Sberbank Group s IFRS Results for 2010 March 2010
Highlights of 2010 (1) The Group s net profit reached RUB 181.6 bn versus RUB 24.4 bn for 2009 Total comprehensive income reached RUB 206.6 bn versus RUB 38.9 bn for 2009 Strong performance in 2010: ROE 20.6%, cost to income ratio 42.4% Fee and commission income grew by 23.8% compared to 2009 Loan impairment charge decreased by 60.5% vis-a-vis 2009 Strong capital adequacy: Basel I total capital adequacy is 16.8%, CBR N1 capital adequacy ratio - 17.7%
Highlights of 2010 (2) Net profit, RUB bn Operating income before provision charge for loan impairment, RUB bn ROE, % 7.4 times +2.9% +17.4 p.p. YE10 181.6 YE10 666.6 YE10 20.6% YE09 24.4 YE09 648.1 YE09 3.2% Cost to income ratio, % Provision charge for loan impairment, RUB bn Interest margin, % +7.0 p.p. -60.5% -1.2 p.p. YE10 42.4% YE10-153.8 YE10 6.6% YE09 35.4% YE09-388.9 YE09 7.8% 3
Highlights 2010 (3) ITEM 2010 (RUB bn) 2009 (RUB bn) Change Operating income before provision charge for loan impairment 666.6 648.1 2.9% Operating expenses 282.6 229.3 23.2% Provision charge for loan impairment -153.8-388.9-60.5% Net profit 181.6 24.4 7.4 times Total comprehensive income 206.6 38.9 5.3 times Earnings per ordinary share, RUB 8.42 1.10 7.7 times ITEM 4Q10 (RUB bn) 4Q09 (RUB bn) Change Operating income before provision charge for loan impairment 183.6 171.7 6.9% Operating expenses 86.9 66.5 30.7% Provision charge for loan impairment -3.8-87.6-95.7% Net profit 72.0 14.1 5.1 times Total comprehensive income 70.1 7.9 8.9 times Earnings per ordinary share, RUB 3.35 0.65 5.2 times 4
Highlights 2010 (4) ITEM 31.12.2010 31.12.2009 Change Assets, RUB bn 8,628.5 7,105.1 21.4% Loans to customers (net), RUB bn 5,489.4 4,864.0 12.9% Due to customers, RUB bn 6,651.1 5,438.9 22.3% Equity, RUB bn 987.2 778.9 26.7% Tier I capital adequacy ratio (Basel I) 11.9% 11.5% 0.4 pp Total capital adequacy ratio (Basel I) 16.8% 18.1% -1.3 pp PLI rate (Provision for loan impairment to Total gross loans) 11.3% 10.7% 0.6 pp ITEM 2010 2009 Change Return on equity 20.6% 3.2% 17.4 pp Return on assets 2.3% 0.4% 1.9 pp Cost to income ratio 42.4% 35.4% 7.0 pp Interest margin* 6.6% 7.8% -1.2 pp * Net interest income to average earning assets. 5
Key Financial Indicators (1) Net Profit, RUB bn 7.4 times 5.1 times 181.6 43.5 45.3 72.0 24.4 14.1 20.8 Earnings per Ordinary Share, RUB 7.7 times 5.2 times 1.10 8.42 0.65 2.01 0.94 2.12 3.35 Reduction of the provision charge for loan impairment by RUB 235.1 bn (or by 60.5%) as compared to 2009 is a major driver of net profit growth in 2010 Lower net profit in 2Q10 is explained by a loss from marking to market the securities portfolio and increased operating expenses 6
Key Financial Indicators (2) Return on Assets (ROA), % +1.9 pp +2.7 pp 2.3% 3.5% 0.4% 0.8% 2.4% 1.1% 2.3% Return on Equity (ROE), % +17.4 pp +23.0 pp 3.2% 20.6% 7.3% 21.3% 9.7% 20.3% 30.3% The Group demonstrated strong performance in 2010 with ROE 20.6% ROA and ROE increased in 4Q10 as a result of higher net profit for the quarter 7
Operating Income Before Provision Charge for Loan Impairment Operating Income Before Provision Charge for Loan Impairment, RUB bn +2.9% 648.1 666.6 8.6 23.2 101.1 123.6 Other income / (expense) Net fee and commission income Net interest income Net gains/(losses) from trading operations and revaluation of securities +6.9% 502.7 495.8 171.7 29.2 169.8 25.6 3.5 149.5 31.2 163.7 5.7 31.2 4.0 183.6 35.6 10.0 127.0 129.2 114.8 116.7 135.1 35.7 24.0 27.5 11.5-12.0-2.2 11.8 2.9 Net operating income before provision charge for loan impairment increased by 2.9% in 2010 compared to 2009, with fee and commission income being the major driver of this growth. Net interest income remains the main component of operating income Growth of net operating income before provision charge for loan impairment in 4Q10 was driven primarily by growth of net interest income and net fee and commission income 8
Net Interest Income Net Interest Income, RUB bn -1.4% +6.4% 502.7 495.8 127.0 129.2 114.8 116.7 135.1 Net Interest Spread and Interest Margin, % Yield on earning assets 12.1% 11.8% 10.5% 9.9% 10.2% Interest margin Net interest spread Cost of funds 7.5% 7.3% 7.0% 6.8% 6.3% 6.1% 6.7% 5.7% 5.6% 6.3% 5.1% 5.0% 4.8% 4.3% 3.9% Net interest income in 2010 decreased by 1.4% reflecting the general decline of interest rates in the market and competition for good borrowers The main drivers of the net interest margin growth were an overall decrease in cost of funds in Q4 2010 by 0.4 percentage points (p.p.) and a 0.3 p.p. growth of yields on corporate loans 9
Interest Income Interest Income, RUB bn 180.2-2.4% 815.0 795.6 62.3 113.6 183.7 572.5 498.3 Other Loans to individuals Corporate loans 204.5 207.8 20.2 27.1 44.3 43.0 +0.6% 191.9 190.2 205.7 31.5 26.1 28.9 44.3 48.8 47.6 140.0 137.7 116.1 115.3 129.2 Average Loan Yields, % Loans to individuals Total loans Corporate loans 15.1% 14.7% 14.9% 15.2% 14.8% 13.4% 13.4% 13.0% 13.0% 11.9% 11.6% 11.7% 11.0% 10.6% 10.9% Interest income decreased in 2010 by 2.4% Yield on corporate loans increased in Q410 by 30 bp as a result of the Group successful efforts to collect overdue interest on a number of corporate loans Other interest income for 2010 includes RUB 105.6 bn of interest income on debt securities (2009: RUB 54.2 bn) 10
Interest Expense Interest Expense, RUB bn -4.0% 312.2 299.8 66.8 45.0 57.6 38.8 187.8 216.0 Other Corporate accounts/term deposits Individual accounts/term deposits 77.4-8.8% 78.7 77.0 73.5 70.6 13.8 13.7 12.1 9.9 12.3 11.0 10.4 8.9 9.3 8.5 51.3 54.0 54.5 54.7 52.8 Average Customer Deposit Costs, % Corporate term deposits Individuals term deposits Current/settlement accounts 6.5% 6.4% 6.2% 5.9% 5.3% 6.1% 5.5% 5.4% 4.7% 0.9% 0.8% 4.2% 0.7% 0.7% 0.6% Interest expense decreased in 2010 by 4.0% The main component of the Group s interest expense is the cost of retail deposits. Their cost was decreasing steadily in 2010 following Group s pricing policy Other interest expense for 2010 includes RUB 28.2 bn of interest expense on subordinated debt (2009: RUB 41.3 bn) 11
Fee and Commission Income Fee and Commission Income, RUB bn +23.8% 130.9 Other fee and commission income Plastic cards operations Cash and settlement transactions with individuals Cash and settlement transactions with legal entities 105.7 24.9 +24.1% 16.7 23.6 17.7 41.8 34.4 36.9 40.6 38.1 32.8 33.2 30.7 7.5 26.8 4.8 6.4 6.2 7.3 5.3 4.8 5.5 6.0 9.9 4.8 8.6 10.7 10.2 12.3 10.7 8.6 10.2 10.8 11.0 Fee and commission income increased in 2010 by 23.8% Cash and settlement transactions with customers remain the major source of Group s fee and commission income. Commission income from operations with individuals grows faster than the income from operations with legal entities Included in other fee and commission income for 2010 are RUB 9.4 bn of agent commissions on selling insurance contracts (2009: RUB 0.6 bn) and RUB 5.9 bn of commissions on operations with foreign currencies (2009: RUB 7.9 bn) 12
Operations with Securities Interest Income on Securities, RUB bn +94.8% +55.9% 105.6 54.2 17.7 24.6 28.8 24.6 27.6 Net Gains from Trading Operations and Revaluation of Securities, RUB bn -32.8% -89.5% 35.7 24.0 27.5 11.5-2.2 11.8 2.9 A substantial increase in interest income on debt securities in 2010 came as a result of growing portfolio of investments in bonds of the Bank of Russia, Russian federal government bonds and corporate bonds Net gains on trading operations and revaluation of securities decreased in 2010 by 32.8% Unrealized gains on revaluation of investment securities available for sale posted in other comprehensive income amounted to RUB 31.3 bn in 2010 (2009: RUB 40.7 bn) 13
Foreign Exchange Operations and Operations with Precious Metals Net Gains from Foreign Exchange Operations, RUB bn -13.0% +139.1% 16.2 14.1 2.3 2.1 5.0 1.5 5.5 Net Gains from Operations with Precious Metals, RUB bn -64.7% -87.5% 1.7 0.6 0.8 0.8 0.9 0.1-1.2 Net gains from foreign exchange operations for 2010 include gains from trading in foreign currencies of RUB 8.1 bn (2009:RUB 13.0 bn), translation gains of RUB 15.2 bn (2009: RUB 15.3 bn) and losses from operations with foreign currency derivatives amounting to RUB 9.2 bn (2009: RUB 12.1 bn). Losses on foreign exchange derivatives are mainly due to hedging operations that are related to the translation gains 14
Operating Expenses Operating Expenses, RUB bn +23.2% 282.6 229.3 123.2 100.7 128.6 159.4 Other operating expenses Staff costs +30.7% 86.9 66.5 61.4 67.0 67.3 42.5 32.7 22.6 28.3 29.8 33.8 38.8 38.7 37.5 44.4 Actual Headcount (Sberbank standalone, in thousands) -3.6% 249.8 245.6 244.0 241.6 240.9 31.12.2009 31.03.2010 30.06.2010 30.09.2010 31.12.2010 Total operating expenses for 2010 grew by 23.2% Staff costs grew in 2010 as a result of a planned increase of staff remuneration to bring it in line with the current market level. Other operating expenses increased on the back of the Group s strategy implementation, including new infrastructure projects, marketing and advertising expenses 15
Provision Charge for Loan Impairment Provision Charge for Loan Impairment, RUB bn -60.5% -95.7% 388.9 153.8 87.6 54.3 56.0 39.7 3.8 Write-offs against Provision for Loan Impairment, RUB bn +172.8% 10.3 times 31.1 16.5 9.5 11.4 1.6 3.5 1.6 In 2010 provision charge for loan impairment decreased by 60.5% as a result of stabilization of the quality of the loan portfolio Sale of some non-performing loans was a key driver for increase of write offs in 4Q2010 16
Asset Dynamics and Structure Assets, RUB bn Asset Structure +28.1% +21.4% 7,105 6,736 451 360 726 804 494 1,064 8,629 596 720 1,824 Other assets Cash and cash equivalents 5% 6% 7% 12% 10% 8% 7% 15% 21% Securities 5,078 4,864 5,489 Loans and advances to customers 76% 69% 64% 31.12.2008 31.12.2009 31.12.2010 31.12.2008 31.12.2009 31.12.2010 The Group s assets grew in 2010 by 21.4% This growth was driven primary by the expansion of the securities portfolio and increased volume of loans and advances to customers As of 2010 year end, interest-earning assets comprised 87.6% of the Group s total assets 17
Loan Portfolio (1) Loan Portfolio before Provision for Loan Impairment, RUB bn +17.3% Corporate Loan Portfolio Structure, RUB bn Commercial loans Specialised loans +13.7% 4,266 +14.2% 4,872 5,280 5,444 6,192 2,060 48% 2,164 44% 2,206 52% 2,708 56% 31.12.2008 31.12.2009 31.12.2010 The Group s gross loan portfolio grew in 2010 by 13.7% due to increase in loans to both corporate and retail customers on the back of higher demand Corporate loans grew by RUB 606 bn or 14.2% in 2010 Loans to individuals grew by RUB 142 bn or 12.1% in 2010 31.12.2009 31.12.2010 Retail Loan Portfolio Structure, RUB bn 1,178 564 Consumer and other loans Mortgage loans Car loans +12.1% 48% 1,320 636 48% 513 44% 604 101 8% 80 31.12.2009 31.12.2010 46% 6% 18
Loan Portfolio (2) Industry Breakdown, as of 31 December 2010 Currency Breakdown Rubles US dollars Other currencies 3.0% 3.9% 14.3% 17.4% 82.7% 78.7% 31.12.2009 31.12.2010 Maturity Breakdown Less than 6 months 6 to 12 months 1 to 3 years More than 3 years 29.1% 29.1% 31.7% 35.7% 19.9% 18.2% 19.3% 17.0% 31.12.2009 31.12.2010 The Group s loan portfolio is well diversified, with the largest industry comprising 16.3% of the total loan portfolio The proportion of ruble-denominated loans decreased in 2010 by 3.9 p.p. The maturity structure of the loan portfolio changed towards increased proportion of medium term loans (1-3 years) 19
Loan Portfolio Quality 459 580 Non-Performing Loans* and Provision for Loan Impairment, RUB bn Provision for loan impairment 479 631 496 677 Non-performing loans 507 715 452 703 Non-Performing Loans in Loan Portfolio, % 8.4% 8.9% 9.1% 8.6% 7.3% 31.12.2009 31.03.2010 30.06.2010 30.09.2010 31.12.2010 31.12.2009 31.03.2010 30.06.2010 30.09.2010 31.12.2010 Provision for Loan Impairment (PLI) to Total Loans, % NPL Coverage Ratio (PLI to Non-Performing Loans) 10.7% 11.7% 12.5% 12.2% 11.3% 1.3 1.3 1.4 1.4 1.6 31.12.2009 31.03.2010 30.06.2010 30.09.2010 31.12.2010 31.12.2009 31.03.2010 30.06.2010 30.09.2010 31.12.2010 * Overall exposure, should there be any payments (principal and/or interest) overdue more than 90 days as of the reporting date. In 4Q10, the proportion of non-performing loans in the loan portfolio decreased by 1.3 pp explained by a sale of some nonperforming loans In 4Q10, the NPL coverage ratio increased by 0.2 and reached 1.6 Renegotiated loans before provision for loan impairment amounted to RUB 747.7 RUB bn as at YE2010, or 12.1% of the loan portfolio (as at YE2009: RUB 646.8 bn or 11.9%) 20
Securities Portfolio Securities by Portfolio, RUB bn Securities by Type, RUB bn 3.7 times +71.4% 1,823.6 1,823.6 Investment securities available for sale 136.0 353.1 Other securities 1,064.1 1,280.3 493.7 848.7 106.9 284.6 78.3 130.5 124.4 358.1 78.6 91.0 31.12.2008 31.12.2009 31.12.2010 Securities designated at fair value through profit or loss Trading securities Investment securities held to maturity 1,064.1 270.7 493.7 105.7 15.0 75.4 87.2 221.1 52.0 264.1 339.3 47.9 79.4 149.4 433.6 684.4 31.12.2008 31.12.2009 31.12.2010 67.1 Corporate bonds Municipal bonds Eurobonds RF Bonds of the Bank of Russia OFZ bonds In 2010, investments in OFZ bonds doubled and reached RUB 684.4 bn. Investments in bonds of the Bank of Russia and corporate bonds also grew at a high pace In 2010, the Group created a portfolio of investment securities held to maturity which totaled RUB 358.1 bn at YE 2010 In 2010, the Group expanded its investments in equities; they totaled RUB 115.3 bn at YE2010 21
Liabilities Dynamics and Structure Liabilities, RUB bn Liabilities Structure +27.6% 5,986 352 536 1,683 3,112 303 6,326 314 519 1,652 3,787 +20.8% 54 7,641 497 304 1,817 4,835 188 Other Due to other banks Subordinated debt Due to legal entities Due to individuals 6% 5% 7% 1% 5% 8% 4% 9% 28% ####### ####### Менее 6 м 32.3% 31.2% От 6 до 12 10.3% 10.0% От 1 года 20.0% 18.7% Более 3 л 37.4% 40.1% 52% 26% 24% 60% 63% 2% 31.12.2008 31.12.2009 31.12.2010 31.12.2008 31.12.2009 31.12.2010 Retail deposits dominate the Group s sources of funding, comprising 63% of total liabilities as of 2010 year end Subordinated debt decreased in 2010 due to repayment of RUB 200 bn before maturity Borrowings from the international capital markets amounted to RUB 250.2 bn as of YE2010 or 3.3% of total liabilities. In September October 2010, the Group issued USD 1.25 bn worth of loan participation notes (LPN) at 5,4% p.a. In December 2010, the Group obtained a syndicated loan of USD 2 bn from a consortium of foreign banks at 6 months LIBOR + 1.5% p.a. 22
Amounts Due to Customers Industry Breakdown, as of 31 December 2010 Currency Breakdown Rubles US dollars Euro Other currencies 8.4% 5.4% 10.8% 10.1% 78.9% 82.4% 31.12.2009 31.12.2010 31.12.200 30.06.2009 Maturity Breakdown Less than 6 months 6 to 12 months 1 to 3 years More than 3 years 5.8% 5.3% 44.0% 43.6% 13.2% 9.0% 37.0% 42.1% 31.12.2009 31.12.2010 Retail deposits are traditionally the core of the Group s customer deposits Maturity breakdown demonstrates a stable and balanced funding structure 23
Shareholders Equity and Capital Adequacy Group s Equity, RUB bn Capital Adequacy Ratio, Basel 1 31.12.200 30.06.200 31.03.2009 Основной 12.10% 11.70% 11.70% Дополнит 6.80% 6.70% 6.30% 13% 18.90% 18.00% 987.2 778.9 +26.7% 18.90% 18.40% Tier 1 Tier 2 18.1% 16.8% 6.6% 4.9% 11.5% 11.9% 31.12.2009 5842.5 5998.7 31.12.2010 Regulatory Capital, Basel 1, RUB bn 31.12.2009 31.12.2010 Risk-Weighted Assets, RUB bn +10.8% +19.2% 1,140.5 1,263.9 Tier 2 Tier 1 416.3 367.0 724.2 896.9 6,303.8 7,513.4 31.12.2009 31.12.2010 31.12.2009 31.12.2010 The Group s capital adequacy ratio is well above the Basel committee requirements. In May 2010, the Group paid back RUB 200 bn of the RUB 500 bn subordinated loan obtained from the CBR in 4Q08. The Group s Tier 2 capital decreased as a result. The total capital adequacy ratio according to the Basel 1 Accord as of YE2010 was 16.8% 24
Forward-Looking Statements This presentation has been prepared by the Group of Sberbank (Sberbank of Russia (the Group )). This presentation does not constitute or form part or all of, and should not be construed as, any offer of, or any invitation to sell or issue, or any solicitation of any offer to purchase, subscribe for, underwrite of otherwise acquire, or a recommendation regarding, any shares or other securities representing shares in, or any other securities of the Bank, or any member of the Bank s group, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or any commitment whatsoever or any investment decision. The information in this presentation or in oral statements of the management of the Group may include forward-looking statements. Forward-looking statements include all matters that are not historical facts, statements regarding the Group's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Group operates. By their nature, forward-looking statements involve risks and uncertainties, because they relate to events and depend on circumstances that may or may not occur in the future. The Group cautions you that forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which the Group operates may differ materially from those made in or suggested by the forward-looking statements contained in this presentation or in oral statements of the management of the Group. In addition, even if the Group's results of operations, financial condition and liquidity and the development of the industry in which the Group operates are consistent with forwardlooking statements contained in this presentation or made in oral statements, those results or developments may not be indicative of results or developments in future periods. The information and opinions contained in this presentation or in oral statements of the management of the Group are provided as at the date of this presentation and are subject to change without notice. 2009 IFRS