Sberbank’s Net Interest Income Came at RUB604.8 bn
Net interest income came at RUB604.8 bn, down by 15.3% compared to that for 10M 2014. The lag in the pace of net interest income growth in 2015 relative to 2014 is contracting: 27.9% (for 3M), 22.5% (for 6M), 16.3% (for 9M) и 15.3% (for 10M).
Interest income increased by RUB304.4 bn, or 23.7%, driven mostly by corporate loan portfolio growth and improving yield, as well as retail loan portfolio growth.
Interest expenses increased by RUB414.0 bn, or 72.7%, due to the increase in market interest rates and inflow of funds. Interest expenses growth continues to subside as a result of the gradual decrease in the CBR's key interest rate: in the January-October period the key rate was cut five times.
Furthermore, starting from 4Q2015 the Bank applies the method of monthly accrual on the deposit insurance expense in order to even the effect on the financial results (previously, the deposit insurance expense was paid in the last month of each quarter). Consequently, the comparison of 10M2015 interest expenses to those of 10M2014 would not be correct. The deposit insurance expense in October was RUB3.1 bn.
The growth of interest expenses for 10M2014 would have been 71.9% if applied the accrual method to deposit insurance expenses accounting.
Net fee and commission income came at RUB231.5 bn, up by 5.7%. The Bank continued to demonstrate growth of net fees and commission income despite the decline in commission income from corporate lending and banking insurance. Noncredit commission income increased by 19.0%, driven by transactional business with bank cards and acquiring.
Net income from FX revaluation and trading operations on capital markets amounted to RUB41.5 bn for 10M 2015 compared to RUB73.1 bn for 10M 2014.
Operating expenses decreased by 1.4% y-o-y for 10M 2015 due to the Bank`s cost optimization program. Effective 2015 the Bank started to apply the accrual method in accounting for employee compensation expenses in order to smoothen the expenses distribution across the year. For comparison purposes the same accounting principle was applied to staff costs for 2014.
Excluding the accrual effect in accounting for employee compensation expenses for the same period of 2014, operating expenses increased by 1.2%.
Total provision charges amounted to RUB333.6 bn for 10M 2015 vs. RUB311.4 bn a year earlier. In October amount of provision charge came at RUB29.9 bn, which is lower than the average monthly number for the previous 9 months (RUB33.7 bn). The Bank continues to form loan-loss provisions in-line with the requirements of the Central Bank of Russia. Loan-loss provisions are 1.9 times the overdue loans.
Net profit before income tax came at RUB211.2 bn for 10M 2015 vs. RUB371.0 bn a year earlier. Net income reached RUB178.3 bn for 10M2015 compared to 293.9 bn for 10M2014.