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Sberbank reports 1Q 2021 Net Profit of RUB304.5 bn under International Financial Reporting Standards (IFRS)
Moscow, April 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 3 months ended 31 March 2021, with report on review by AO PricewaterhouseCoopers Audit.
Alexandra Buriko, CFO, stated:
"In the first quarter of 2021, the business progressed better than expected: Sber increased the retail loan book to 9.7 trillion Rubles, the transactional business expanded despite the high base of last year, and the revenue of the non-financial business quadrupled. Moreover, the stabilization of the loan portfolio asset quality allowed significant reduction of the credit risk cost. As a result, Sber earned 304.5 billion Rubles net profit for the quarter.
The improving customer experience, expansion of the digital services, and integration of a wide range of offerings, fortified by the technological transformation, have allowed to surpass the milestone of 100 million active retail customers.
A strong start in 2021 gives us the ground to raise our forecast for the Return on Equity to exceed 20% in the current year."
1Q 2021 Financial and Operational Highlights:
Statement of Profit or Loss Results Highlights
Balance Sheet Highlights
Net interest income increased by 13.3% y/y in 1Q 2021 to RUB421.5 bn.
Interest income was up by 5.8% y/y in 1Q 2021 to RUB617 bn on the back of strong retail lending dynamics.
Interest expense, including deposit insurance expenses, decreased by 7.6% y/y in 1Q 2021 to RUB195.5 bn on the back of the reduction in deposit insurance contribution, as well as lower cost of funding as compared to a year ago.
Net LDR ratio equaled 88.4% in 1Q 2021, down by 2.3 pp compared to 4Q 2020.
Securities portfolio grew by 0.9% in 1Q 2021 and amounted to RUB6.6 trn, mainly from purchases of the OFZ bonds.
The Group net fee and commission income increased by 6.3% y/y in 1Q 2021 to RUB134.3 bn on the back of high comparison base of 1Q 2020, and were driven mainly by high transactional activity.
The combined operating income before provisions of the segment Wealth management and brokerage reached RUB16.3 bn, up by 17.3% in 1Q 2021. Assets under management increased by 3% to RUB1.8 trn. The share of sales of the Wealth management products in digital channels increased by 1.5x to 28%.
The combined operating income before provisions of the segment Risk insurance was RUB18.7 bn, down by 5.1%. The decline in the segment income was the result of an active flow of customers to online channels in 2020 against the backdrop of a pandemic. Rapid sales growth in digital channels has partially offset their decline in physical network.
The revenues8 of the segment Non-financial business increased 4x y/y to RUB33.6 bn for 1Q 2021.
e-commerce platform for Sber, and already presents 16 main categories and 2.5 mn SKUs.
The Group operating expenses were up by 7.1% y/y to RUB179.9 bn in 1Q 2021. The efficiency of the financial business improved significantly thanks to the technological transformation and growth of sales in digital channels, that led to the reduction of headcount in the financial segment. Overall, the Group total headcount was down by 7.4 ths employees to 278.2 ths for the quarter. At the same time, the number of employees engaged in the development of the non-financial services increased.
The Group Cost-to-Income ratio6 for the banking business was down by 1.4 pp y/y to 29.3% in 1Q 2021.
The combined provision charge including revaluation of loans at fair value amounted to RUB25.5 bn, while the combined Cost of Risk was 41 bp in 1Q 2021.
The credit quality of the loan portfolio remained merely unchanged in 1Q 2021. The share of Stage 3 and POCI loans in loans at amortized cost was 6.76%, up 15 bp, as compared to 4Q 2020.
Total provision coverage of impaired loans in 1Q 2021 was down by 3.9 pp to 98.9% as compared to 4Q 2020.
Selected Capital Adequacy Results
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 31.03.2021 and 31.12.2020 were assessed according to Basel 3.5.
Risk-weighted assets under an IRB approach as of 31.03.2021 and 31.12.2020 were assessed according to Basel 3.5.
Common equity Tier 1 capital increased by 4.3% for 1Q 2021 to RUB4,992.1 bn from net profit earned for the reporting period.
The Group's total capital increased by 5% for 1Q 2021 to RUB5,261.4 bn from growth of CET1 capital, as well as placement of subordinated bonds in the amount of RUB56 bn.
The Group's risk-weighted assets were up by 0.9% to RUB34,421.2 bn in 1Q 2021 mostly due to the 0.6% increase in the credit risk component of the risk-weighted assets on the back of loan portfolio growth, and the 10.4% increase in the market risk from increased operations on the financial markets.
The risk-weighted assets density decreased from 90.3% to 87.6% for 1Q 2021 due to the application for the foreign Group subsidiaries of the macroprudential adjustments to the risk coefficients set up by their national regulators, as well as growth of assets with zero risk weight.
The Group's leverage ratio was unchanged at 12.9% in 1Q 2021.
Common equity Tier 1 capital adequacy ratio increased by 47 bp to 14.3% in 1Q 2021, Tier 1 capital adequacy ratio was up by 47 bp to 14.74%, while total capital adequacy ratio increased by 61 bp to 15.29%.
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 Based on management accounts
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 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
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US80585Y3080, RU0009029540, RU0009029557, US80585Y4070
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