OREANDA-NEWS. March 24, 2011. Sberbank publishes its Consolidated Financial Statements in accordance with IFRS as of 31 December 2010 and for the year ended 31 December 2010, including independent audit report by Ernst & Young, reported the press-centre of Sberbank.

Highlights of Sberbank Group’s (hereafter “the Group”) performance as of 31 December 2010 and for the year 2010 are presented below (download the presentation):

Net profit for 2010 totaled RUB 181.6 bn (or RUB 8.42 per ordinary share) as compared to RUB 24.4 bn (or RUB 1.10 per ordinary share) for 2009;

Total comprehensive income reached RUB 206.6 bn, compared to RUB 38.9 bn for 2009;

Operating income before provision charge for loan impairment amounted to RUB 666.6 bn, a 2.9% growth from RUB 648.1 bn for 2009;

Return on average equity was 20.6% demonstrating strong performance as compared to ROE of 3.2% for 2009;

Cost to income ratio remains strong at 42.4% versus 35.4% in 2009;

Provision charge for loan impairment decreased by 60.5% year-on-year: from RUB 388.9 bn for 2009 down to RUB 153.8 bn in 2010;

The core capital adequacy ratio as per Basel 1 was 11.9%, total capital adequacy ratio was 16.8% as of 31 December 2010, well above the 8% minimum. The regulatory capital ratio (the CBR N1 ratio) was 17.7%.

Interest income for 2010 decreased by 2.4% to RUB 795.6 bn. The decrease was due to declining interest rates during the year and strong competition for good borrowers. The Group’s average yields on loans increased in Q4 2010, however, as a result of the Group’ successful efforts to collect overdue interest on a number of corporate loans.

Interest expense decreased in 2010 by 4.0% to RUB 299.8 bn, as interest rates for both retail and corporate deposits followed the general decline of interest rates in the market.

Net interest income for 2010 declined by 1.4%. Net interest margin improved considerably in Q4 2010 and comprised 6.7% for the quarter as compared to 6.1% in Q3 2010. The main drivers of the net interest margin growth were an overall decrease in cost of funds in Q4 2010by 0.4 percentage points (p.p.) and a 0.3 p.p. growth of yields on corporate loans. Net interest income increased by 15.6% in Q4 2010 versus Q3 2010 and reached RUB 135.1 bn for Q4 2010.

The Group’s fee and commission income for 2010 totaled RUB 130.9 bn, representing a 23.8% increase. Almost all kinds of fee-generating activities contributed to this growth, with commissions on cash and settlement operations remaining their principal component.

Net gains on operations with securities, including trading gains and gains from securities revaluation, reached RUB 24.0 bn for 2010, a 34.2% decline compared with 2009. In addition to this, the Group showed in Other comprehensive income RUB 31.3 bn of gains on revaluation of investment securities available for sale.

As a result, total operating income before provision charge for loan impairment for 2010 grew by 2.9%.

The Group’s operating expenses grew in 2010 by 23.2%. The major component of operating expenses are staff costs which increased by 24.0% as a result of planned increase of staff remuneration to the current market level. Growth of operating expenses was also due to planned implementation of infrastructure projects in accordance with Sberbank’s development strategy and as a result of business expansion.

Provision charge for loan impairment for 2010 totaled RUB 153.8 bn, a 60.5% decrease as compared to 2009. The decrease came as a result of a much slower growth of problem loans against the backdrop of economic recovery in Russia and the Group’s efforts to stabilize loan portfolio quality and work out problem loans.

The Group’s net profit for 2010 totaled RUB 181.6 bn versus RUB 24.4 bn for the previous year. Earnings per share for 2010 amounted to RUB 8.42 versus RUB 1.10 in 2009.

The Group’s total assets increased in 2010 by 21.4% and reached RUB 8,628.5 bn, the increase being attributable both to the expansion of lending and investments in securities.

Loan portfolio, net of provision for impairment, increased by 12.9% in 2010. The increase was driven by growing demand for both corporate and retail loans starting from Q2 2010. In Q4 2010, gross corporate loans grew by 5.9% to RUB 4,872.2 bn as of 31 December 2010, and gross loans to individuals increased by 4.8% to RUB 1,319.7 bn. For 2010 as a whole gross corporate loans increased by 14.2% and retail loans by 12.1%.

Provisions for loan impairment grew in 2010 by 21.2% and reached RUB 702.5 bn as of 31 December 2010. This brought the ratio of provision for loan impairment to total gross loans to 11.3% compared to 10.7% as of 31 December 2009.

Non-performing loans comprised 7.3% of total loan portfolio at 31 December 2010, decreasing in Q4 2010 by 1.3 p.p. The ratio of total provisions for loan impairment to non-performing loans was 1.6.

Securities portfolio grew by 71.4% in 2010 and reached RUB 1,823.6 bn as of 31 December 2010. The growth is attributable mostly to larger investments in bonds of the Bank of Russia and Federal Government bonds which together comprised 61.3% of total securities as of 31 December 2010. The proportion of corporate bonds in the securities portfolio decreased from 25.4% as of 2009 year end to 19.4% as of 31 December 2010. In absolute terms, however, investments in corporate bonds grew in 2010 by 30.4%, mainly through purchases of corporate bonds issued by Russian companies which the Group considers another form of corporate lending. In 2010, the Group created a portfolio of investment securities held to maturity which totaled RUB 358.2 bn as of 31 December 2010. In 2010, the Group expanded its investments in corporate shares (mostly Russian “blue chips”) - they increased 2.8 times for the year to RUB 115.3 bn.

The Group’s total liabilities amounted to RUB 7,641.4 bn, a 20.8% increase for the year. The Group’s liabilities’ structure remained stable throughout 2010. Retail deposits amounting to RUB 4,834.5 bn as of 31 December 2010 remain the core of the Group’s funding. Retail deposits increased in 2010 by 27.7%. Gross loans to deposits ratio was 0.93 as of 31 December 2010 versus 1.00 a year before.

As of 31 December 2010, the Group’s shareholders’ equity amounted to RUB 987.2 bn, a 26.7% increase for the year. The Group’s total capital adequacy ratio as per Basel 1 Accord was 16.8% as of 31 December 2010, the Tier 1 ratio was 11.9%.