OREANDA-NEWS. January 17, 2014. Please note that the numbers are calculated in accordance with Sberbank`s internal methodology. Also note that the effect of subsequent events is included in the numbers as of January 1, 2013 but excluded from the numbers as of January 1, 2014.

Income Statement Highlights for 2013 (as compared to 2012):

Net interest income grew by 17.1% y-o-y

Net fee and commission income grew by 16.7% y-o-y

Commission income related to other than lending grew by 20.4%

Operating income before total provisions increased by 17.0% y-o-y

Total provision charge was RUB97.3 bn vs. RUB29.9 bn charge for 2012

Operating expenses were up by 9.7% y-o-y

C/I ratio declined from 44.5% to 41.7%

Profit before tax amounted to RUB480.5 bn vs. RUB440.5 bn for 2012

Net profit totaled RUB392.6 bn (excluding the effect of subsequent events) vs. RUB346.2 bn for 2012 (including subsequent events)

Net interest income came at RUB721.0 bn for 2013, up by 17.1% compared to 2012:

Interest income increased by RUB236.1 bn driven by loan portfolio growth (both retail and corporate). Share of interest income from retail loans in total interest income keeps growing steadily – for 2013 this share increased up to 35%, what reflects the growth of retail loans share in the Bank loan portfolio.

Interest expenses grew by RUB130.6 bn, of which RUB80.9 bn were attributed to retail deposit expenses.

Net fee and commission income amounted to RUB227.5 bn or 23% of total operating income. Net fees and commissions growth accelerated by 16.7% for 2013 vs. 12.7% for 2012. Commission income related other than lending was the main driver. It generated RUB210.2 bn, where plastic cards and acquiring services generated RUB94.3 bn. The volume of commission income related other than lending increased by 20.4% for 2013, considerably outpaced net interest income growth (+17.1%).

Net income from trading operations on financial markets fell in December by RUB0.9 bn down to RUB22.0 bn. This negative result in December associated with a currency revaluation of investments in subsidiary banks.

Generally, operating income before provisions increased by 17.0% and amounted to RUB991.4 bn.

Operating expenses were up by 9.7% in 2013. The pace of growth slowed by half compared to 2012 due to the Bank`s cost optimization program. C/I ratio declined from 44.5% to 41.7%. Further cost increases are expected from posting subsequent events, however it won`t have significant impact on the existing trend of C/I ratio improvement.

Total provision charges amounted to RUB97.3 bn vs. RUB29.9 bn charge a year earlier. 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. Provision write-backs mostly relate to past due loan situations which have been resolved.

Profit before tax totaled RUB480.5 bn and net profit amounted to RUB392.6 bn.

Assets grew by 19.9% for the year and exceeded RUB16.3 trn. Assets growth in December was 5.3%. The main driver for growth in assets is still the loan portfolio, which totaled almost RUB12 trn.

The Bank lent about RUB1.4 trn (a record ammount) to corporate clients in December. In total about RUB7.3 trn were lent to corporate clients for the year, which exceeded the total amount for the previous year (RUB5.9 trn). Corporate loan portfolio increased in December by 4.0% up to RUB8.6 trn. The portfolio growth for the year was 15.1%.

About RUB190 bn were lent to retail clients in December. As a result retail loan portfolio grew in December by 3.1% up to RUB3.3 trn. The portfolio growth for 2013 amounted to +31.8%, with mortgage loans outpacing the growth of the total retail portfiolio. Mortgage portfolio increased by 37.4%, up to RUB1.4 trn and its share in retail loans grew to 42.0%. The Bank lent about RUB650 bn of mortgages for the year.

Loan growth was accompanied by an improvement in its quality: the share of overdue loans in the portfolio decreased in December by 0.26pp to 2.24%. As a result, overdue loans decreased for the year by 0.45pp both due to corporate (-0.55pp) and retail (-0.11pp).

Securities portfolio increased by RUB88 bn or 4.7% in December, mainly due to investment in OFZ federal and corporate bonds.

Amount of Cash on the balance sheet increased in December up to RUB685 bn, due to seasonal need to ensure an adequate supply of cash, incl. ATMs, during New Year holidays.

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

Retail deposits and accounts increased in December by RUB644 bn and exceeded RUB8 trn. The growth for the year amounted +20.6%, which exceeded the increase for the previous year (+17.4%).

Corporate deposits and accounts increased in December by RUB87 bn and amounted about RUB3.2 trn. The growth for the year was 13.7%.

Regulatory capital (under CBR regulation No. 215-P) came to RUB2,003 bn as of January 1, 2014, as per preliminary calculations. Capital increased in December by RUB39 bn mainly due to net profit.

Capital adequacy ratio of the Bank (under RAS) amounted to 12.7% as of January 1, 2014.