Sberbank reports 2019 net profit of RUB 845.0 bn under international Financial Reporting Standards (IFRS)
Sberbank (SBER )
Sberbank reports 2019 net profit of RUB 845.0 bn under international Financial Reporting Standards (IFRS)
Moscow, February 27, 2020 - Sberbank (hereafter "the Group") has released its Annual consolidated IFRS financial statements (hereafter "the Financial Statements") as at and for the 12 months ended 31 December 2019, with audit report by AO PricewaterhouseCoopers Audit. All information is presented net of Denizbank A.S. operations, unless stated otherwise. Herman Gref, Chairman of the Executive Board, CEO: "The most important achievement for 2019 was the industrial launch of the new Sberbank Digital Platform and the start of the large-scale migration of our products and services to it. By creating a private Cloud, not only did we increased the level of infrastructure utilization 4-fold, we also started offering Cloud solutions to our clients. The Artificial Intelligence has already become our important business driver: the economic effect of increasing AI use amounted to RUB42 bn last year. Better customer experience allows us to widen our client base: the number of active retail clients has grown by 3 mln over the year up to 96 mln people. We have 54 mln monthly active digital users, and 24 mln daily active users. We have learned how to convert a growing number of Sberbank Online clients into sales: more than a half of consumer loans and over a third of mortgages are issued in digital channels. We are focused on the extention of our digital sales experience to Ecosystem products. Last year we defined an Ecosystem framework, adding new digital services to the Sberbank Ecosystem, including food delivery, transportation, job classified and video streaming. We remain client centric and continually work to improve efficiency on the back of technological development that allowed Sberbank to ensure a return on equity of more than 20%." The 2019 Operational and Financial Highlights:
The 4Q 2019 Financial Highlights:
Selected Statement of Profit or Loss Results
Selected Statement of Financial Position Results
Net interest income came at RUB371.0 bn in 4Q 2019, up by 4.6% y/y. Interest income increased by 5.8% y/y to RUB607.5 bn in 4Q 2019 on the back of both the loan portfolio1 expansion by 3.2% y/y to RUB21.7 trn or 4.0% y/y adjusted for FX revaluation as well as the increase in the yield of working assets by 10 bp to 8.8% in 4Q 2019 and optimization of the balance sheet structure.
Net LDR ratio equaled to 94.4%, up by 5.7 pp compared to 3Q 2019. The Group net fee and commission income came at RUB148.3 bn in 4Q 2019, up by more than 23.6% y/y mainly driven by operations with banking cards and cash and settlements transactions income. Starting from 1 January 2019 VAT for loyalty programs, which was earlier recognized in operating expenses, is included into net fee and commission income. The comparative base of the previous year was adjusted as well.
Assets under management of the Wealth Management business increased by 22% from the beginning of the year and achieved RUB1.5 trn. The Group operating expenses (staff and administrative) were up by 15.5% y/y to RUB238.0 bn in 4Q 2019 and by 10.2% y/y to RUB724.6 bn for 12M 2019. The operating expenses dynamics was mainly affected by growth of IT costs, related to the industrial launch and further development of the new technological platform. The VAT rate increase from the beginning of 2019 also affected the cumulative operating expenses dynamics. The Group Cost-to-Income ratio2 came at 43.4% in 4Q 2019 and 35.8% for the full year. Net credit loss allowance charge for loans at amortized costs amounted to RUB 35.5 bn in 4Q 2019. The Cost of Risk for loans at amortized cost was 72 bps in 4Q 2019. According to IFRS 9 part of the loan portfolio is accounted at fair value through profit or loss. Negative revaluation of these loans due to change in credit quality amounted to RUB5.7bn for the quarter. The combined Cost of Risk for loans at amortized cost and at fair value was down by 26 bp to 80 bp in 4Q 2019. The FX component was shown as foreign exchange translation (losses) / gains and amounted to RUB 12.7 bn in 4Q 2019.8 The loan portfolio quality improved in 2019. The share of impaired loans, including the POCI loans, in total gross loan portfolio at amortized cost decreased by 0.4 pp to 7.5%. Total provision coverage of Stage 3 and POCI loans was up by 1.3 pp compared to the previous quarter to 89.3% in 4Q 2019. Selected Capital Adequacy Results3 (the data in the table is in accordance with standardized and IRB approaches applied to the corresponding assets groups)
The Group's total capital under Basel III reached RUB4 435.7 bn as of 31/12/2019, up by 3.8% as compared to previous quarter. The Group's risk-weighted assets were up by 6.0% to RUB32 634.1 in 4Q 2019 due to growth of operational risk by 4.4% on the back of calculation period shift as well as increase in credit risk by 6.2%. The credit risk growth was influenced by introduction macro-prudential add-ons for some loan segments. Nevertheless, in 1Q 2020 the Group got the approval from the Bank of Russia of application for IRB implementation, which will have positive impact on risk-weighted assets density. The Group's leverage ratio increased by 70 bp to 13.7% in 4Q 2019. Common equity Tier 1 capital adequacy ratio and total capital adequacy ratio showed a slight decrease in 4Q by 12 bp to 13.41% and by 29 bp to 13.59% respectively on the back of the Group's risk-weighted assets growth. 1 Before loan loss allowance and including loans at amortized cost and at fair value 2 Operating income before provisions for debt financial assets, credit related commitments and revaluation of loans at fair value due to change in credit quality 3 Including corresponding line from discontinued operations, that, effective May 2018, Denizbank is classified as 4 Other non-interest income / (expense) includes: Net gains from non-derivative financial instruments at fair value through profit or loss excluding revaluation of loans at FV through P&L due to change in credit quality; Net gains from financial instruments at fair value through other comprehensive income; Net gains / (losses) from derivatives, trading in foreign currencies, foreign exchange and precious metals accounts translation; Net gains/ losses on initial recognition of financial instruments and on loans restructuring; Net losses from revaluation of office premises; Impairment of non-financial assets; Net recovery of / (charge for) other provisions; Revenue of non-banking business activities; Cost of sales and other expenses of non-banking business activities; Net premiums from insurance and pension fund operations; Net claims related to insurance and pension fund operations; Income from operating lease of equipment; Expenses related to equipment leased out; Other net operating income 5 Net interest margin was recalculated as working assets adjusted for the amount of provisions, created against Stage 3 loans 6Total equity attributable to shareholders of the Bank / Total numbers of shares outstanding (ordinary + preferred) 7 Starting from 1Q19 the FX-component is excluded from provision charge / recovery for FX-denominated loans at amortized cost as well as from revaluation of FX-denominated loans at fair value. 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ISIN: | US80585Y3080, RU0009029540, RU0009029557, US80585Y4070 |
Category Code: | ACS |
TIDM: | SBER |
LEI Code: | 549300WE6TAF5EEWQS81 |
Sequence No.: | 49207 |
EQS News ID: | 984789 |
End of Announcement | EQS News Service |
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