On June 7, 2018, Sberbank released its key highlights for the first five months of 2018. The numbers were calculated in accordance with Sberbank’s internal methodology, which was updated effective January 1, 2018. The numbers for 2017 have been calculated in accordance with the updated methodology as well for comparison purposes.

Sberbank earned about RUB67 billion in net profit in May. Sberbank extended over RUB1.1 trillion in loans to corporate and over RUB270 billion to retail clients in May. The loan portfolio continued expanding in May, growing by 1.3 percent in the corporate segment and by 2.1 percent in the retail segment. The bank’s net fee and commission income grew 23.7 percent in the first five months of the year as compared to the corresponding period of 2017.

Sberbank’s deputy chairman Alexander Morozov stated, “Sberbank sees robust growth in fees and commission income, up by 23.7 percent for the five months. Our credit-related business is developing well: the loan portfolio expanded by 6.5 percent for corporate clients and by 9.1 percent for retail clients. These factors together provide for the bank’s high profitability: ROE (return on equity) stood at 22.6 percent and the cost-to-income ratio at 28.3 percent for the five months of 2018.”

The net interest income increased by 7.2 percent in the reporting period compared to the first five months of 2017, totaling RUB510.9 billion. The increase was due to expanding working assets and a lower cost of client funds.

The net fee and commission income grew by 23.7 percent to RUB164.9 billion, with the main drivers being the income from operations with bank cards and acquiring (plus 31.8 percent), settlement transactions (plus 21.2 percent), and fees from insurance products (plus 52.7 percent).

Operating expenses increased by 9.4 percent, which was slower than the growth in operating income before provisioning (plus 13.0 percent). The transition to a more even allocation of accrued expenses throughout the year is underway. Cost-to-income ratio for the first five months of 2018 improved by 0.9 percentage points year-on-year to 28.3 percent.

Provision charges for the first five months of 2018 amounted to RUB110.8 billion, which was seven percent lower as compared to the corresponding period one year ago. As of June 1, 2018, loan-loss provisions were 2.6 times the overdue loans.

The bank’s net profit before income tax came to RUB416.4 billion for the first five months of 2018, while the net profit totaled RUB328.8 billion, including about RUB67 billion earned in May.

Total assets increased by 0.7 percent in May to RUB24.3 trillion, mainly driven by both corporate and retail loan portfolio growth.

Sberbank lent over RUB1.1 trillion to corporate clients in May, and RUB5.6 trillion year-to-date. This is 1.6-times the amount extended in loans for the first five months of 2017. The corporate portfolio added 1.3 percent in May or 6.5 percent year-to-date to RUB12.8 trillion as of June 1, 2018.

Sberbank extended over RUB270 billion in loans to retail clients in May. Thus, the loan volume has remained high for the last several months. Loans issued for the first five months of 2018 totaled about RUB1.2 trillion, or 1.7-times the amount issued for the first five months of 2017. The retail loan portfolio was up by 2.1 percent in May and 9.1 percent year-to-date, amounting to RUB5.4 trillion as of June 1, 2018.

The share of overdue loans in the total loan portfolio remained unchanged at 2.4 percent, which is substantially below the average figure for the banking sector (8.6 percent excluding Sberbank as of May 1, 2018).

The bank’s securities portfolio increased by 2.5 percent to RUB2.7 trillion in May, mainly as a result of short-term bond purchases.

Corporate deposits and accounts in May increased by 0.9 percent to RUB6.0 trillion. Retail deposits and accounts decreased by 0.7 percent to RUB12.2 trillion.

In addition, Sberbank made another issuance of exchange-traded bonds in the amount RUB40 billion with five-year maturity dates and a coupon rate of 7.2 percent. The spread to OFZ for the new issuance narrowed to 43 basis points as compared to the previous issuance.

Core Tier 1 and Tier 1 capital (equal since Sberbank does not have instruments of additional capital) totaled RUB3,080 billion as of June 1, 2018, under preliminary calculations. Total capital amounted to RUB4,027 billion. The net profit was the primary source of capital growth in May.

Sberbank’s risk-weighted assets increased by RUB0.2 trillion to RUB25.2 trillion, mainly due to the increase in lending volumes.