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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
Sber key metrics of client activity
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.
Key segments overview
Key 2Q 2021 Banking business segment highlights
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%.
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%.
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
Wealth management and brokerage
Assets under management increased by 3.8% in 2Q 2021 to RUB1.9 trn.
Net assets under custody on the brokerage accounts exceeded RUB2.1 trn, as of 2Q 2021.
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.
Selected Capital Adequacy Results Overview
Common equity Tier 1 capital decreased by 2.5% for 2Q 2021 to RUB4,798.7 bn from dividend distribution of RUB422.4 bn for 2020. The Group total capital decreased by 2.3% for 2Q 2021 to RUB5,139.0.
The Group risk-weighted assets were down by 0.7% to RUB34,164.0 bn in 2Q 2021, mainly due to the transition to a standardized approach in calculating operational risk under the Central Bank Regulation #744-P, the savings effect from which was RUB0.7 trn.
The risk-weighted assets density decreased from 87.6% to 85.8% for 2Q 2021.
Common equity Tier 1 capital adequacy ratio and Tier 1 capital adequacy ratio in 2Q 2021 came down by 25 bp to 14.05% and 14.49% respectively, while total capital adequacy ratio decreased by 25 bp to 15.04%.
Conference call details
The Sber 2Q 2021 Consolidated IFRS Results Conference Call will be held on July 29, 2021 at 5:00 pm Moscow time (3:00 pm London / 10:00 am New York time).
The conference call dial-in and webcast details are:
Conference ID: English - 5692107
Russian - 8858537
8 800 500 9283 (toll free)
0800 358 6377 (toll free)
800-458-4148 (toll free)
1 Includes discontinued operations, which included Eurocement Group from 3Q 2020
2 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
3 Based on profit from continuing operations
4 Operating income before provisions for debt financial assets, credit related commitments and revaluation of loans at fair value due to change in credit quality
5 Other non-interest income / (expense) includes: Net gains / (losses) from non-derivative financial instruments at fair value through profit or loss; 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; Impairment of non-financial assets; Net charge for other provisions and allowances; Revenue of non-financial and other business activities; Cost of sales and other expenses of non-financial and other 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 loss of associates and joint ventures; Other net operating income / (expenses)
6 Includes net expenses from provisioning for debt financial assets and revaluation of loans at Fair Value due to changes in credit quality
7 Total equity attributable to shareholders of the Bank / Total numbers of shares outstanding (ordinary + preferred)
8 Before loan loss allowance and including loans at amortized cost and at fair value
9 Based on management accounts
10 Taking into account the change in the methodology in accounting for the revaluation of the OTC assets and REPO transactions
11 For the segment Non-financial business Revenues of the associates and joint ventures are disclosed proportionately to the ownership share of the Group in the reporting period. For the companies of the Group Revenues are calculated on the 100% basis from the date of the control. The information does not include data on Yandex.Market and the financial results from the disposal of Yandex.Market
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US80585Y3080, RU0009029540, RU0009029557, US80585Y4070
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