OREANDA-NEWS. July 18, 2011. Please note that the numbers are calculated in accordance with Sbernank's internal methodology.

Income Statement Highlights for 1H 2011 (as compared to 1H 2010), reported the press-centre of Sberbank.

Net interest income grew 7.0% y-o-y

Net fee and commission income rose by 2.8% y-o-y

Operating income before total provisions increased by 6.7% y-o-y

Write-back of total provisions amounted to RUB17.8 bn vs. provision charge of RUB104.6 bn for the same period a year ago

Operating income after total provisions grew 1.7-fold y-o-y

Operating expenses increased by 24.1% y-o-y

Profit before tax amounted to RUB211.6 bn vs. RUB94.8 bn for 1H 2010

Net profit totaled RUB171.3 bn vs. RUB60.7 bn for 1H 2010

Operating income before total provisions increased by 6.7% y-o-y for 1H 2011.
Net interest income rose 7.0% y-o-y, which was mainly due to a 19.5% increase in income from retail lending as portfolio expanded;

Reduced interest expenses on customer accounts and amounts due to other banks (down by 17.4% on average) as the cost of this funding fell.

Net fee and commission income (F&C) increased by 2.8% y-o-y, primarily from growth in the number of issued banking cards and related operations as well as agent fees from stronger sales of insurance contracts. Net F&C income was up in spite of the cancellation of upfront fees on retail loans in 2010.

Net gain from trading on financial markets amounted to RUB6.2 bn for 1H 2011, 1.9 times higher than the gain a year ago. This was the result of income growth from investment in securities and precious metals.

The Bank’s expertise in handling distressed assets led to a RUB17.8 bn gain from total provision release for 1H 2011 vs. a provision charge of RUB104.6 bn for the same period a year ago. The gain came from provision releases of RUB26.1 bn on loans and other assets (vs. provision charge of RUB52.2 bn in 1H 2010), which reflect the combined effect of improved financial health of borrowers and resumption of debt payment as well as repayment of some overdue loans, restructuring and asset sales;

Significant reduction in losses from assignment sales: RUB8.3 bn for 1H 2011 vs. RUB52.4 bn for the same period a year ago.

Operating income after total provisions grew 1.7 times y-o-y.

Operating expenses rose by 24.1% y-o-y, which was mainly due to higher staff costs on the planned salary adjustments which commenced in early 2010 and an increase in general and administrative expenses related to business expansion. Furthermore, growth in deposits entailed an increase in mandatory fee payments to the state-deposit insurance system. Cost to income ratio printed at 41.2%.

Profit before tax totaled RUB211.6 bn, which was 2.2 times that of a year ago. Net profit came in at RUB171.3 bn, which is 2.8 times higher than for 1H 2010. Both figures made historical record highs for the half-year results.

The Bank’s assets increased by RUB423 bn or 5.0% year-to-date to RUB8,971 bn for 1H 2011. The balance sheet was significantly affected by negative foreign currency revaluation as a result of ruble strengthening relative to US dollar.

In June assets grew by RUB141 bn led by loan portfolio expansion:

The Bank lent Russian companies about RUB365 bn in June and over RUB2,150 bn for 1H 2011. As of July 1, 2011, the balance of corporate loan portfolio amounted to RUB5,122 bn, up 7.5% ytd.

 The Bank issued RUB97 bn of retail loans in June and about RUB490 bn for 1H 2011. The retail loan portfolio increased by 11.1% ytd to RUB1,446 bn as of July 1, 2011.

The quality of the loan portfolio continued to improve: the overdue loans as a percentage of the total book decreased to 4.52% from 5.04% in the beginning of the year and 4.64% as of June 1, 2011. The Bank retains adequate coverage ratio. As of July 1, 2011, loan-loss provisions amounted to RUB636 bn, which exceeds overdue loans 2.1 times.

Investment portfolio contracted by RUB224 bn in June to RUB1,463 bn. This was mainly due to redemption of CBR bonds (bonds of the Bank of Russia) in the amount of RUB300 bn which were mainly allocated to CBR deposits. At the same time, the Bank increased corporate bonds’ purchases, lifting their balance in the portfolio by RUB40.2 bn to RUB442 bn. As a result, the share of government bonds shrank from 63% to 54%, while that of corporate bonds was up from 24% to 30% in June.

The retail deposits increased by RUB113 bn in June to RUB5,058 bn, which translates into a  5.2% ytd growth. Corporate accounts and deposits were up by RUB14 bn in June to RUB1,920 bn due to increased term deposits, while current accounts saw an outflow. The balance of current accounts and deposits increased by 2.9% ytd. Also, the Bank tapped the international capital market, and issued in June 10-year LPNs of USD1.0 bn.

Regulatory capital (under CBR regulation No. 215-P) rose by RUB12 bn in June to RUB1,391 bn, due to higher retained earnings (increase of RUB34 bn). At the same time, the regulatory capital decreased due to dividend payment of RUB21 bn for 2010 approved by the AGM and contributions to charter capital of its subsidiaries. The regulatory capital increased by 12.0% ytd.
Capital adequacy ratio remained at 18% as of July 1, 2011.