Sberbank — Annual Report 2014

Dec 31, 2014

MANAGEMENT REPORT 2014

Opening Statement from Sergey Ignatiev, Chairman of the Supervisory Board 5
Opening Statement from Herman Gref, CEO and Chairman of the Executive Board 7
Management Responsibility Statement 9
Bank Profile 10
Mission10
Our Values10
Management
Report 11
Macroeconomic situation and trends in Russian banking system 12
Group's 2014 key Financial Results 14
Strategy Implementation 17
With our Customers for Life 17
Team and Culture20
Technological Breakthrough20
Financial Performance 21
Mature Organisation 21
Corporate services 23
Сorporate and investment business 24
Key transactions for Sberbank CIB in 201425
Corporate business26
Retail Business 28
Retail lending29
Retail funding 31
Relations with the Pension Fund of Russia (PFR) 33
Payroll Projects 33
Sources of Non-interest income 34
Insurance and wealth management 35
Development of remote service channels36
Customer service quality 37

Financial results of key subsidiaries 38
DenizBank A.S. (Turkey)38
Sberbank Europe AG 39
Sberbank Kazakhstan 39
BPS-Sberbank (Belarus) 40
Sberbank Ukraine40
Risk management 41
Corporate Governance 44
Corporate Governance System 44
Executive Bodies 52
Control of Financial and Business Operations 53
Corporate Governance of the Bank55
Sberbank Share Capital Structure56
Dividend Payment Report56
Shareholder and Investor Relations57
Bank Awards 58
Financial Results 59
Summary Consolidated Financial Statements 60
Dynamics of Sberbank Group 's key figures over the past five years in accordance with IFRS 70
Profit and Loss Statement Analysis 72
Structure of Sberbank Group's assets under IFRS 78
Structure of Sberbank Group's liabilities and equity under IFRS 82
Appendix 1. List of main subsidiaries and associated companies of the Bank85
Appendix 2. Information on the specific financial results of the Group by jurisdictions where the companies of the Group are registered 89

Sergey Ignatiev Chairman

of the Supervisory Board

OPENING STATEMENT FROM SERGEY IGNATIEV, CHAIRMAN OF THE SUPERVISORY BOARD

Dear Shareholders,

The year 2014 brought many significant events that created new challenges for Russian economy and influenced activities of all Russian business segments. External political circumstances aggravated negative economic trends. Nevertheless, Sberbank withstood the trial and demonstrated decent financial results. I am confident that the professionalism of thousands of our employees will help Sberbank to handle current challenges and continue successful development to benefit our shareholders, customers, and partners.

Sberbank is the backbone of the Russian financial sector with the leading positions in key segments on the Russian market. Sberbank has been continually strengthening its position as a customer-oriented innovative bank that is actively implementing the latest technologies and techniques and improving its services. Supported by the necessary expertise, Sberbank Group is developing its business in different regions of presence.

The key focus for Sberbank is improving its corporate governance. Currently, the bank has embarked on a programme for implementing the recommendations of a new Corporate Governance Code of the Russian Federation. I would like to emphasise that Sberbank pro-actively interacts with all categories of shareholders, seeing to their rights and balancing their interests.

I am confident that Sberbank Group employees will continue to successfully implement its development strategy to benefit the bank's customers, partners, shareholders and the society.

Herman Gref CEO and Chairman

of the Executive Board

OPENING STATEMENT FROM HERMAN GREF, CEO AND CHAIRMAN OF THE EXECUTIVE BOARD

Dear Shareholders, Clients, and Partners,

The year 2014 was a tough year for Sberbank, full of macroeconomic instability, geopolitical uncertainties and risks. Nonetheless, our team successfully mastered new challenges, delivering on the targets we had set for the first year of our Strategy 2018. Considering the challenging market environment the financial results that Sberbank achieved in 2014 evidence the bank's decent performance.

The Sberbank Group earned a net profit of RUB 290 billion under IFRS. The bank reaffirmed its status as one of Europe's leaders in terms of return on assets, which constituted 1.4%. The return on equity was also high, reaching almost 15%.

The total loan portfolio grew by 38%, reaching almost RUB 18,6 trillion, with corporate loan portfolio increasing 41% and retail loan portfolio – 29%.

Mortgage lending was the priority for our retail business. Sberbank enhanced its approach to mortgage sales model by simplifying loan application process and by building a network of partnerships with real estate agencies and developers. As a result, the home equity loan portfolio increased by 45% and Sberbank's share on the home equity loan market in Russia reached 53% by the end of the year.

Customer servicing model in all segments of the corporate sector underwent a major revamp, which improved the quality of service, increased the number of products per customer and enhanced customer satisfaction with the bank's services.

With every process in the bank fully transformed, including new approaches to risk management, IT systems and HR introduced over the last years, we faced the recent downturn in a much better shape than during the previous crisis of 2008−2009.

Sberbank has built an efficient risk management system that helps us maintain the quality of our portfolio at a level far above the market average. The flexibility to customise models and accuracy in predicting various scenarios enable the system to respond to any changes in the market environment in a timely manner. In an effort to further improve the system, the bank started working on the development of a "risk culture" that involves identification, analysis and minimisation of risks at all management levels across all business lines.

In 2014 Sberbank made a substantial step forward in IT development as part of creating an advanced system that would become the cornerstone of the bank's competitive advantage in the world of widespread digital technologies. Among the key achievements in 2014 were an increase in the share of remote channel of corporate clients' transactions to 94%, a great progress in implementing the IT platform consolidation project, substantially improved reliability and performance of IT systems and leadership in developing innovative banking products.

We would have never achieved such results without putting considerable effort into developing our corporate culture and investing in our greatest asset – our people. Sberbank pays special attention to employee training and professional development. In 2014 more than 250 thousand employees underwent our corporate training programmes, including those for top-managers in cooperation with the world's leading business schools.

One of the highlights of our corporate life in the previous year was the launch of a new campus of our Corporate University that was built to meet the highest standards of the world's leading business schools. The University is to become a training and talent development centre that will raise a new generation of managers who are ready to handle global challenges posed by new economic realities and who are committed to the bank's strategic goal of becoming a leader among the world's most innovative financial institutions.

The first year that we spent working on our Strategy 2018 demonstrated that the fundamental changes we had envisioned remained relevant in the new conditions; what is more, some of those changes had to be implemented even faster than we had planned. We are committed to continue working on the goals we have set and we will make every effort in order to be the best bank for our clients and partners, we will go the extra mile and create shareholder value through continuous development.

MANAGEMENT RESPONSIBILITY STATEMENT

I confirm that to the best of my knowledge and belief:

• (a) the financial statements, prepared in accordance with the International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of Sberbank Group as a whole, and
• (b) the management report includes a fair review of the development and performance of the business and the position of Sberbank Group included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

On behalf of the Executive Board,

_________________________________

Herman Gref CEO, Chairman of the Executive Board

BANK PROFILE

Full name: Open Joint-Stock Company Sberbank of Russia.

Abbreviated name: OJSC Sberbank of Russia (hereinafter – the bank or Sberbank).

The principal shareholder: Central Bank of the Russian Federation (hereinafter – Bank of Russia).

Head office: 19 Vavilova St., Moscow, Russia, 117997.

MISSION

We instill confidence, provide reliability and make people's lives better by helping them fulfil their aspirations and dreams.

OUR VALUES

Our values are at the core of our attitude towards life and work; they are an internal compass that helps us make decisions in complex situations; these are the principles that we follow always and everywhere.

Guiding points that help us make the right decisions in any situations:

I am a leader

• ▶ We take responsibility for our actions and for what is happening around us.
• ▶ We give our best effort.
• ▶ We continuously develop and improve ourselves, the bank and our environment.
• ▶ We are honest with each other and with our clients.

We are a team

• ▶ We gladly help each other, working to achieve a common goal.
• ▶ We are open and trust our colleagues.
• ▶ We respect each other.
• ▶ We help our colleagues grow and develop.

All for the customer

• ▶ All our activities are built around clients and are in their interests.
• ▶ We aim to surprise and delight clients with the quality of our services and attitude.
• ▶ We exceed client expectations.

MANAGEMENT REPORT

SBERBANK.COM

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MACROECONOMIC SITUATION AND TRENDS IN RUSSIAN BANKING SYSTEM

Russia's key economic indicators in 2014 were impacted by a number of adverse external factors, including a decline in the oil price and significant geopolitical tension followed by sectorial sanctions imposed on Russia. These external factors contributed to the economic slowdown that started back in 2012 due to structural problems.

Limited access to international capital markets and significantly deteriorating trading conditions coupled with the decline in the oil price contributed to faster capital outflow from Russia and caused sharp weakening of the Russian rouble. In October, the Bank of Russia prematurely introduced a floating FX rate and proposed measures to increase USD liquidity, including FX REPOs and swaps. Nevertheless, the situation on the FX market remained challenging. To stabilise the FX market, the Bank of Russia raised the key interest rate from 9.5% to 17% in December 2014. The FX rate was stabilised, although the weakening was substantial. The year results showed 41.8% RUB depreciation versus USD and 34.2% depreciation versus EUR. Gold and foreign currency reserves dropped by 25% in 2014.

The growth of the key interest rate substantially increased the cost of funding from the Bank of Russia without diminishing its role as the major supplier of liquidity. Retail deposits growth rates in Russian banks slowed down from 19.0% in 2013 to 9.4% in 2014. Striving to compensate for the shortage of internal resources and capital outflow and to maintain lending activity, the Bank of Russia increased lending volumes to banks from RUB 4.8 trillion to 9.8 trillion over the year, with the increase in loans primarily secured by banks' non-market assets. The result was an increase of Bank of Russia funds in banking sector liabilities from 7.7% to 12% in 2014.

Key Russian borrowers had to seek loans from Russian banks due to limited external financing and fewer opportunities to borrow from the RUB bond market. As a result, unlike the previous year, changes in banks' loan book were mainly driven by loans to legal entities with a loan book increase of 30.3% versus a 13.2% increase a year earlier. The growth of retail loan book decreased by almost half, reaching 13.8% versus 28.7% a year earlier.

Declining economic growth prospects and real income of the population put pressure on the quality of banks' loan book. Overdue debt level grew from 4.1% to 4.6% with the worst situation in the consumer lending segment mainly affecting the banks in the high-margin consumer lending market.

High growth rates of lending to corporate customers helped maintain the share of overdue payables in loans to non-financial organisations at the previous year's level. However, worsening financial positions of some major borrowers called for restructuring of their loans. Moreover, events in Ukraine significantly decreased the quality of loans from Russian banks to Ukrainian borrowers.

The decline in loan book quality and devaluation of the rouble, which called for additional provisions along with sharp growth in funding costs advanced by the Bank of Russia led to a reduction of profits in the banking sector by almost 40% compared to the year of 2013.

Financial markets also ended the year with the RTS USD index and the MICEX RUB index reduced by 45.2% and 7.1%, respectively. The sovereign credit rating of the Russian Federation decreased to the lower boundary of the investment quality rating group.

Despite such external economic challenges, Sberbank kept its leading positions in key segments of the Russian financial market¹ .

SBERBANK'S MARKET SHARE

%	December 31, 2014	December 31, 2013
Assets	29.1	29.6
Equity	28.7	28.4
Corporate Lending	35.0	33.3
Retail Lending (including Cetelem Bank)	36.8	34.0
Due to corporate customers	21.9	17.2
Due to individuals	45.0	46.7

A complex macroeconomic environment was also observed in the countries where Sberbank's subsidiaries operate.

Turkish GDP growth slowed in 2014 to 2.9% versus 4.5% in the previous year. The key factors that contributed to the slowdown were instability in emerging markets and capital outflow intensified by the non-transparent policy of the Central Bank of Turkey.

Economic growth rates in Central and Eastern Europe slightly increased, driven by the improving situation in leading Eurozone economies. However, political risks, such as the unresolved "Greek issue" remain.

The GDP of Belarus growth rate decreased to 1.6% in 2014, while the inflation was maintained at the 2013 level and totalled 16.2%.

Despite a slight slowdown, Kazakhstan economy remained the most stable among all CIS countries. Based on 2014 results, GDP growth amounted to 4.3% (versus 6% a year earlier). KZT devaluation of 16% in February helped to cope with the accumulated imbalance in the external sector for the time being but sped up the inflation to 7.4%.

The recession continued in Ukraine; the country's GDP fell by 6.8% in 2014, while political risks and the risk of default on government debt still remain high.

¹ Estimated according to Sberbank's internal methodology based on data provided by the Bank of Russia.

GROUP'S 2014 KEY FINANCIAL RESULTS

Despite significant worsening in macroeconomic indicators in 2014, Sberbank Group managed to demonstrate decent financial results. The net profit under IFRS amounted to RUB 290.3 bn reduced in comparison to 2013 due to a sharp increase in cost of funding in December 2014 and an increase in provision charge. The Group managed to maintain a return on equity at a fairly high level of 14.8% and return on assets at 1.4%. Based on its return on assets, the Group is rated among the ten leading companies in Central and Eastern Europe and the BRICS countries.

Following a conservative approach to forming provisions for loan impairment, the Group allocated RUB 357.0 bn to provisions for loan impairment, and the cost of risk² totalled 2.3%. The growth of the cost of risk was driven by the need to additionally create provisions for FX loans due to the reduced RUB FX rate and the overall deterioration of the quality of the loan portfolio for corporate and retail customers, one-off provisions for several major borrowers and provisions for Ukrainian borrowers due to the challenging situation in Ukraine.

However, the Group's loan book grew by 40.7% in corporate loans and 29.3% in loans to retail customers. Sberbank continued to improve its operating performance and cutting costs, which facilitated a significant reduction of cost to income ratio to 43.4%.

The capital adequacy level (calculated in accordance with Basel I requirements) decreased on RUB devaluation in 2014 to 8.6% in comparison to 2013 with total capital adequacy at 12.1%.

² Cost of risk is understood as the ratio of expenses for forming provisions against the average loan book in the period and prepayments to customers before deduction of provisions for loan book impairment.

NET PROFIT

RETURN ON ASSETS (ROА)

COSTS TO ASSETS

COST TO INCOME RATIO

CORPORATE CUSTOMERS LOAN PORTFOLIO

RETAIL CUSTOMERS LOAN PORTFOLIO

CAPITAL ADEQUACY (BASEL I)

CUSTOMERS' FUNDS

STRATEGY IMPLEMENTATION

Sberbank Development Strategy 2014-2018 was approved by the Supervisory Board on November 11, 2013. In 2014, the bank developed and launched strategy implementation principles and embarked on the implementation of its key strategic initiatives. Systemic changes defined by the Strategy remain relevant in the new environment, with certain qualitative changes requiring faster implementation.

The bank achieved substantial progress in each of its strategic areas based on 2014 results. Sberbank's most visible achievements related to innovative banking, improved operating performance, and cross-sales.

WITH OUR CUSTOMERS FOR LIFE:

«We will build deep, trusting relationships with our clients, becoming an integral part of their lives without drawing attention to ourselves. Our objective is to exceed our clients' expectations»

Sberbank is making a concerted effort to improve the quality of its customer service and expand the product range.

Annual survey results showed that customer perception of Sberbank improved in a number of ways:

SBERBANK KEEPS ON TOP OF TRENDS

SBERBANK USES CUTTING-EDGE BANKING TECHNOLOGIES / LATEST INNOVATIONS

SBERBANK OFFERS VARIOUS CONVENIENT WAYS TO MAKE PAYMENTS

In 2014, the bank improved its services model for all corporate customer segments. One of the achievements was an increase in the number of products per customer in all mass corporate business segments:

NUMBER OF PRODUCTS PER ACTIVE CUSTOMER IN SMALL AND MICROBUSINESSES

Sberbank is focusing on promotion of cross-sales in the retail segment. The number of products per active retail customer increased to 2.0 in 2014.

Sberbank set up one of the largest and most accessible loyalty banking programmes in Russia. Based on 2014 results, the number of customers covered by the programme reached 14.2 mn people. The partnership network includes over 1,000 leading companies.

TEAM AND CULTURE:

We will make our people and our corporate culture one of the main sources of our competitive edge»

• ▶ In 2014, Sberbank was rated by Universum Global to be among three top Russia's employers for students and graduates.
• ▶ Sberbank's personnel turnover in 2014 decreased by a quarter, and employee engagement level increased from 61% to 69%.
• ▶ The Sberbank Corporate University was launched in 2014. It is a unique corporate educational institution among other corporate schools in Russia. A total of 26,100 people were trained at the Corporate University in 2014.
• ▶ Strategic conferences were held in all regional and subsidiary banks to communicate the corporate strategy, mission, and values at all levels. Every manager took part in promoting the Group's updated mission and values at his/her level. This ensures common understanding of Sberbank Development Strategy and coordinated work of our team.

TECHNOLOGICAL BREAKTHROUGH:

«We will complete the technological modernisation of Sberbank and integrate the most advanced technologies and innovations into our business»

Sberbank Development Strategy 2014-2018 defined two key vectors for technological development: completing the upgrade started in 2008 and building conditions for implementing the most innovative solutions. In 2014, Sberbank Group achieved significant progress in every area:

• ▶ DenizBank was recognised as the most innovation-intensive bank worldwide according to the Bank Administration Institute (BAI) for the quality and innovations in its internal processes.
• ▶ Sberbank Online was named the best mobile and Internet-bank in Russia and Central and Eastern Europe (according to Global Finance and Synnovate).
• ▶ The number of Mobile Banking and Sberbank Online users increased by 40% and 109%, respectively.
• ▶ 1.65 mn customers use the Sberbank Business Online service. Over one million documents are processed on a daily basis.
• ▶ The process of merging the Automated Banking System (ABS) amongst Sberbank's regional banks and transferring to a single IT-platform is 95% complete.
• ▶ The bank started developing the concept of the optimal product offering to customers as part of its Big Data technology development projects.

FINANCIAL PERFORMANCE:

«We will increase the financial returns of our business through more efficient management of costs and the ratio of risk to return»

• ▶ Sberbank has achieved excellent performance and continues to improve its operating efficiency. Thus, income growth significantly exceeded the growth of costs, which resulted in cost to income ratio being reduced to 43.4% (-2.7 bps versus 2013).
• ▶ The RAROC³ methodology was implemented. RAROC is key to customer price flexibility for certain products based on risk and the total return ratio for all bank products used by this customer.
• ▶ Tools and infrastructure were implemented to calculate Basel III liquidity ratios in subsidiary banks.

MATURE ORGANISATION:

«We will develop organisational and managerial skills and establish processes that reflect the size of the Group and the level of our ambitions»

• ▶ Significant progress has been achieved relative to the implementation of efficient risk management systems in the Group's subsidiary banks.
• ▶ Based on 2014 results, Sberbank Talents career portal was rated among the world Top 8 Internet websites in the Buried Treasures nomination. This portal was successfully integrated with an in-house SAP Recruiting System and three leading internet job search platforms (www.hh.ru, www.superjob.ru, www.job.ru).
• ▶ In order to improve corporate governance and comply with the best practices, in 2014 the bank launched a plan for implementing the revised Corporate Governance Code of the Bank of Russia, set up a Corporate Secretary Service, and resolved to reduce the Supervisory Board from 17 to 14 people in-line with the world's best corporate governance practices.
• ▶ The Management Information System (MIS) providing management with information on key business indicators of the bank was further developed. In 2014, as part of improvement of the MIS, the higher level of detalisation was achieved, so information on key indicators could be provided for any single customer or business unit. The MIS is used as a basis for business planning and building incentive systems at all bank management levels.

³ RAROC is Risk-Adjusted Return on Capital.

SBERBANK.COM DECEMBER 16–21 — «THE SBERBANK STRESS TEST» CASE STUDY

16–21 ДЕКАБРЯ — «СТРЕСС-ТЕСТ СБЕРБАНКА» The critical point of Russia's currency crisis in late 2014 was Black Tuesday on the December 16, 2014. Throughout that day, RUB lost about 24% of its value against USD and almost 28% against EUR. This significant devaluation of RUB led to panic among bank customers resulting in an increased load on all Sberbank's operating systems.

⁴ Financial statements compiled in accordance with the Russian accounting rules.

Sberbank Group is represented in 22 countries. The Russian market is the key market for the Group, where over 82% of the Group's assets are located and where the bulk of Group profits is earned.

Based on materiality principles, the first part of the report describes the Group's business in the Russian market and the second part provides key performance results of subsidiary banks.

CORPORATE SERVICES

Sberbank is one of the key finance providers in the Russian economy, continuously improving and expanding product offerings for all corporate customer categories.

The growth in Sberbank's corporate loan book in 2014 resulted in 36%5 outpacing the sector's growth of 30.3%, based on yearend results.

Key achievements in 2014 in corporate services were as follows:

• ▶ The launch of a new service model for services to largest, large, and medium-sized corporate customers. The new model establishes customer service teams and assigns customer and product managers to all customers. The model prioritises the customer base and develops optimal product offerings for the customer, contributing to a significant improvement in service quality and efficiency of corporate services.
• ▶ Applying RAROC⁶ in the corporate lending process, which is key to customer price flexibility for certain products based on risk and the total return ratio for all bank products used by this customer.
• ▶ Sberbank's share of total corporate funds of the banking system increased to 21.9% based on 2014 results (versus 17.2% in the previous year) owing to efficient corporate funds raising efforts.

In 2014, Sberbank continued to improve performance and optimise its corporate business structure, taking into account the new economic environment. A number of important organisational and HR decisions, including appointment of a new head of the business, were made at the end of the year for the corporate investment business (Sberbank CIB), which services the bank's major customers. A new business organisation was developed, the implementation of which started in 2015.

⁵ According to Sberbank's management reports

⁶ RAROC is Risk-Adjusted Return on Capital

СORPORATE AND INVESTMENT BUSINESS

Services for largest clients

Significant improvements in corporate services, coupled with a tendency toward substitution of foreign financing, resulted in expansion of Sberbank's major customer base to include reliable borrowers with a public credit reputation, which in turn led to growth in the loan book of this client category and had a positive impact on loan book quality, created additional cross-selling potential for other bank products.

Based on 2014 results, the loan book of major customers increased 1.5 times to RUB 7.1 trillion, approximating 60% of Sberbank's total corporate loan book as at the end of the year.

Trade finance business

The trade finance business is being consistently developed. The scope of Sberbank's trade finance and documentary business transactions in 2014 exceeded USD 36 bn. Along with developing cooperation with its partners in Western and Eastern Europe, the bank is steadily upscaling transactions with Asia-Pacific countries, mainly with China as well as India, South Korea, and Singapore.

In 2014, Sberbank substantially increased its active transactions in the trade finance and documentary business portfolio. Business involving issuance of guarantees to secure counter-guarantees of foreign partner banks alone increased almost six times in 2014.

Investment banking business

Despite the challenging market environment in 2014, the investment banking business was able to demonstrate decent results in many areas.

The launch of a new model for servicing largest customers and ongoing improvements in processes and team competencies contributed to substantial growth in the level of customer satisfaction. The customer satisfaction index increased from 73.6 in 2013 to 77.6. Based on the completed market survey7 , Sberbank CIB became the leader in customer satisfaction in Russia.

Another successful venture despite the lack of liquidity was the implementation of share transactions with a complex structure in real estate, the consumer sector, and the mining industry through Sberbank Merchant Banking.

The bank received some industry-wide awards for its achievements in the investment banking business, including the Best Brokerage House in Russia and CIS Award (based on the Extel Survey) and the Most Innovative Investment Bank in Central and Eastern Europe Award from The Banker magazine.

⁷ The survey was conducted by an independent company «TNS MIC».

KEY TRANSACTIONS FOR SBERBANK CIB IN 2014

CORPORATE BUSINESS

Large and medium-sized businesses

Sberbank prioritised its customers as part of implementing a new service model in 2014. The potential of each large or mediumsized business customer was estimated using a product and task configurator, centralised planning and business development plan follow-up was employed. The launch of the new service model facilitated an annual increase in the number of products per customer from 3.3 to 3.6.

Throughout the year, the bank continued to improve lending and guarantee extensions on loan terms and collateral requirements, also providing for more pricing flexibility based on borrower quality and risk. Thus, special conditions for the financing of government-supported projects were determined, the decision-making process for the low-risk guarantees was streamlined, and the period for making decisions on unified products was reduced. Special focus was placed on developing and promoting products that will facilitate access to government support for agricultural businesses that will further support import substitution in Russia.

A special government relations service line was set up in mid-2014 to liaise with the governments of Russia's constituent entities and local governments.

Small and micro businesses

Developing cooperation with small and micro businesses is one of the key segments of Sberbank's operations. Based on yearend results, the number of active small business customers exceeded one million. Despite the challenging environment, the loan portfolio of this customer category increased by 2%.

Sberbank is focusing on setting up an accessible and convenient infrastructure for small business development in Russia. In 2014, the bank made significant efforts to enhance the performance and attractiveness of the Business Development Centres and the internet portal Business Environment, offering a wide range of services for business launch, management, and development:

• ▶ The bank started to launch new format Business Development Centres with an extended list of non-banking services and by offering the ability to receive different government services using the "one-stop shop" principle (25 updated centres were functioning as at the end of the year).
• ▶ The Business Environment portal launched services for remote submission of reports to the Federal Tax Service and preparation and submission of business registration documents.
• ▶ Educational workshops and on-line video broadcasts are regularly held on the internet portal and in centres across the country.

Based on 2014 results, the number of users registered with the Business Environment portal exceeded 145,000 entities.

During the year, Sberbank continued to improve and expand its product offerings for small business customers. Thus, products facilitating small business access to government procurement processes (Tender Guarantees, Tender Loans, and integrated bidding solutions) were replicated across the branch network. Large-scale customer migration from the old remote service systems to Sberbank Business Online was completed. The number of customers connected to Sberbank Business Online exceeded one million at the end of the year.

TRANSACTIONS PER CHANNEL

NUMBER OF CUSTOMERS CONNECTED TO SBERBANK BUSINESS ONLINE

Services for сorporate сustomers

Sberbank continues to develop and implement new cutting-edge services that improve the attractiveness and efficiency of bank services for corporate customers. The main focus is on creating services using innovative information technologies and transferring as many transactions as possible to remote channels.

In 2014, the bank implemented a service enabling customers to open and use accounts online followed by execution of necessary documents, which improves bank service accessibility and saves customers' time. In December 2014 alone, the system was used to open 4,100 accounts.

During the year, the bank continued to expand the functionality and customer coverage of its E-Invoicing service of electronic document management. In cooperation with its partners, Sberbank is undergoing a transition to electronic document management by offering additional discounts to increase customer interest in this product. By the end of 2014 the E-Invoicing service covered 60,000 customers.

Another pilot innovative product – the Business Tablet – was launched in 2014 in five regions. The product supports cash operations, daily business tasks, document management and obtaining cash flow details at any place and at any time. Alongside with providing access to Sberbank Business Online and Sberbank Online systems, the Business Tablet also enables the user to accept credit card payments and print out receipts, manage customer requests through the contact centre, and remotely prepare and submit reports to various government authorities.

As part of Cash Management service, a new product of monitoring accounts opened with other banks was launched to allow clients to receive detailed information on cash flows through accounts opened with other commercial banks, including Sberbank subsidiary banks. The number of accounts connected to the account cash management services grew by 60% in 2014.

RETAIL BUSINESS

Retail lending continued to grow in Russia demonstrating a 14% growth in 2014. Sberbank retail loan portfolio (including Cetelem portfolio) increased by 23% based on management reports.

The following achievements of Sberbank retail business in 2014 are noteworthy:

• ▶ In 2014, Sberbank focused on mortgage products, increasing its market share to a record 53% by the end of the year. For the first time in its history, Sberbank share of mortgage loans exceeded its consumer unsecured loan portfolio share in total retail loan portfolio (46.4% vs 40.2%).
• ▶ An efficient risk management system enabled Sberbank to keep its retail loan book quality at the level above market average despite the worsening of the economic situation in 2014.
• ▶ In 2014, Sberbank continued to demonstrate good performance in the bankcard and acquiring segments, having strengthened its market leadership. Reinforced IT-infrastructure, robust development of remote servicing channels and a targeted approach to sales channels all contributed to maintaining high growth rates in related commission income (33.0% vs 35.5% in 2013).

In 2014, Sberbank started to use a new method to determine the most suitable product for the customer based on financial modelling and customer base segmentation. Sberbank premium segment demonstrated good progress attracting affluent and VIP customers with integrated solutions and service packages.

Active sales campaign optimisation was launched in the public segment. Initial steps were taken to implement mass personalisation, including the launch of communications with clients that receive salaries through Sberbank and developing the best product offering for the customer.

Based on annual customer survey results8 , the Net Promoter Score, i.e., readiness to recommend Sberbank, increased by 6 pp over the year, reaching 60%. These were the best survey results in Russia's banking sector.

Cross-sell promotion enabled Sberbank to increase its retail product sales per active customer from 1.6 to 2.0 over the year.

Source: ARMI-Marketing survey

⁸ The survey was conducted in 16 Russian regions in cities with a population greater than 100,000 people by ARMI-Marketing, an independent company and a member of the Millward Brown international network.

RETAIL LENDING

Sberbank and Cetelem aggregate retail loan portfolio grew by 23% to RUB 4.2 trillion in 20149 . Mortgage lending growth accelerated against the slowdown in consumer unsecured lending. Over the year, individuals received over RUB 2 trillion of loans. Sberbank and Cetelem joint share in the Russian retail lending market increased by 2.8 pp, totaling 36.8%.

SBERBANK AND CETELEM RETAIL LOAN BOOK STRUCTURE, BASED ON MANAGEMENT REPORTS

Mortgage lending

Mortgages remained Sberbank priority product, with the portfolio growth of 38.8% in 2014; the market share reached 53% while asset quality remained sustainably high. High growth rates were supported by several factors including product range expansion (launched new product "Military mortgages – purchase of housing under construction"), more efficient cooperation with real estate agents and developers, enabling to submit mortgage applications through the Partner Online web portal across Russia, and a new streamlined customer request submission process. The bank simplified the application submission process for loan product "Mortgage with two documents" requiring only two forms of personal ID – a Russian national passport and another document.

Consumer unsecured lending

Sberbank key priority in 2014 was sustaining asset quality of its loan book, lending only to high quality borrowers. Based on management reports, consumer unsecured loan portfolio increased by 6.4% over the year. Sberbank launched a number of new products in 2014, including government subsidy programmes such as "Consumer loans for military participants of the savings and mortgage system" and "Government-supported education loans".

Sberbank continued the loan refinancing program for customers with good credit history.

⁹ The survey was conducted in 16 Russian regions in cities with a population greater than 100,000 people by ARMI-Marketing, an independent company and a member of the Millward Brown international network.

SBERBANK AND CETELEM SHARE

SBERBANK SHARE OF THE CREDIT CARD MARKET

SBERBANK AND CETELEM SHARE OF THE AUTO LOAN MARKET

Source: Data provided by Frank Research, Sberbank's estimates.

Credit Cards

Credit cards remain an essential element in the bank's product range, promoted as a cross-sell product to existing bank customers. The latter allows to maintain loan quality at acceptable levels.

Sberbank issued a total of 14.6 mn credit cards. According to Frank Research, Sberbank market share of credit cards and overdrafts increased from 23.5% to 29.9%. The bank strengthened its leadership in the Russian market. Credit cards portfolio increased by 52.2% to RUB 411 bn in 2014.

Auto lending

Sberbank and Cetelem joint market share of the auto lending market increased by 1 pp to 15.8% in 2014. Sberbank Group became the leader of the Russian auto loan market in 2014. Since 2014, all auto lending business has been done through Sberbank subsidiary Cetelem. Cetelem has cooperation agreements with 23 car brands, and despite the drop in car sales and auto lending slowdown in 2014, Sberbank and Cetelem aggregate auto loan portfolio increased to RUB 145 bn.

RETAIL FUNDING

The volume of retail deposits, including saving certificates, grew by 5.9%, reaching RUB 8.5 trillion in 2014.

Sberbank actively raised funding to saving certificates, reaffirming its dominant market share exceeding 95%. Saving certificates portfolio amounted to RUB 457 bn. (+32.8% per annum). Current accounts exceeded 18% of retail funding structure, which was supportive to lowering Sberbank average cost of funding. Pensioners' funds make up a significant part of Sberbank funding base.

STRUCTURE OF RETAIL FUNDS, BASED ON MANAGEMENT REPORTS

It is worth noting that during 2014 the structure of retail deposits in the Russian banking system was shifting toward heavier FX component that increased by 58.8%. Sberbank outpaced the market in raising FX funds (+76.9%), growing its market share of FX deposits by 2.2 pp to 30.4% in 2014. The bank also kept its market share of the RUB deposits relatively flat (50.1% versus 50.6% in 2013). However, Sberbank market share of total deposits declined to 45.0% (versus 46.7% in 2013) as the entire structure of deposits in the banking system changed.

%

Sberbank Market (without Sberbank)

Source: Central Bank's data, Sberbank's estimates.

RELATIONS WITH THE PENSION FUND OF RUSSIA (PFR)

In 2014, Sberbank launched a unified format for information exchange with the PFR, which made it possible to offer a new service to retired citizens: generating statements of types and amounts of pensions and other social payments from the PFR made to their Sberbank account.

THE NUMBER OF PENSIONERS RECEIVING SOCIAL PENSIONS THROUGH SBERBANK AND MARKET SHARE IN PENSION PAYMENTS DISTRIBUTION

The number of pensioners receiving social pensions through Sberbank increased by 1.5 mn people in 2014, which allowed to increase the market share in pensions distribution to 56.2%.

PAYROLL PROJECTS

Sberbank has been strengthening its market position as a bank providing comprehensive payroll solutions for corporate clients. The number of employed individuals receiving their salary through Sberbank exceeded 22 mn people, increasing 5.7% yearon-year. Sberbank market share of the service grew by 4.1 pp to 48%. Sberbank has over 334,000 agreements with corporate clients cooperating on payroll projects.

MANAGEMENT REPORT 2014

SOURCES OF NON-INTEREST INCOME

Growing non-interest income is one of Sberbank strategic goals. As of the end of 2014, the share of net non-interest income in the Operating income before provision charge was 22.5%. The key drivers of non-interest income growth in the Retail business are operations with bankcards, acquiring services, payments and money transfers.

Bankcards

Growth in bankcard issuance has significantly increased the volumes of operations with cards. The turnover on card operations in 2014 increased by more than one third. The share of non-cash transactions in total card turnover has been growing sustainably, increasing from 19.5% to 23.8%.

Sberbank was rated first in Europe by the number of issued cards.

NUMBER OF BANKCARDS

In 2014, Sberbank launched bankcards of Russian payments system the Universal electronic card (PRO100) across Russia with an issuance by the end of the year exceeding 50,000 cards. PRO100 cards are issued as Personal or Payroll cards and are accepted across the entire Sberbank acquiring network and by the banks that are members of UEC Payment System.

Acquiring services

The number of active selling points accepting Sberbank acquiring services increased by 40,200 to 446,100 over the course of the year.

Sberbank commission income from trade acquiring services in 2014 increased to RUB 30.4 bn (+43% versus 2013) with Sberbank share in the acquiring market increasing by 3.2 pp to 46.4%.

The annual turnover on bankcards in the Internet increased from RUB 17 bn to RUB 47 bn and the total number of clients using Internet acquiring service from Sberbank exceeded 750 corporate entities.

Payments and money transfers

In 2014 there was a sustainable growth in payments from individuals to legal entities relative to all types of payments. The average number of payments grew by 27% reaching a daily level of 10 mn payments. Sberbank was the leader of the market in processing housing and utilities payments with a market share of 35%, while its coverage of the mobile telecommunication payments market was 39%. The result was achieved through active promoting of non-cash payments via Mobile Banking and Sberbank Online.

The number of Direct Debit service users reached 19.6 mn Sberbank clients (+35% per year). The number of users of Direct Debit for Mobile Communications payments reached 12.9 mn people. The number of Direct Debit subscribers for Housing and Utilities payments was 6.7 mn people in over 100 Russian cities.

ACTIVE SUBSCRIBERS TO HOUSING AND UTILITIES DIRECT DEBIT SERVICE

The volumes of money transfers increased significantly in 2014, growing by 60% with a total transferred amount of RUB 4.3 trillion. Growth was driven mainly by card transfers.

The increase in non-cash payments and transfers was facilitated by the development of Yandex.Money services, a Sberbank subsidiary. As part of integration with Yandex. Money in 2014, Sberbank continued to improve its payment solutions, expand its range of joint services and customer base. Sberbank became the core channel for top-ups of Yandex.Money e-wallets with a total monthly top-up volumes exceeding RUB 1 bn. The bank is steadily developing distribution of digital products of Yandex. Money partners via Sberbank Online, as well as promotes "Pay with Sberbank" solution for Yandex.Money products.

INSURANCE AND WEALTH MANAGEMENT

Sberbank offers a wide range of insurance products both for its retail and corporate clients. The product range includes health and life insurance, insurance of the property provided as collateral under retail and corporate loans, financial risks and third party liability insurance of its corporate clients, savings and investment life insurance and other projects. Over 8.5 mn individuals used bank insurance programmes in 2014; the bank's corporate clients received 192,000 insurance policies. Over 17 mn individuals used insurance programmes offered by Sberbank since the start of insurance products business in September 2009. Corporate clients purchased over 500,000 insurance products during that period.

Sberbank Life Insurance subsidiary strengthened its leadership in the life insurance market. The clients of Sberbank 1 and Sberbank Premier purchased 35,000 long-term savings and investment life insurance programmes. The new client count increased by 78% year-on-year, while related product proceeds more than doubled.

Over 3.4 mn customers transferred their pension savings to Sberbank Private Pension Fund (PPF), which was the best result in the market in 2014. All in all, Sberbank PPF services 5.2 mn Russian citizens.

As part of its Strategy 2018 goal implementation to expand the Group's business in the insurance and pension markets, Sberbank registered and obtained licences for Sberbank Insurance and Sberbank Insurance Broker subsidiaries that successfully started their business in 2014.

DEVELOPMENT OF REMOTE SERVICE CHANNELS

As part of its innovative development, Sberbank continues to improve its remote service channels. The self-service network included more than 90,000 self-service machines at the end of 2014.

The number of subscribers to the Mobile Banking SMS-service reached 72.2 mn with the number of active users exceeding 20.9 mn people.

According to the Global Finance magazine, in 2014 Sberbank was awarded in the following categories: Best Mobile Banking in Central and Eastern Europe, Best SMS-Banking in Central and Eastern Europe, and Best Banking Application for Mobile Phones in Central and Eastern Europe. In the same year, Sberbank Online was recognised as the best retail Internet bank both in Russia and in Central and Eastern Europe.

The number of active Sberbank Online users increased from 9.3 to 19.4 mn customers with the number of Sberbank Online users totalling 33.2 mn.

The number of payments via Sberbank Online reached 30 mn per month (+68% per year). Monthly fund transfers doubled to RUB 122 bn.

MOBILE BANKING ACTIVE USERS

ACTIVE USERS OF SBERBANK ONLINE

CUSTOMER SERVICE QUALITY

Handling customer calls remains as one of Sberbank key priorities. The results of initiatives aimed at improving customer service revealed over one hundred systemic issues in the bank's processes and highlighted measures to cope with each issue. Over 30 improvement measures were introduced that reduced the number of customer calls by 31% during the year.

Remote service channels are an efficient means to reduce the load off the branch network: in 2014, 93% of customers queued for no more than 10 minutes in 94% of offices equipped with the Queue Management System.

Sberbank Call Centre particularly focuses on quality of service, growth of productivity, and personnel training. In 2014, the bank managed to keep a record low average waiting time of 35 seconds. The Call Centre's customer satisfaction increased from 70% to 80%, even against substantially increased call volumes (in 2014, the bank received 77.7 mn calls versus 61.6 mn calls a year earlier).

Based on the results of the survey conducted by ARMI-Marketing, an independent company, 72% of customers are fully satisfied with Sberbank service quality, and the share of such customers in 2014 increased by 7 pp.

FINANCIAL RESULTS OF KEY SUBSIDIARIES

In 2014, Sberbank Group continued integration of acquired assets.

A new International business management model was approved in the second half of 2014 and an International business management policy was adopted to define the goals, objectives, and general principles of managing Sberbank Group's foreign network.

Despite increasing geopolitical tension and internal economic problems in some countries of operation, the Group's subsidiary banks maintained their sustainable development.

DENIZBANK A.S. (TURKEY)

DenizBank A.Ş. is one of the five largest private Turkish banks by asset size and has a market share of 4.7%. The DenizBank branch network as of December 2014 included 758 divisions. It has subsidiary banks in Austria, Russia, and Northern Cyprus and branches in Germany and Bahrain.

Vigorous integration of DenizBank A.Ş. within Sberbank Group is ongoing. The subsidiary bank's business model was revised in 2014 relative to its retail business. New mortgage products are developed and implemented in Turkey for the customers of OJSC Sberbank of Russia. DenizBank A.Ş ATM network is expanded with Russian language support added in tourist areas in Antalya to benefit the banks' Russian customers. DenizBank A.Ş. implements a loyalty programme for Sberbank Groups customers.

Robust efforts are being made to develop and implement methodologies in the subsidiary bank to assess all risks in accordance with Sberbank Group approaches. It is noteworthy to highlight successful implementation of New Credit Process in DenizBank and its key subsidiaries in 2014.

• ▶ The Bank Administration Institute (BAI) recognised DenizBank as the most innovation-intensive bank globally in 2014.
• ▶ DenizBank was rated first by The Banker among Turkish banks (Bank of the Year in Turkey).

SBERBANK EUROPE AG

Sberbank Europe AG, Austria (SBE) and its full-service subsidiary banks operate in Czech Republic, Slovakia, Hungary, Croatia, Slovenia, Bosnia and Herzegovina and in Ukraine. A full-fledged corporate bank was launched at the Vienna central office and its loan book at the end of 2014 exceeded EUR 1.7 bn. SBE Group's branch network includes 290 divisions servicing over 600,000 legal entities and individuals.

In order to ensure fast-paced integration of SBE within Sberbank Group, Sberbank Group implements a common liquidity management model, monitors and manages distressed assets and implements a new crediting process for corporate customers in line with the standards of Sberbank of Russia.

Key qualitative achievements of Sberbank Europe in 2014:

• ▶ SBE Group implemented its rebranding project. Renaming of the head bank was followed by renaming SBE Group subsidiaries10. Brand awareness increased from 0% to 14%.
• ▶ SBE Group opened its flagship offices in Czech Republic, Slovakia, Slovenia, Croatia, Bosnia and Herzegovina (also in the city of Banja Luka).
• ▶ The Sberbank Direct business was launched as a bank branch in July 2014 in Germany. Without an aggressive marketing campaign, the subdivision demonstrates excellent results in mobilising liabilities. Over EUR 500 mn was deposited online by retail customers.
• ▶ In Q1 2014, SBE received a debut syndicated loan from major international banks.
• ▶ The SBE Group's IT strategy was approved in September 2014. All Group banks obtained approvals from local regulators to use Sberbank's Mega-Data Center resources in Moscow, which significantly mitigates external risks and supports uninterrupted business and significantly optimises future expenses.

SBERBANK KAZAKHSTAN

At the end of 2014, the bank had 117 divisions across the country, including 16 branches. Its customer base is 40,700 legal entities and 775,800 individuals. The bank's self-service terminal network includes 4,300 ATMs, POS-terminals and self-service machines. The corporate and retail loan portfolios before provision increased by 23.6% and by 86.2% respectively in 2014. Retail and corporate deposits increased by 34.8% and 18.9% respectively.

The bank launched the following strategic projects in 2014:

• ▶ implementation of Credit Factory technology;
• ▶ implementation of CRM in corporate and retail businesses;
• ▶ implementation of Hunter system to identify fraudulent loan requests;
• ▶ development of Colibri Online, international money transfer system;
• ▶ implementation of Sberbank Online, internet-banking for individuals;
• ▶ issuance and acquiring of Union Pay International cards (China).

According to Forbes Kazakhstan, the bank is recognised to lead in stress resistance among other Kazakhstan banks. The bank also headed Euromoney's Private Banking and Wealth Management Survey 2014 rating in Best private banking services overall in Kazakhstan.

¹⁰ Including the intermediate decision to rename the Ukrainian bank to VS Bank.

BPS-SBERBANK (BELARUS)

Based on the 2014 results, BPS-Sberbank maintains third place in the national financial market based on its asset scope, equity, loans, and retail deposits. Its customer base is over 31,600 legal entities and 1.5 mn individuals. Customers can benefit from 139 points of sale located in all regions of the Republic of Belarus. Sberbank Group's cross-border business with corporate customers in Belarus amounted to the equivalent of over USD 2 bn as at the beginning of 2015.

Key projects implemented in 2014:

• ▶ connecting the subsidiary bank to SAS OpRisk Management, intergroup operating risk management system;
• ▶ building and implementing a centralised small business lending process;
• ▶ commercial operation of the SavEx automated e-trading system;
• ▶ implementing customer funds trust management;
• ▶ issuing the Visa Classic PayWave and Visa Gold PayWave, and MasterCard Paypass swipe plastic cards;
• ▶ transforming the operating and cash system and implementing cash liquidity centralised management in a single operations office.

According to The Banker, BPS-Sberbank became Bank of the Year 2014 which is confirmed by its strengthening leadership on the market.

SBERBANK UKRAINE

A sharp deterioration of the business, financial, and political situation in Ukraine led to a significant reduction in bank deposits and poorer loan quality. Devaluation of Ukraine's national currency amounted to 97% (from UAH 7.99 to UAH 15.77 for USD 1).

Sberbank Ukraine's key objectives in the current conditions were to ensure timely fulfilment of its obligations to customers, maintain customer deposits, and manage the loan book.

Throughout the reporting year, the bank made significant efforts to mitigate adverse impacts on Sberbank Group's performance:

• ▶ in 2014, the loan book decreased by 14.5%;
• ▶ headcount optimisation was completed;
• ▶ by the end of the reporting period, the outflow of retail customers decreased substantially and neared the average market level;
• ▶ in order to improve its capitalisation, in September 2014, the bank reclassified its interbank loan from OJSC Sberbank of Russia as a subordinated loan of USD 100 mn which provided a sufficient reserve to meet NBU's mandatory equity requirements. The capital adequacy rate as of January 01, 2015 (Н2, min=10%) was 15.0%.
• ▶ the results of stress testing conducted by NBU revealed that the bank did not need additional capitalisation.

RISK MANAGEMENT

Sberbank considers risk management an important competitive advantage and a strategic area of its business operations.

Given the general deterioration of the macroeconomic environment in 2014, the bank purposefully created significant provisions for possible losses in troubled sectors, adhering to a conservative approach to forming provisions.

In 2014, implementation of effective risk management practices at the Group's subsidiary banks continued.

Credit risk management

Starting from 2013, Sberbank has consistently implemented and developed both integrated and special risk management methods and processes.

Credit risk management methods:

• ▶ managing risk through assessment of potential risks prior to operations;
• ▶ planning the level of credit risk by assessing expected losses;
• ▶ minimising credit risk by setting limits;
• ▶ structuring transactions;
• ▶ ensuring transaction security;
• ▶ applying the decision-making system;
• ▶ monitoring and controlling the level of credit risk.

The Group has set up an Internal Ratings-based System. The foundation of the system is economic and mathematical models estimating the probability of default relating to contractors and transactions. Models are reviewed periodically using historical statistics. The risk factors assessed include those associated with the contractor's financial position and its potential changes, ownership structure, business reputation, credit record, cash flow and financial risk management system, information transparency, the client's position in the industry and the region, and the support of public authorities, parent companies, and the group to which the borrower belongs. Credit risk assessment models were validated in 2014.

Risk is limited and expected losses due to the borrower's default are controlled through a system of limits available for each business line. The limit amount depends on the borrower's risk level, which is calculated based on the borrower's financial position and other factors: external influences, management quality, business reputation rating, etc. Country limits are classified as a separate group aimed at limiting the Group's country-related risks. These limits restrict the geographic concentration of risks. In 2014, the bank introduced an automated control system for credit exposure limits.

The main tool for reducing credit risk is risk coverage. The amount of risk coverage depends on the risk of the borrower/ transaction and is fixed under the terms of loan products. The bank applies collateral policy as one of the approaches to credit risk hedging in order to improve collateral quality of loan portfolio. The collateral quality is based on the probability of obtaining funds in the amount of the estimated collateral value when selling the collateral.

Considering the deterioration of the economic environment in Russia in 2014, the bank took the following measures:

• ▶ More stringent requirements were introduced when granting loans/credit cards and making relative decisions.
• ▶ As of October 2014, lending to micro-businesses and small businesses in foreign currency was suspended.
• ▶ Restrictions were imposed on lending to high-risk sectors.

An effective and fine-tuned credit risk management system enabled Sberbank to outperform the sector in terms of loan book quality and increase its advantage regarding both corporate and retail clients during 2014:

Source: Bank of Russia, Banking Sector Overview, No. 148, 2015

¹¹ Non-consolidated RAS data, overdue loans 1+

CREDIT RISK COVERAGE INDICATORS ALSO IMPROVED OVER THE YEAR12¹³

	January 1, 2015	January 1, 2014
Provisions for loan impairment to customers' loan book	5.1%	5.0%
Coverage ratio for overdue loans	2.56 times	2.22 times

¹² Sberbank's management reports.

Distressed assets

The bank seeks to identify problems at early stages and makes every effort to settle customer debt issues amicably.

In light of the current difficult economic situation, a number of anti-crisis measures related to distressed assets have been drawn up:

• ▶ developing a talent pool of divisions handling distressed loans;
• ▶ creating anti-crisis teams dealing with major customers;
• ▶ adopting a set of measures to simplify the restructuring of retail loans.

The Group's subsidiary banks have also taken a number of measures. Restructuring processes have been adjusted, transactions with distressed assets are controlled and monitored.

Liquidity risk

Liquidity management in 2014 was largely determined by the situation on the financial markets considering the current macroeconomic environment, the Ukrainian crisis, the sanctions imposed on Russia, RUB devaluation and other factors. Despite the volatility of the financial markets, Sberbank made the best use of its opportunities to borrow currency on the debt and capital markets:

• ▶ In February 2014, the bank placed subordinated bonds under reviewed Regulation No. 395-P capable of being redeemed after five years with the consent of the Bank of Russia. The issue totalled USD 1 bn. The bond placement resulted not only in attracting long-term funding, but also in improving the capital adequacy ratio.
• ▶ In March 2014, the bank made a private placement worth USD 500 mn and EUR 500 mn within the MTN programme.
• ▶ In June 2014, Sberbank issued its first Eurobonds worth EUR 1 billion.

Due to the flexible interest rate policy, a highly diversified liabilities structure and low dependence on external borrowing, Sberbank preserved a sufficient level of RUB and FX liquidity throughout the year. The bank managed to reduce short-term borrowings from the Bank of Russia by replacing them with medium-term and long-term borrowings and thus improving the liquidity profile.

More information about the risks is available in the Financial Risk Management Section of the Group's IFRS financial statements.

Risk culture

Sberbank is focusing on the development of risk culture as an important system ensuring sustainable development in a constantly changing environment. The risk culture is part of the Bank's corporate culture. It can be defined as a body of knowledge, values, principles and beliefs relating to risk management, which form the Bank's collective ability to identify, analyse, openly discuss and respond to the current and future risks. The risk culture is a supplement to the Bank's formal mechanisms and is an essential part of the integrated risk management system.

The bank pays special attention to employee behaviour as a practical demonstration of risk culture. The bank established standards of behaviour for all employees regardless of their position in terms of risk culture.

CORPORATE GOVERNANCE

CORPORATE GOVERNANCE SYSTEM

Sberbank's corporate governance is a system of management and control bodies established in compliance with Russian legislation, the regulator and Moscow Stock Exchange, as well as the recommendations of the Basel Committee on Banking Supervision and international best corporate governance practices.

The bank's system of management and control bodies establishes rules and procedures for corporate decision-making, provides management and control of the bank's operations, governs the relationship between shareholders, the Supervisory Board, management and other stakeholders.

The current corporate governance system meets the interests of the bank's sustainable business development by ensuring protection of the rights and legitimate interests of shareholders.

The bank's corporate governance system can be graphically represented as follows:

General shareholders' meeting

The General Shareholders' Meeting is the supreme management body of the bank which acts on principal issues of the bank's activity.

The bank's shareholders have the right to make key decisions and approve documents regulating the corporate governance system, as well as elect members of the Supervisory Board and the CEO and Chairman of the Executive Board. Each shareholder may exercise the right to vote at the General Shareholders' Meeting.

Shareholders (or their representatives) are entitled to express their opinion to and ask questions of the Chairman of the meeting, members and candidates to the Supervisory Board and the Statutory Audit Commission, the auditor's representative and members of the bank's executive bodies attending the meeting. The meeting may be attended remotely, as the bank constantly organises (since 2011) online streaming of meetings in Russian and English on the corporate website.

The procedure for preparing and holding the General Shareholders' Meeting is governed by the Regulation on the General Shareholders' Meeting of OJSC Sberbank of Russia.

Supervisory Board

The Supervisory Board is a collegiate governing body that exercises strategic and general management of the bank's operations, sets out basic principles and approaches to the bank's corporate governance system, including risk management and internal control systems, and monitors the activities of executive bodies.

The Supervisory Board reports to the General Shareholders' Meeting.

Members of the Supervisory Board are elected at the General Shareholders' Meeting until the next annual meeting and may be re-elected any number of times. In June 2014, the General Shareholders' Meeting approved amendments to the bank's Charter and resolved to reduce the Supervisory Board from 17 to 14 people, which the bank considers to be an optimal and sufficient number to meet business needs and ensure the Supervisory Board's productivity.

The Supervisory Board is governed by the Regulation on the Supervisory Board of OJSC Sberbank of Russia.

The Supervisory Board comprises executive, non-executive and independent directors.

Executive directors are members of the Supervisory Board employed by the bank.

Non-executive directors are members of the Supervisory Board who are not employed by the bank and are not independent directors.

Independent directors are those who are qualified, experienced and independent enough to have their own vision and who are able to make objective and honest judgements independently from the bank's executive bodies, groups of shareholders or other stakeholders.

MEMBERS OF SBERBANK'S SUPERVISORY BOARD

	Members of the Supervisory Board elected at General Shareholders Meeting on May 31, 2013		Members of the Supervisory Board elected at General Shareholders Meeting on June 6, 2014
	Non-Executive Directors
1	Sergey Ignatiev	1	Sergey Ignatiev
2	Nadezhda Ivanova	2	Nadezhda Ivanova
3	Georgy Luntovskiy	3	Georgy Luntovskiy
4	Alexei Moiseev	4	Alexei Kudrin
5	Alessandro Profumo	5	Alessandro Profumo
6	Alexei Ulyukaev	6	Valery Goreglyad
7	Sergei Shvetsov	7	Sergei Shvetsov
	Executive Directors
8	Herman Gref	8	Herman Gref
9	Bella Zlatkis	9	Bella Zlatkis
	Independent Directors
10	Sergei Guriev	10	Martin Grant Gilman
11	Alexei Kudrin	11	Evsey Gurvich
12	Ilya Lomakin-Rumyantsev	12	Peter Kraljic
13	Vladimir Mau	13	Vladimir Mau
14	Sergei Sinelnikov-Murylev	14	Sergei Sinelnikov-Murylev
15	Dmitry Tulin	15	Dmitry Tulin13
16	Ronald Freeman	16	Gennady Melikyan
17	Elgimez Ahmet Mahfi	17	Nadia Wells

lost his status as an independent director on January 21, 2015.

STATUS OF MEMBERS OF SBERBANK'S SUPERVISORY BOARD

Full name of Member of the Supervisory Board	Chairman of the Supervisory Board	Deputy Chairman of the Supervisory Board	Chairman of the Audit Committee	Chairman of the Com mittee for Personnel and Remu neration	Chairman of the Com mittee for Strategic Planning	Member of the Audit Committee	Member of the Com mittee for Personnel and Remu neration	Member of the Com mittee for Strategic Planning
Sergey Ignatiev
Georgy Luntovskiy
Alexei Kudrin
Martin Grant Gilman
Valery Goreglyad
Herman Gref
Evsey Gurvich
Bella Zlatkis
Nadezhda Ivanova
Peter Kraljic
Vladimir Mau
Alessandro Profumo
Gennady Melikyan
Sergei Sinelnikov Murylev
Dmitry Tulin
Nadia Wells
Sergei Shvetsov

Supervisory Board Meetings

Supervisory Board meetings are held in accordance with the Working Plan of the Supervisory Board, additional meetings can be held, if needed.

In 2014, the Supervisory Board held seven meetings in presentio where the bank's core business issues were discussed, including those to be approved by the bank's General Shareholders Meeting, such as issues related to preparation for the Annual Shareholders Meeting, resolutions on membership in the Executive Board and appointment of the Head of the Internal Audit Service and the bank's Corporate Secretary, and the approval of the bank's internal documents.

All members of the Supervisory Board elected at the Annual Shareholders Meeting on June 6, 2014, attended more than 75% of the meetings of the Supervisory Board and its committees in 2014.

Remuneration of Supervisory Board Members

Remuneration to members of the Supervisory Board and compensation of expenses related to their participation in the work of the Supervisory Board are paid in the amount and manner prescribed by the bank's in-house document entitled Regulation on Remuneration and Compensation for Members of Supervisory Board of OJSC Sberbank of Russia, approved at the Annual Shareholders Meeting on May 31, 2013.

The remuneration consists of basic remuneration paid to Supervisory Board members if they participate in at least half of the meetings of the Supervisory Board in a payroll period, and additional remuneration for work in the committees, chairmanship of the committees and chairmanship of the Supervisory Board.

Basic remuneration of RUB 4.2 mn was determined by the resolution of the General Shareholders Meeting on May 31, 2013.

Depending on participation in the work of the Supervisory Board, its members are paid the following types of additional remuneration:

• ▶ 10% of basic remuneration for performing duties as a member of any Supervisory Board committee;
• ▶ 20% of basic remuneration for performing duties as a Chairman of any Supervisory Board committee;
• ▶ 30% of basic remuneration for performing duties as a Chairman of the Supervisory Board.

Should members of the Supervisory Board perform extra duties, amounts of additional remuneration for each of such duties are summarised, but the total remuneration may not exceed 30% of basic remuneration.

A payroll period is the period from the date of election to the Supervisory Board until the date of termination of office of the Supervisory Board member.

The Bank has no long-term incentive programmes and employee stock option plans for Supervisory Board members.

Eleven members of the Supervisory Board received basic remuneration in the amount of RUB 46.2 mn in 2014 (2013 – RUB 58.8 mn for 14 members). Payment to two chairmen of the committees equalled RUB 1.7 mn (RUB 840,000 each), and payment to members of the committees totalled RUB 4.2 mn (RUB 420,000 for each of the ten members). Three members of the Supervisory Board received compensation in the amount of RUB 879,000 for their duty-related target expenses.

Total remuneration in the amount of RUB 53 mn was paid to the members of the Supervisory Board for their membership in the Supervisory Board in 2014 (2013 – RUB 61.3 mn).

Conflict of interest

Supervisory Board members shall refrain from actions that will or may potentially lead to a conflict of interest, and should such a conflict arise, they shall promptly notify the Supervisory Board thereof, as well as notify the bank of actual ownership and each purchase and/or disposal of the bank's securities.

Members of the Supervisory Board refrain from voting on matters exposed to potential conflict of interest.

The bank has never granted loans to Supervisory Board members.

DIRECT BANK SHARE OWNERSHIP BY MEMBERS OF THE SUPERVISORY BOARD

Full name	Participatory interest in the share capital, %	Ordinary shares, %	Transactions with the bank's shares in 2014
Sergey Ignatiev	-	-	No transactions
Georgy Luntovskiy	-	-	No transactions
Alexei Kudrin	-	-	No transactions
Martin Grant Gilman	0.00018	0.00019	Two acquisition transactions ADR of ordinary shares (22.09.2014 and 01.10.2014)
Valery Goreglyad	-	-	No transactions
Herman Gref	0.0031	0.003	No transactions
Evsey Gurvich	-	-	No transactions
Bella Zlatkis	0.0004	0.0005	No transactions
Nadezhda Ivanova	-	-	No transactions
Peter Kraljic	-	-	No transactions
Vladimir Mau	-	-	No transactions
Alessandro Profumo	-	-	No transactions
Gennady Melikyan	0.0001	0.0001	No transactions
Sergei Sinelnikov-Murylev	-	-	No transactions
Dmitry Tulin	-	-	No transactions
Nadia Wells	-	-	No transactions
Sergei Shvetsov	-	-	No transactions
TOTAL (cumulative ownership of the bank's shares by Supervisory Board members):	0.00378	0.00379	-

Liability Insurance

The liability of all members of the Supervisory Board is insured under the Liability Insurance Contract of the bank and its subsidiaries, members of the Supervisory Board and officials of the bank and its subsidiaries (Insurance Contract), signed between the bank and Ingosstrakh Insurance Company Ltd.

Supervisory Board members' actions covered by the Insurance Contract include only those erroneous actions committed by them as part of their official duties. The Insurance Contract does not cover any other actions or omissions committed by Supervisory Board members in any other capacity, as well as deliberate wrongdoing.

Liability insurance for collegial bodies is prescribed by the Corporate Governance Code recommended for use by letter of the Bank of Russia dated April 10, 2014, for the purpose of guaranteeing protection of shareholders' interests and compensation for damages in the event of negative consequences caused by the actions of members of the management bodies.

Evaluating the Effectiveness of the Supervisory Board and Its Committees

In order to detect additional focuses in the work of the Supervisory Board and its committees, and identify areas for improvement and development, the Supervisory Board annually assesses its performance.

Periodically, the bank hires an independent external consultant to conduct such an assessment (at least once in three years), as well as conducts an independent assessment of its operational effectiveness (self-assessment).

In 2014, the Supervisory Board performed a self-assessment for the second time. The self-assessment showed a high level of work organisation and efficiency of interaction between the Supervisory Board and the bank. In particular, Supervisory Board members highly appreciated the performance of the Supervisory Board Chairman, noting that the atmosphere of Supervisory Board meetings encouraged an open exchange of views and efficient settlement of disputes. The self-assessment resulted in identifying a few areas for improvement on which the Supervisory Board should focus in the future.

The Supervisory Board intends to continue the assessment of its operational effectiveness both independently and with the assistance of an external consultant.

Supervisory Board Committees

The bank has an Audit Committee, a Committee for Personnel and Remuneration and a Committee for Strategic Planning.

The committees are advisory bodies of the Supervisory Board, established for preliminary consideration of the bank's key business issues that fall within the competence of the Supervisory Board, as well as for preparing recommendations on such issues to the Supervisory Board.

RESPONSIBILITIES OF SBERBANK'S SUPERVISORY BOARD COMMITTEES15

Audit Committee	Committee for Personnel and Remuneration	Committee for Strategic Planning
Preliminary consideration of issues related to: ▶financial statements of the bank; ▶risk management; ▶internal control; ▶corporate governance; ▶internal and external audit; ▶remedying the consequences of unscrupulous actions of bank employees and third parties; ▶consideration of the Statutory Audit Commission's report on the audit results of the bank's financial and business operations.	Preliminary consideration of issues related to: ▶planning succession and developing an HR structure for the Supervisory Board, executive bodies and other key executives14; ▶creating an effective system of remuneration for members of the Supervisory Board, executive bodies, and other bank employees.	Preliminary consideration of issues related to: ▶determining the bank's strategic business objectives (jointly with the bank's executive bodies); ▶implementing the bank's Development Strategy and preparing recommendations thereof to the Supervisory Board; ▶the bank's Risk and Capital Management Strategy, ▶assessment of the bank's operational efficiency in the long term.

MEMBERS OF THE COMMITTEES:16

Audit Committee	Committee for Personnel and Remuneration	Committee for Strategic Planning
Committee Chairman: Vladimir Mau	Committee Chairman: Georgy Luntovskiy	Committee Chairman: Alexei Kudrin
Committee members: Valery Goreglyad, Nadezhda Ivanova, Evsey Gurvich, Dmitry Tulin	Committee members: Vladimir Mau, Sergei Sinelnikov-Murylev, Dmitry Tulin	Committee members: Herman Gref, Martin Grant Gilman, Peter Kraljic, Gennady Melikyan, Alessandro Profumo, Sergei Sinelnikov-Murylev, Nadia Wells, Sergei Shvetsov

Supervisory Board Committees' Performance in 2014

The Audit Committee previously considered the candidacy of the bank's auditor for 2014 and Q1 2015, and heard the auditor's interim performance report in 2014. Moreover, the Committee discussed the auditor's report on the bank's annual financial statements of 2013 as well as the results of audits conducted by the bank's Internal Audit Service.

In 2014, the Committee for Personnel and Remuneration considered approaches to the selection of candidates for the Supervisory Board and changes in the membership of the Executive Board, as well as conducted preliminary year-end evaluation of the Corporate Secretary.

The Committee for Strategic Planning addressed issues related to the implementation of Sberbank Group Strategy 2014-2018 during 2014.

¹⁴ Other key executives refer to managers who should comply with the bank's qualification criteria and requirements for business reputation in accordance with Art. 60, Federal Law No. 86-FZ dated July 10, 2002, On Central Bank of Russia (Bank of Russia).

Corporate Secretary

The bank introduced the position of the Corporate Secretary in order to ensure that the bank's governing bodies and officials comply with corporate governance procedures, applicable law, the bank's Charter and in-house documents guaranteeing the rights and legitimate interests of shareholders. The Supervisory Board is responsible for appointing the Corporate Secretary, who is accountable to the Supervisory Board and administratively reports to the CEO and Chairman of the Executive Board. The Corporate Secretary is the Head of the Corporate Secretary Service, the bank's structural unit.

Oleg Tsvetkov is the Corporate Secretary of OJSC Sberbank of Russia.

The Corporate Secretary's work is governed by the Regulation on Corporate Secretary of OJSC Sberbank of Russia.

EXECUTIVE BODIES

Such executive bodies as the CEO and Chairman of the Executive Board as well as the Executive Board itself manage day-to-day operations of the bank.

The bank's executive bodies and the Supervisory Board enjoy a high degree of autonomy. The Supervisory Board does not interfere with the daily activities of the executive bodies or limit their ability to quickly resolve the bank's ongoing issues. However, the executive bodies regularly inform the Supervisory Board about the bank's major operational issues related to the implementation of the bank's Development Strategy and business planning and development, as well as about the status of the risk management and internal control system.

The Supervisory Board interacts with the bank's executive bodies and officials in order to obtain complete and accurate information for decision-making.

Remuneration of Senior Management

According to Sberbank's IFRS consolidated financial statements, the remuneration of the CEO and Executive Board members equalled RUB 2,825.8 mn in 2014. (2013 – RUB 3,197.6 mn).

Total remuneration paid to Executive Board members includes salaries, bonuses, annual paid leave, sick leave, travel expenses (average salary), social benefits, year-end remuneration, compensation for membership in the Supervisory Board and other payments stipulated by law and the bank's regulations.

Annual remuneration is recorded for the period of assessment of effectiveness as part of the annual remuneration in 2014. The amount to be paid in 2015 is based on estimates. The estimates were made as per standards under the employment contract in accordance with the resolution of the Supervisory Board.

CONTROL OF FINANCIAL AND BUSINESS OPERATIONS

External Auditor

In order to verify and validate financial statements prepared in compliance with Russian law, as well as IFRS (International Financial Reporting Standards) financial statements, Sberbank hires auditing companies on a contractual basis which operate in compliance with Russian law and the International Auditing Standards.

The bank holds an annual public tender to select an auditing company. Tender documents are approved by Sberbank's Tender Committee for the purchase of goods, work and services, and are published on the bank's official website. The auditing company selected as a result of the tender shall be approved by the Executive Board, the Audit Committee of the Supervisory Board, and the Supervisory Board, as well as by Sberbank's Annual General Shareholders Meeting.

The auditor's fee is determined by tender within the framework of public tenders, further formalised in the audit contract and approved by the Supervisory Board.

On June 6, 2014, the bank's Annual General Shareholders Meeting approved CJSC Ernst & Young Vneshaudit as Sberbank's auditor in 2014 and Q1 2015. Ernst & Young companies are also auditors of Sberbank's main subsidiaries. Expenses of Sberbank Group for Sberbank's auditor were as follows:

RUB mn	2014	2013
Audit of annual financial statements (including regulatory reporting, IFRS reporting, consolidated and separate financial statements)	174.3	134.2
Interim audits and reviews	100.9	85.7
Tax consulting services	66.8	49.4
Other consulting services (not related to taxation)	129.5	153.1
Total	471.5	422.4

Statutory Audit Commission

The Annual General Shareholders' Meeting selects the Statutory Audit Commission to monitor the bank's financial and business operations.

The Statutory Audit Commission examines (audits) the bank's financial and business operations at year-end as well as at any other time at the initiative of bodies and individuals specified in Russian Federal Law No. 208-FZ dated December 26, 1995, On Joint-Stock Companies, the bank's Charter and the Regulation on the Statutory Audit Commission. The Statutory Audit Commission assesses the accuracy of data included in the bank's annual report and annual financial statements and may request the convening of an extraordinary General Shareholders Meeting and meetings of the Supervisory Board, in the event when violations in financial and business operations revealed during the audit or a real threat to the interests of the bank (its depositors) require decisions on matters within the competence of these bodies.

1	Natalia Borodina	Head of the Financial Operations Audit and Credit Institutions Engagement Division, Internal Audit Department, Central Bank of Russia
2	Vladimir Volkov	Deputy Chief Accountant, Central Bank of Russia & Deputy Director of the Accounting and Reporting Department
3	Tatiana Domanskaya	Head of the External Regulatory Bodies Relations Division, Internal Control, Inspection and Audit Office, Sberbank
4	Yulia Isakhanova	Head of the Financial Control Division, Finance Department, Sberbank
5	Alexei Minenko	Deputy Chief Accountant, Sberbank, and Deputy Director of the Accounting and Reporting Division, Sberbank
6	Olga Polyakova	Director of the Internal Audit Department, Central Bank of Russia
7	Natalia Revina	Director of the Risk Methodology and Control Department, Sberbank

MEMBERS OF THE STATUTORY AUDIT COMMISSION

Based on the resolution of the Annual General Shareholders Meeting held on June 6, 2014, members of the Statutory Audit Commission received remuneration in the amount of RUB 3.3mn for 2013 associated with their membership in this control body.

Internal Audit Service

The Internal Audit Service is a set of the bank's structural units that are responsible for examining and assessing the effectiveness of the internal control system, risk management system, information security system, accounting and reporting reliability, and have a number of other supervisory responsibilities, including monitoring compliance of the bank's financial and business operations with the internal control procedures.

The Internal Audit Service applies the best internal auditing practices, including the International Professional Practices Framework of Internal Audit (Internal Audit Standards, Definition of Internal Audit and Code of Ethics) developed by the International Institute of Internal Auditors.

The Service inspects all of the bank's business areas and may check any bank division or employee, as well as any corporate member of the Group.

The Internal Audit Service has set up an independent channel for bank employees to report (including confidentially) violations of the law and internal procedures, cases of abuse and non-compliance with the professional code of ethics by any bank employee or any member of the governing body or inspection body monitoring the bank's financial and business operations.

The divisions of the Internal Audit Service conducted over 5,900 scheduled audits and over 9,400 random audits in 2014 in accordance with the schedule approved by the Supervisory Board, and as ordered by the bank's management.

In 2014, the Internal Audit Service performed 42 audits of financial and business operations of subsidiaries and affiliated noncredit institutions, as well as audits of four subsidiary banks.

The Internal Audit Service is functionally accountable to the Supervisory Board and administratively reports to the CEO and Chairman of the Executive Board.

CORPORATE GOVERNANCE OF THE BANK

In 2014, special focus was given to enhancement of the corporate governance system, its implementation and quality, as well as to the improvement of the internal communication system of the bank.

In the course of the year, all components pertaining to the bank's corporate governance system underwent integrated assessment for compliance with the Corporate Governance Code recommended by the Bank of Russia (hereinafter referred to as the Bank of Russia corporate governance code), recommendations of the Basel Committee on Banking Supervision (Principles for Enhancing Corporate Governance) and the MICEX Listing Rules.

It was decided to optimise the number of members of the Supervisory Board and reduce it from 17 to 14 directors, and the bank's Corporate Secretary was appointed, the Bank of Russia Corporate Governance Code implementation scheme was elaborated, new versions of the Charter and by-laws were adopted, considering best practices in corporate governance. In the near future, the implementation of bank's corporate governance standards on the level of subsidiaries is one of the bank's key priorities.

Principles, Standards and Norms of Conduct

Norms and regulations pertaining to bank employees' conduct are based on the bank's values stipulated in Sberbank's 2014- 2018 Development Strategy.

The code of ethics holds a special place in the bank's corporate values. It shapes the bank's targets and defines the employees' actions and conduct required in order to achieve them. The bank's code of ethics and business strategy are to be observed by every bank employee regardless of job title.

Members of the bank's team are advised to:

• ▶ observe high occupational standards and business conduct towards customers, colleagues, shareholders, business partners, representatives of local communities and the state;
• ▶ respect national and cultural identity of the countries and regions where the bank operates;
• ▶ act strictly in accordance with applicable law in any country of operation;
• ▶ fight corruption and other unlawful business conduct;
• ▶ advocate and support the spirit of fellowship that will ensure open discussion of any issues related to ethical conduct.

SBERBANK SHARE CAPITAL STRUCTURE

OJSC Sberbank of Russia is a public company that operates on various markets, with shares trading free on the Russian stock market, as well as in London, Frankfurt and in the USA (over-the-counter) as ADR.

From the moment of the bank's transformation into a joint-stock company in June 1991, investors (Russian and foreign individuals and legal entities) have placed 13 stock issues. The share capital equals RUB 67.76bn and comprises 21,586,948,000 ordinary shares and 1,000,000,000 preferred shares, with nominal value of RUB 3 each.

The bank's principle shareholder is the Central Bank of Russia, with a 50% participatory interest of the share capital including 1 share carrying voting rights, or 52.32% in voting shares.

	Percentage of the share capital as of share register record date, %
Shareholder	2013 (COB of April 11, 2013)	2014 (COB of June 17, 2014)
Bank of Russia	50.0 + 1 share	50.0 + 1 share
Foreign legal entities	44.0	43.52
Russian legal entities	2.3	2.52
Private investors	3.7	3.96

DIVIDEND PAYMENT REPORT

In 2014, as a result of operations performed in 2013, the bank allocated 20% of the net profit accounted for by shareholders and calculated in accordance with the IFRS consolidated financial statements for dividend payment.

The dividend payment for year-end 2014 will be subject to review by the Supervisory Board as part of the preparation for the bank's Annual General Shareholders Meeting. Following the discussion, the total profit allocated for dividend payment and dividends corresponding to one share of each category will be subject to further approval. Resolutions of the General Shareholders Meeting are disclosed in accordance with legislation of the Russian Federation and are available on Sberbank's website: www.sberbank.ru and on the Group's website: sberbank.com. Dividend payments for Sberbank shares in the last two years are as follows:

Year	Ratio accrued to dividend payments, the Group IFRS net profit	Bank's RAS net profit ratio allocated for dividend payment	Dividends per one ordinary share, in RUB	Dividends per one preferred share, in RUB	Total dividends on ordinary and preferred shares, in RUB mn	Date of the General Shareholders Meeting, where the decision pertaining to dividend payment was made
2012	16.9%	17.0%	2.57	3.20	58,678	31.05.2013
2013	20.0%	19.2%	3.20	3.20	72,278	06.06.2014

On March 20, 2015, the bank's Supervisory board approved a new version of the Dividend Policy that is available on Sberbank's website www.sberbank.ru and on the Group's website: sberbank.com.

SHAREHOLDER AND INVESTOR RELATIONS

Institutional Investor Relations

In 2014, the Sberbank team took part in 18 international investment conferences, held 405 meetings with investor representatives, engaging over 700 investment funds and around 1,000 portfolio managers in order to increase the bank's information transparency and its investment potential.

The annual perception study on Sberbank's evaluation by leading international investors and analysts held since 2011 demonstrates constant improvement in financial communications, information disclosure, reference materials and increase in availability and recognition of the bank's management among investors, which favours the bank's equity story.

Committee for Minority Shareholder Engagement

At Sberbank, minority shareholder engagement is maintained by the Committee for Minority Shareholder Engagement under the chairmanship of Anton Danilov-Danilyan. In 2014, the focus was placed on the interaction with Sberbank's subsidiaries and separate business segments.

Meetings of the Committee in Moscow were dedicated to presentations on new approaches to operational management, innovative technologies development, CJSC Sberbank Leasing and CJSC Sberbank AST operation results, and development of a loan system for small, medium and large businesses. In December 2014, the Committee held one visiting meeting at the South-West regional bank of Sberbank with over 200 shareholders participating.

BANK AWARDS

• ▶ Global Finance rated Sberbank the best bank in Russia among banks operating in emerging markets in Central and Eastern Europe.
• ▶ Sberbank took the first place among the banks of Central and Eastern Europe according to The Banker magazine rating.
• ▶ In 2014, Sberbank Online was acknowledged as the best online retail bank in Russia and in Central and Eastern Europe in two categories based on the results of research conducted by Global Finance.
• ▶ Sberbank won in the following categories: 'Best mobile bank in Central and Eastern Europe' and 'Best banking application for mobile devices in Central and Eastern Europe' according to Global Finance.
• ▶ Sberbank's website received second prize for online design from the prestigious W3 Awards Festival sponsored by AIVA (Academy of Interactive and Visual Arts) and Behance.
• ▶ Sberbank's website was acknowledged as the most efficient among Russian banks based on the results of annual research conducted by Markswebb Rank & Report analytic agency.
• ▶ Global Finance rated Sberbank as the best bank in Russia in trade finance business.
• ▶ Sberbank is the award winner for 'Market leader in mortgage loan' organised by International group of rating agencies Expert RA as part of fifth annual conference Mortgage in Russia.

FINANCIAL RESULTS

| 59 | MANAGEMENT REPORT ²⁰¹⁴

Sberbank of Russia and its subsidiaries

SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

Summary consolidated financial statements derived from the audited consolidated financial statements in accordance with IFRS with independent auditor's report for the year ended 31 December 2014

INDEPENDENT AUDITORS' REPORT ON THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

TO THE SHAREHOLDERS AND SUPERVISORY BOARD OF SBERBANK

The accompanying summary consolidated financial statements, which comprise the consolidated statement of financial position as at 31 December 2014, and the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year 2014, are derived from the audited consolidated financial statements of Sberbank and its subsidiaries (the "Group") as at 31 December 2014 and for the year 2014. We expressed an unmodified audit opinion on those consolidated financial statements in our report dated 25 March 2015.

The summary consolidated financial statements do not contain all the disclosures required by International Financial Reporting Standards. Reading the summary consolidated financial statements, therefore, is not a substitute for reading the audited consolidated financial statements of the Group.

Management's responsibility for the summary consolidated financial statements

Management is responsible for the preparation of a summary of the audited consolidated financial statements on the basis described in footnote to the each statement comprising the summary consolidated financial statements.

Auditors' responsibility

Our responsibility is to express an opinion on the summary consolidated financial statements based on our procedures, which were conducted in accordance with International Standard on Auditing (ISA) 810, Engagements to Report on Summary Financial statements.

Opinion

In our opinion, the summary consolidated financial statements derived from the audited consolidated financial statements of the Group as at 31 December 2014 and for the year 2014 are consistent, in all material respects, with those audited consolidated financial statements, on the basis described in footnote to each statement comprising the summary consolidated financial statements.

S.M. Taskaev, Partner Ernst & Young Vneshaudit CJSC 25 March 2015

DETAILS OF THE AUDITED ENTITY

Name: Sberbank of Russia

Information about state registration of the credit institution by the Bank of Russia: #1481, dated 20 June 1991.

Record made in the State Register of Legal Entities on 16 August 2002, certificate of state registration #1027700132195.

Address: 19 Vavilova St., 117997 Moscow, Russia.

DETAILS OF THE AUDITOR

Name: Ernst & Young Vneshaudit CJSC

Record made in the State Register of Legal Entities on 16 September 2002, certificate of state registration #1027739199333.

Address: Russia 115035, Moscow, Sadovnicheskaya naberezhnaya, 77, building 1 Ernst & Young Vneshaudit CJSC is a member of Non Profit partnership «Russian Audit Chamber» («NP APR»).

Ernst & Young Vneshaudit CJSC is included in the control copy of the register of auditors and audit organisations, main registration number 10301017410.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

in billions of Russian Roubles	31 December 2014	31 December 2013
ASSETS
Cash and cash equivalents	2,308.8	1,327.0
Mandatory cash balances with central banks	365.7	251.5
Trading securities	37.3	101.2
Securities designated as at fair value through profit or loss	77.7	17.5
Due from banks	240.8	330.5
Loans and advances to customers	17,756.6	12,933.7
Securities pledged under repurchase agreements	1,169.3	1,343.8
Investment securities available-for-sale	829.7	476.2
Investment securities held-to-maturity	117.9	202.5
Deferred tax asset	19.1	12.3
Premises and equipment	496.4	477.3
Assets of the disposal group and non-current assets held for sale	72.0	3.1
Other financial assets	1,369.6	406.2
Other non-financial assets	339.9	327.5
TOTAL ASSETS	25,200.8	18,210.3
LIABILITIES
Due to banks	3,640.0	2,111.3
Due to individuals	9,328.4	8,435.8
Due to corporate customers	6,234.5	3,628.4
Debt securities in issue	1,302.6	853.4
Other borrowed funds	537.2	499.1
Deferred tax liability	45.3	23.8
Liabilities of the disposal group	58.2	0.2
Other financial liabilities	1,213.6	299.5
Other non-financial liabilities	51.4	52.7
Subordinated debt	769.5	424.7
TOTAL LIABILITIES	23,180.7	16,328.9
EQUITY
Share capital	87.7	87.7
Treasury shares	(7.6)	(7.2)
Share premium	232.6	232.6
Revaluation reserve for office premises	72.3	75.8
Fair value reserve for investment securities available-for-sale	(171.4)	1.3
Foreign currency translation reserve	83.2	(13.7)
Retained earnings	1,718.8	1,495.2
Total equity attributable to shareholders of the bank	2,015.6	1,871.7
Non-controlling interest	4.5	9.7
TOTAL EQUITY	2,020.1	1,881.4
TOTAL LIABILITIES AND EQUITY	25,200.8	18,210.3

Approved for issue and signed on behalf of the Management Board on 25 March 2015.

_________________ _________________

Herman Gref, Chairman of the Management Alexey Minenko, Board and CEO Acting Chief Accountant

These summary consolidated financial statements do not contain all the disclosures required by International Financial Reporting Standards (IFRS), namely summary of principal accounting policies and other explanatory information as presented in the audited consolidated financial statements of Sberbank and its subsidiaries (together "the Group") prepared in accordance with IFRS for the year ended 31 December 2014. For a better understanding of the Group's financial position, its financial performance and its cash flows, these summary consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Group which these summary consolidated financial statements were derived from.

The copies of the audited consolidated financial statements can be obtained from Sberbank of Russia.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

	Year ended 31 December
in billions of Russian Roubles	2014	2013
Interest income	1,837.9	1,478.6
Interest expense	(785.1)	(587.8)
Deposit insurance expenses	(33.1)	(28.6)
Net interest income	1,019.7	862.2
Net provision charge for impairment of debt financial assets	(361.4)	(134.9)
Net interest income after provision charge for impairment of debt financial assets	658.3	727.3
Fee and commission income	329.5	253.7
Fee and commission expense	(47.2)	(32.4)
Net losses arising from trading securities	(7.1)	(3.2)
Net losses arising from securities designated as at fair value through profit or loss	(8.4)	(1.1)
Net gains arising from investment securities available-for-sale	6.2	11.7
Impairment of investment securities available-for-sale	(0.8)	(5.2)
Net gains arising from trading in foreign currencies, operations with foreign currency derivatives and foreign exchange translation	8.1	2.7
Net (losses) / gains arising from operations with precious metals, precious metals derivatives and
precious metals accounts translation	(18.8)	1.2
Net gains arising from operations with other derivatives	27.0	8.2
Impairment of fixed assets	(0.3)	—
Goodwill impairment	(1.2)	(8.7)
Net charge for other provisions	(18.4)	(4.5)
Revenue of non-banking business activities	27.5	30.2
Cost of sales and other expenses of non-banking business activities	(31.2)	(29.4)
Net income from insurance and pension fund operations	7.6	0.5
Other operating income	8.5	8.9
Operating income	939.3	959.9
Operating expenses	(565.1)	(504.2)
Profit before tax	374.2	455.7
Income tax expense	(83.9)	(93.7)
Profit for the year	290.3	362.0
Attributable to:
– shareholders of the bank	292.2	363.8
- non-controlling interest	(1.9)	(1.8)
Earnings per ordinary share attributable to the shareholders of the bank, basic and diluted	13.45	16.78
(expressed in RR per share)

Approved for issue and signed on behalf of the Management Board on 25 March 2015

Herman Gref, Chairman of the Management Alexey Minenko, Board and CEO Acting Chief Accountant

_________________ _________________

These summary consolidated financial statements do not contain all the disclosures required by International Financial Reporting Standards (IFRS), namely summary of principal accounting policies and other explanatory information as presented in the audited consolidated financial statements of Sberbank and its subsidiaries (together "the Group") prepared in accordance with IFRS for the year ended 31 December 2014. For a better understanding of the Group's financial position, its financial performance and its cash flows, these summary consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Group which these summary consolidated financial statements were derived from.

The copies of the audited consolidated financial statements can be obtained from Sberbank of Russia.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Year ended 31 December
in billions of Russian Roubles	2014	2013
Profit for the year	290.3	362.0
Other comprehensive income:
Other comprehensive income to be reclassified to profit or loss in subsequent periods
Investment securities available-for-sale:
– Net losses on revaluation of investment securities available-for-sale	(211.8)	(39.9)
– Impairment of investment securities available-for-sale transferred to statement of profit or loss	0.8	5.2
- Accumulated gains transferred to statement of profit or loss upon disposal of investment securities available-for-sale	(4.8)	(10.7)
Net foreign currency translation effect	97.0	(9.0)
Deferred income tax relating to other comprehensive income on:
- Investment securities available-for-sale	43.1	9.4
Total other comprehensive loss to be reclassified to profit or loss in subsequent periods, net of tax	(75.7)	(45.0)
Total other comprehensive loss	(75.7)	(45.0)
Total comprehensive income for the year	214.6	317.0
Attributable to:
– shareholders of the bank	216.4	318.8
– non-controlling interest	(1.8)	(1.8)

These summary consolidated financial statements do not contain all the disclosures required by International Financial Reporting Standards (IFRS), namely summary of principal accounting policies and other explanatory information as presented in the audited consolidated financial statements of Sberbank and its subsidiaries (together "the Group") prepared in accordance with IFRS for the year ended 31 December 2014. For a better understanding of the Group's financial position, its financial performance and its cash flows, these summary consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Group which these summary consolidated financial statements were derived from.

The copies of the audited consolidated financial statements can be obtained from Sberbank of Russia.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Attributable to shareholders of the bank
in billions of Russian Roubles	Share capital	Treasury shares	Share premium	Revaluation reserve for office premises
Balance as at 31 December 2012	87.7	(7.6)	232.6	79.0
Changes in equity for the year ended 31 December 2013
Net result from treasury shares transactions	—	0.4	—	—
Dividends declared	—	—	—	—
Transfer of revaluation reserve for office premises upon disposal or depreciation	—	—	—	(3.2)
Changes in ownership interests in subsidiaries	—	—	—	—
Profit for the year	—	—	—	—
Other comprehensive loss for the year	—	—	—	—
Total comprehensive income for the year	—	—	—	—
Balance as at 31 December 2013	87.7	(7.2)	232.6	75.8
Changes in equity for the year ended 31 December 2014
Net result from treasury shares transactions	—	(0.4)	—	—
Dividends declared Transfer of revaluation reserve for office premises upon disposal or depreciation	— —	— —	— —	— (3.5)
Changes in ownership interests in subsidiaries	—	—	—	—
Profit for the year	—	—	—	—
Other comprehensive loss for the year	—	—	—	—
Total comprehensive income for the year	—	—	—	—
Balance as at 31 December 2014	87.7	(7.6)	232.6	72.3

The copies of the audited consolidated financial statements can be obtained from Sberbank of Russia.

These summary consolidated financial statements do not contain all the disclosures required by International Financial Reporting Standards (IFRS), namely summary of principal accounting policies and other explanatory information as presented in the audited consolidated financial statements of Sberbank and its subsidiaries (together "the Group") prepared in accordance with IFRS for the year ended 31 December 2014. For a better understanding of the Group's financial position, its financial performance and its cash flows, these summary consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Group which these summary consolidated financial statements were derived from.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Attributable to shareholders of the bank
in billions of Russian Roubles	Fair value reserve for investment securities available-for-sale	Foreign currency translation reserve	Retained earnings	Total	Non-con trolling interest	Total equity
Balance as at 31 December 2012	37.3	(4.7)	1,186.7	1,611.0	12.8	1,623.8
Changes in equity for the year ended
31 December 2013
Net result from treasury shares transactions	—	—	—	0.4	—	0.4
Dividends declared	—	—	(58.5)	(58.5)	—	(58.5)
Transfer of revaluation reserve for office premises upon disposal or depreciation	—	—	3.2	—	—	—
Changes in ownership interests in subsidiaries	—	—	—	—	(1.3)	(1.3)
Profit for the year	—	—	363.8	363.8	(1.8)	362.0
Other comprehensive loss for the year	(36.0)	(9.0)	—	(45.0)	—	(45.0)
Total comprehensive income for the year	(36.0)	(9.0)	363.8	318.8	(1.8)	317.0
Balance as at 31 December 2013	1.3	(13.7)	1,495.2	1,871.7	9.7	1,881.4
Changes in equity for the year ended
31 December 2014
Net result from treasury shares transactions	—	—	—	(0.4)	—	(0.4)
Dividends declared	—	—	(72.1)	(72.1)	—	(72.1)
Transfer of revaluation reserve for office premises upon disposal or depreciation	—	—	3.5	—	—	—
Changes in ownership interests in subsidiaries	—	—	—	—	(3.4)	(3.4)
Profit for the year	—	—	292.2	292.2	(1.9)	290.3
Other comprehensive loss for the year	(172.7)	96.9	—	(75.8)	0.1	(75.7)
Total comprehensive income for the year	(172.7)	96.9	292.2	216.4	(1.8)	214.6
Balance as at 31 December 2014	(171.4)	83.2	1,718.8	2,015.6	4.5	2,020.1

These summary consolidated financial statements do not contain all the disclosures required by International Financial Reporting Standards (IFRS), namely summary of principal accounting policies and other explanatory information as presented in the audited consolidated financial statements of Sberbank and its subsidiaries (together "the Group") prepared in accordance with IFRS for the year ended 31 December 2014. For a better understanding of the Group's financial position, its financial performance and its cash flows, these summary consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Group which these summary consolidated financial statements were derived from.

The copies of the audited consolidated financial statements can be obtained from Sberbank of Russia.

CONSOLIDATED STATEMENT OF CASH FLOWS

	Year ended 31 December
in billions of Russian Roubles	2014	2013
Cash flows from operating activities before changes in operating assets and liabilities
Interest received	1,809.4	1,445.8
Interest paid	(675.1)	(507.1)
Expenses paid directly attributable to deposit insurance	(31.9)	(26.8)
Fees and commissions received	328.2	253.1
Fees and commissions paid	(44.6)	(30.9)
Net losses incurred on trading securities	(1.3)	(3.3)
Dividends received from trading securities	—	0.4
Net gains received on securities designated as at fair value through profit or loss	1.0	1.2
Net losses incurred from trading in foreign currencies and from operations with foreign currency derivatives	(147.4)	(20.5)
Net gains received from operations with other derivatives	20.0	0.5
Net (losses incurred) / gains received from operations with precious metals and precious metals derivatives	(26.2)	(0.3)
Revenue received from non-banking business activities	26.3	31.8
Expenses paid on non-banking business activities	(25.5)	(33.1)
Insurance premiums received	34.8	8.9
Payments on insurance operations	(0.2)	—
Payments on pension insurance agreements received	2.4	—
Payments on pension fund operations	(0.3)	—
Other operating income received	10.1	24.8
Operating expenses paid	(465.7)	(405.6)
Income tax paid	(88.4)	(98.2)
Cash flows from operating activities before changes in operating assets and liabilities	725.6	640.7
Changes in operating assets and liabilities
Net increase in mandatory cash balances with central banks	(34.9)	(51.1)
Net decrease in trading securities	70.1	36.1
Net increase in securities designated as at fair value through profit or loss	(13.7)	(0.4)
Net decrease / (increase) in due from banks	173.2	(224.7)
Net increase in loans and advances to customers	(2,615.5)	(2,422.0)
Net increase in other assets	(175.9)	(120.7)
Net increase in due to banks	1,156.6	652.4
Net (decrease) / increase in due to individuals	(96.0)	1,438.2
Net increase in due to corporate customers	1,569.4	340.0
Net increase in debt securities in issue	20.9	113.3
Net increase in other liabilities	50.1	13.5
Net cash from operating activities	829.9	415.3

The copies of the audited consolidated financial statements can be obtained from Sberbank of Russia.

These summary consolidated financial statements do not contain all the disclosures required by International Financial Reporting Standards (IFRS), namely summary of principal accounting policies and other explanatory information as presented in the audited consolidated financial statements of Sberbank and its subsidiaries (together "the Group") prepared in accordance with IFRS for the year ended 31 December 2014. For a better understanding of the Group's financial position, its financial performance and its cash flows, these summary consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Group which these summary consolidated financial statements were derived from.

CONSOLIDATED STATEMENT OF CASH FLOWS

	Year ended 31 December
in billions of Russian Roubles	2014	2013
Cash flows from investing activities
Purchase of investment securities available-for-sale	(717.9)	(710.0)
Proceeds from disposal and redemption of investment securities available-for-sale	682.7	541.1
Purchase of investment securities held-to-maturity	(6.3)	(168.3)
Proceeds from redemption of investment securities held-to-maturity	81.0	107.0
Acquisition of premises and equipment and intangible assets	(127.0)	(137.4)
Proceeds from disposal of premises and equipment and intangible assets including insurance payments	13.7	17.5
Acquisition of investment property	(0.3)	(0.2)
Proceeds from disposal of investment property	1.5	0.8
Proceeds from disposal of associates	—	3.4
Acquisition of subsidiaries net of cash acquired	9.6	(12.1)
Proceeds from disposal of subsidiaries net of cash disposed	1.4	0.6
Dividends received from investment securities available-for-sale	2.0	0.9
Net cash used in investing activities	(59.6)	(356.7)
Cash flows from financing activities
Other borrowed funds received	182.4	258.6
Redemption of other borrowed funds	(388.5)	(249.2)
Repayment of interest on other borrowed funds	(13.7)	(14.1)
Subordinated debt received	238.9	39.5
Redemption of subordinated debt	—	(0.7)
Repayment of interest on subordinated debt	(34.5)	(24.6)
Funds received from loan participation notes issued or reissued / other bonds issued	106.8	43.9
Redemption of loan participation notes / other bonds issued	(36.9)	(36.5)
Repayment of interest on loan participation notes / other bonds issued	(23.8)	(18.7)
Cash received from non-controlling shareholders	—	1.9
Acquisition of non-controlling interests in subsidiaries	—	(0.3)
Purchase of treasury shares	(34.5)	(49.2)
Proceeds from disposal of treasury shares	34.9	48.8
Dividends paid	(72.0)	(58.3)
Net cash used in financing activities	(40.9)	(58.9)
Effect of exchange rate changes on cash and cash equivalents	254.0	37.5
Effect of hyperinflation on cash and cash equivalents	1.5	(1.0)
Net increase in cash and cash equivalents	984.9	36.2
Cash and cash equivalents as at the beginning of the year	1,327.0	1,290.8
Reclassification of cash and cash equivalents to assets of the disposal group and non-current assets held for sale	(3.1)	—
Cash and cash equivalents as at the end of the year	2,308.8	1,327.0

These summary consolidated financial statements do not contain all the disclosures required by International Financial Reporting Standards (IFRS), namely summary of principal accounting policies and other explanatory information as presented in the audited consolidated financial statements of Sberbank and its subsidiaries (together "the Group") prepared in accordance with IFRS for the year ended 31 December 2014. For a better understanding of the Group's financial position, its financial performance and its cash flows, these summary consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Group which these summary consolidated financial statements were derived from.

The copies of the audited consolidated financial statements can be obtained from Sberbank of Russia.

DYNAMICS OF SBERBANK GROUP 'S KEY FIGURES OVER THE PAST FIVE YEARS IN ACCORDANCE WITH IFRS

DYNAMICS OF SBERBANK GROUP 'S KEY FIGURES OVER THE PAST FIVE YEARS IN ACCORDANCE WITH IFRS

	2014	2013	Change, %	2012	2011	2010
For the year, RUB bn
Operating income before provisions	1,300.7	1,094.8	18.8	915.3	733.7	646.8
Provision charge for loan impairment	(357.0)	(133.5)	167.4	(21.5)	1.2	(153.8)
Operating income	939.3	959.9	-2.1	893.8	734.9	493.0
Operating expenses	(565.1)	(504.2)	12.1	(445.9)	(339.2)	(262.9)
Profit before tax	374.2	455.7	-17.9	447.9	395.7	230.1
Net profit	290.3	362.0	-19.8	347.9	315.9	181.6
As of 31 December, RUB bn
Loans and advances to customers, net	17,757	12,934	37.3	10,499	7,720	5,489
Loans and advances to customers before provision for loan impairment	18,626	13,544	37.5	11,064	8,382	6,192
Total assets	25,201	18,210	38.4	15,097	10,835	8,629
Due to individuals and corporate customers	15,563	12,064	29.0	10,179	7,932	6,651
Total liabilities	23,181	16,329	42.0	13,474	9,567	7,641
Total equity	2,020	1,881	7.4	1,624	1,268	987

	2014	2013	Change, %	2012	2011	2010
Per share, RUB
Basic and diluted earnings	13.45	16.78	-19.8	16.03	14.60	8.40
Dividends per ordinary share declared during the year	3.2	2.6	24.5	2.1	0.9	0.1
Net assets per ordinary share	94.0	87.5	7.4	75.2	58.7	45.7
Financial ratios,%
Profitability ratios
Return on assets (ROA)	1.4	2.2	-0.8 pp	2.7	3.2	2.3
Return on equity (ROE)	14.8	20.8	-6.0 pp	24.2	28	20.6
Spread (return on assets less cost of funds)	5.5	5.7	-0.2 pp	5.8	6.1	5.9
Net interest margin (net interest income to average assets)	5.6	5.9	-0.3 pp	6.1	6.4	6.4
Operating expenses to operating income before provisions	43.4	46.1	-2.7 pp	48.7	46.2	40.6
Loans and advances to customers after provision for loan impairment to amounts due to individuals and
corporate customers	114.1	107.2	6.9 pp	103.1	97.3	82.5
Capital adequacy ratios
Core capital ratio (Tier I)	8.6	10.6	-2.0 pp	10.4	11.6	11.9
Total capital ratio (Tier I and Tier II)	12.1	13.4	-1.3 pp	13.7	15.2	16.8
Equity to total assets	8.0	10.3	-2.3 pp	10.8	11.7	11.4
Asset quality ratios,%
Non-perfoming loans to total loans outstanding	3.2	2.9	0.3 pp	3.2	4.9	7.3
Provision for loan impairment to non-perfoming loans (times)	1.4	1.5	-0.1	1.6	1.6	1.6
Provision for loan impairment to total gross loans to customers	4.7	4.5	0.2 pp	5.1	7.9	11.3

DYNAMICS OF SBERBANK GROUP 'S KEY FIGURES OVER THE PAST FIVE YEARS IN ACCORDANCE WITH IFRS

PROFIT AND LOSS STATEMENT ANALYSIS

GENERAL TRENDS

In 2014, the Sberbank Group's net profit under IFRS decreased to RUB 290.3 bn, which is 19.8% less y-o-y. In 2014, the Group's net operating profit before provisions increased by 18.8% up to RUB 1.3 trillion largely due to net interest income and net fee income from the core banking business.

In 2014, operating expenses decelerated y-o-y and increased by 12.1%, amounting to RUB 565.1 bn.

In 2014, the provision charge for loan impairment across the Group rose to RUB 361.4 bn (versus RUB 134.9 bn in 2013). The significant increase in the provision charge was mainly driven by a rise in the level of loan portfolio provisioning, which resulted from economic slowdown in Russia, the increase in provisions for loans to Ukrainian borrowers considering the deterioration of the economy in Ukraine, and the increase in Rouble provisions for foreign currency loans, regardless of signs for credit quality deterioration.

NET INTEREST INCOME

In 2014, the Group's interest income increased 24.3% to RUB 1.84 trillion. Most of this growth came from the expansion of the Group's loan portfolio, both corporate and retail.

FACTOR ANALYSIS OF CHANGES IN NET INTEREST INCOME

RUB bn	Volume factor	Interest rate factor	Change in interest income / expenses
ASSETS
Loans to legal entities	230.6	(42.1)	188.5
Loans to individuals	157.3	(12.8)	144.5
Due from banks, correspondent accounts and overnight placements with banks	(0.7)	8.4	7.7
Debt securities	14.0	4.6	18.6
Change in interest income	401.2	(41.9)	359.3
LIABILITIES
Due to individuals	(49.8)	32.7	(17.1)
Due to corporate customers	(36.5)	(25.0)	(61.5)
Subordinated debt	(11.7)	0.9	(10.8)
Other borrowed funds	(0.1)	(4.0)	(4.1)
Debt securities in issue	(9.8)	2.3	(7.5)
Due to banks	(56.0)	(44.8)	(100.8)
Change in interest expense	(163.9)	(37.9)	(201.8)
CHANGE IN NET INTEREST INCOME	237.3	(79.8)	157.5

FACTOR ANALYSIS OF CHANGES IN INTEREST INCOME

		2014			2013
RUB bn	Average amount for the year	Interest income	Average yield, %	Average amount for the year	Interest income	Average yield, %
Loans to corporate customers	11,089.9	1,031.1	9.3	8,707.1	842.6	9.7
Loans to individuals	4,214.7	637.6	15.1	3,195.5	493.1	15.4
Due from banks, correspondent accounts and overnight placements with banks	750.8	19.2	2.6	801.5	11.5	1.4
Debt securities	2,118.1	150.0	7.1	1,913.6	131.4	6.9
Working assets, total*	18,173.5	1,837.9	10.1	14,617.7	1,478.6	10.1
Provision for loan impairment	(734.9)			(592.1)
Non-interest-earning assets	2,782.5			2,124.7
Total assets	20,221.1			16,150.3

* interest-earning assets.

QUARTERLY LOAN YIELDS

In 2014, interest expenses increased 32.7% y-o-y to RUB 818.2 bn. The interest expenses on due to individuals remain the main component of the Group's interest expenses (44.1%) being the Group's core source of funding. In 2014, loans on the interbank market (mainly from the Bank of Russia) became the key driver for interest expense growth due to the increase in volume and cost. This factor explains nearly 50% of interest expense growth. Interest expenses on due to banks increased by 152.5%. In 2014, the increase in the Group's interest expenses by 23.9% was driven by the increase in amounts of term deposits to corporate customers and the increase of its cost.

			2014			2013
RUB bn	Average amount for the year	Interest and similar expense	Average cost, %	Average amount for the year	Interest and similar expense	Average cost, %
Due to individuals	8,558.2	360.7	4.2	7,474.0	343.6	4.6
Due to corporate customers	4,489.5	189.2	4.2	3,491.2	127.7	3.7
Subordinated debt	614.5	35.9	5.8	419.0	25.1	6.0
Other borrowed funds	552.5	12.8	2.3	544.8	8.7	1.6
Debt securities in issue	993.4	52.7	5.3	815.7	45.2	5.5
Due to banks	2,390.9	166.9	7.0	1,293.9	66.1	5.1
	17,599.0	818.2	4.6	14,038.6	616.4	4.4
Non-interest bearing liabilities	660.6			370.2
Total liabillities	18,259.6			14,408.8

FACTOR ANALYSIS OF CHANGES IN INTEREST EXPENSE

The cost of term deposits of individuals experienced a decrease in Q1-3, 2014. In Q4, 2014, cost of term deposits of individuals decreased to 4.5% (versus 5.2% in Q3, 2014) due to early termination of deposit accounts due to a change in clients investment strategy, as well as due to retail deposits in foreign currency increase. All the aforementioned events resulted in the decrease in interest expenses by more than RUB 32 bn due to decrease in cost of funds. However, there was the opposite trend in 2014 for corporate funding costs, as they were rising during the year, reaching its maximum in Q4, 2014.

In 2014, the Group's net interest margin decreased by 0.3 pp and amounted to 5.6%. The margin decreased mainly due to the funding cost growth for other banks' and corporate funds in particular.

THE FOLLOWING FACTORS AFFECTED NET INTEREST MARGIN IN 2014

2013 net interest margin	5.9%
Return on loans to legal entities	‑0.2%
Return on loans to individuals	‑0.1%
Return on amounts due from banks	0.0%
Return on securities	0.0%
Structure of interest-earning assets	0.2%
Cost of amounts due to corporate customers	‑0.1%
Cost of amounts due to individuals	0.2%
Cost of amounts due to banks	‑0.2%
Cost of debt securities in issue and subordinated debt	0.0%
Structure of interest-bearing liabilities	0.0%
Ratio of interest-earning assets to interest-bearing liabilities*	-0.1%
2014 net interest margin	5.6%

* Interest-earning assets are assets that generate interest income; interest-bearing liabilities are liabilities for which the Group incurs interest expenses.

QUARTERLY INTEREST MARGIN

Return on interest-earning assets Net interest margin Cost of interest-bearing liabilities

FEE AND COMMISSION INCOME AND EXPENSE

In 2014, the Group's net fee and commission income increased by 27.6% to RUB 282.3 bn. Commission income received from cash and settlements transactions with individuals and legal entities were the key driver for net fee and commission income growth. During the year, it increased by 27.8% to RUB 234.1 bn. Also the significant growth - by 118.4% up to RUB 33.2 bn showed commissions on operations with foreign currencies and precious metals. This growth was driven by high volatility of financial markets in 2014. Documentary commissions and commissions on operations on financial markets on behalf of clients and investment banking operations showed slight growth.

FEE AND COMMISSION INCOME AND EXPENSE

RUB bn	2014	2013	Change	Change, %
Cash and settlements transactions with legal entities	165.2	128.1	37.1	29.0
Cash and settlements transactions with individuals	68.9	55.1	13.8	25.0
Operations with foreign currencies and precious metals	33.2	15.2	18.0	118.4
Agent commissions	27.4	27.1	0.3	1.1
Documentary commissions	18.6	14.8	3.8	25.7
Cash collection	6.5	5.6	0.9	16.1
Operations on financial markets on behalf of clients and investment
banking operations	4.6	1.9	2.7	142.1
Other	5.1	5.9	(0.8)	-13.6
Fee and commission expense	(47.2)	(32.4)	(14.8)	45.7
Net fee and commission income	282.3	221.3	61.0	27.6

Provision charge for loan impairment

QUARTERLY PROVISION CHARGE FOR LOAN IMPAIRMENT

In 2014, the provision charge for loan impairment icreased to RUB 357.0 bn (versus RUB 133.5 bn in 2013). The increase in credit risks was driven by overall loan portfolio quality impairment in a context of a reduced rate of economic growth in Russia, provisions for loans to Ukrainian borrowers due to the deterioration of the economy in Ukraine, and provisions for foreign currency loan impairment due to RUB devaluation, regardless of signs for credit quality deterioration.

The current level of provisions corresponds to the cost of risk of 233 b.p. per annum (versus 110 b.p. in 2013).

QUARTERLY CREDIT RISK COST

OTHER OPERATING INCOME

In 2014, other operating losses comprising net income (losses) from securities, derivative financial instruments, and foreign currency transactions amounted to RUB 1.3 bn (versus RUB 11.3 bn in 2013). Incurred operating losses are due to other provisions (namely, provisions for loan related commitments, contingent commitments and other assets) and the decrease in income from financial market transactions.

OPERATING EXPENSES

In 2014, the Group's operating expenses grew by 12.1%. The most substantial growth was attributed to staff costs (+11.7%) that comprises the main portion of operating expenses. At the same time, the Group's income was increasing faster than the Group's expenses, which resulted in a decrease in the ratio of operating expenses to operating income before provision charge for loan impairment by 2.7 pp to 43.4% based on the 2014 results.

OPERATING EXPENSES

RUB bn	2014	2013	Change	Change, %
Staff costs	318.8	285.3	33.5	11.7
Depreciation of premises and equipment	58.7	54.5	4.2	7.7
Repairs and maintenance of premises and equipment	36.3	31.8	4.5	14.2
Administrative expenses	35.3	23.3	12.0	51.5
Taxes other than on income	29.7	24.6	5.1	20.7
Operating lease expenses	22.9	17.5	5.4	30.9
Telecommunication expenses	18.8	16.6	2.2	13.3
Amortisation of intangible assets	15.0	14.4	0.6	4.2
Consulting and assurance services	11.2	9.2	2.0	21.7
Advertising and marketing services	9.6	10.2	(0.6)	-5.9
Other	8.8	16.8	(8.0)	-47.6
Total operating expenses	565.1	504.2	60.9	12.1

STRUCTURE OF SBERBANK GROUP'S ASSETS UNDER IFRS

GENERAL TRENDS

In 2014, the Group's assets increased by 38.4% to RUB 25.2 trillion. Loans and advances to customers remained the largest asset component, comprising 70.5% of total assets as at the year-end. The proportion of liquid assets comprising cash, due from banks and securities portfolio amounted to 19%. In 2014, the securities portfolio increased by RUB 90.7 bn and reached RUB 2.2 trillion. The portfolio comprised mostly bonds and is primarily used for liquidity management.

LOANS AND ADVANCES TO CUSTOMERS

The Group's total gross loan portfolio grew by 37.5% y-o-y to RUB 18.6 trillion. Loans to legal entities became the key driver for loan portfolio growth: in 2014, the portfolio increased by 40.7% against 29.3% growth in loans to individuals. In 2014, the proportion of corporate loans in the total loan portfolio increased to 74.0% y-o-y (versus 72.3% in 2013).

About 60% of the growth in total customer loan portfolio before provisions was driven by the increase in the volumes of the Group's lending, whereas the other 40% was the result of the revaluation of loans nominated in foreign currency due to RUB devaluation.

| 79 | MANAGEMENT REPORT ²⁰¹⁴

The retail portfolio increased 29.3% y-o-y to RUB 4,8 trillion. In 2014, the structure of the loan portfolio continued to shift towards mortgage loans, which increased to 12.2% in total gross loans, with the mortgage loan portfolio exceeding consumer unsecured loan portfolio. In 2014, mortgage loans were the key driver of retail loan portfolio growth making 63.7% of the total retail loan portfolio growth.

LOAN PORTFOLIO BREAKDOWN

	December 31, 2014		December 31, 2013
	RUB bn	% of total	RUB bn	% of total
Commercial loans to legal entities	9,026.5	48.5	6,223.9	46.0
Specialised loans to legal entities	4,752.3	25.5	3,572.1	26.3
Mortgage loans to individuals	2,269.8	12.2	1,569.0	11.6
Consumer and other loans to individuals	1,868.3	10.0	1,672.8	12.3
Credit cards and overdrafts	538.8	2.9	349.0	2.6
Car loans to individuals	170.4	0.9	157.2	1.2
Total loans and advances to customers before provision for loan impairment	18,626.1	100.0	13,544.0	100.0

The portfolio of loans to legal entities increased by 40.7% y-o-y to RUB 13.8 trillion. Accelerated growth in volumes of corporate lending is due, but not limited to, sanctions imposed on a number of Russian companies, which largely resulted in unavailability for large corporations to attract funds on foreign capital markets, as well as due to revaluation of loans nominated in foreign currencies.

During the year, the Group's corporate loans to all categories of clients increased, with the most part of loans being granted to the largest clients.

CREDIT QUALITY

The provision coverage of the total gross loan portfolio amounted to 4.7% at the end of 2014 (versus 4.5% in 2013). In 2014, the proportion of NPL90+ (non-performing loans with interest payments or principal overdue more than 90 days) in the total loan portfolio of the Group increased from 2.9% to 3.2%. In 2014, the provision coverage of restructured loans remained at a comfortable level above 140%.

SECURITIES PORTFOLIO

Debt instruments represent 98.0% of the Group's securities portfolio and is mainly used for liquidity management. In 2014, the proportion of equities in the portfolio decreased by 0.8 pp and amounted to 1.8%. By the end of 2014, corporate bonds amounted to 31.9% of the total portfolio, reduced by 1.2 pp during the year.

The proportion of corporate bonds with investment rating in this category increased to 62.6% (versus 59.8% in 2013). The share of securities pledged under repo transactions decreased from 62.8% to 52.4% during 2014. Most of these transactions are with the Bank of Russia.

SECURITIES PORTFOLIO BREAKDOWN

	December 31, 2014		December 31, 2013
	RUB bn	% of total	RUB bn	% of total
Federal loan bonds (OFZ bonds)	807.9	36.3	946.1	44.2
Corporate bonds	712.7	31.9	707.9	33.1
Foreign government bonds	355.5	15.9	169.5	7.9
Russian Federation Eurobonds	217.3	9.7	139.6	6.5
Municipal and subfederal bonds	93.3	4.2	120.0	5.6
Promissory notes	0.4	–	–	–
Total debt securities	2,187.1	98.0	2,083.1	97.3
Corporate shares	40.2	1.8	55.1	2.6
Investments in mutual funds	4.6	0.2	3.0	0.1
Total securities	2,231.9	100.0	2,141.2	100.0

DEBT SECURITIES PORTFOLIO BY CREDIT RATING

	December 31, 2014		December 31, 2013
	RUB bn	% of total	RUB bn	% of total
Investment rating	1,790.3	81.9	1,719.4	82.5
Speculative rating	312.5	14.3	310.5	14.9
Not rated	84.3	3.8	53.2	2.6
Total debt securities	2,187.1	100.0	2,083.1	100.0

STRUCTURE OF SBERBANK GROUP'S LIABILITIES AND EQUITY UNDER IFRS

GENERAL TRENDS

The Group's liability structure is dominated by amounts due to individuals and corporate customer totaling RUB 15.6 trillion, or 67.1% of total liabilities as of 2014 year-end. In 2014, the Group increased borrowings from banks by RUB 1,528.7 bn (up 72.4% y-o-y). The funds received from the Bank of Russia were the main component of the growth in interbank borrowings.

CUSTOMER DEPOSITS

Amounts due to customers increased by 29.0% to RUB 15.6 trillion in 2014. In 2014, the growth in amounts due to corporate customers outpaced the growth in amounts due to individuals thus increasing the share of due to corporate customers in total amounts due to customers by 10.0 pp to 40.1%.

In 2014, amounts due to individuals increased by 10.6% to RUB 9.3 trillion remaining the Group's key source of funding. The volatility in the Russian economy had a great impact on amounts due to individuals as it changed an attitude to deposits. Amounts due to corporate customers grew by 71.8% to RUB 6.3 trillion.

BREAKDOWN OF AMOUNTS DUE TO CUSTOMERS

	December 31, 2014	December 31, 2013
	RUB bn	% of total	RUB bn	% of total
Due to individuals
– Current/demand accounts	1,886.2	12.1	1,748.4	14.5
– Term deposits	7,442.2	47.8	6,687.4	55.4
Total due to individuals	9,328.4	59.9	8,435.8	69.9
Due to corporate customers
– Current/settlement accounts	1,819.7	11.7	1,663.5	13.8
– Term deposits	4,414.8	28.4	1,964.9	16.3
Total due to corporate customers	6,234.5	40.1	3,628.4	30.1
Total	15,562.9	100.0	12,064.2	100.0

DEBT SECURITIES ISSUED

RUB bn	December 31, 2014	December 31, 2013	Change	Change,%
Loan participation notes, issued under the MTN
programme of Sberbank	629.9	324.9	305.0	93.9
Savings certificates	456.8	344.5	112.3	32.6
Bonds issued:
– on the local market	80.2	44.7	35.5	79.4
– on international capital markets	33	14.7	18.3	124.5
Promissory notes	73.3	74.7	(1.4)	‑1.9
Notes issued under the ECP programme of Sberbank	15.9	46.9	(31.0)	‑66.1
Bonds issued under mortgage securitization
programme of Sberbank	9.7	0	9.7	–
Deposit certificates	2.7	1.6	1.1	68.8
Equity linked notes and credit linked notes	1.1	1.4	(0.3)	‑21.4
Total debt securities issued	1,302.6	853.4	449.2	52.6

In 2014, the volume of debt securities issued increased by RUB 449.2 bn. Loan participation notes issued under MTN programme of Sberbank have made about 70% of an increase in debt securities issued (+ RUB 305 bn), another 25% was driven by an increase in savings certificates issued (+ RUB 112.3 bn). The increase in the balance of loan participation notes issued under MTN programme of Sberbank is primarily driven by considerable RUB depreciation as compared to other world currencies.

RUB bn	December 31, 2014	December 31, 2013	Change	Change,%
Share capital	87.7	87.7	–	–
Treasury shares	(7.6)	(7.2)	(0.4)	5.6
Share premium	232.6	232.6	–	–
Revaluation reserve for office premises	72.3	75.8	(3.5)	‑4.6
Fair value reserve for investment securities available for sale	(171.4)	1.3	(172.7)	‑13,284.6
Foreign currency translation reserve	83.2	(13.7)	96.9	‑707.3
Retained earnings	1,718.8	1,495.2	223.6	15.0
Total equity attributable to shareholders of the bank	2,015.6	1,871.7	143.9	7.7
Non-controlling interest	4.5	9.7	(5.2)	‑53.6
TOTAL EQUITY	2,020.1	1,881.4	138.7	7.4

EQUITY

In 2014, the Group's equity increased by 7.4% to RUB 2.0 trillion. The growth is attributed to the Group's profit earned.

CAPITAL ADEQUACY

RUB bn	December 31, 2014	December 31, 2013
Tier 1 capital
Share capital	87.7	87.7
Share premium	232.6	232.6
Retained earnings	1,718.8	1,495.2
Treasury shares	(7.6)	(7.2)
Less Goodwill	(23.7)	(20.2)
Total tier 1 capital (core capital)	2,007.8	1,788.1
Tier 2 capital
Revaluation reserve for premises	72.3	75.8
Fair value reserve for investment securities available-for-sale	(77.1)	0.6
Foreign currency translation reserve	83.2	(13.7)
Subordinated capital	753.4	420.1
less investments in associates	(4.3)	(4.4)
Total tier 2 capital	827.5	478.4
Total capital	2,835.3	2,266.5
Risk weighted assets (RWA)
Credit risk	22,845.3	16,397.1
Market risk	519.7	550.0
Total risk weighted assets (RWA)	23,365.0	16,947.1
Core capital adequacy ratio (Total tier 1 to Total RWA)	8.6	10.6
Total capital adequacy ratio (Total capital to Total RWA)	12.1	13.4

Based on the 2014 results, the core capital and total capital adequacy ratios amounted to 8.6% and 12.1%, respectively, which is significantly higher than the baseline specified by the Basel Committee (8%). At the same time, 2014 was marked by a reduction in the capital adequacy ratio mainly due to risk weighted assets growth attributed to an increase in foreign currency assets caused by Russian currency devaluation.

APPENDIX 1.

LIST OF MAIN SUBSIDIARIES AND ASSOCIATED COMPANIES OF THE BANK 31.12.2014

	Company name	Country of incorporation	Country of business operations	Percentage of ownership by the Group
1	LLC Aukсion	Russian Federation	Russian Federation	100,00%
2	KIPARISIANA INVESTMENT LTD	Cyprus	Cyprus	100,00%
3	LLC Moscow city Golf club	Russian Federation	Russian Federation	71,95%
4	LLC Garant-SV	Russian Federation	Russian Federation	100,00%
5	LLC Sberbank Capital	Russian Federation	Russian Federation	100,00%
6	CJSC Sberbank Leasing	Russian Federation	Russian Federation	100,00%
7	LLC Sberbank Leasing Ukraine	Ukraine	Ukraine	99,00%
8	SB Leasing Cyprus Limited	Cyprus	Cyprus	100,00%
9	SB LEASING IRELAND LIMITED	Ireland	Russian Federation	100,00%
10	CJSC Sberbank Leasing Nord	Russian Federation	Russian Federation	100,00%
11	LLP Sberbank Leasing Kazakhstan	Kazakhstan	Kazakhstan	100,00%
12	CJSC RUST	Russian Federation	Russian Federation	100,00%
13	CJSC BPS-Leasing	Belarus	Belarus	99,23%
14	SB SBERBANK JSC	Kazakhstan	Kazakhstan	100,00%
15	JSC Sberbank of Russia	Ukraine	Ukraine	100,00%
16	Asset management company - pension fund administrator Troika Dialog Ukraine LLC	Ukraine	Ukraine	99,99%
17	OJSC BPS-Sberbank	Belarus	Belarus	98,43%
18	JSC Sberbank-Automated System for Trading	Russian Federation	Russian Federation	100,00%
19	LLC Sovremennye technologii	Russian Federation	Russian Federation	100,00%
20	JSC Registrar company Status	Russian Federation	Russian Federation	40,00%
21	CJSC United Credit Bureau	Russian Federation	Russian Federation	50,00%
22	CJSC IKS	Russian Federation	Russian Federation	100,00%
23	LLC Grand Baikal	Russian Federation	Russian Federation	50,00%
24	LLC Baikal skiing resort Gora sobolinaya	Russian Federation	Russian Federation	50,00%
25	LLC Perspektivnye investicii	Russian Federation	Russian Federation	100,00%
26	CJSC Rublevo-Archangelskoe	Russian Federation	Russian Federation	100,00%
27	LLC Sberbank Financial Company	Russian Federation	Russian Federation	100,00%
28	LLC Sberbank Fund Administration	Russian Federation	Russian Federation	100,00%
29	JSC Universal electronic card	Russian Federation	Russian Federation	84,70%

	Company name	Country of incorporation	Country of business operations	Percentage of ownership by the Group
30	JSC Ediny centre processinga I billinga Orlovskoy oblasti	Russian Federation	Russian Federation	43,20%
31	JSC Ediny centre processinga I billinga v gorode Nijny Tagil	Russian Federation	Russian Federation	43,20%
32	OJSC Ediny informacionno-raschetny centre Region-21	Russian Federation	Russian Federation	43,20%
33	OJSC Oblastnoy Ediny Informacionno-raschetny centre	Russian Federation	Russian Federation	43,20%
34	JSC Regionalny informacionny centre Kirovskoy oblasti	Russian Federation	Russian Federation	41,50%
35	LLC Edinaya transportnaya karta	Russian Federation	Russian Federation	84,70%
36	OJSC Ediny informacionno-raschetny centre Kalujskoy oblasti	Russian Federation	Russian Federation	43,20%
37	LLC Non-banking credit organisation Universal electronic card	Russian Federation	Russian Federation	84,70%
38	OJSC Universalnaya electronnaya karta Irkutskoy oblasti	Russian Federation	Russian Federation	43,20%
39	OJSC Ediny raschetny centre na territorii Respubliki Mariy El	Russian Federation	Russian Federation	41,50%
40	CJSC Strategy Partners Group	Russian Federation	Russian Federation	74,75%
41	LLP Strategy Partners-Kazakhstan	Kazakhstan	Kazakhstan	74,75%
42	LLP Research and consulting center Strategy (Kazakhstan)	Kazakhstan	Kazakhstan	37,38%
43	LLC Sberbank Investments	Russian Federation	Russian Federation	100,00%
44	SBERBANK INVESTMENTS LIMITED	Cyprus	Cyprus	100,00%
45	CJSC Sberbank-Technology	Russian Federation	Russian Federation	100,00%
46	LLC Sberbank-Technology	Belarus	Belarus	99,61%
47	CJSC Centre of Loyalty programs	Russian Federation	Russian Federation	100,00%
48	CJSC Germes	Russian Federation	Russian Federation	100,00%
49	SB International S.à r.l.	Luxembourg	Luxembourg	100,00%
50	SBTVF Limited	Cyprus	Cyprus	100,00%
51	SBGB Cyprus Limited	Cyprus	Cyprus	100,00%
52	Troika Dialog Group Limited	Cayman islands	Russian Federation	100,00%
53	Sberbank CIB USA, Inc.	USA	USA	100,00%
54	Sberbank CIB (UK) Limited	United Kingdom	United Kingdom	100,00%
55	T.D. E.S.O.P. Holdings Limited	Cyprus	Cyprus	100,00%
56	CJSC 3D	Russian Federation	Russian Federation	100,00%
57	CJSC Asset management company SBVK (Troika Venture Capital)	Russian Federation	Russian Federation	100,00%
58	LLC Bylinnye bogatyri	Russian Federation	Russian Federation	100,00%
59	JSC CIB Financial Broker	Russian Federation	Russian Federation	100,00%
60	CJSC Sberbank CIB	Russian Federation	Russian Federation	100,00%
61	CJSC CIB Financial consultant	Russian Federation	Russian Federation	100,00%
62	LLC CIB Finance (LLC Troika Finance)	Russian Federation	Russian Federation	100,00%
63	LLC Bogatyrskaya troika	Russian Federation	Russian Federation	100,00%
64	LLC TD soft	Russian Federation	Russian Federation	100,00%
65	CJSC Sberbank Asset Management	Russian Federation	Russian Federation	100,00%
66	SA&PM (Cyprus) Limited (TDAM)	Cyprus	Cyprus	100,00%
67	Polenica Investments Limited	Cyprus	Cyprus	100,00%
68	Roinco Enterprises Limited	Cyprus	Cyprus	100,00%

	Company name	Country of incorporation	Country of business operations	Percentage of ownership by the Group
69	SIB (CYPRUS) Limited	Cyprus	Cyprus	100,00%
70	Troika Capital Partners Limited (Кипр)	Cyprus	Cyprus	100,00%
71	TD KUA Holdings Limited	Cyprus	Cyprus	100,00%
72	Silver Standard Operations Limited	Cyprus	Cyprus	100,00%
73	Troika Dialog Investments Limited	Cyprus	Cyprus	100,00%
74	Verner Holdings Limited	Cyprus	Cyprus	100,00%
75	SB Luxembourg S.à r.l.	Luxembourg	Luxembourg	100,00%
76	Sberbank (Switzerland) AG	Switzerland	Switzerland	99,15%
77	LLC Insurance company Sberbank Life insurance	Russian Federation	Russian Federation	100,00%
78	Sberbank Europe AG	Austria	Austria	100,00%
79	SBERBANK BH D.D.	Bosnia and Herzegovina	Bosnia and Herzegovina	100,00%
80	BAMCARD d.o.o. Sarajevo	Bosnia and Herzegovina	Bosnia and Herzegovina	20,03%
81	SBERBANK A.D. BANJA LUKA	Bosnia and Herzegovina	Bosnia and Herzegovina	100,00%
82	SBERBANK D.D.	Croatia	Croatia	100,00%
83	Sberbank Srbija A.D.	Serbia	Serbia	100,00%
84	«SUPER KARTICA» d.o.o. Beograd	Serbia	Serbia	33,00%
85	PJSC VS Bank	Ukraine	Ukraine	99,92%
86	SBERBANK Banka D.D.	Slovenia	Slovenia	99,98%
87	Privatinvest d.o.o.	Slovenia	Slovenia	99,98%
88	SBERBANK CZ, A.S.	Czech republic	Czech republic	100,00%
89	SBERBANK Slovensko, A.S.	Slovakia	Slovakia	99,50%
90	ALPHA Plus, s.r.o.	Slovakia	Slovakia	99,50%
91	Sberbank Magyarorszag Zrt (MAGYARORSZAGI VOLKSBANK RT.)	Hungary	Hungary	98,93%
92	V-Dat Informatikai Szolgaltato es Kereskedlmi Kft.	Hungary	Hungary	98,93%
93	Uj «Garai ter» Ingatlanforgalmazo es Ingatlanhasznosito Kft.	Hungary	Hungary	98,93%
94	Egressy 2010 Ingatlanforgalmazo Kft.	Hungary	Hungary	98,93%
95	Karolyi Ingatlan 2011 Kft.	Hungary	Hungary	98,93%
96	Garay Center Ingatlanforgalmazo es Ingatlanhasznosito Kft.	Hungary	Hungary	98,93%
97	BEVO-Holding GmbH	Austria	Austria	100,00%
98	ALB EDV-Service GmbH	Austria	Austria	100,00%
99	Pronam Nekretnine d.o.o. (Sberbank Nekretnine d.o.o.)	Croatia	Croatia	100,00%
100	LLC Korus Consulting CIS	Russian Federation	Russian Federation	100,00%
101	LLC Sberbank Faktoring	Russian Federation	Russian Federation	100,00%
102	JSC Delovaya sreda	Russian Federation	Russian Federation	100,00%
103	Cetelem Bank LLC (Commercial bank BNP Paribas Vostok LLC)	Russian Federation	Russian Federation	74,00%
104	SB Securities S.A.	Luxembourg	Luxembourg	100,00%
105	DENIZBANK A.S.	Turkey	Turkey	99,85%
106	Deniz Faktoring Anonim Sirketi	Turkey	Turkey	99,84%
107	Deniz Yatirim Menkul Kiymetler Anonim Sirketi	Turkey	Turkey	99,84%

	Company name	Country of incorporation	Country of business operations	Percentage of ownership by the Group
108	Deniz Portfoy Yonetimi A.S.	Turkey	Turkey	99,82%
109	Deniz Gayrimenkul Yatirim Ortakligi A.S. (Deniz Yatirim Ortakligi A.S.)	Turkey	Turkey	91,24%
110	DESTEK VARLIK YONETIM A.S.	Turkey	Turkey	99,84%
111	Intertech Bilgi islem ve Pazarlama Ticaret A.S.	Turkey	Turkey	99,85%
112	Deniz Kartli Odeme Sistemleri A.S.	Turkey	Turkey	99,85%
113	Acik Deniz Radyo ve Televizyon Iletisim Yayincilik Ticaret ve Sanayi A.S.	Turkey	Turkey	99,84%
114	EKSPRES MENKUL DEGERLER A.S.	Turkey	Turkey	99,85%
115	Denizbank Kultur Sanat Yayincilik Ticaret ve Sanayi A.S.	Turkey	Turkey	99,85%
116	Euro Deniz International Banking Unit Limited	Turkey	Turkey	99,76%
117	DENIZBANK AG	Austria	Austria	99,85%
118	Deniz Finansal Kiralama Anonim Sirketi	Turkey	Turkey	99,85%
119	Deniz Immobilien Service Gmbh	Austria	Austria	99,85%
120	CJSC Denizbank Moscow	Russian Federation	Russian Federation	99,85%
121	CR Erdberg Eins GmbH & Co KG	Austria	Austria	99,85%
122	Bantas Nakit ve Kiymetli Mal Tasima ve Guvenlik Hizmetleri A.S.	Turkey	Turkey	33,28%
123	OJSC Socialnye garantii	Russian Federation	Russian Federation	49,87%
124	LLC ActiveBusinessCollection	Russian Federation	Russian Federation	100,00%
125	LLC PS Yandex.Money	Russian Federation	Russian Federation	75,00%
126	LLC Non-banking credit organisation Yandex.Money	Russian Federation	Russian Federation	75,00%
127	LLC Sberbank Service	Russian Federation	Russian Federation	100,00%
128	SB Capital S.A.*	Luxembourg	Luxembourg	0,00%
129	CJSC Non-state Pension Fund of Sberbank	Russian Federation	Russian Federation	75,00%
130	LLC Insurance company Sberbank Insurance	Russian Federation	Russian Federation	100,00%
131	LLC Insurance broker of Sberbank	Russian Federation	Russian Federation	100,00%

^* SB Capital S.A. (Luxembourg) is a specialized company established with the purposes of attracting funds from foreign capital markets, accordingly mentioned company meets the control criteria stated in IFRS 10

APPENDIX 2.

INFORMATION ON THE SPECIFIC FINANCIAL RESULTS OF THE GROUP BY JURISDICTIONS WHERE THE COMPANIES OF THE GROUP ARE REGISTERED

For the year ended 31 December 2014, RUB bn

	Jurisdiction
	Russian Federation	Austria	Belarus	Bosnia and Herzegovina	Croatia	Cyprus and other jurisdictions	Czech Republic	United	Kingdom Switzerland	Hungary		Ireland Kazakhstan	Serbia	Slovakia	Slovenia	Turkey	Ukraine	USA	TOTAL before intercompany balances	Intercomopany balances	Total
Net interest income	912,30	10,50	8,00	1,70	2,20	-3,80	3,30	-	0,50	2,00	0,40	12,90	2,00	2,80	1,90	52,60	10,40	-	1 019,70	-	1 019,7
Net provision charge for impairment of debt financial assets	-313,10	-0,10	-1,70	-0,40	-1,20	-0,50	-0,70	-	-0,30	-1,10	-1,90	-4,70	-1,00	-0,70	-1,20	-10,50	-21,70	-	-361,40	-	-361,4
Net fee and comission income	253,30	0,40	4,40	0,40	0,30	-1,00	0,50	0,20	0,20	1,20	-	3,60	0,40	0,50	0,30	16,20	1,20	0,20	282,30	-	282,3
Net other operating income	-13,10	-0,10	-1,70	0,10	0,20	10,50	0,40	0,90	0,10	0,30	-	2,00	0,20	0,20	0,40	-4,90	8,10	-	3,60	-4,9	-1,3
Operating income	838,80	10,70	9,00	1,80	1,50	5,20	3,50	1,10	0,50	2,40	-1,50	13,80	1,60	2,80	1,40	53,40	-2,00	0,20	944,20	-4,90	939,30
Operating expenses	-478,50	-6,10	-8,20	-1,30	-1,50	-1,70	-2,50	-2,40	-1,10	-4,50	-	-6,70	-1,30	-2,70	-1,30	-40,10	-5,00	-0,60	-565,50	0,4	-565,1
Profit/(loss) before tax	360,30	4,60	0,80	0,50	-	3,50	1,00	-1,30	-0,60	-2,10	-1,50	7,10	0,30	0,10	0,10	13,30	-7,00	-0,40	378,70	-4,50	374,20
Income tax expense	-81,00	-0,30	-0,80	-	-	0,50	-0,20	-	-	-0,10	0,20	-1,40	-	-	-0,10	-2,20	1,40	-	-84,00	0,1	-83,9
Net profit/(loss)	279,30	4,30	-	0,50	-	4,00	0,80	-1,30	-0,60	-2,20	-1,30	5,70	0,30	0,10	-0,00	11,10	-5,60	-0,40	294,70	-4,40	290,30
Capital expenditures	132,20	0,10	1,00	0,40	0,20	-	0,10	-	0,20	0,60	-	1,10	0,20	0,10	0,10	3,90	0,80	-	141,00		141,0

For the year ended 31 December 2014, RUB bn

	Jurisdiction
	Russian Federation	Austria	Belarus	Bosnia and Herzegovina	Croatia	Cyprus and other jurisdictions	Czech Republic	United	Kingdom Switzerland	Hungary		Ireland Kazakhstan	Serbia	Slovakia	Slovenia	Turkey	Ukraine	USA	TOTAL before intercompany balances	Intercomopany balances	Total
Net interest income	770,3	4,9	5,3	1,7	2,0	2,1	3,2	-	0,1	2,4	0,1	9,6	2,5	2,7	1,5	46,6	7,0	-	862,0	0,2	862,2
Net provision charge for impairment of debt financial assets	-109,3	-0,3	0,4	-0,1	-1,0	-	-0,7	-	-0,2	-1,0	-0,1	-2,3	-1,3	-0,2	-0,9	-12,4	-1,0	-	-130,4	-4,5	-134,9
Net fee and comission income	200,5	0,2	2,9	0,3	0,2	-1,2	0,4	0,3	0,1	0,8	-	2,3	0,2	0,4	0,2	12,3	1,2	0,5	221,6	-0,3	221,3
Net other operating income	6,9	0,2	-0,1	0,1	0,1	2,2	0,2	0,1	-0,1	0,1	-	0,8	0,2	0,3	0,1	-2,9	0,4	-0,2	8,4	2,9	11,3
Operating income	868,40	5,00	8,50	2,00	1,30	3,10	3,10	0,40	-0,10	2,30	-	10,40	1,60	3,20	0,90	43,60	7,60	0,30	961,60	-1,70	959,90
Operating expenses	-438,5	-3,5	-5,7	-1,2	-1,2	0,2	-2,0	-0,8	-0,6	-2,9	-	-5,1	-1,0	-2,4	-0,9	-34,9	-4,9	-0,5	-505,9	1,7	-504,2
Profit/(loss) before tax	429,90	1,50	2,80	0,80	0,10	3,30	1,10	-0,40	-0,70	-0,60	-	5,30	0,60	0,80	-	8,70	2,70	-0,20	455,70	-	455,70
Income tax expense	-92,1	1,6	-0,7	-	-	0,3	-0,1	-	-	-0,1	-	-1,0	-	-0,1	-	-2,1	-0,3	-	-94,6	0,9	-93,7
Net profit/(loss)	337,80	3,10	2,10	0,80	0,10	3,60	1,00	-0,40	-0,70	-0,70	-	4,30	0,60	0,70	-	6,60	2,40	-0,20	361,10	0,90	362,00
Capital expenditures	121,9	0,2	1,1	0,2	0,2	-	0,2	-	-	0,1	-	2,6	-	0,3	0,1	2,5	1,3	-	130,70		130,7