Sberbank — Earnings Release 2014

Mar 7, 2014

Sberbank / Miscellaneous

07.03.2014 07:26

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Please note that the numbers are calculated in accordance with Sberbank's internal methodology. Also note that the effect of subsequent events is excluded from the numbers as of January 1, 2014.

March 7, 2014

Income Statement Highlights for January-February 2014 (as compared to January-February 2013):

• Net interest income grew by 26.0% y-o-y
• Net fee and commission income grew by 26.8% y-o-y
• Noncredit commission income grew by 28.0% y-o-y
• Operating income before total provisions increased by 26.4% y-o-y
• Total provision charge was RUB45.2 bn vs. RUB14.8 bn charge in January-Ferbuary 2013
• Operating expenses were up by 11.3% y-o-y
• Profit before tax amounted to RUB82.7 bn vs. RUB80.8 bn for January-February 2013
• Net profit amounted to RUB68.2 bn vs. RUB65.2 bn for January-February 2013

Net interest income came at RUB138.7 bn, up by 26.0% compared to January-February 2013:

• Interest income increased by RUB43.9 bn driven by total loan portfolio growth.
• Interest expenses grew by RUB15.2 bn, more than a half of what was attributed to retail deposit expenses.

Net fee and commission income amounted to RUB35.7 bn. The growth rate of this item remains high: 26.8% compared to January-February 2013. The bank increases the F&C income primarily due to noncredit commission, which was highly contributed by transactions with bank cards and acquiring. The noncredit commission growth rate has accelerated in 2014: the noncredit commission income for January 2014 was 24% higher than for January 2013, for February 2014 was 28% higher than for February 2013 (for comparison: the increase in the noncredit commission income for 2013FY was 20%).

Net income from trading operations amounted to RUB2.7 bn for January-February 2014, which was 13.7% higher than for January-February 2013.

Generally Operating income before provisions, that comes from core operations of the Bank, increased by more than 1/4 (up by 26.4% y-o-y) and amounted to RUB180.0 bn.

Operating expenses increased by 11.3%. C/I ratio for January-February 2014 was 28.9% vs. 32.8% for January-February 2013. The improvement trend in C/I ratio is maintained by the Bank's cost optimization program.

Total provision charges amounted to RUB45.2 bn for January-February 2014 vs. RUB14.8 bn charge a year earlier. The growth in provision charges can be explained by the growth of the total loan portfolio, as well as significant Ruble depreciation against the major foreign currencies in January and February 2014, what also caused a significant increase in provisions for foreign currency loans. Due to current macroeconomic conditions with a high degree of uncertainty the Bank sticks to conservative approaches for loan-loss provisioning based on international standards and requirements of the Central Bank of Russia. Coverage ratio remained strong: loan-loss provisions are 2.2 times the overdue loans.

Profit before tax totaled to RUB82.7 bn and net profit amounted to RUB68.2 bn for January-February 2014. Both figures exceeded results for the same period 2013.

Assets increased by RUB169 bn in February, or 1.0%, and exceeded RUB16.8

trn. The main growth drivers were corporate and interbank loans. The growth of balance sheet items was also augmented by positive reevaluation of FX component due to Ruble devaluation against prime foreign currencies in February.

Assets increased by RUB169 bn in February, or 1.0%, and exceeded RUB16.8

The Bank lent nearly RUB400 bn to corporate clients in February. Corporate loan portfolio increased by 1.3% to exceed RUB9 trn driven by new demand as well as positive reevaluation of FX loans issued earlier on recent ruble depreciation.

More than RUB120 bn were lent to retail clients in February, primarily in mortgages and consumer loans. Retail loan portfolio grew by RUB46.6 bn, or 1.4%, to reach RUB3.4 trn.

With the loan portfolio growth the Bank retained its quality at a high level: overdue loans were 2.3% as of March 1, 2014.

Securities portfolio decreased by RUB29 bn, or 1.4%, in February mainly due to redemptions of OFZ bonds and repayments of corporate bonds.

The clients' funds remain the core source of funding for the Bank's operations:

• Retail deposits and accounts repeatedly demonstrated an inflow increasing by RUB135 bn, or 1.7%, in February, amounting approximately RUB7.9 trn.
• Corporate deposits and accounts increased in February as well (+RUB288 bn or +8.0%), and amounted to about RUB3.9 trn. Both current accounts and term deposits increased.

The share of government funding to Sberbank on the balance sheet decreased to 10% (the amount includes the balance of subordinated debt, provided by the CBR in 2008, which accounted to RUB300 bn as of March 1, 2014).

Since Sberbank does not have instruments of additional capital both core tier 1 and tier 1 capital as of March 1, 2014 amounted to RUB1,340 bn under preliminary calculations. Total capital amounted to RUB2,114 bn on the same date. Total capital increased by RUB70 bn in February as a result of net profit contribution as well as subordinated Eurobonds of USD1 bln raised.

Capital adequacy ratios under preliminary calculations and not accounting for net profit for 2013 to be included in capital post audit were:

• N1.1 7.9% (minimum adequacy level, required by the Central Bank of Russia at 5.0%)
• N1.2 7.9% (minimum required level at 5.5%)
• N1.0 12.5% (minimum required level with Deposit Insurance Regulation at 11%).

Sberbank 2M 2014 Financial Highlights (under RAS, unconsolidated)

07.03.2014 EquityStory.RS, LLC's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de

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Language:	English
Company:	Sberbank
	19 Vavilova St.
	117997 Moscow
	Russia
Phone:	+7-495-957-57-21
Fax:
E-mail:	media@sberbank.ru
Internet:	www.sberbank.ru
ISIN:	US80585Y3080, RU0009029540, RU0009029557
Listed:	Frankfurt in Open Market (Entry Standard) ; MICEX, RTS
Category Code:	MSC
TIDM:	SBER
Sequence Number:	1935
Time of Receipt:	March 07, 2014 07:26:35

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