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Sberbank reports 2Q 2021 Net Profit of RUB325.3 bn under International Financial Reporting Standards (IFRS)

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Sberbank (SBER)
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

 

 

Sber key metrics of client activity

 

mn, unless stated otherwise

30.06.2021

31.03.2021

31.12.2021

30.06.2021/

31.03.2021

30.06.2021/

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 Online

68.9

67.2

65.3

1.7

3.6

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 channels

2.4

2.4

2.3

-

0.1

 

 

 

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.

 

RUB bn, unless stated otherwise

2 Q 2021

2 Q 2020

1 Q 2021

2Q2021/  2Q2020,    % change

2Q2021/       1Q2021,    % change

6 M 2021

6 M 2020

6M2021/       6M2020,     % change

Net interest income

439.5

398.5

421.5

10.3%

4.3%

861.0

770.4

11.8%

Net fee and commission income

157.1

120.0

134.3

30.9%

17.0%

291.4

246.4

18.3%

Other non-interest income / (expense) 5

35.4

-4.0

33.4

na

6.0%

68.8

5.1

1249.0%

Operating income before provisions 5

632.0

514.5

589.2

22.8%

7.3%

1 221.2

1 021.9

19.5%

Net charge related to change in asset    quality 6 

-27.2

-132.9

-25.5

-79.5%

6.7%

-52.7

-300.0

-82.4%

Net loss allowance / (provision) for credit related commitments

-6.9

-0.7

-6.5

885.7%

6.2%

-13.4

-15.3

-12.4%

Staff and administrative expenses

-201.6

-172.0

-179.9

17.2%

12.1%

-381.5

-340.0

12.2%

Net profit  from continuing operations

317.6

166.7

304.8

90.5%

4.2%

622.4

287.2

116.7%

Profit / (Loss) from discontinued      operations

7.7

0.0

-0.3

na

na

7.4

0.0

na

Net profit

325.3

166.7

304.5

95.1%

6.8%

629.8

287.2

119.3%

Earnings per ordinary share from       continuing operations. RUB

13.98

7.78

14.20

79.7%

-1.5%

28.20

13.38

110.8%

Earnings per ordinary share. RUB

14.34

7.78

14.19

84.3%

1.1%

28.54

13.38

113.3%

Total comprehensive income 

307.8

229.1

230.0

34.4%

33.8%

537.8

350.6

53.4%

 

 

 

 

 

 

 

 

 

Key financial coefficients

 

 

 

 

 

 

 

 

Return on equity  2

25.8%

14.3%

24.7%

--

--

25.3%

12.5%

--

Return on assets 3

3.4%

2.1%

3.4%

--

--

3.4%

1.8%

--

Net interest margin

5.22%

5.61%

5.18%

--

--

5.20%

5.56%

--

Cost of risk (amortized cost and FV loans)

 43 bp

 226 bp

 42 bp

 --

 --

 42 bp

 259 bp

--

Cost-to-income ratio - banking business 4

30.0%

31.8%

29.3%

--

--

29.7%

31.2%

--

 

 

 

 

 

 

 

 

 

Book value per share 7. RUB

227.4

232.6

223.4

-2.2%

1.8%

--

--

--

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key segments overview

 

 

Banking business

Key 2Q 2021 Banking business segment highlights

RUB bn, unless stated otherwise

 

30.06.2021

31.03.2021

31.12.2020

30.06.2021/

31.03.2021,

% change

30.06.2021/

31.12.2020,

% 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%.

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

RUB bn, unless stated otherwise

30.06.2021

31.03.2021

31.12.2020

30.06.2021/

31.03.2021,

% change

30.06.2021/

31.12.2020,

% 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%

--

--

 

Payments business

 

Wealth management and brokerage

RUB trn, unless stated otherwise

30.06.2021

31.03.2021

31.12.2020

30.06.2021/

31.03.2021, % change

30.06.2021/

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.

Net assets under custody on the brokerage accounts exceeded RUB2.1 trn, as of 2Q 2021.
 

Risk insurance

 

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.

 

Technological leadership

ESG

 

Selected Capital Adequacy Results Overview

RUB bn, unless stated otherwise 

30.06.2021

31.03.2021

31.12.2020

30.06.2021/

31.03.2021,

% change

30.06.2021/

31.12.2020,

% change

Common equity Tier 1 capital

          4 798.7

           4 922.1

            4 719.9

-2.5%

1.7%

Tier 1 capital

          4 948.7

            5 072.1

           4 869.9

-2.4%

1.6%

Total capital

          5 139.0

           5 261.4

           5 008.9

-2.3%

2.6%

Risk-weighted assets

        34 164.0

         34 421.2

         34 124.2

-0.7%

0.1%

      Credit risk

        29 772.7

        29 425.8

        29 253.9

1.2%

1.8%

     Operational risk

         2 986.3

          3 664.3

          3 664.3

-18.5%

-18.5%

     Market risk

          1 405.0

            1 331.1

           1 206.0

5.6%

16.5%

Common equity Tier 1 capital adequacy ratio

14.05%

14.30%

13.83%

--

--

Tier 1 capital adequacy ratio

14.49%

14.74%

14.27%

--

--

Total capital adequacy ratio

15.04%

15.29%

14.68%

--

--

Leverage ratio  

12.4%

12.9%

12.9%

--

--

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

 

Telephone numbers:

 

Russia
+7 495 213 1767 (local access)

8 800 500 9283 (toll free)

UK
+44 (0)330 336 9127 (local access)

0800 358 6377 (toll free)

USA
+1 929-477-0324 (local access)

800-458-4148 (toll free) 

 

Webcast-Link:

https://www.webcast-eqs.com/sberbank20210729

 

 

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

 

 

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. The information in this press release is confidential and is being provided to you solely for your information and may not be reproduced, retransmitted or further distributed to any other person or published, in whole or in part, for any purpose.

This press release doesn't constitute an offer of securities of the Bank for sale in the United States. The Securities may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act of 1993 as amended.

This press release is only being distributed to and is only directed at (A) persons in member states of the European Economic  Area (other than the United Kingdom) who are "qualified investors" within the meaning of Article 2(1)(e) of Directive 2003/71/EC (as amended and together with any applicable implementing measures in that member state, the "Prospectus Directive") ("Qualified Investors"); (B) in the United Kingdom, Qualified Investors who are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") and/or high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order; and (C) such other persons as to whom this press release may be lawfully distributed and directed under applicable laws (all such persons in (A) to (C) above together being referred to as "relevant persons").  The shares, or other securities representing shares, or any other securities of the Bank are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons.  Any person who is not a relevant person should not act or rely on this press release or any of its contents.

This press release does not constitute any offer of, or any invitation to sell or issue, or any solicitation of any offer to purchase, subscribe for, underwrite or otherwise acquire any securities of the Bank within the Russian Federation or in favor of the Russian entities or persons. Any foreign securities representing shares of the Bank may not be offered or sold within the Russian Federation, except as provided by the relevant Russian legislation.

The information in this press release or in oral statements of the management of the Bank may include forward-looking statements. Forward-looking statements include all matters that are not historical facts, statements regarding the Bank's intentions, beliefs or current expectations concerning, among other things, the Bank's results of operations, financial condition, liquidity, prospects, growth, targets, strategies, and the industry in which the Bank operates. By their nature, forward-looking statements involve risks and uncertainties, because they relate to events and depend on circumstances that may or may not occur in the future. The Bank cautions you that forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which the Bank operates may differ materially from those made in or suggested by the forward looking statements contained in this press release or in oral statements of the management of the Bank. In addition, even if the Bank's results of operations, financial condition and liquidity and the development of the industry in which the Bank operates are consistent with forward-looking statements contained in this press release or made in oral statements, those results or developments may not be indicative of results or developments in future periods.

Sberbank assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason.

The information and opinions contained in this press release or in oral statements of the management of the Bank are provided as at the date of this press release or as at the other date if indicated and are subject to change without notice.

No reliance may be placed for any purpose whatsoever on the information contained in this press release or oral statements of the management of the Bank or on assumptions made as to its completeness.

No representation or warranty, express or implied, is given by the Bank, its subsidiaries or any of their respective advisers, officers, employees or agents, as to the accuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this press release or its contents.

This press release is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.

By attending or reviewing this press release, you acknowledge and agree to be bound by the foregoing.

 


ISIN:

US80585Y3080, RU0009029540, RU0009029557, US80585Y4070

Category Code:

IR

TIDM:

SBER

LEI Code:

549300WE6TAF5EEWQS81

Sequence No.:

118704

EQS News ID:

1222535


 

End of Announcement

EQS News Service

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