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Sberbank: Sberbank reports 1Q 2021 Net Profit of RUB304.5 bn under IFRS

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Sberbank (SBER)
29-Apr-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 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

 

RUB bn, unless stated otherwise

1Q

2021

 

1Q

2020

 

4Q

2020

 

1Q2021/

1Q2020

% change

1Q2021/

4Q2020

% change

Net interest income

421.5

371.9

426.5

13.3%

-1.2%

Net fee and commission income

134.3

126.4

158.5

6.3%

-15.3%

Other non-interest income / (expense) 5

33.4

9.1

-9.2

267.0%

-463.0%

Operating income before provisions 6

589.2

507.4

575.8

16.1%

2.3%

Net charge related to change in asset quality: 

-25.5

-167.1

-108.1

-84.7%

-76.4%

     Net credit loss allowance charge for debt financial assets

-44.2

-138.0

-84.2

-68.0%

-47.5%

     Positive / (negative) revaluation of loans at fair value due to change in credit quality

18.7

-29.1

-23.9

-164.3%

-178.2%

Net loss allowance / provision for credit related commitments

-6.5

-14.6

16.1

-55.5%

-140.4%

Staff and administrative expenses

-179.9

-168.0

-241.4

7.1%

-25.5%

Net profit  from continuing operations

304.8

120.5

199.0

152.9%

53.2%

Profit / (Loss) from discontinued operations

-0.3

0.0

2.7

--

--

Net profit

304.5

120.5

201.7

152.7%

51.0%

Earnings per ordinary share from continuing operations. RUB

14.20

5.60

9.02

153.6%

57.4%

Earnings per ordinary share. RUB

14.19

5.60

9.15

153.4%

55.1%

Total comprehensive income 

230.0

121.5

211.9

89.3%

8.5%

Return on equity 1

24.3%

10.6%

16.6%

--

--

Return on assets 2

3.3%

1.5%

2.2%

--

--

Net interest margin

5.18%

5.49%

5.34%

--

--

Cost of risk (amortized cost loans)

 74 bp

 251 bp

 139 bp

 --

 --

Cost of risk (amortized cost and FV loans)

 41 bp

 292 bp

 171 bp

 --

 --

Cost-to-income ratio - banking business 6

29.3%

30.7%

--

--

--

 

 

Balance Sheet Highlights

 

RUB bn. unless stated otherwise

31.03.2020

31.12.2020

31.03.2020/

31.12.2020

% change

Gross total loans 3:

     25 498.6

     25 008.6

2.0%

Corporate loans 3

     15 823.8

     15 700.4

0.8%

Retail loans 3

      9 674.8

      9 308.2

3.9%

Securities portfolio

      6 617.4

      6 557.4

0.9%

Assets

     37 500.4

     36 016.0

4.1%

Total deposits:

     26 997.6

     25 765.7

4.8%

Retail deposits

    16 508.1

    16 641.0

-0.8%

Corporate deposits

    10 489.5

      9 124.7

15.0%

Book value per share 7. RUB

         232.6

         223.4

4.1%

Ratios

 

 

 

Net Loans / Deposits ratio (LDR)

88.4%

90.8%

--

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

6.8%

6.6%

--

Provision coverage of Stage 3 + POCI loans

98.9%

102.8%

--

 

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.

Under Basel 3.5

RUB bn, unless stated otherwise 

31.03.2021

31.12.2020

31.03.2021 /

31.12.2020

% change

Common equity Tier 1 capital

          4 922.1

            4 719.9

4.3%

Tier 1 capital

           5 072.1

           4 869.9

4.2%

Total capital

          5 261.4

           5 008.9

5.0%

Risk-weighted assets

        34 421.2

         34 124.2

0.9%

Credit risk

       29 425.8

        29 253.9

0.6%

Operational risk

         3 664.3

          3 664.3

0.0%

Market risk

           1 331.1

           1 206.0

10.4%

Ratios

 

 

 

Common equity Tier 1 capital adequacy ratio

14.30%

13.83%

--

Tier 1 capital adequacy ratio

14.74%

14.27%

 

Total capital adequacy ratio

15.29%

14.68%

--

Leverage ratio

12.9%

12.9%

--

 

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

 

 

 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:

QRF

TIDM:

SBER

LEI Code:

549300WE6TAF5EEWQS81

Sequence No.:

101863

EQS News ID:

1190284


 

End of Announcement

EQS News Service

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