Sberbank Europe Group YE 2017 financial results

“Sberbank Europe closes the financial year 2017 with a positive net result in almost all subsidiaries of Central and Eastern Europe. I am particularly satisfied thatSberbank Hungary achieved a turnaround and records a net profit for the first time since acquisition in 2012. On overall Group-level, we are continuously improving our asset quality and we have grown our net fee and commission income based on the increase of our Retail loan volumes and our client base in our markets. With the necessary one-off effects in 2017, Sberbank Europe is ready for further growth of its healthy and sustainable assets”, comments Gerhard Randa, CEO of Sberbank Europe.

The highest profits within Sberbank Europe Group were generated by the subsidiaries in the Czech Republic (EUR 16.1 mn) and Serbia (EUR 6.6 mn). All other banks, besides the Croatian subsidiary (EUR -21.5 mn due to a one-off effect), reported a profit (Slovenia: EUR 3.0 mn, Bosnia & Herzegovina (Sarajevo): EUR 2.8 mn, Banja Luka: EUR 2.8 mn, Hungary: EUR 1.3 mn). Sberbank Europe Group sold its subsidiary in Ukraine (VS Bank) and exited the market. The Retail segment as the main pillar of Sberbank Europe’s business grew significantly in 2017. The active retail customer base (excluding Ukrainian subsidiary) increased from approximately 634 thousand to around 654 thousand (+3.2%). Gross Retail loan volume continued to increase substantially (+14.3% y-o-y), reaching EUR 3.4 bnat YE 2017.

Net interest income remained relatively flat in 2017 compared to 2016 (decrease by 0.8% y-o-y) and amounted to EUR 293.5 mn. The development of the Group net interest income was driven by the ongoing pressure from a low interest rate environment, a reduction in the loan pricing and a lower risk appetite. Net fee and commission income grew by 2.9% in 2017 compared to 2016 and amounted to EUR 80.3 mn. The largest contributors towards improvement of the net fee and commission income in the countries were Hungary, Czech Republic and Serbia.

Loan/Deposit ratio stood at 96%, compared to 110% as of YE 2016. Customer deposits increased to EUR 8,272 mn (compared to EUR 7,774 mn as of YE 2016).Gross customer loans decreased to EUR 8,498 mn (compared to EUR 9,036 mn as of YE 2016) mainly as a result of the decrease in corporate loans portfolio in Austria. The gross loan portfolio in subsidiary banks increased by EUR 393.8 mn or 6.2% in 2017. The largest contributors were Czech Republic (+14.9% or EUR 312.3 mn), followed by Slovenia (+6.7% or EUR 86.5 mn), Serbia (+3.7% or EUR 24.1 mn) and Hungary (+3.3% or EUR 22.1 mn). As of 31 December 2017, Sberbank Europe Group reports EUR 12,581 mn in total assets. 

General administrative expenses increased by 5.6% to EUR 286.6 mn in 2017. The increase in operating expenses was mainly driven by the implementation of IFRS 9 and other key regulatory projects as well as Core Banking System updates in the countries.

Sberbank Europe demonstrates a healthy and sustainable capital base, with an increased CET 1 ratio of 17.1% (compared to 15.4% at YE 2016), comfortably meeting all regulatory requirements. Total capital adequacy ratio stood at 21.0% (compared to 19.0% at YE 2016). 

Sberbank Europe Group results reflect a conservative risk management approach, which translates into a net increase of loan loss provisions in balance sheet to EUR 575.1 mn or +EUR 95.0 mn compared to YE 2016. At the same time, NPL coverage ratio grew y-o-y from 57% to 68% as of YE 2017.
 

Outlook 2018

Supported by the solid macroeconomic forecast in Central and Eastern Europe, Sberbank Europe aims to further grow its business by focusing on competitive and accessible lending and saving products as well as attractive partnerships, while strengthening its digital proposition and continuously optimizing its operational and cost efficiency. Sberbank Europe intends to strengthen the expertise and authority of local banks and to focus on the development in the segments of micro and small business, as well as retail and high-margin products with a controlled level of risk. 
In February 2018, Sberbank Europe has set its next Retail milestone by starting to offer online loans to customers of Sberbank Direct in Germany. Within Corporate business, Sberbank Europe plans to strengthen its transaction banking and trade finance business, establishing itself as the go-to banking group for Austrian and CEE companies doing business in Russia/CIS and across the CEE region.
 

Key financial highlights of Sberbank Europe Group consolidated YE 2017 results*

P&L Highlights

Balance Sheet Highlights