01/15/16. De Facto - Sberbank calculated the results of the past year using internal methods.
Key facts from December 2015:
- The influx of client funds for the month showed a historical maximum, amounting to 1.4 trillion rubles:
The growth rate of funds of individuals exceeded 9%, their volume increased to 10.9 trillion rubles,
The growth rate of funds of legal entities exceeded 7%, their volume reached 6.7 trillion rubles.
The volume of funds raised from the Bank of Russia and the Federal Treasury was reduced by 0.5 trillion rubles.
The bank's net profit for December exceeded 33.8 billion rubles.
Deputy Chairman of the Board of Sberbank Alexander Morozov:
“In difficult conditions in 2015, the bank earned a profit excluding events after the reporting date in the amount of 236.3 billion rubles, which amounted to 76% of the net profit of 2014. By the end of the year, Sberbank managed to reduce the gap from the results of 2014 due to the consistent implementation of the cost reduction program, as well as the repayment of government funding in the amount of 3 trillion rubles.”
Analysis of balance sheet and income statement items for 2015 relative to 2014:
interest income increased by 21.3%, interest expenses increased by 59.5%; net interest income decreased by 11.1%;
commission income not related to lending increased by 17.0%, net commission income increased by 4.4%;
operating income before total provisions decreased by 9.2%;
expenses for creating total reserves amounted to 397.6 billion rubles compared to 397.9 billion rubles a year earlier;
operating expenses decreased by 1.0%;
profit before income tax amounted to 283.9 billion rubles compared to 394.6 billion rubles a year earlier;
net profit amounted to 236.3 billion rubles excluding events after the reporting date versus 311.2 billion rubles taking into account events after the reporting date a year earlier.
Comments:
The bank's net interest income for 2015 amounted to 763.2 billion rubles. During the year, the bank gradually restored its volume: at the end of the 1st quarter the gap from the previous year was 27.9%, and at the end of the year 11.1%.
Interest income increased by 21.3% due to an increase in the volume of loans to customers and the profitability of loans to legal entities.
Interest expenses increased by 59.5% due to an increase in interest rates in the market and an increase in the volume of attracted client funds. The growth of interest expenses throughout the year slowed down due to the consistent reduction of the key rate by the Bank of Russia, as well as Sberbank’s reduction in government funding.
Net commission income increased by 4.4%. The bank increases net commission income, despite a decrease in commission income from lending operations and bancassurance. The increase in commission income not related to lending at the end of the year amounted to 17.0%. The largest amount of commission income comes from transactions with bank cards.
Net income from currency revaluation and trading operations in financial markets amounted to 68.6 billion rubles compared to 81.1 billion rubles for the previous year.
Operating expenses decreased by 1.0% due to the bank's implementation of a cost optimization program. Administrative expenses were reduced by 4.7% over the year.
Expenditures on total reserves amounted to 397.6 billion rubles, which is similar to the amount of the previous year. Expenses on reserves in December amounted to 27.4 billion rubles and were mainly due to the creation of reserves for foreign currency loans as a result of the weakening of the ruble against major currencies. The Bank continues to create reserves for possible losses in order to cover existing credit risks, based on the requirements of the Bank of Russia. The reserves created on the balance sheet exceed the overdue debt by 1.9 times.
Profit before income tax amounted to 283.9 billion rubles compared to 394.6 billion rubles in 2014. Net profit amounted to 236.3 billion rubles excluding events after the reporting date versus 311.2 billion rubles taking into account events after the reporting date in 2014.
Assets in December increased by 1.3 trillion rubles and exceeded 23 trillion rubles. A significant part of the increase was due to the revaluation of the currency component of balance sheet items. Overall, assets increased by 5.6% for the year.
In December, the bank provided loans to corporate clients in the amount of more than 1.2 trillion rubles, a total of 6.8 trillion rubles for the year. The balance of the loan portfolio in December increased by 417 billion rubles, or 3.5%, largely due to currency revaluation. The volume of the portfolio as of January 1, 2016 is 12.3 trillion rubles.
About 160 billion rubles were issued to private clients in December, a total of more than 1.2 trillion rubles for the year. The loan portfolio in December increased by 16 billion rubles or 0.4% and as of January 1, 2016 amounted to more than 4.1 trillion rubles. The share of housing loans in the portfolio structure increased over the year from 48% to 54%.
The share of overdue debt in the customer loan portfolio decreased by 0.1 percentage points in December. up to 3.3%. The level of overdue debt at Sberbank remains significantly lower than the average for the banking system (6.6% as of December 1, 2015).
The volume of investments in securities in December increased by 265 billion rubles. or by 13.1% mainly due to the acquisition of corporate Eurobonds and exchange rate revaluation. The balance of the portfolio as of January 1, 2016 amounted to 2.3 trillion rubles.
Individual funds in December increased by 908 billion rubles or 9.1% (excluding currency revaluation, the growth rate was 6.7%). As a result, the balance of funds of individuals by January 1, 2016 approached 10.9 trillion rubles. In just one year, funds from individuals increased by 27.5% (a year earlier – by 5.9%).
Funds of legal entities in December increased by 449 billion rubles or 7.1% due to the influx of ruble funds into deposits and due to the revaluation of foreign currency funds. In general, over the year, funds from legal entities increased by 32.9% and amounted to 6.7 trillion rubles.
The record influx of ruble client funds in December allowed the volume of funds attracted from the Bank of Russia to be reduced to a minimum. The share of these funds, excluding subordinated debt, in the bank’s liabilities decreased in December from 2.7% to 1.3% (as of January 1, 2015 – 15.2%). In just one year, Sberbank returned funds to the Bank of Russia and the Federal Treasury in the amount of 3.0 trillion rubles.
The values of the bank's base and fixed capital coincide due to the lack of sources of additional capital and, according to operational data as of January 1, 2016, amount to RUB 1,753 billion. The total capital as of the same date is 2,679 billion rubles
In December, total capital increased by 39 billion rubles. The main factor in the growth of total capital was earned profit.
N1.1 - 8.0% (minimum value established by the Bank of Russia, 5.0%)
N1.2 - 8.0% (minimum value established by the Bank of Russia, 6.0%)
N1.0 - 12.1% (minimum value taking into account the requirements of the Law “On Deposit Insurance” 10.0%).
Reference:
Sberbank draws the attention of users to the fact that the indicators in this press release are calculated using the internal methodology of Sberbank PJSC. Data as of January 1, 2015 take into account events after the reporting date. Data as of January 1, 2016 do not take into account events after the reporting date.
« Hello. In the results of the first half of 2018, BV per share indicated 175.8 rubles. What is the formula used to calculate it if equity capital belonging to shareholders amounts to 3485 billion rubles, and the total number of shares is about 22.6 billion. (I understand that this is a forecast, but still).»
Good afternoon. The book price at the end of 2018 of 175.8 rubles was obtained by dividing the projected own funds at the end of 2018 in the amount of 3.971 trillion rubles by the total number of ordinary and preferred shares.
« Good afternoon Why has capital adequacy fallen so much?»
Good afternoon. Largely due to the payment of higher dividends based on the results of 2017.
« How significant could the additional profit of banks and Sberbank in particular be as a result of the entry into force in July of the law on financing housing construction by developers not at the expense of equity holders’ funds, but at the expense of banks’ credit money?»
So far, we have not made any special adjustments to bank models related to changes in housing construction financing.
« To be honest, we were very surprised by the initial premise contained in your question, Dmitry. Who is Sberbank considered and why?»
Artem, I heard this opinion from the speeches of many analysts at RBC. Of course, I don’t keep track of their surnames, but with 100% probability I can name a couple of names: Alexander Razuvaev, Alexander Krapivko. This is discussed with the program presenters as a matter of course.
« Good afternoon
Looks like you've had the paper in your briefcase since June? And you write in September that they can only apply...?)) "
Good day, Andrey! Yes, in June we bought ordinary shares of Sberbank only for the Arsagera - Mixed Investment Fund fund; at the moment we bought them for all portfolios.
« Sberbank should have sold its business in Ukraine for pennies before the summer. I haven't seen any more information about this. What is the transaction price, when and how will it be reflected in the bank’s financial statements? She will be»
Good morning, Dmitriy! In the first quarter of 2017, the Bank signed a framework agreement for the sale of 100% of the shares of PJSC SBERBANK (Ukraine). The implementation of this agreement was subject to prior approval by regulatory authorities and the fulfillment of other conditions. In the third quarter of 2017, the National Bank of Ukraine refused to approve the transaction. We have no other information at the moment. As for the reflection in the bank's financial statements, we believe that the appropriate reserve for impairment has already been created.
« Apparently, part of the cash, about 100 billion rubles, was spent on the acquisition of fixed assets, which can be seen in note 14 of the IFRS statements for 2016.»
That's the point: Sberbank plans to get rid of the excess number of its branches. He couldn’t buy real estate for himself again for new offices...
« Hello Dmitry! The question is not very clear. Could you explain in more detail what you mean?»
Elena, if we take, for example, the financial results of Sberbank for 2015, then the profit is 222.9 billion rubles. In accordance with this, the return on equity was calculated to be 11%, given that at the beginning of 2015 Sberbank had 2,020 billion rubles. The question arises: why, in this case, when calculating the profit received, the indicators “Other comprehensive income” are not taken into account, where the income item is calculated: “Investment securities available for sale”? After all, that amount of equity capital (RUB 2,020 billion) includes the cost of investment securities for sale. The logic of my reasoning is this: if you include the cost of investment securities for sale in the indicators of equity capital, then it is fair to evaluate the profitability of this capital, including the item “Other comprehensive income” in the indicators of net profit received.
« I looked at the charts from five years ago. In them, preferred shares occupied lower positions than ordinary shares, although in those years Arsagera had not yet taken into account the lack of a protective clause in the Charter of Sberbank. What is this connected with?»
Perhaps at that time Sberbank's preferred shares were trading above a fair discount.
« Sberbank does not use borrowed funds from the Central Bank of the Russian Federation. Are high rates in the country beneficial for Sberbank? On the one hand, lowering rates will increase lending volumes. On the other hand, when rates are reduced, the bank’s margin will also fall, and its advantage over other banks in the form of cheap customer money will also be leveled out?»
Historical data shows that during periods of lower interest rates, Sberbank's net interest margin was higher than the bank's current performance.
« Hello Andrei! The norm of paragraph 2 of Article 32 of the Federal Law of December 26, 1995 N 208-FZ “On Joint-Stock Companies” states that owners of preferred shares for which the amount of dividend is not determined have the right to receive dividends on an equal basis with owners of ordinary shares. In the case of Sberbank (unlike Transneft, for example), the amount of dividends of preferred shares is not defined in the charter, which means clause 2 of Article 32 of the law on joint stock companies protects owners of preferred shares, and this is better than a “protective clause in the charter.” So why did you exclude Sberbank from the market types? Do you think that the clause in the charter provides more reliable protection than the articles of the federal law?»
Good evening, Evgeniy! According to the opinion of our courts, the wording that is in the charter of Sberbank (at least 15% of the nominal value) is the definition of the amount of dividends on preferred shares. As a result, the provision of law you specified does not apply.
« Hello Andrei! I thought so. But why then is VTB there? After all, you also excluded him from the composition of market types.»
Alexander, indeed, VTB ordinary shares are included in the market types. Could you provide a link to where we talk about excluding them? Perhaps this term was used in a different context. For example, for similar reasons, due to the lack of a clause in the charter, we do not calculate the profitability of preferred shares of Transneft, Kuibyshevazot, Bashinformsvyaz.
« Hello! Why don’t you have Sberbank preferred shares in the “Issuer Analytics” section?»
Good afternoon! We have excluded Sberbank preferred shares from market types, since the Bank’s charter does not contain a protective clause for dividends. As a rule, it reads as follows: “In this case, if the amount of dividends paid by the Company on each ordinary share in a certain year exceeds the amount to be paid as dividends on each preferred share, the amount of the dividend paid on the latter must be increased to the amount dividend paid on ordinary shares."
« “Investors always appreciate the fact that the management of a joint-stock company is motivated to increase value, since this is the most important component of shareholder income.” Artem Abalov, December 11, 2015 at 12:57 There are, of course, all sorts of investors. I also consider myself an investor. But I do not approve of such management motivation. Managers' salaries must be tied to the growth of share capital and ROE, subject to certain standards for the company's debt level and leverage.»
We completely agree with you, but it is even more correct to use both indicators: the growth of share capital and its rate, as well as the correspondence of capitalization to the indicator of internal value achieved by the company. For example, in our company the management remuneration system is three-stage: 1. Availability of profit; 2. Excess of ROE over the OFZ yield level; 3. The excess of capitalization over the maximum of two: the size of the company’s equity capital or the number of profits multiplied by 7.
« Investors always appreciate the fact that the management of a joint stock company is motivated to increase value, since this is the most important component of shareholder income.»
There are, of course, all kinds of investors. I also consider myself an investor. But I do not approve of such management motivation. Managers' salaries must be tied to the growth of share capital and ROE, subject to certain standards for the company's debt level and leverage.
« We also remember a smaller spread, but Sberbank has been saying in recent years that conversion is not the immediate goal. Perhaps because this will lead to a decrease in the state share below 50%.»
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