In terms of operating income and net profit, almost all banks within Sberbank Europe Group performed above expectations.

Sberbank Europe Group: Net profit of EUR 8.9 million for HY 2017 reflects growth in fee income and focus on efficiency; BB+ rating & stable outlook affirmed by Fitch

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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 Group: Net profit of EUR 8.9 million for HY 2017

Sberbank Europe closes the first six months of 2017 with a positive result above initially planned levels. We are showing a net result of EUR 8.9 million on the back of higher net interest as well as fee and commission income combined with a strong focus on efficiency. Our subsidiaries in Central and Eastern Europe performed well, despite the pressure on margins and high competitiveness on the banking market. I am particularly satisfied that Sberbank Hungary is recording a profit for the first time since acquisition in 2012”, comments Arndt Röchling, CFO of Sberbank Europe.

Net interest income (NII) increased by 7% to EUR 159 million as a result of liquidity optimization measures implemented in 2016. Net fee and commission income grew by 12% to EUR 43.3 million compared to same period of last year (EUR 38.5 million). Sberbank Europe’s higher fee income has been mainly driven by business activities of its subsidiaries in Bosnia & Herzegovina, Czech Republic and Hungary.

Operating expenses and risk costs were developing in line with expectations. Sberbank Europe’s strict cost management led to a decrease in operating expenses in particular in Hungary and the Balkan region. Overall, Cost/Income ratio came down to 68% in HY 2017 (vs. 71% in HY 2016).
Sberbank Europe results reflect a conservative risk management approach, which translates into a net increase of loan loss provisions to EUR 53 million compared to EUR 38 million in HY 2016.
At the same time, NPL coverage ratio grew y-o-y from 45% to 46.8% as of HY 2017.

Sberbank Europe is showing a healthy and sustainable capital base, with a CET 1 ratio of 16.6%, comfortably meeting all regulatory requirements. Capital adequacy ratio stood at 20.3% (vs. 19% in HY 2016).

Loan/Deposit ratio stood at 104% and continues to improve compared to 110% as of YE 2016. Customer deposits increased to EUR 7,932 million (vs. EUR 7,774 million as of YE 2016). Total customer loans slightly decreased to EUR 8,286 million (vs. EUR 8,556 million as of YE 2016), while Sberbank Europe’s loan volumes in Retail and SME segment are on the rise in the Czech Republic, Serbia, Croatia, Bosnia & Herzegovina, and in Hungary.

Sberbank Europe continues to grow its active customer base from 673 thousand clients as of YE 2016 to 677 thousand until 30 June 2017. As of 30 June 2017, Sberbank Europe Group reports EUR 12,731 million in total assets.
Sberbank Europe’s subsidiaries had a solid start into 2017. In terms of operating income and net profit, almost all banks within the Group performed above expectations. The major contribution to the Group result was achieved in Sberbank Europe subsidiaries in Czech Republic, Serbia and Hungary.

Based on strict cost management combined with a strong focus on Retail and SME lending as well as trade finance, Sberbank Hungary is profitable for the first time since acquisition of VBI by Sberbank in 2012. In Czech Republic, Sberbank Europe records a profit after tax of EUR 7.6 million, which is three times higher compared to last year (EUR 2.5 million). In Serbia, Sberbank Europe increased its net profit by 34% to EUR 5.2 million compared to same period of last year.

Sberbank Europe wants to focus on sustainably growing its market share in Retail, SME and Large Corporate segment in Central and Eastern Europe, while continuously optimizing its operating expenses. In Retail business, Sberbank Europe aims at further increasing its customer base, driven by lending and partnerships, while strengthening and improving its digital proposition. In Corporate business, Sberbank Europe wants to strengthen its focus on transaction banking and trade finance activities, establishing itself as the go-to banking group for Austrian and CEE companies doing business in Russia and CIS countries.

Fitch affirms BB+ rating and stable outlook of Sberbank Europe AG

The international rating agency Fitch has recently affirmed both, the Long-Term Issuer Default Rating (IDR) at BB+ as well as the standalone Viability Rating of Sberbank Europe AG at b+. The Outlook is stable. The main rating drivers are a solid level of capitalization, strong funding and liquidity position as well as a sound self-funding strategy combined with gradual improvement of Sberbank Europe’s operating efficiency. Furthermore, the latest ratings also reflect Fitch's view that based on its strategic commitment to its European subsidiaries, the ultimate parent Sberbank of Russia (SBRF, BBB-/Stable/bbb-) is likely to support Europe AG in case of need.

Key financial highlights of Sberbank Europe AG consolidated HY 2017 results*

P&L Highlights

EUR million HY 2017 HY 2016
Net Result after taxes 8.9 13.8
Net Interest Income (NII) 159 148
Net Interest Margin (%) 2.5 2.4
Net fee and comission income 43.3 38.5
Cost/Income Ratio (%) 68 71
General administrative expenses 139 132
NPL coverage ratio (%) 46.8 45

 

Balance Sheet Highlights

EUR million HY 2017 (30.06.2017) YE 2016 (31.12.2016)
Total net customer loans 8,286 8,556
Total customer deposit 7,932 7,774
Loan/Deposit Ratio (%) 104 110
Core Tier 1 (CET1) ratio (%) 16.6 15.3
Capital Adequacy Ratio (%) 20.3 19.0
NPL ratio 11.9 10.0
Total assets 12,731 12,710

 

  HY 2017 (30.06.2017) YE 2016 (31.12.2016)
Employees 4,404 4,333
Branches 225 228

*consolidated HY 2017 results for Sberbank Europe based on unaudited IFRS results


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 nine markets in Central and Eastern Europe (CEE): Austria, Bosnia and Herzegovina, Croatia, Czech Republic, Germany, Hungary, Slovenia, Serbia and Ukraine. In total, the European banking group operates 225 branches and has over 4,400 employees (as of 30.06.2017). Website: www.sberbank.at

About Sberbank of Russia

Sberbank of 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.

As of HY 2017, Sberbank of Russia’s net profit reached RUB185.6 bn. The Group’s annualized return on equity (ROE) reached 24.8%, up from 22.8% compared to same period last year. Sberbank has almost 140 million individual customers and 1.5 million corporate clients served by 325 thousand employees in over 20 countries. Sberbank has the largest distribution network in Russia with 15,000 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

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