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Sberbank: Sber earned RUB271.4 bn in 3Q 2020 under IFRS

·19-min read

Sberbank (SBER)
29-Oct-2020 / 10:15 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 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 to RUB411.3 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.

Interest expense, including deposit insurance expenses, decreased by 24.4% y/y in 3Q 2020 to RUB188.1 bn on the back of lower market rates and reduction in deposit insurance contribution. Allocations for deposit insurance were down by 24.8% y/y to RUB16.1 bn in 3Q 2020.

Net LDR ratio equaled 91.2% in 3Q 2020, up by 0.3 pp compared to 2Q 2020.
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. 

Brokerage services are gathering momentum on the back of the growing range of investment instruments. Over the first 9 months in 2020, the number of brokerage accounts on the Sberbank Investor platform doubled and exceeded 2.5 mn.
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 to the 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 loans at 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 Russia in 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%.  
 
Before loan loss allowance and including loans at amortized cost and at fair value
Operating income before provisions for debt financial assets, credit related commitments and revaluation of loans at fair value due to change in credit quality
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
Total equity attributable to shareholders of the Bank / Total numbers of shares outstanding (ordinary + preferred)
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
Based on profit from continuing operations


 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.

 


RUB bn, unless stated otherwise

3Q
2020

3Q
2019

2Q
2020

3Q2020/
3Q2019
% change

3Q2020/
2Q2020
% change

9M
2020

9M
2019

9M2020/
9M2019
% change

Net interest income

411.3

353.9

398.5

16.2%

3.2%

1 181.7

1 044.5

13.1%

Net fee and commission income

147.7

130.0

120.0

13.6%

23.1%

394.1

349.6

12.7%

Other non-interest income / (expense) 3

33.6

27.1

-3.6

24.0%

-1033.3%

40.3

79.6

-49.4%

Operating income before provisions 2

592.6

511.0

514.9

16.0%

15.1%

1 616.1

1 473.7

9.7%

Net charge related to change in asset quality: 

-85.7

-54.0

-132.9

58.7%

-35.5%

-385.7

-108.3

256.1%

     Net credit loss allowance charge for debt financial assets

-63.3

-30.6

-126.5

106.9%

-50.0%

-327.8

-57.1

474.1%

     Negative revaluation of loans at fair value due to change in credit quality

-22.4

-23.4

-6.4

-4.3%

250.0%

-57.9

-51.2

13.1%

Net loss allowance / provision for credit related commitments

1.9

-3.9

-0.7

-148.7%

-371.4%

-13.4

-2.0

570.0%

Staff and administrative expenses

-175.5

-167.4

-172.4

4.8%

1.8%

-517.1

-486.6

6.3%

Net profit  from continuing operations

265.6

230.8

166.7

15.1%

59.3%

552.8

702.8

-21.3%

Profit / (Loss) from discontinued operations

5.8

-74.7

0.0

-107.8%

NA

5.8

-69.8

-108.3%

Net profit

271.4

156.1

166.7

73.9%

62.8%

558.6

633.0

-11.8%

Earnings per ordinary share from continuing operations. RUB

11.55

10.72

7.78

7.7%

48.5%

24.94

31.94

-21.9%

Earnings per ordinary share. RUB
 

11.82

7.25

7.78

63.0%

51.9%

25.21

28.70

-12.2%

Total comprehensive income 

293.6

271.8

229.1

8.0%

28.2%

644.2

758.7

-15.1%

Ratios

Return on equity 5

22.8%

15.2%

14.2%

--

--

15.9%

20.9%

--

Return on assets 6

3.2%

3.1%

2.1%

--

--

2.2%

3.2%

--

Net interest margin

5.48%

5.30%

5.61%

--

--

5.52%

5.33%

--

Cost of risk (amortized cost loans)

 111 bp

 63 bp

 224 bp

 --

 --

 194 bp

 41 bp

--

Cost of risk (amortized cost and FV loans)

 143 bp

 106 bp

 225 bp

 --

 --

 219 bp

 72 bp

--

Cost-to-income ratio 2

29.6%

32.8%

33.5%

--

--

32.0%

33.0%

--

 

 

 

 

 

 

 

 

 

 

RUB bn. unless stated otherwise

30.09.2020

30.06.2020

31.12.2019

30.09.2020/
31.06.2020
% change

30.09.2020/
31.12.2019
% change

Gross total loans1:

     24 546.2

     22 852.1

     21 749.4

7.4%

12.9%

Corporate loans 1

     15 664.3

     14 582.1

     13 865.4

7.4%

13.0%

Retail loans 1

      8 881.9

      8 270.0

      7 884.0

7.4%

12.7%

Securities portfolio

      5 687.8

      4 845.0

      4 369.7

17.4%

30.2%

Assets 3

     35 123.8

     32 383.4

     29 958.9

8.5%

17.2%

Total deposits:

     25 152.1

     23 312.4

     21 574.4

7.9%

16.6%

Retail deposits

    15 759.1

    15 108.2

    14 209.6

4.3%

10.9%

Corporate deposits

      9 393.0

      8 204.2

      7 364.8

14.5%

27.5%

Book value per share6. RUB

         214.2

         213.4

         198.3

0.4%

8.0%

Ratios

 

 

 

 

 

Net Loans / Deposits ratio (LDR)

91.2%

90.9%

94.4%

--

--

Stage 3 + POCI loans / total gross loans at amortized cost

6.9%

7.5%

7.5%

--

--

Provision coverage of Stage 3 + POCI loans

98.4%

102.0%

89.3%

--

--

Under Basel III
RUB bn, unless stated otherwise 

30.09.2020

30.06.2020

31.12.2019

30.09.2020 /
30.06.2020
% change

30.09.2020 /
31.12.2019
% change

Common equity Tier 1 capital

 4 554.8

 4 721.2

 4 375.4

-3.5%

4.1%

Tier 1 capital

 4 704.8

 4 721.2

 4 375.4

-0.3%

7.5%

Total capital

 4 836.4

 4 863.2

 4 433.5

-0.6%

9.1%

Risk-weighted assets

 34 004.7

 31 936.4

 32 634.1

6.5%

4.2%

Credit risk

 29 468.4

 27 538.6

 28 062.7

7.0%

5.0%

Operational risk

 3 486.8

 3 486.8

 3 486.8

0.0%

0.0%

Market risk

 1 049.5

 911.0

 1 084.6

15.2%

-3.2%

Ratios

 

 

 

 

 

Common equity Tier 1 capital adequacy ratio

13.39%

14.78%

13.41%

--

--

Tier 1 capital adequacy ratio

13.84%

14.78%

13.41%

 

 

Total capital adequacy ratio

14.22%

15.23%

13.59%

--

--

Leverage ratio

12.7%

13.7%

13.7%

--

--

RUB bn, unless stated otherwise

3Q
2020

3Q
2019

2Q
2020

3Q2020/
3Q2019
% change

3Q2020/
2Q2020
% change

9M
2020

9M
2019

9M2020/
9M2019
% change

Net interest income

411.3

353.9

398.5

16.2%

3.2%

1 181.7

1 044.5

13.1%

Net fee and commission income

147.7

130.0

120.0

13.6%

23.1%

394.1

349.6

12.7%

Other non-interest income / (expense) 3

33.6

27.1

-3.6

24.0%

-1033.3%

40.3

79.6

-49.4%

Operating income before provisions 2

592.6

511.0

514.9

16.0%

15.1%

1 616.1

1 473.7

9.7%

Net charge related to change in asset quality: 

-85.7

-54.0

-132.9

58.7%

-35.5%

-385.7

-108.3

256.1%

     Net credit loss allowance charge for debt financial assets

-63.3

-30.6

-126.5

106.9%

-50.0%

-327.8

-57.1

474.1%

     Negative revaluation of loans at fair value due to change in credit quality

-22.4

-23.4

-6.4

-4.3%

250.0%

-57.9

-51.2

13.1%

Net loss allowance / provision for credit related commitments

1.9

-3.9

-0.7

-148.7%

-371.4%

-13.4

-2.0

570.0%

Staff and administrative expenses

-175.5

-167.4

-172.4

4.8%

1.8%

-517.1

-486.6

6.3%

Net profit  from continuing operations

265.6

230.8

166.7

15.1%

59.3%

552.8

702.8

-21.3%

Profit / (Loss) from discontinued operations

5.8

-74.7

0.0

-107.8%

NA

5.8

-69.8

-108.3%

Net profit

271.4

156.1

166.7

73.9%

62.8%

558.6

633.0

-11.8%

Earnings per ordinary share from continuing operations. RUB

11.55

10.72

7.78

7.7%

48.5%

24.94

31.94

-21.9%

Earnings per ordinary share. RUB
 

11.82

7.25

7.78

63.0%

51.9%

25.21

28.70

-12.2%

Total comprehensive income 

293.6

271.8

229.1

8.0%

28.2%

644.2

758.7

-15.1%

Ratios

Return on equity 5

22.8%

15.2%

14.2%

--

--

15.9%

20.9%

--

Return on assets 6

3.2%

3.1%

2.1%

--

--

2.2%

3.2%

--

Net interest margin

5.48%

5.30%

5.61%

--

--

5.52%

5.33%

--

Cost of risk (amortized cost loans)

 111 bp

 63 bp

 224 bp

 --

 --

 194 bp

 41 bp

--

Cost of risk (amortized cost and FV loans)

 143 bp

 106 bp

 225 bp

 --

 --

 219 bp

 72 bp

--

Cost-to-income ratio 2

29.6%

32.8%

33.5%

--

--

32.0%

33.0%

--

 

 

 

 

 

 

 

 

 

 

RUB bn. unless stated otherwise

30.09.2020

30.06.2020

31.12.2019

30.09.2020/
31.06.2020
% change

30.09.2020/
31.12.2019
% change

Gross total loans1:

     24 546.2

     22 852.1

     21 749.4

7.4%

12.9%

Corporate loans 1

     15 664.3

     14 582.1

     13 865.4

7.4%

13.0%

Retail loans 1

      8 881.9

      8 270.0

      7 884.0

7.4%

12.7%

Securities portfolio

      5 687.8

      4 845.0

      4 369.7

17.4%

30.2%

Assets 3

     35 123.8

     32 383.4

     29 958.9

8.5%

17.2%

Total deposits:

     25 152.1

     23 312.4

     21 574.4

7.9%

16.6%

Retail deposits

    15 759.1

    15 108.2

    14 209.6

4.3%

10.9%

Corporate deposits

      9 393.0

      8 204.2

      7 364.8

14.5%

27.5%

Book value per share6. RUB

         214.2

         213.4

         198.3

0.4%

8.0%

Ratios

 

 

 

 

 

Net Loans / Deposits ratio (LDR)

91.2%

90.9%

94.4%

--

--

Stage 3 + POCI loans / total gross loans at amortized cost

6.9%

7.5%

7.5%

--

--

Provision coverage of Stage 3 + POCI loans

98.4%

102.0%

89.3%

--

--

Under Basel III
RUB bn, unless stated otherwise 

30.09.2020

30.06.2020

31.12.2019

30.09.2020 /
30.06.2020
% change

30.09.2020 /
31.12.2019
% change

Common equity Tier 1 capital

 4 554.8

 4 721.2

 4 375.4

-3.5%

4.1%

Tier 1 capital

 4 704.8

 4 721.2

 4 375.4

-0.3%

7.5%

Total capital

 4 836.4

 4 863.2

 4 433.5

-0.6%

9.1%

Risk-weighted assets

 34 004.7

 31 936.4

 32 634.1

6.5%

4.2%

Credit risk

 29 468.4

 27 538.6

 28 062.7

7.0%

5.0%

Operational risk

 3 486.8

 3 486.8

 3 486.8

0.0%

0.0%

Market risk

 1 049.5

 911.0

 1 084.6

15.2%

-3.2%

Ratios

 

 

 

 

 

Common equity Tier 1 capital adequacy ratio

13.39%

14.78%

13.41%

--

--

Tier 1 capital adequacy ratio

13.84%

14.78%

13.41%

 

 

Total capital adequacy ratio

14.22%

15.23%

13.59%

--

--

Leverage ratio

12.7%

13.7%

13.7%

--

--

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

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