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Sberbank: Sber reports 3Q 2021 Net Profit of RUB348.3 bn under International Financial Reporting Standards (IFRS)
Sber reports 3Q 2021 Net Profit of RUB348.3 bn under International Financial Reporting Standards (IFRS)
Moscow, October 28, 2021 - Sberbank (hereafter "the Group" or "Sber") has released its interim condensed IFRS financial statements (hereafter "the Financial Statements") as at and for the 9 months ended 30 September 2021, with report on review by AO PricewaterhouseCoopers Audit.
Alexandra Buriko, CFO, stated:
'For 9M 2021, Sber earned RUB978 bn in net profit - thus hitting a historical record. Return on equity came in at 25.8%.
Growth momentum was obvious across all key business segments. In the banking business, the retail loan portfolio continues to expand, while corporate lending has accelerated along with improvement in the asset quality. The payment business is driven by client transactional activity. The wealth management and insurance businesses are developing rapidly on the back of new product launches in 3Q 2021. Revenues of the non-financial business segment increased 3 times y/y for 9M 2021 and exceeded RUB120 bn.
Penetration of ecosystem services is rising, thanks to the development of the unified elements. A single login, Sber ID, is now used by 27 mn clients, and allows access to 135 of Sber own and partner services. The number of SberPrime subscribers has reached more than 3.7 mn. Client engagement of SberBank Online DAU/MAU has exceeded 50% for the first time, and the number of clients shopping with SberPay grew 4-fold in 3Q 2021 to 4.4 mn.
A combination of solid results and ongoing business dynamics is our rational to enhance the full-year guidance for 2021 and we expect the return on equity to come in above 23%.'
Key financial and operating highlights for the reporting period
Key metrics of client activity
Statement of Profit or Loss Overview
The Group net interest income was up by 14.2% y/y in 3Q 2021 to RUB469.6 bn. The increase was attributable to expanding volume and higher yields of the working assets (see Banking business segment). Interest expenses grew by 30% y/y due to increased rate of deposit insurance allocations. Excluding this effect, net interest income increased by 15%. Net interest income for 9M 2021 was up by 12.6% y/y to RUB1,330.6 bn.
The Group net fee and commission income increased by 11.2% y/y for in 3Q 2021 to RUB164.3 bn, driven by bank cards operations (see Payment business segment). The net fee and commission income growth in 9M 2021 was up by 15.6% y/y to RUB455.7 bn, which was also due to the low-base effect in 1H 2020 when client transactional activity slowed down under the COVID-related restrictions.
Other operating income. In 3Q 2021, the Group classified assets of the subsidiary bank in Ukraine as restricted assets. The reason for such classification was the regulatory restrictions that do not allow the Group to manage fully the mentioned assets. The Group recorded provisions in relation to these assets in the amount of RUB33.3 bn in 3Q 2021.
The Group operating expenses amounted to RUB210.1 bn in 3Q 2021, up by 20.6% y/y. The growth was driven by payroll indexation in 3Q 2021, the calendarization effect and expenses related to non-financial businesses that led to headcount increase to 281.7 K (+5.6 K in the quarter). For 9M 2021, OpEx grew by 15.1% y/y to RUB591.6 bn.
Cost-to-Income ratio for the financial business 4 improved by 60 bp to 29.4% in 3Q2021, and came in at 29.6% for 9M 2021.
Combined provision charge including revaluation of loans at fair value amounted to RUB57.2 bn for 3Q 2021, and RU110.7 bn for 9M 2021. Cost of Risk was stabilizing on the back of expansion in the corporate and retail loan portfolios, and came in at 85 bp for 3Q 2021 and at 57 bp for 9M 2021.
Key segments overview
Key 3Q 2021 Banking business segment highlights
Retail loan portfolio exceeded RUB11 trn, growing by 6.5% in 3Q 2021, or by 18.5% YTD. The share of retail loans in total loan portfolio exceeded 40% for the first time. The share of sales in digital channels came to almost 60% (+1.1 pp), which increases the accessibility to lending. The yield on retail loans remained unchanged at 11.1%.
Corporate loan portfolio in 3Q 2021 reached RUB16.5 trn, adding 3.8%, or 3.7% adjusted for the impact of the FX revaluation9, primarily thanks to Ruble lending. The portfolio was affected by the repayment of loans to state and municipal institutions in light of the replacement of their debt with budget loans. Excluding the effect of the repayment, the corporate loan portfolio increased by 5.3% in 3Q21, or 7.4% for 9M21. The yield on corporate loans moved up by 50 bp to 7.1% from increasing market rates and high share of Ruble loans at floating rates, the share of which exceeded 44% at quarter-end.
Retail funding increased by 2.1% in 3Q 2021 to over RUB17.3 trn, in part thanks to state social disbursements. The cost of retail term deposits increased by 30 bp to 4.0%.
Corporate funding was up by 6.1% to RUB11.6 trn. The cost of corporate funding increased by 80 bp to 4.3% on the back of market rates moves.
Net LDR ratio changed to 89.8% in 3Q 2021, adding 1.3pp during the quarter.
Key asset quality metrics
Wealth management and brokerage
Assets under management increased by 5.3% in 3Q 2021, approaching RUB2 trn.
Net assets under custody on the brokerage accounts increased by 15.3% in 3Q 2021 to RUB2.5 trn.
Total operating income before provisions for the Risk insurance segment reached RUB25.3 bn, up by 18.2% y/y.
Revenues11 of the Non-financial business segment increased by 2.6 times y/y to RUB47.6 bn for 3Q 2021. For 9M 2021, the segment's revenues increased by 2.8 times y/y to RUB121.7 bn.
Sber continues tech transformation, and expands the range of product and service offerings.
Selected Capital Adequacy Results Overview
Common equity Tier 1 capital grew 6.4% to RUB5,105.7 bn. Total capital increased by 5.7% for 3Q 2021 to RUB5,429.8 bn.
The Group risk-weighted assets were up by 7.1% to RUB36,604.3 bn in 3Q 2021, driven by loan portfolio expansion and change in the macro add-on for retail loans. Risk-weighted assets density increased by 2.3 pp to 88.1% in 3Q 2021.
Common equity Tier 1 capital adequacy ratio and Tier 1 capital adequacy ratio in 3Q 2021 came down by 10 bp to 13.95% and by 13 bp to 14.36%, respectively, while total capital adequacy ratio decreased by 21 bp to 14.83%.
Conference call details
Sber Conference call dedicated to consolidated IFRS results for 9M 2021 and as at September 30, 2021 will be held on October 28, 2021 at 5:00 pm Moscow time (3:00 pm London / 10:00 am New York time).
Conference ID: English - 6842767
Russian - 7839279
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1 Includes discontinued operations, which included Eurocement Group from 3Q 2020
2 Excluding the subordinated loan agreement in the amount of RUB150.0 bn classified as equity financial instrument that was previously ceded by the Bank of Russia in favor of the Ministry of Finance
3 Based on profit from continuing operations
4 Operating income before provisions for debt financial assets, credit related commitments and revaluation of loans at fair value due to change in credit quality
5 Other non-interest income / (expense) includes: Net gains / (losses) from non-derivative financial instruments at fair value through profit or loss; Net gains from financial instruments at fair value through other comprehensive income; Net gains from derivatives, trading in foreign currencies, foreign exchange and precious metals accounts translation; Net losses arising on initial recognition and modification of financial instruments measured at amortized cost; Impairment of non-financial assets; Net charge for other provisions and allowances; Revenue of non-financial and other business activities; Cost of sales and other expenses of non-financial and other business activities; Net premiums from insurance and pension fund operations; Net claims, benefits, change in contract liabilities and acquisition costs on insurance and pension fund operations; Income from operating lease of equipment; Expenses related to equipment leased out; Net share of loss of associates and joint ventures; Other net operating income / (expenses)
6 Includes net expenses from provisioning for debt financial assets and revaluation of loans at Fair Value due to changes in credit quality
7 Total equity attributable to shareholders of the Bank / Total numbers of shares outstanding (ordinary + preferred)
8 Before loan loss allowance and including loans at amortized cost and at fair value
9 Based on management accounts
10 Taking into account the change in the methodology in accounting for the revaluation of the OTC assets and REPO transactions
11 For the segment Non-financial business Revenues of the associates and joint ventures are disclosed proportionately to the ownership share of the Group in the reporting period. For the companies of the Group Revenues are calculated on the 100% basis from the date of the control. The information does not include data on Yandex.Market and the financial results from the disposal of Yandex.Market
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|ISIN:||US80585Y3080, RU0009029540, RU0009029557, US80585Y4070|
|EQS News ID:||1244203|
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