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Sberbank: Sber reports FY2020 Net Profit of RUB760.3 bn under International Financial Reporting Standards (IFRS)

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Sberbank (SBER)
04-March-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.

Sber reports FY2020 Net Profit of RUB760.3 bn under International Financial Reporting Standards (IFRS)

Moscow, March 4, 2021 - Sberbank (hereafter "the Group" or "Sber") released its Annual consolidated IFRS financial statements (hereafter "the Financial Statements") as at and for the 12 months ended 31 December 2020, with audit report by AO PricewaterhouseCoopers Audit.

Herman Gref, Chairman of the Executive Board, CEO:

"A year ago we could hardly imagine the challenges we would encounter in 2020: the pandemic, the drop in oil prices, interruption in operations of certain segments of the economy. In the scope of the joint efforts with the government and businesses, we became an important player in the collective fight against the consequences of the pandemic: we immediately organized an anti-crisis control centre, started offering support to retail clients and businesses from the beginning of the turmoil. During 2020, we issued RUB17.7 trn loans under our own and state programs. We offered our clients different restructuring and financing options to cope with the crisis.

Sber was able to quickly restore the business once the restrictions were lifted. The launch of a massive costs optimization program helped us support profitability, and as a result achieve Return on Equity of 16%.

An important milestone of 2020, was the launch of our new brand, Sber, which is a universe of our financial and non-financial products and services, as well as our new Strategy 2023 that concentrates on building an integrated ecosystem around a client."

 

FY 2020 Financial and Operational Highlights:

 

 

4Q 2020 Financial and Operational Highlights:

 

 

 

 

 

Statement of Profit or Loss Results Highlights

 

RUB bn, unless stated otherwise

4Q

2020

 

4Q

2019

 

3Q

2020

 

4Q2020/

4Q2019

% change

4Q2020/

3Q2020

% change

12M

2020

 

12M

2019

 

12M2020/

12M2019

% change

Net interest income

426.5

371.0

411.3

15.0%

3.7%

1 608.2

1 415.5

13.6%

Net fee and commission income

158.5

148.3

147.7

6.9%

7.3%

552.6

497.9

11.0%

Other non-interest income / (expense) 5

-7.9

28.7

33.6

-127.5%

-123.5%

32.4

108.3

-70.1%

Operating income before provisions 6

577.1

548.0

592.6

5.3%

-2.6%

2 193.2

2 021.7

8.5%

Net charge related to change in asset quality: 

-108.1

-41.2

-85.7

162.4%

26.1%

-493.8

-149.5

230.3%

     Net credit loss allowance charge for debt financial assets

-84.2

-35.5

-63.3

137.2%

33.0%

-412.0

-92.6

344.9%

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

-23.9

-5.7

-22.4

319.3%

6.7%

-81.8

-56.9

43.8%

Net loss allowance / provision for credit related commitments

16.1

-6.9

1.9

-333.3%

747.4%

2.7

-8.9

-130.3%

Staff and administrative expenses

-242.7

-238.0

-175.5

2.0%

38.3%

-759.8

-724.6

4.9%

Net profit  from continuing operations

199.0

212.0

265.6

-6.1%

-25.1%

751.8

914.8

-17.8%

Profit / (Loss) from discontinued operations

2.7

0.0

5.8

--

-53.4%

8.5

-69.8

-112.2%

Net profit

201.7

212.0

271.4

-4.9%

-25.7%

760.3

845.0

-10.0%

Earnings per ordinary share from continuing operations. RUB

9.02

9.86

11.55

-8.5%

-21.9%

33.96

41.80

-18.8%

Earnings per ordinary share. RUB

 

9.15

9.85

11.82

-7.1%

-22.6%

34.36

38.55

-10.9%

Total comprehensive income 

211.9

234.5

293.6

-9.6%

-27.8%

856.1

993.2

-13.8%

Ratios

Return on equity 1

16.6%

19.4%

22.8%

--

--

16.1%

20.5%

--

Return on assets 2

2.2%

2.8%

3.2%

--

--

2.3%

3.1%

--

Net interest margin

5.34%

5.52%

5.48%

--

--

5.47%

5.38%

--

Cost of risk (amortized cost loans)

 139 bp

 72 bp

 111 bp

 --

 --

 180 bp

 49 bp

--

Cost of risk (amortized cost and FV loans)

 171 bp

 80 bp

 143 bp

 --

 --

 206 bp

 74 bp

--

Cost-to-income ratio for the financial business

 

 

 

 

 

33.2%

34.9%

 

Cost-to-income ratio 6

42.1%

43.4%

29.6%

--

--

34.6%

35.8%

--

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Highlights

 

RUB bn. unless stated otherwise

31.12.2020

30.09.2020

31.12.2019

31.12.2020/

30.09.2020

% change

31.12.2020/

31.12.2019

% change

Gross total loans3:

     25 008.6

     24 546.2

     21 749.4

1.9%

15.0%

Corporate loans

     15 700.4

     15 664.3

     13 865.4

0.2%

13.2%

Retail loans

      9 308.2

      8 881.9

      7 884.0

4.8%

18.1%

Securities portfolio

      6 557.4

      5 687.8

      4 350.3

15.3%

50.7%

Assets

     36 016.0

     35 123.8

     29 959.7

2.5%

20.2%

Total deposits:

     25 765.7

     25 152.1

     21 574.4

2.4%

19.4%

Retail deposits

    16 641.0

    15 759.1

    14 209.6

5.6%

17.1%

Corporate deposits

      9 124.7

      9 393.0

      7 364.8

-2.9%

23.9%

Book value per share7. RUB

         223.4

         214.2

         198.3

4.3%

12.6%

Ratios

 

 

 

 

 

Net Loans / Deposits ratio (LDR)

90.8%

91.2%

94.4%

--

--

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

6.6%

6.9%

7.5%

--

--

Provision coverage of Stage 3 + POCI loans

102.8%

98.4%

89.3%

--

--

 

Net interest income increased by 13.6% y/y and 15% y/y to RUB1 608.2 bn and RUB426.5 bn for FY 2020 and 4Q 2020 respectively.

Interest income was up by 2.3% y/y in 4Q 2020 to RUB621.7 bn on the back of strong lending volumes.

Interest expenses including deposit insurance expenses decreased by 17.5% y/y in 4Q 2020 to RUB195.2 bn on the back of lower market rates and reduction in deposit insurance contribution.

Net LDR ratio was 90.8% in 4Q 2020, down by 0.4 pp as compared to 3Q 2020.

Securities portfolio increased 1.5 times for 12M 2020, or by 15.3% in 4Q 2020 to exceed RUB6.5 trn, mainly driven by purchases of OFZ with a floating coupon 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 11% y/y and 6.9% y/y to RUB552.6 bn and RUB158.5 bn for FY 2020 and 4Q 2020 respectively mainly on upbeat payments business, the main driver of which were settlement operations, as well as brokerage services. 

The combined operating income before provisions of the segment Wealth management and brokerage reached RUB65.8 bn, up by 8.4% for FY 2020. Assets under management increased by 17.3% to RUB1.75 trn.

The combined operating income before provisions of the segment Risk insurance was RUB78.9 bn, down by 2.8% impacted by the pandemic and related restrictions.

The revenues8 of the segment Non-financial business increased 2.7 times to exceed RUB71 bn for FY 2020.

The Group operating expenses were up by 4.9% y/y and 2.0% y/y to RUB759.8 bn and RUB242.7 bn for FY 2020 and 4Q 2020 respectively. Moderate cost growth was facilitated by the launched in 2020 efficiency enhancement program. The increase in staff expenses slowed down to 1.4% y/y (+3.6% y/y for 12M 2020).

The Group Cost-to-Income ratio5 for the financial business improved to 33.2% for FY 2020, down by 1.7 pp y/y.

The combined provision charge including negative revaluation of loans at fair value amounted to RUB484.0 bn and RUB105.9 bn for FY 2020 and 4Q 2020 respectively. The combined Cost of Risk was 206 bp and 171 bp for FY 2020 and 4Q 2020 respectively.

Net credit loss allowance charge for loans at amortized costs amounted to RUB 84.2 bn in 4Q 2020. The Cost of Risk for loans at amortized cost was 139 bp. Negative revaluation of loans accounted at fair value through profit or loss statement due to change in the credit quality amounted to RUB23.9 bn in 4Q 2020.

The credit quality of the loan portfolio improved in 4Q 2020 and returned to the pre-crisis level. The Stage 3 + POCI ratio was 6.6%, down by 33 bp as compared to 3Q 2020, and down by 85 bp for FY 2020.

Total provision coverage of impaired loans was 102.8%, up by 4.3 pp and by 13.4 pp for 4Q 2020 and FY 2020 respectively.

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 31.12.2020 and 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 31.09.2020 and 30.09.2020 were assessed according to Basel 3.5 and those for 31.12.2019 were assessed according to Basel III.

Under Basel III

RUB bn. unless stated otherwise 

31.12.2020

30.09.2020

31.12.2019

31.12.2020 /

30.09.2020

% change

31.12.2020 /

31.12.2019

% change

Common equity Tier 1 capital

           4 719.9

 4 554.8

 4 375.4

3.6%

7.9%

Tier 1 capital

          4 869.9

 4 704.8

 4 375.4

3.5%

11.3%

Total capital

          5 008.9

 4 836.4

 4 433.5

3.6%

13.0%

Risk-weighted assets

        34 124.2

 34 004.7

 32 634.1

0.4%

4.6%

Credit risk

       29 253.9

 29 468.4

 28 062.7

-0.7%

4.2%

Operational risk

         3 664.3

 3 486.8

 3 486.8

5.1%

5.1%

Market risk

          1 206.0

 1 049.5

 1 084.6

14.9%

11.2%

Ratios

 

 

 

 

 

Common equity Tier 1 capital adequacy ratio

13.83%

13.39%

13.41%

--

--

Tier 1 capital adequacy ratio

14.27%

13.84%

13.41%

 

 

Total capital adequacy ratio

14.68%

14.22%

13.59%

--

--

Leverage ratio

12.9%

12.7%

13.7%

--

--

 

Total capital increased by 13.0% to RUB5 008.9 bn for FY 2020. The growth of 3.6% in 4Q 2020 was due to retained earnings and positive revaluation of the securities portfolio.

The Group's risk-weighted assets were up by 4.6% to RUB34 124.2 bn for FY 2020. The growth of 0.4% in 4Q 2020 mostly due to a 5.1% increase in the operating risk component of the risk-weighted assets on the back of the calculation period shift, as well as a 14.9% increase in the market risk related to growth in the investments in securities.

The risk-weighted assets density decreased for the quarter from 92.0% to 90.3% mainly from the growth of the OFZ portfolio that has zero risk-weight. The decrease of 12 pp for FY 2020 was attributed to the implementation of new IRB models, transition to Basel 3.5 and partial release of macro add-ons for retail loans.

The Group's leverage ratio was up by 20 bp to 12.9% in 4Q 2020.

Common equity Tier 1 capital adequacy ratio increased by 44 bp to 13.83% in 4Q 2020. Tier 1 capital adequacy ratio was up by 43 bp to 14.27, while total capital adequacy ratio increased by 46 bp to 14.68%. 

 

 

1 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

2 Based on profit from continuing operations

3 Before loan loss allowance and including loans at amortized cost and at fair value

4 As per management accounts

5 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 and modification of financial instruments measured at amortized cost; Net losses from revaluation of office premises; Impairment of non-financial assets; Net charge for 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; Net share of profit / (loss) of associates / joint ventures; Other net operating (expense) / income

6 Operating income before provisions for debt financial assets. credit related commitments and revaluation of loans at fair value due to change in credit quality

7 Total equity attributable to shareholders of the Bank / Total numbers of shares outstanding (ordinary + preferred)

8 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:

ACS

TIDM:

SBER

LEI Code:

549300WE6TAF5EEWQS81

OAM Categories:

1.1. Annual financial and audit reports

Sequence No.:

94786

EQS News ID:

1173013


 

End of Announcement

EQS News Service

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