 0.1 channels - Active retail client base exceeded 101 mn, while active corporate client base reached 2.9 mn; - Number of monthly active users (MAU) of mobile App Sberbank Online was up by 1.7 mn to 68.9 mn, and the number of
daily active users (DAU) increased by 0.7 mn to 33.9 mn; - The number of users of the loyalty program Spasibo increased by 3 mn to exceed 50 mn clients. - About 23 mn clients (+4 mn in 2Q 2021) are using Sber ID, a unified login that gives access to 118 services of Sber
ecosystem and partners, which creates a seamless client journey. - The number of monthly active users (MAU) of the virtual assistant Salut reached almost 6 mn by the end of 2Q 2021.
Statement of Profit or Loss results overview
Net interest income was up by 10.3% y/y in 2Q 2021 to RUB439.5 bn. The growth was attributable to increasing volumes of the working assets (see Banking business segment). Net interest income in 1H 2021 increased by 11.8% y/y to RUB861.0 bn.
The Group net fee and commission income increased by 30.9% y/y in 2Q 2021 to RUB157.1 bn, driven by growth in operations with bank cards and income from acquiring on the back of high client transactional activity (see Payments business). The high growth dynamics were also influenced by the low-base effect of last year due to COVID-related restrictive measures. The net fee and commission income growth in 1H 2021 was 18.3% y/y to RUB291.4 bn.
The Group operating expenses were up by 17.2% y/y to RUB201.6 bn in 2Q 2021, due to growth of the non-financial businesses expenses, the low-base effect of last year and the calendarization effect. The operating expenses growth in 1H 2021 was 12.2% y/y to RUB381.5 bn. The pace of operating expenses growth of the financial business was 8.6% y/y in 1H 2021, and 11.9% y/y in 2Q 2021.
The Group total headcount was down by 2.1 ths employees to 276.1 ths for the quarter. At the same time, the number of employees engaged in the development of the non-financial services continued to increase to 19.1 ths by the end of the reporting period.
The Group Cost-to-Income ratio 4 was 30.0% in 2Q 2021, and 29.7% for 1H 2021, improving by 1.5pp y/y.
The combined provision charge including revaluation of loans at fair value amounted to RUB27.2 bn for 2Q 2021, and RUB52.7 bn for 1H 2021. The combined Cost of Risk was 43 bp in 2Q 2021, and was 42 bp for 1H 2021, thanks to the settlement of a number of large problem loans and substantial improvement in the asset quality of the loan portfolio.
2Q2021/ 2Q2021/ 6M2021/ RUB bn, unless 2 Q 2 Q 1 Q 2Q2020, 6 M 6 M stated otherwise 2021 2020 2021 % change 1Q2021, 2021 2020 6M2020, % change % change Net interest 439.5 398.5 421.5 10.3% 4.3% 861.0 770.4 11.8% income Net fee and 157.1 120.0 134.3 30.9% 17.0% 291.4 246.4 18.3% commission income Other non-interest income / (expense) 35.4 -4.0 33.4 na 6.0% 68.8 5.1 1249.0% 5 Operating income 1 1 before provisions 632.0 514.5 589.2 22.8% 7.3% 221.2 021.9 19.5% 5 Net charge related to change in asset -27.2 -132.9 -25.5 -79.5% 6.7% -52.7 -300.0 -82.4% quality 6 Net loss allowance / (provision) for -6.9 -0.7 -6.5 885.7% 6.2% -13.4 -15.3 -12.4% credit related commitments Staff and administrative -201.6 -172.0 -179.9 17.2% 12.1% -381.5 -340.0 12.2% expenses Net profit from continuing 317.6 166.7 304.8 90.5% 4.2% 622.4 287.2 116.7% operations Profit / (Loss) from discontinued 7.7 0.0 -0.3 na na 7.4 0.0 na operations Net profit 325.3 166.7 304.5 95.1% 6.8% 629.8 287.2 119.3% Earnings per ordinary share from 13.98 7.78 14.20 79.7% -1.5% 28.20 13.38 110.8% continuing operations. RUB Earnings per ordinary share. 14.34 7.78 14.19 84.3% 1.1% 28.54 13.38 113.3% RUB Total comprehensive 307.8 229.1 230.0 34.4% 33.8% 537.8 350.6 53.4% income Key financial coefficients Return on equity 25.8% 14.3% 24.7% -- -- 25.3% 12.5% -- 2 Return on assets 3 3.4% 2.1% 3.4% -- -- 3.4% 1.8% -- Net interest 5.22% 5.61% 5.18% -- -- 5.20% 5.56% -- margin Cost of risk 226 259 (amortized cost 43 bp bp 42 bp -- -- 42 bp bp -- and FV loans) Cost-to-income ratio - banking 30.0% 31.8% 29.3% -- -- 29.7% 31.2% -- business 4 Book value per 227.4 232.6 223.4 -2.2% 1.8% -- -- -- share 7. RUB
Key segments overview
Banking business - Operating income before provisions for the Banking business segment increased by 15.3% y/y to RUB484.6 bn in 2Q
2021. - Profit before tax increased by 95.3% y/y to RUB308.5 bn in 2Q 2021.
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DJ Sberbank reports 2Q 2021 Net Profit of RUB325.3 -2-
Key 2Q 2021 Banking business segment highlights
30.06.2021/ 30.06.2021/ RUB bn, unless stated otherwise 30.06.2021 31.03.2021 31.12.2020 31.03.2021, 31.12.2020, % change % change Gross loans 8: 26 210.0 25 498.6 25 008.6 2.8% 4.8% Corporate loans 15 856.0 15 823.8 15 700.4 0.2% 1.0% Retail loans 10 354.0 9 674.8 9 308.2 7.0% 11.2% Deposits: 27 855.5 26 997.6 25 765.7 3.2% 8.1% Retail deposits 16 963.7 16 508.1 16 641.0 2.8% 1.9% Corporate deposits 10 891.8 10 489.5 9 124.7 3.8% 19.4% Net Loans / Deposits ratio (LDR) 88.5% 88.4% 90.8% -- --
Retail loan portfolio exceeded RUB10 trn, growing by 7.0% in 2Q 2021. The yield on retail loans was down by 10 bp to 11.1%. - The mortgage portfolio grew by 7.7%; the share of mortgages in total retail loan portfolio reached nearly 57%.
There was an elevated demand for mortgage loans on the back of anticipated changes to the terms of the state
subsidized program. The share of the state and the bank's own subsidized mortgage programs accounted for over 32%
of new mortgages origination. - Consumer loan portfolio increased by 7.3%, thanks to more favorable macroeconomic conditions that stimulated
spending, as well as seasonal promos. The share of consumer lending in digital channels increased by 2.1pp to
exceed 70% at the end of 2Q 2021.
Corporate loan portfolio grew by 0.2% in 2Q 2021 to RUB15.9 trn. Adjusted for the impact of the FX revaluation 9, the portfolio was up by 2.2%, primarily thanks to Ruble lending. The yield on corporate loans moved up by 20 bp to 6.6% from increasing market rates and high share of loans at floating rates.
Retail funding increased by 2.8% in 2Q 2021 to almost RUB17 trn. The cost of retail term deposits increased by 10 bp to 3.8%. - The share of retail current account balances in total retail funding increased by 3.1 pp for the quarter to 41%
thanks to growing volumes on the escrow accounts and increased cashless transactions.
Corporate funding was up by 3.8% to RUB10.9 trn. The cost of corporate funding increased by 60 bp to 3.4% on the back of market rates moves.
Net LDR ratio changed insignificantly to 88.5% in 2Q 2021.
Key asset quality metrics
30.06.2021/ 30.06.2021/ RUB bn, unless stated otherwise 30.06.2021 31.03.2021 31.12.2020 31.03.2021, 31.12.2020, % change % change Stage 3 + POCI loans / total gross loans at amortized cost 6.2% 6.8% 6.6% -- -- Provision coverage of Stage 3 + POCI loans 101.0% 98.9% 102.8% -- -- - The credit quality of the loan portfolio improved substantially in 2Q 2021 in all main segments. The share of Stage
3 and POCI loans in loans at amortized cost was 6.2%, down by 58 bp, compared to 1Q 2021. - The share of impaired loans in the structure of corporate loan portfolio decreased significantly thanks to
effective recovery strategies and foreclosures. The share of impaired corporate loans decreased by 0.7 pp in 2Q
2021. - Total provision coverage of impaired loans in 2Q 2021 was up by 2.0 pp to 101.0%, compared to 1Q 2021.
Payments business - Operating income for the Payments business increased by 32.5% y/y in 2Q 2021 to RUB96.3 bn. - Profit before tax increased by 51.8% y/y in 2Q 2021 to RUB68.0 bn. - The total volume of transfers, payments and acquiring increased by 45% y/y in 2Q 2021 to RUB14.5 trn, demonstrating
growth across all segments. - Over 65 thousand partners joined the SberPay payment service, which allows to pay online without a card from the
SberBank Online mobile application. To date, more than 1 million Sber customers use it to make purchases. - In July, the service for accepting payments, UKassa, launched a settlements solution for users of the C2C
platforms, the Safe Transaction service, in which money is received by the seller only after the customer receives
his purchase.
Wealth management and brokerage - Total operating income before provisions for Wealth management and brokerage segment increased by 12.0% y/y in 2Q
2021 to RUB16.8 bn. - Profit before tax increased by 8.7% y/y in 2Q 2021 to RUB11.3 bn.
30.06.2021/ 30.06.2021/ RUB trn, unless stated otherwise 30.06.2021 31.03.2021 31.12.2020 31.03.2021, % change 31.12.2020, % change AUM 1.89 1.82 1.75 3.8% 8.0% AUC 10 2.16 2.05 1.90 5.3% 13.7%
Assets under management increased by 3.8% in 2Q 2021 to RUB1.9 trn. - Companies of the Sber Asset Management business were ranked first by the volume of assets under management among
all Russian asset management companies as of 2Q 2021 (according to rating agency Expert RA). - Sber holds its leadership in terms of the number individual investment accounts (IIA) opened among all asset
management companies in Russia, managing about 60% of all IIA in the country.
Net assets under custody on the brokerage accounts exceeded RUB2.1 trn, as of 2Q 2021.
Risk insurance - Total operating income before provisions for the Risk insurance segment reached RUB24.5 bn, up by over 50% y/y. The
Group Insurance companies significantly expanded their product mix, and improved customer experience in the
SberBank Online mobile application for insurance products. - There were several product launches in 2Q 2021: car insurance SBERKASCO 2.0, Business Protection for owners of
Evotor smart terminals, and FINCASCO car insurance for insurance of vehicles pledged to the bank when applying for
a car loan. - Sber entered the voluntary health insurance market in July.
Non-financial business
Revenues11 of the Non-financial business segment increased by 2.5x y/y to RUB41.1 bn for 2Q 2021. Revenues for 1H 2021 tripled to reach RUB74.7 bn, which were more than for FY 2020. - The e-commerce GMV in 2Q 2021 reached RUB19.7 bn, up by 9x y/y. The key driver remains the e-grocery segment,
represented by SberMarket and Samokat. - In April, the main multi-category marketplace, SberMegaMarket, was launched; it already offers 18 main categories
of goods. Clients now have access to Sber ID and SberPay services, free delivery of goods with SberPrime
subscription, as well as the ability to pay with SberSpasibo bonuses for goods. - The FoodTech & Mobility revenues were RUB 3.9 bn, increasing 3.7x y/y. The number of restaurants and stores signed
up to Delivery Club exceeded 45 ths, up by 84% y/y. The number of rides via CitiMobil was 51.9 mn in 2Q 2021, over
100 mn in 1H 2021. - Revenues for companies in the Entertainment segment reached RUB 3.0 bn, increasing by 2.7x. - The number of paying users of the audio streaming service SberZvuk was 1.9 mn as of 30.06.2021, up by 2.4x since
rebranding in September 2020. MAU of the service was 5.0 mn listeners. - SberCloud revenues increased by 3.3x y/y during the quarter to RUB2.0 bn; for 1H 2021 demonstrated a five-fold
growth y/y to RUB3.7 bn. - There is a growing demand for digital non-financial services of the classified platform DomClick among both clients
with mortgages and without mortgages; the revenues from additional services increased by 25% for the quarter to
exceed RUB3 bn. The monthly audience reached 14.4 mn, while the number of listings on the platform increased by
12%, compared to 1Q 2021, to exceed 1.8 mn. - Sber presented a new product of the ecosystem, the ed-tech marketplace Sberobrazovanie, that will bring together
authors of educational content with users by means of advanced digital solutions. In May 2021, Sberbank acquired
25% in Prosveshchenie JSC, the largest Russian textbook publisher. - In 1H 2021, the revenue of the Health segment increased by 2.3x, reaching RUB1.8 bn. The main growth drivers were
telemedicine services and online doctor appointments. The number of telemedicine consultations increased by 2.1x,
and in the beginning of July 2021 already exceeded the total number of calls for the entire 2020.
Technological leadership - The 1H 2021 was significant in terms of technological rollouts, including Platfom V, SmartMarket, SberCloud. The
number of external IT specialists who partnered to develop products using Sber solutions increased by 9x and
reached 25,000 developers; - The SmartMarket, a marketplace of SmartApps, that allows to train and use virtual assistants, already has more than
500 applications. - Sber launched its own video conferencing platform Jazz by Sber, a platform for developing its own visual characters
Visper. - Sber continues to expand the use of Salut virtual assistants. In July, Sber launched a new product, TV media
center, with a smart camera SberBox Top and Salut TV operating system for partner devices, created a special
SberBox edition, Salut for hotels; virtual assistants now also help clients find information about the financial
markets in SberOnline app.
ESG - Sber disclosed its first ESG Policy that integrates the corporate governance and sustainable development, sets the
main elements of the business architecture, principles, directions and objectives in the field of ESG, taking into
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