Sberbank: Sber reports FY2020 Net Profit of RUB760.3 bn under International Financial Reporting Standards (IFRS)

Sberbank (SBER) Sberbank: Sber reports FY2020 Net Profit of RUB760.3 bn under International Financial Reporting Standards (IFRS) 04-March-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. Sber reports FY2020 Net Profit of RUB760.3 bn under International Financial Reporting Standards (IFRS) Moscow, March 4, 2021 - Sberbank (hereafter "the Group" or "Sber") released its Annual consolidated IFRS financial statements (hereafter "the Financial Statements") as at and for the 12 months ended 31 December 2020, with audit report by AO PricewaterhouseCoopers Audit. Herman Gref, Chairman of the Executive Board, CEO: "A year ago we could hardly imagine the challenges we would encounter in 2020: the pandemic, the drop in oil prices, interruption in operations of certain segments of the economy. In the scope of the joint efforts with the government and businesses, we became an important player in the collective fight against the consequences of the pandemic: we immediately organized an anti-crisis control centre, started offering support to retail clients and businesses from the beginning of the turmoil. During 2020, we issued RUB17.7 trn loans under our own and state programs. We offered our clients different restructuring and financing options to cope with the crisis. Sber was able to quickly restore the business once the restrictions were lifted. The launch of a massive costs optimization program helped us support profitability, and as a result achieve Return on Equity of 16%. An important milestone of 2020, was the launch of our new brand, Sber, which is a universe of our financial and non-financial products and services, as well as our new Strategy 2023 that concentrates on building an integrated ecosystem around a client."   FY 2020 Financial and Operational Highlights: The Group net profit reached RUB760.3 bn (-10.0% y/y); The Group earnings per ordinary share (EPS) came in at RUB34.36 (-10.9% y/y); The Group return on equity (ROE)1 reached 16.1%, and return on assets (ROA)2 was 2.3%; The Group gross loans3 exceeded RUB25 trn, up by 15.0% y/y. The retail loan portfolio was up by over 18% to RUB9.3 trn, while the corporate loan portfolio increased to RUB15.7 trn, up by 9.3% excluding the effect of FX revaluation4; Retail funding increased by 17.1% during 2020 (+11.8% excluding the FX revaluation4) to RUB16.6 trn. Corporate funding increased by nearly 24% (+8.7% excluding the FX revaluation4) to RUB9.1 trn; Active retail client base grew by 3 mn during the year to nearly 99 mn; Number of monthly active users (MAU) of mobile App Sberbank Online was up by 10.6 mn to 65.3 mn, and the number of daily active users (DAU) increased by 7.7 mn to 32.4 mn; Active corporate client base increased by 200 ths to exceed 2.7 mn, while MAU in digital channels surpassed 2.43 mn users; At year-end 2020, over 16 mn clients were using Sber ID, a unified login that gives access to more than 95 Sber ecosystem services and partners; In 2020 we reshaped our ESG activities. We presented our ESG strategy, outlined our commitment to ESG and sustainability standards in the Corporate Governance Code, and formed an ESG committee. Starting from FY 2020 Sber financial statements include information on the basis of business segments, which gives a more detailed and complete presentation on Sber operations, products structure and financial results of the business segments.     4Q 2020 Financial and Operational Highlights: The Group net profit reached RUB201.7 bn, down 4.9% as compared to 4Q 2019; the Group earnings per ordinary share (EPS) came in at RUB9.15; The Group return on equity (ROE)1 reached 16.6%, and return on assets (ROA)2 was 2.2%; The Group gross loans3 increased by 1.9% during the quarter to exceed RUB25 trn. The retail loan portfolio was up by 4.8% to RUB9.3 trn, while the corporate loan portfolio increased by 0.2% to RUB15.7 trn, or by 3.5% excluding the effect of FX revaluation4; The asset quality of the loan portfolio improved: the share of Stage 3 and POCI loans was 6.6%, down by 33 bp as compared to 3Q 2020.           Statement of Profit or Loss Results Highlights   RUB bn, unless stated otherwise 4Q 2020   4Q 2019   3Q 2020   4Q2020/ 4Q2019 % change 4Q2020/ 3Q2020 % change 12M 2020   12M 2019   12M2020/ 12M2019 %change Net interest income 426.5 371.0 411.3 15.0% 3.7% 1 608.2 1 415.5 13.6% Net fee and commission income 158.5 148.3 147.7 6.9% 7.3% 552.6 497.9 11.0% Other non-interest income / (expense) 5 -7.9 28.7 33.6 -127.5% -123.5% 32.4 108.3 -70.1% Operating income before provisions 6 577.1 548.0 592.6 5.3% -2.6% 2 193.2 2 021.7 8.5% Net charge related to change in asset quality:  -108.1 -41.2 -85.7 162.4% 26.1% -493.8 -149.5 230.3%      Net credit loss allowance charge for debt financial assets -84.2 -35.5 -63.3 137.2% 33.0% -412.0 -92.6 344.9%      Negative revaluation of loans at fair value due to change in credit quality -23.9 -5.7 -22.4 319.3% 6.7% -81.8 -56.9 43.8% Net loss allowance / provision for credit related commitments 16.1 -6.9 1.9 -333.3% 747.4% 2.7 -8.9 -130.3% Staff and administrative expenses -242.7 -238.0 -175.5 2.0% 38.3% -759.8 -724.6 4.9% Net profit  from continuing operations 199.0 212.0 265.6 -6.1% -25.1% 751.8 914.8 -17.8% Profit / (Loss) from discontinued operations 2.7 0.0 5.8 -- -53.4% 8.5 -69.8 -112.2% Net profit 201.7 212.0 271.4 -4.9% -25.7% 760.3 845.0 -10.0% Earnings per ordinary share from continuing operations. RUB 9.02 9.86 11.55 -8.5% -21.9% 33.96 41.80 -18.8% Earnings per ordinary share. RUB   9.15 9.85 11.82 -7.1% -22.6% 34.36 38.55 -10.9% Total comprehensive income  211.9 234.5 293.6 -9.6% -27.8% 856.1 993.2 -13.8% Ratios Return on equity1 16.6% 19.4% 22.8% -- -- 16.1% 20.5% -- Return on assets 2 2.2% 2.8% 3.2% -- -- 2.3% 3.1% -- Net interest margin 5.34% 5.52% 5.48% -- -- 5.47% 5.38% -- Cost of risk (amortized cost loans)  139 bp  72 bp  111 bp  --  --  180 bp  49 bp -- Cost of risk (amortized cost and FV loans)  171 bp  80 bp  143 bp  --  --  206 bp  74 bp -- Cost-to-income ratio for the financial business           33.2% 34.9%   Cost-to-income ratio 6 42.1% 43.4% 29.6% -- -- 34.6% 35.8% --                         Balance Sheet Highlights   RUB bn. unless stated otherwise 31.12.2020 30.09.2020 31.12.2019 31.12.2020/ 30.09.2020 % change 31.12.2020/ 31.12.2019 % change Gross total loans3:      25 008.6      24 546.2      21 749.4 1.9% 15.0% Corporate loans      15 700.4      15 664.3      13 865.4 0.2% 13.2% Retail loans       9 308.2       8 881.9       7 884.0 4.8% 18.1% Securities portfolio       6 557.4       5 687.8       4 350.3 15.3% 50.7% Assets      36 016.0      35 123.8      29 959.7 2.5% 20.2% Total deposits:      25 765.7      25 152.1      21 574.4 2.4% 19.4% Retail deposits     16 641.0     15 759.1     14 209.6 5.6% 17.1% Corporate deposits       9 124.7       9 393.0       7 364.8 -2.9% 23.9% Book value per share7. RUB          223.4          214.2          198.3 4.3% 12.6% Ratios           Net Loans / Deposits ratio (LDR) 90.8% 91.2% 94.4% -- -- Stage 3 + POCI loans / total gross loans at amortized cost 6.6% 6.9% 7.5% -- -- Provision coverage of Stage 3 + POCI loans 102.8% 98.4% 89.3% -- --   Net interest income increased by 13.6% y/y and 15% y/y toRUB1 608.2 bn andRUB426.5 bn for FY 2020 and 4Q 2020 respectively. Interest income was up by 2.3% y/y in 4Q 2020 to RUB621.7 bn on the back of strong lending volumes. Retail loan portfolio expanded by 4.8% in 4Q 2020 (+18.1% for 12M 2020) to RUB9.3 trn. The share of retail loans in the total loan portfolio increased to a record 37.2%. The yield on retail loans declined by 20 bp to 11.6% from the turnover with loans at lower rates and higher share of mortgages. The mortgage portfolio grew by 7.3% in 4Q 2020 (+21.6% for 12M 2020) benefiting from robust demand for both the state and the bank's own subsidized mortgage programs, which accounted for about 30% of new loan origination. The securitization of the mortgages portfolio also impacted the dynamics within the portfolio. Excluding the effect of the securitization transaction the mortgages portfolio would have increased by 8.3%. Our real-estate platform DomClick makes a substantial contribution to the development of the mortgage lending; the DomClick monthly audience increased 2.6 times during 2020 to exceed 11 mn users.  Consumer loan portfolio increased by 2.8% in 4Q 2020 (+16.9% for 12M 2020) on the back of declining market rates. The share of issuances of consumer unsecured loans via digital channels approached 70% by the end of 2020. Corporate loan portfolio amounted to RUB15.7 trn, up by 0.2% in 4Q 2020, or up by 3.5% excluding the impact of FX revaluation4. The portfolio increased by 13.2% for 12M 2020 (9.3% excluding the FX revaluation4). The yield on corporate loans was down by 50 bp for the quarter to 6.3%. Own and state business financing programs were among the factors contributing to the portfolio growth; over RUB420 bn loans were issued under the latter.   Half of all loans to large and medium size businesses are issued using Loan in 7 minutes technology. The Loan in 3 minutes technology accounts for more than a quarter of loan origination to small businesses.  Interest expenses including deposit insurance expenses decreased by 17.5% y/y in 4Q 2020 to RUB195.2 bn on the back of lower market rates and reduction in deposit insurance contribution. Retail funding increased by 5.6% in 4Q 2020 (+7.2% excluding the FX revaluation4) to RUB16.6 trn. The average cost of retail funding decreased by 30 bp to 3.7% during the quarter.  Retail funding growth exceeded 17%for 12M 2020 (+11.8% excluding the FX revaluation4). Corporate funding was down by 2.9% in 4Q 2020 to RUB9.1 trn, whereas were up by 3.2% adjusted for FX revaluation4.  The average cost of corporate funding was down by 30 bp to 2.7% during the quarter. Corporate funding increased by nearly 24% for 12M 2020 (+8.7% excluding the FX revaluation4). Total outstanding current account balances were up by 9.6% during 4Q 2020; their share in total deposits increased to a record 37%. Net LDR ratio was 90.8% in 4Q 2020, down by 0.4 pp as compared to 3Q 2020. Securities portfolio increased 1.5 times for 12M 2020, or by 15.3% in 4Q 2020 to exceed RUB6.5 trn, mainly driven by purchases of OFZ with a floating coupon aimed at forming a liquidity buffer without any impact on capital adequacy and negligible effect on interest rate risk. The Group net fee and commission income increased by 11% y/y and 6.9% y/y to RUB552.6 bn and RUB158.5 bn for FY 2020 and 4Q 2020 respectively mainly on upbeat payments business, the main driver of which were settlement operations, as well as brokerage services.  The combined operating income before provisions of the segment Wealth management and brokerage reached RUB65.8 bn, up by 8.4% for FY 2020. Assets under management increased by 17.3% to RUB1.75 trn. The combined operating income before provisions of the segment Risk insurance was RUB78.9 bn, down by 2.8% impacted by the pandemic and related restrictions. The revenues8 of the segment Non-financial business increased 2.7 times to exceed RUB71 bn for FY 2020. In 2020 Sber acquired controlling stakes in Sbermarket, a leading e-grocery player, and 2GIS, a leading Russian geolocating mapping service, as well and consolidated 100% of the Rambler Group and launched its own audio-steaming service SberZvyk. The Group operating expenses were up by 4.9% y/y and 2.0% y/y to RUB759.8 bn and RUB242.7 bn for FY 2020 and 4Q 2020 respectively. Moderate cost growth was facilitated by the launched in 2020 efficiency enhancement program. The increase in staff expenses slowed down to 1.4% y/y (+3.6% y/y for 12M 2020). The Group Cost-to-Income ratio5 for the financial business improved to 33.2% for FY 2020, down by 1.7 pp y/y. The combined provision charge including negative revaluation of loansat fair value amounted to RUB484.0 bn and RUB105.9 bn for FY 2020 and 4Q 2020 respectively. The combined Cost of Risk was 206 bp and 171 bp for FY 2020 and 4Q 2020 respectively. Net credit loss allowance charge for loans at amortized costs amounted to RUB 84.2 bn in 4Q 2020. The Cost of Risk for loans at amortized cost was 139 bp. Negative revaluation of loans accounted at fair value through profit or loss statement due to change in the credit quality amounted to RUB23.9 bn in 4Q 2020. The credit quality of the loan portfolio improved in 4Q 2020 and returned to the pre-crisis level. The Stage 3 + POCI ratio was 6.6%, down by 33 bp as compared to 3Q 2020, and down by 85 bp for FY 2020. Total provision coverage of impaired loans was 102.8%, up by 4.3 pp and by 13.4 pp for 4Q 2020 and FY 2020 respectively. Selected Capital Adequacy Results4 The data in the table is in accordance with standardized and IRB approaches applied to the corresponding assets groups. Risk-weighted assets under a standardized approach as of 31.12.2020 and 30.09.2020 were assessed according to Basel 3.5 and those for the previous periods were assessed according to Basel III. Risk-weighted assets under an IRB approach as of 31.09.2020 and 30.09.2020 were assessed according to Basel 3.5 and those for 31.12.2019 were assessed according to Basel III. Under Basel III RUB bn. unless stated otherwise  31.12.2020 30.09.2020 31.12.2019 31.12.2020 / 30.09.2020 % change 31.12.2020 / 31.12.2019 % change Common equity Tier 1 capital            4 719.9  4 554.8  4 375.4 3.6% 7.9% Tier 1 capital           4 869.9  4 704.8  4 375.4 3.5% 11.3% Total capital           5 008.9  4 836.4  4 433.5 3.6% 13.0% Risk-weighted assets         34 124.2  34 004.7  32 634.1 0.4% 4.6% Credit risk        29 253.9  29 468.4  28 062.7 -0.7% 4.2% Operational risk          3 664.3  3 486.8  3 486.8 5.1% 5.1% Market risk           1 206.0  1 049.5  1 084.6 14.9% 11.2% Ratios           Common equity Tier 1 capital adequacy ratio 13.83% 13.39% 13.41% -- -- Tier 1 capital adequacy ratio 14.27% 13.84% 13.41%     Total capital adequacy ratio 14.68% 14.22% 13.59% -- -- Leverage ratio 12.9% 12.7% 13.7% -- --   Total capital increased by 13.0% to RUB5 008.9 bn for FY 2020. The growth of 3.6% in 4Q 2020 was due to retained earnings and positive revaluation of the securities portfolio. The Group's risk-weighted assets were up by 4.6% to RUB34 124.2 bn for FY 2020. The growth of 0.4% in 4Q 2020 mostly due to a 5.1% increase in the operating risk component of the risk-weighted assets on the back of the calculation period shift, as well as a 14.9% increase in the market risk related to growth in the investments in securities. The risk-weighted assets density decreased for the quarter from 92.0% to 90.3% mainly from the growth of the OFZ portfolio that has zero risk-weight. The decrease of 12 pp for FY 2020 was attributed to the implementation of new IRB models, transition to Basel 3.5 and partial release of macro add-ons for retail loans. The Group's leverage ratio was up by 20 bp to 12.9% in 4Q 2020. Common equityTier 1 capital adequacy ratio increased by 44 bp to 13.83% in 4Q 2020. Tier 1 capital adequacy ratio was up by 43 bp to 14.27, while total capital adequacy ratio increased by 46 bp to 14.68%.      1 Excluding the subordinated loan agreement in the amount of RUB150.0 bn classified as equity financial instrument that was previously ceded by the Bank of Russia in favor of the Ministry of Finance 2 Based on profit from continuing operations 3 Before loan loss allowance and including loans at amortized cost and at fair value 4 As per management accounts 5 Other non-interest income / (expense) includes: Net losses from non-derivative financial instruments at fair value through profit or loss (excluding revaluation of loans at fair value due to change in credit quality); Net gains from financial instruments at fair value through other comprehensive income; Net gains from derivatives, trading in foreign currencies, foreign exchange and precious metals accounts translation; Net losses arising on initial recognition and modification of financial instruments measured at amortized cost; Net losses from revaluation of office premises; Impairment of non-financial assets; Net charge for other provisions and allowances (excluding Net loss allowance / provisions for credit related commitments); Revenue of non-core business activities; Cost of sales and other expenses of non-core business activities; Net premiums from insurance and pension fund operations; Net claims, benefits, change in contract liabilities and acquisition costs on insurance and pension fund operations; Income from operating lease of equipment; Expenses related to equipment leased out; Net share of profit / (loss) of associates / joint ventures; Other net operating (expense) / income 6 Operating income before provisions for debt financial assets. credit related commitments and revaluation of loans at fair value due to change in credit quality 7 Total equity attributable to shareholders of the Bank / Total numbers of shares outstanding (ordinary + preferred) 8 ForthesegmentNon-financialbusinessRevenuesoftheassociatesandjointventures are disclosed proportionately to the ownership share of the Group in the reporting period.  For thecompaniesoftheGroupRevenuesarecalculatedonthe 100% basisfrom the date of the control. The information does not include data on Yandex.Market and the financial results from the disposal of Yandex.Market.   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. 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ISIN:	US80585Y3080, RU0009029540, RU0009029557, US80585Y4070
Category Code:	ACS
TIDM:	SBER
LEI Code:	549300WE6TAF5EEWQS81
OAM Categories:	1.1. Annual financial and audit reports
Sequence No.:	94786
EQS News ID:	1173013

End of Announcement	EQS News Service