Reduced NPLs while one-off effects weighted on YE 2015 results

Sberbank Europe AG: stronger capital and funding base

Contact

Mag. Linda Michalech
Corporate Communications Manager

Sberbank Europe AG
Tel.: +43 1 22732 1300
Mobile: +43 664 8891 3662
linda.michalech@sberbank.at

Sberbank Europe AG: stronger capital and funding base

In 2015, Sberbank Europe AG started with the execution of its revised business model. As an important step, Sberbank Europe signed an agreement for the sale of its 99.5% stake in Sberbank Slovensko, a.s to Penta Investments. The deal is expected to be closed within 1HY 2016.

One of the main strategic pillars to lead Sberbank Europe towards a self-funded future was proven successful by the significant repayment of shareholder funding in Q1 2015.

As of YE 2015, Sberbank Europe Group reported a net result after tax of EUR -218.7 million.

In 2015, mainly two one-time effects had a negative impact on the financial results of Sberbank Europe: The CHF-loan legislation in Croatia and discontinuing our business in Slovakia. Sberbank Europe’s ramp-up investments are slowly yielding fruits. We are continuously reducing our inherited NPL portfolio, improving our Loan to Deposit Ratio, and we can see first green shoots of lending growth. Operationally and without one-off effects, the 2015 financial performance was above expectations and we expect this positive trend to continue in 2016. Sberbank Europe’s business results are reflecting ongoing ramp-up investments mainly into IT and operations. In parallel, we are strengthening our capital and funding base for sustainable future growth as well as investments into new digital products and services”, comments Axel Hummel, CEO of Sberbank Europe AG.

External challenges contributing to the negative result of 2015 were the continuously low interest rate environment, EU and US sanctions against Russia as well as new regulatory requirements. In 2015, Sberbank Europe paid banking taxes and contributions to the Resolution Fund in the amount of EUR 17.7 mn.

In 2015, Sberbank Europe has completed the Comprehensive Assessment consisting of the Asset Quality Review (AQR) and the Stress Test conducted by the European Central Bank. Sberbank Europe comfortably passed the AQR while the measures taken in 2015 fully covered the capital shortfall identified in the adverse scenario of the Stress Test.

Net interest income declined to EUR 260 million from EUR 276.9 million compared to YE 2014, mainly due to low interest rates and high liquidity levels which were only partially offset by loan growth. NII in Austria increased by 16.2% to EUR 23.8 million. In 2015, risk provisions in the amount of EUR -167.4 million were built as a consequence of further growth of the corporate loan portfolio and specific loan loss provisions in Croatia, Hungary, Serbia and Austria, representing a year-on-year increase of EUR -72.4 mn.

As of 31 December 2015, Sberbank Europe Group counted EUR 14,346.7 mn in total assets (incl. discontinued opeartions) which corresponds to an increase of EUR 1,132.4 mn or 8.6% compared to YE 2014.  

The total loan volume (incl. SK business) grew by EUR 11.7 mn to EUR 10.4 bn with the major contribution of the Austrian large corporate business (+36.4%).

Deposits (incl. SK business) grew y-o-y by 33.5%, from EUR 6.8 bn to EUR 9.1 bn. The year 2015 was the first full year of operation for Sberbank Direct in Germany. The collected deposits since the launch of the German branch in August 2014 amounted to EUR 1.8 bn and were mainly used to support corporate lending business in the Austrian head office.

Outlook:

In Q1 2016, Sberbank Europe successfully converted EUR 370 mn subordinated loans (Tier 2 capital) to Common Equity Tier 1 (CET1) capital. “With this step we created a solid base for our business and sales activities for 2016 and beyond”, adds Axel Hummel. After the conversion, Sberbank Europe’s CET1 capital ratio increased to 14.6% as of Q1 2016. 
On the back of increased NII, lower NPLs and a strict cost discipline, Sberbank Europe AG reports a positive net result as of Q1 2016, despite upfront booking of the banking tax and yearly contributions to the Deposit Insurance and Resolution fund.

Key financial highlights of Sberbank Europe AG consolidated 2015 results (IFRS):

  • Loan/Deposit Ratio improved to 110.6% (144.1% in 2014)
  • NPL ratio decreased to 11.0% compared to 12.1% in 2014
  • NPL coverage ratio increased to 46% (44% in 2014)
  • Net Result after taxes: EUR -218.7 million at YE 2015 (EUR 3.4 mn at YE 2014)
  • Net Interest Income declined to EUR 260 mn from EUR 277 mn in 2014
  • Net Interest Margin stood at 2.1% vs. 2.2% in 2014
  • Net fee and commission income decreased to EUR 75.3 mn from EUR 79.9 mn in 2014
  • Total assets: EUR 14,346.7 mn (+8.6% or EUR +1,132.4 mn compared to 2014)
  • Core Tier 1 (CET1) ratio was stable at 10.7% (2014: 10.7%)
  • Capital Adequacy Ratio (CAR) improved to 17.7% (16.8% in 2014)
  • General administrative expenses increased to EUR 287 mn from EUR 276.4 mn in 2014
  • Cost/Income Ratio stood at 90% (80% in 2014)
  • Employees: 5,079 (5,158 in 2014)
  • Branches: 280 (294 in 2014)

About Sberbank Europe Group
Sberbank Europe Group (Sberbank Europe AG), headquartered in Vienna, Austria, is a banking group that is 100% owned by Sberbank Russia. Sberbank Europe Group is present in ten markets in Central and Eastern Europe (CEE): Austria, Bosnia and Herzegovina, Croatia, Czech Republic, Germany, Hungary, Slovakia, Slovenia, Serbia and Ukraine. In total, the bank operates 280 branches and has 5,079 employees (as of 31.12.2015). Website: www.sberbank.at

About Sberbank Group
Sberbank Russia is Russia’s largest bank and a leading global financial institution. Sberbank holds almost one third of aggregate Russian banking sector assets, it is the key lender to the national economy and the biggest deposit taker in Russia. The Central Bank of the Russian Federation is the founder and principal shareholder of Sberbank owning 50% of the Bank’s authorized capital plus one voting share, with the remaining 50% held by domestic and international investors. Sberbank has more than 135 million individual customers and 1 million corporate clients in 22 countries. Sberbank has the largest distribution network in Russia with almost 17,000 branches, and its international operations include UK, US, CIS, Central and Eastern Europe, Turkey and other countries. The bank holds a general banking license No. 1481 issued by the Bank of Russia. Website: www.sberbank.ru

Sberbank was awarded “Best Bank in CEE 2014” by The Banker magazine and “Best Information Security Initiatives in CEE 2015” by Global Finance magazine.

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