Sberbank reports 2016 Net Profit of RUB541.9 bn, or RUB25.00 per ordinary share, under International Financial Reporting Standards (IFRS)

02.03.17

Moscow, March 2, 2017 – 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 2016, with review report by AO PricewaterhouseCoopers Audit.
“Sberbank emerged from the crisis stronger than before. Record profit and 140% EPS growth were achieved through significant efficiency improvements and radical changes in all our business processes.  Our continued efforts in digital transformation, and cultural and organizational development lay a solid foundation for Sberbank’s sustained growth in this fast changing environment,” said Herman Gref, President, Chairman of the Executive Board.

The 2016 Financial Highlights:

  • The Group net profit reached RUB541.9 bn
  • The Group earnings per share (EPS) came at RUB25.00, up by 141.3% compared to 2015
  • The Group return on equity (ROE) reached 20.8% p.a., compared to 10.2% a year ago
  • The Group capital position improved during the year, with core capital adequacy ratio up by 340 basis points to 12.3%, while total capital adequacy ratio reached 15.7%, up by 310 basis points during the year
  • The annual cost of risk (CoR) came at 177 bp, down by 77 basis points compared to 2015. CoR of the retail portfolio was 130 bp, down by 85 basis points compared to 2015, while CoR of the corporate portfolio was 194 bp, down by 74 basis points compared to 2015
  • Cost-to-income ratio improved to 39.7% in 2016 compared to 43.7% a year ago
  • Net income from insurance and pension fund businesses increased by 63.0% during the year

 

The Q4 2016 Financial Highlights:

  • Sberbank’s net profit reached RUB141.8 bn, or RUB6.54 per ordinary share, for the quarter, up by 95.3% compared to Q4 2015
  • Quarterly annualized ROE 20.4%, up by 780 basis points compared to Q4 2015
  • The quarterly cost of risk (CoR) came at 122 bp, down by 91 basis points compared to Q3 2016. CoR of the corporate portfolio was 147 bp, down by 102 basis points compared to Q3 2016, when CoR of the retail portfolio was 55 bp, down by 57 basis points compared to Q3 2016
  • Client deposits were up 0.4% to RUB18.7 trn in Q4 2016 compared to Q3 2016. Retail deposits increased by 3.0%, while corporate deposits decreased by 4.4% during the quarter
  • The level of non-performing loans (NPLs) of total loan portfolio came down to 4.4% from 4.9% a quarter ago, while coverage level of NPLs improved to 157% from 142% during the quarter  

Selected Financial Results


RUB bn, unless stated otherwise

4Q 2016

3Q 2016

4Q 2015

4Q16/
3Q16

4Q16/
4Q15

12M 2016

12M 2015

12M16/
12M15

 

Net interest income

355.2

342.8

297.2

3.6%

19.5%

1 362.8

988.0

37.9%

Net fee and commission income

97.4

88.6

95.6

9.9%

1.9%

349.1

319.0

9.4%

Other non-interest income

(10.5)

3.6

25.8

 

 

(14.4)

122.8

 

Total revenues

442.1

435.0

418.6

1.6%

5.6%

1 697.5

1 429.8

18.7%

Net provision charge for impairment of debt financial assets

(60.3)

(101.7)

(112.7)

(40.7%)

(46.5%)

(342.4)

(475.2)

(27.9%)

Operating expenses

(202.0)

(163.0)

(191.7)

23.9%

5.4%

(677.6)

(623.4)

8.7%

Net profit

141.8

137.0

72.6

3.5%

95.3%

541.9

222.9

143.1%

Earnings per ordinary share, RUB

6.54

6.36

3.40

 

 

25.00

10.36

141.3%

Total comprehensive income

88.0

130.6

133.7

(32.6%)

(34.2%)

492.4

365.8

34.6%

Book value per share*, RUB

130.7

126.6

110.0

(3.2%)

18.8%

130.7

110.0

18.8%

Ratios

 

 

 

 

 

 

Return on equity

20.4%

20.5%

12.6%

 

 

20.8%

10.2%

 

Return on assets

2.2%

2.1%

1.1%

 

 

2.1%

0.9%

 

Net interest margin

6.1%

5.8%

4.9%

 

 

5.7%

4.4%

 

Cost of risk

1.2%

2.1%

2.3%

 

 

1.8%

2.5%

 

Cost-to-income ratio

45.9%

37.3%

45.8%

 

 

39.7%

43.7%

 

*Total equity / Total number of ordinary shares outstanding. Unaudited 

Net interest income was RUB355.2 bn in Q4 2016, up by 19.5% from the year-ago period:

  • Interest income (down 0.6% to RUB595.4 bn compared to Q4 2015) was in large influenced by Rouble appreciation.
  • Interest expenses including deposit insurance expenses for Q4 2016 decreased by 20.4% from Q4 2015 to RUB240.2bn. The cost of liabilities decreased by 10 basis points to 4.5% in Q4 2016 relative to Q3 2016, driven by retail term deposits, cost of which came down by 60 basis points to 5.5%.
    • During 2016 the annualized cost of liabilities  decreased by 130 basis points to 4.7% from 6.0% in 2015, driven by both corporate and retail term deposits, cost of which came down by 180 basis points to 4.3% and by 70 basis points to 6.0% respectively.
    • The corporate deposits portfolio came down by 19.6% during the year.

The Group Q4 2016 net fee and commission income came at RUB97.4 bn, up by 1.9% from the year-ago period. The income from cash and settlement transactions business (RUB99.2 bn) accounted for a strong 79.5% share in total fees and commissions income in the fourth quarter. Income from the banking cards operations increased by 10.0% in Q4 2016 from the same period a year ago.
Net provision chargefor loan impairment for Q4 2016 totaled RUB57.7 bn compared to RUB112.3 bn for Q4 2015. This translated into the cost of risk of 122 basis points for the quarter versus 230 basis points a year ago.

  • The cost of risk for corporate loans dropped by 102 basis points to 147 basis points in Q4 2016 relative to the previous quarter of 2016.
  • The cost of risk for retail loans decreased by 57 basis points to 55 basis points in Q4 2016 relative to the previous quarter of 2016.

The Group conducted a Revaluation of office premises as of yearend 2016. Revaluation of office premises resulted in a negative effect of RUB25.0 bn to Operating income.
The Group operating expenses for Q4 2016 increased to RUB202.0 bn, up by 5.4% from the same period a year ago.
Selected Balance Sheet Results


RUB bn, unless stated otherwise

31/12/16

30/09/16

31/12/15

12M-9M 2016

12M16-12M15

Total net loans

17 361.3

17 781.3

18 727.8

(2.4%)

(7.3%)

Total gross loans

18 664.7

19 096.6

19 924.3

(2.3%)

(6.3%)

Corporate loans

13 633.0

14 062.4

14 958.7

(3.1%)

(8.9%)

Retail loans

5 031.7

5 034.2

4 965.6

(0.05%)

1.3%

Restructured loans

1 209.1

1 191.9

1 231.2

1.4%

(1.8%)

Securities portfolio

2 717.5

2 969.0

2 906.0

(8.5%)

(6.5%)

Assets

25 368.5

25 531.6

27 334.7

(0.6%)

(7.2%)

Total deposits

18 684.8

18 609.9

19 798.3

0.4%

(5.6%)

Retail deposits

12 449.6

12 088.1

12 043.7

3.0%

3.4%

Corporate deposits

6 235.2

6 521.8

7 754.6

(4.4%)

(19.6%)

Ratios

 

 

 

 

 

Net loans-to-deposits ratio

90.6%

92.7%

91.9%

 

 

NPL ratio

4.4%

4.9%

5.0%

 

 

NPL coverage ratio

157%

142%

121%

 

 

Restructured-to-gross loans

6.5%

6.2%

6.2%

 

 

Total provision coverage of total NPLs + restructured non-NPLs

75%

73%

64%

 

 

Total loans, net, decreased by 2.4% to RUB17,361.3 bn in Q4 2016 as compared to Q3 2016. The decrease of the corporate loan portfolio was influenced by the currency revaluation, while new loan issues of retail loans was offset by large volumes of repayments during the quarter. During the year the Bank revised economic sector risk concentrations within the Group Loans and advances to customers disclosed in the ConsolidatedIFRS Financial Statements for the year ended December 31, 2016.

Client deposits portfolio remained merely unchanged during the fourth quarter, in large influenced by the currency revaluation; furthermore, the increase of 3.0% of retail deposits was offset by the 4.4% decrease of corporate deposits.

Total NPL portfolio came down by 10.7% to RUB828.4 bn during the fourth quarter. The NPL ratio decreased to 4.4% in Q4 2016 as compared to 4.9% in Q3 2016, while the coverage level of the NPL portfolio by provisions improved to 157% during the quarter.

The share of restructured loans of the total loan portfolio reached 6.5% in Q4 2016 as compared to 6.2% in Q3 2016. The total provision coverage of NPLs combined with restructured non-NPLs reached 75% in Q4 2016, up from 73% in Q3 2016.

Selected Equity Position Results


Under Basel I
RUB bn

31/12/16

30/09/16

31/12/15

12M-9M 2016

12M16-12M15

Total Tier 1 capital

2 729.2

2 585.0

2 226.7

5.6%

22.6%

Total capital

3 497.3

3 444.4

3 151.2

1.5%

11.0%

Risk-weighted assets

22 268.2

23 162.2

24 995.5

(3.9%)

(10.9%)

Equity

2 821.6

2 733.0

2 375.0

3.2%

18.8%

Ratios

 

 

 

 

 

Core capital adequacy ratio

12.3%

11.2%

8.9%

 

 

Total capital adequacy ratio

15.7%

14.9%

12.6%

 

 

The Group total capital increased by 1.5% to RUB3.5 trn in Q4 2016 relative to Q3 2016 primarily as a result of retained net profit.

The Group risk-weighted assets decreased by 3.9% in Q4 2016 from Q3 2016 to RUB22.3 trn, driven mainly by Rouble appreciation. The total capital adequacy ratio (Basel I) improved by 80 basis points in Q4 2016 from Q3 2016 to 15.7%. The core capital adequacy ratio increased by 110 basis points in Q4 2016 from Q3 2016 to 12.3%.

 

1 Other non-interest income consists of Net gains from trading securities; Net gains from securities designated as at fair value through profit or loss; Net gains from investment securities available-for-sale; Impairment of investment securities available-for-sale; Net (losses) / gains from trading in foreign currencies, operations with foreign currency derivatives and foreign exchange translation; Net gains / (losses) from operations with precious metals, precious metals derivatives and precious metals accounts translation; Net gains from operations with other derivatives; Net losses from revaluation of office premises; Impairment of premises, equipment and intangible assets; Goodwill impairment; Losses on initial recognition of financial instruments and on loans restructuring; Net charge for other provisions; 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; Other net operating income.

2 Non-performing loans more than 90 days overdue