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Sberbank / 1st Quarter Results Sberbank: Sberbank reports 1Q 2017 Net Profit of RUB166.6 bn, or RUB7.79 per ordinary share, under International Financial Reporting Standards (IFRS) 24-May-2017 / 09:12 CET/CEST Dissemination of a Regulatory Announcement, transmitted by EquityStory.RS, LLC - a company of EQS Group AG. The issuer / publisher is solely responsible for the content of this announcement. *Sberbank reports 1Q 2017 Net Profit of RUB166.6 bn, or RUB7.79 per ordinary share, under International Financial Reporting Standards (IFRS)* 24 May 2017, Moscow Sberbank (hereafter 'the Group') has released its interim condensed consolidated IFRS financial statements  (hereafter 'the Financial Statements') as at and for the 3 months ended 31 March 2017, with review report by AO PricewaterhouseCoopers Audit. Alexander Morozov, Deputy Chairman of the Executive Board, CFO, commented: '_We strive to deliver strong efficiency in all areas of our operations. The results of our work in 1Q2017 amounted to a Cost Income ratio of below 35% allowing for a Return on Equity of 23.1% and Return on Assets of 2.7%. We believe that in the long run efficiency is the base upon which we will be able to deliver strong business development and superior shareholder value._' *The 1Q 2017 Financial Highlights:* - The Group *net profit* reached *RUB166.6 bn* - The Group earnings per ordinary share (*EPS*) came at RUB7.79, up by 41.9% compared to 1Q 2016 - The Group annualized return on equity (*ROE*) reached 23.1%, up from 19.3% in 1Q 2016 - The quarterly Cost of Risk (*CoR*) came at 146 bp, compared to 170 bp for 1Q 2016 - The Group *Cost-to-Income* ratio improved to 34.7% from 36.7% in 1Q 2016 - The Group *operating expenses* increased by 2.4% relative to 1Q 2016, while domestic annualized inflation was 4.6% during the quarter - The Group *capital position* improved during the quarter, with core capital adequacy ratio under Basel I up by 90 basis points to 13.2%, while total capital adequacy ratio reached 16.6%, up by 90 basis points during the quarter *Selected Financial Results * _RUB bn, *1Q 2017* *1Q 2016* *4Q 2016* *1Q17/ *1Q17/ unless stated 1Q16, 4Q16, otherwise _ % change* % change* Net interest 336.6 325.5 355.2 3.4% (5.2%) income Net fee and 80.4 77.2 97.4 4.1% (17.5%) commission income Other 5.5 (25.1) (10.5) non-interest income / (expense)** *Total *422.5* *377.6* *442.1* *11.9%* *(4.4%)* revenues * Provision (67.3) (83.9) (60.3) (19.8%) 11.6% charge Operating (147.3) (143.8) (202.0) 2.4% (27.1%) expenses *Net profit * *166.6* *117.7* *141.8* *41.5%* *17.5%* Earnings per 7.79 5.49 6.54 41.9% 19.1% ordinary share, RUB Total 138.2 124.5 88.0 11.0% 57.0% comprehensive income Book value per 131.0 110.7 124.9 18.3% 4.9% share*, RUB *Ratios* Return on 23.1% 19.3% 20.4% equity Return on 2.7% 1.7% 2.2% assets Net interest 5.8% 5.3% 6.1% margin Cost of risk 146 bp 170 bp 122 bp Cost-to-income 34.7% 36.7% 45.9% ratio *_Total equity / total numbers of shares outstanding (ordinary + preferred). Unaudited _ *Net interest income* reached *RUB336.6 bn *in 1Q 2017, up by 3.4% from the year-ago period: - Interest income (down 7.7% to RUB565.6 bn compared to 1Q 2016) dynamics were explained by declining interest rate environment, while interest expenses including deposit insurance expenses decreased by 20.3% from 1Q 2016 to RUB229.0 bn. The cost of liabilities decreased by 10 basis points to 4.4% in 1Q 2017 relative to 4Q 2016, driven by corporate term deposits, cost of which came down by 50 basis points to 3.8%. The Group 1Q 2017 *net fee and commission income* came at *RUB80.4 bn, *up by 4.1%from the year-ago period. - The fee and commission income grew by 9.1% to RUB103.2 bn from the year-ago period. The main drivers of this growth slowdown as compared to the same period a year ago were Rouble strengthening against other currencies in the countries of our presence, as well as decrease in volume of FX transactions in the domestic market on the back of FX market stabilization; - Income from banking cards operations increased by 20.2% in 1Q 2017 from 1Q 2016; - The fee and commission expense increased by 31.0% to RUB22.8 bn in part from expansion of the banking cards business. *Net provision charge* *for loan impairment* for 1Q 2017 totaled *RUB67.4 bn* compared to RUB84.3 bn for 1Q 2016. This translated into the cost of risk of 146 basis points for the quarter versus 170 basis points a year ago. - The cost of risk for corporate loans amounted to 169 basis points in 1Q 2017; - The cost of risk for retail loans amounted to 87 basis points in 1Q 2017. The Group *operating expenses* for 1Q 2017 increased to *RUB147.3 bn*, up by 2.4% from the same period a year ago. *Selected Balance Sheet Results* _RUB bn, unless stated *31/03/17* *31/12/16* *3M17/ otherwise_ 12M16, % change* Total gross loans, _of which_: 18 168.0 18 664.7 (2.7%) _Corporate loans _ _13 122.4_ _13 633.0_ _(3.7%)_ _Retail loans_ _5 045.6_ _5 031.7_ _0.3%_ Restructured loans 1 230.4 1 209.1 1.8% Securities portfolio 2 737.5 2 717.5 0.7% Assets 24 655.4 25 368.5 (2.8%) Total customer deposits, _of 18 043.0 18 684.8 (3.4%) which:_ _Retail deposits_ _12 325.4_ _12 449.6_ (1.0%) _Corporate deposits_ _5 717.6_ _6 235.2_ (8.3%) *Ratios* Net loans-to-deposits ratio 90.9% 90.6% NPL ratio 4.7% 4.4% NPL coverage ratio 157% 157% Restructured-to-gross loans 6.8% 6.5% Total provision coverage of 75.3% 74.6% total NPLs + restructured non-NPLs *Total gross loans* decreased by 2.7% to RUB18.2 trn in 1Q 2017 as compared to 4Q 2016. The decrease of the corporate loan portfolio was mostly influenced by revaluation of foreign currency denominated loans. The dynamics within the retail loan portfolio were influenced primarily by the increase in mortgages (up 1.0% during the quarter). *Client deposits* demonstrated a decrease of 3.4% in 1Q 2017 as compared to 4Q 2016 mainly driven by the outflow of corporate funds, down by 8.3% during the quarter, as a result of Rouble appreciation as well as the Bank's targeted strategy to manage the cost of the corporate deposit base. The retail deposit base, adjusted for FX, showed positive dynamics unlike the usual seasonal weakness of the first quarters in the previous years. The composition of client deposits improved during the quarter with the share of current accounts in total deposits increasing to 26.4%. *Total NPL ratio* came at 4.7% in 1Q 2017 as compared to 4.4% in 4Q 2016. This growth was driven by the combination of the decreasing loan portfolio and slight increase in the NPLs. The coverage level of the NPL portfolio remained unchanged during the quarter at 157% of total NPLs. The share of *restructured loan portfolio* of total gross loan portfolio reached 6.8%, largely driven by the restructuring of a loan to an international retailer within the food and agriculture sector. The provision coverage of total NPLs combined with restructured non-NPLs reached 75.3% in 1Q 2017, up from 74.6% in 4Q 2016. *Selected Equity Position Results * Under Basel I *31/03/17* *31/12/16* *3M17/ _RUB bn, unless stated 12M16, otherwise_ % change* Total Tier 1 capital 2 903.2 2 732.7 6.2% Total capital 3 635.5 3 499.7 3.9% Risk-weighted assets 21 926.6 22 268.2 (1.5%) Equity 2 958.9 2 821.6 4.9% *Ratios* Core capital adequacy ratio 13.2% 12.3% Total capital adequacy ratio 16.6% 15.7% The Group's *total capital* increased by 3.9% to RUB3.6 trn in 1Q 2017 relative to 4Q 2016 primarily as a result of retained net profit. The Group's *risk-weighted assets* decreased by 1.5% in 1Q 2017 from 4Q 2016 to RUB21.9 trn, driven mainly by Rouble appreciation. The total capital adequacy ratio (Basel I) increased by 90 basis points to 16.6% during 1Q 2017. The core capital adequacy ratio increased by 90 basis points to 13.2% during 1Q 2017.  Other non-interest income consists of Net gains from trading securities ; Net gains from securities designated as at fair value through profit or loss; Net gains from investment securities available-for-sale; Impairment of investment securities available-for-sale; Net losses from trading in foreign currencies, operations with foreign currency derivatives and foreign exchange translation; Net gains from operations with precious metals, precious metals derivatives and precious metals accounts translation; Net gains / (losses) from operations with other derivatives; Impairment of premises, equipment and intangible assets; Goodwill impairment; Net charge for other provisions; Revenue of non-core business activities; Cost of sales and other expenses of non-core business activities; Net premiums from insurance and pension fund operations; Net claims, benefits, change in contract liabilities and acquisition costs on insurance and pension fund
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