SBERBANK OF RUSSIA
Sberbank (SBER)
Sberbank reports 3Q 2020 Net Profit of RUB271.4 bn under International Financial Reporting Standards (IFRS)Moscow, July 29, 2020 - Sberbank (hereafter "the Group" or "Sber") has released its interim condensed IFRS financial statements (hereafter "the Financial Statements") as at and for the 9 months ended 30 September 2020, with report on review by AO PricewaterhouseCoopers Audit.Alexandra Buriko, CFO, stated: "Revival in corporate and consumer activity in 3Q further to the end of the lockdown and meaningful support to business and the population led to significant growth in loan portfolio and transactional volumes in Sber. Further development of digital services along with the anti-crisis cost optimization program supported efficiency: Cost-to-Income Ratio decreased to 29.6%. Sber earned RUB271.4 bn in net profit and delivered 22.8% ROE5 in 3Q 2020. We expect that business activity will somewhat slow in 4Q as the pandemic continues. However, our solid financial position and upcoming seasonal uptick allows us to remain cautiously optimistic until the end of the year." 3Q 2020 Financial and Operational Highlights:
Statement of Profit or Loss Results Highlights
Balance Sheet Highlights
Net interest income increased by 16.2% y/y in 3Q 2020 toRUB411.3 bn. Interest income was down by 0.5% y/y in 3Q 2020 to RUB599.4 bn on the back of a gradual decline in yields following the market rates.
Securities portfolio grew by 17.4% in 3Q 2020 and amounted to RUB5,687.8 bn, driven by purchases of OFZ with a floating coupon for the amount of RUB500 bn 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 13.6% y/y in 3Q 2020 to RUB147.7 bn due to upbeat transactional activity.
According to management accounts, the operating income of insurance, pension and asset management businesses totaled RUB28.9 bn (-10% y/y) in 3Q2020. Total assets under management increased by 4.4% in 3Q 2020 to RUB1.66 trn. The Group operating expenses (staff and administrative) were up by 4.8% y/y to RUB175.5 bn in 3Q 2020. Moderate cost growth was facilitated by the pandemic-related efficiency enhancement program. The increase in staff expenses slowed down to 2.1% y/y due tothe leveling off the base effect from payroll indexation in July last year. The Group Cost-to-Income ratio2 was down by 3.2 pp y/y to 29.6% in 3Q 2020. Net credit loss allowance charge for loans at amortized costs amounted to RUB 62.5 bn in 3Q 2020. The Cost of Risk for loans at amortized cost was 111 bp. In accordance with 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 amounting to RUB22.4 bn in 3Q. The combined provision charge including negative revaluation of loansat fair value amounted to RUB84.9 bn, while the combined Cost of Risk was down by 82 bp to 143 bp in 3Q 2020. The credit quality of the loan portfolio remained stable in 3Q 2020. The decrease in the share of impaired loans by 0.6 pp to 6.9% for loans at amortized cost was mostly technical and related to the bad debt recovery procedure for the Eurocement Group. Based on agreements with a previous beneficiary Sber consolidated 100% shares of the parent company of this group. An investor search is currently in process to sell the shares for the benefit of Sber. Total provision coverage of impaired loans in 3Q 2020 was down by 3.6 pp compared to the previous quarter to 98.4%. 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 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 30.09.2020 and 30.06.2020 were assessed according to Basel 3.5 and those for 31.12.2019 were assessed according to Basel III.
Common equity Tier 1 capital decreased by 3.5% to RUB4,554.8 bn on the back of dividends for 2019 declared in 3Q 2020. Tier 1 capital decreased by 0,3% to RUB4,554.8 bn. In 3Q 2020, the subordinated loan agreement in the amount of RUB150.0 bn, that was previously assigned by the Bank of Russiain favor of the Ministry of Finance, was included in the sources of additional capital. The Group's total capital changed insignificantly and amounted to RUB4,836.4 bn as of 30.09.2020. The Group's risk-weighted assets were up by 6.5% to RUB34,004.7 bn in 3Q 2020 mostly due to a 7% increase in the credit risk component of the risk-weighted assets on the back of loan portfolio growth and its FX revaluation. The increase was partially offset by the reduction of risk-weighted assets driven by transition to Basel 3.5 for Standardized approach and the cancellation of the macro add-on for unsecured consumer loans issued before 01.09.2019. Risk-weighted assets density decreased for the quarter from 92.9% to 92.0%. The Group's leverage ratio was down by 100 bp to 12.7% in 3Q 2020. Common equity Tier 1 capital adequacy ratio decreased by 139 bp to 13.39% in 3Q 2020, Tier 1 capital adequacy ratio was down by 94 bp to 13.84%, while total capital adequacy ratio decreased by 101 bp to 14.22%. 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 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 of financial instruments and loan modification; Impairment of non-financial assets; Net (charge for) / recovery of 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; Other net operating (expense) / income 4 Total equity attributable to shareholders of the Bank / Total numbers of shares outstanding (ordinary + preferred) 5 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 6 Based on profit from continuing operations DISCLAIMER This document has been prepared by Sberbank of Russia (the "Bank") and has not been independently verified. 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By attending or reviewing this press release, you acknowledge and agree to be bound by the foregoing. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ISIN: | US80585Y3080, RU0009029540, RU0009029557, US80585Y4070 |
| Category Code: | QRT |
| TIDM: | SBER |
| LEI Code: | 549300WE6TAF5EEWQS81 |
| Sequence No.: | 86776 |
| EQS News ID: | 1143861 |
| End of Announcement | EQS News Service |
