Sberbank Posts Record 1.5 Trillion Rouble IFRS Net Profit for 2023

Moscow, 28 February 2024. Sberbank (Сбербанк), Russia's largest lender, earned 1 trillion 508.6 billion roubles of net profit under IFRS in 2023, the bank said in a statement. In the fourth quarter alone the group made 359.7 billion roubles. The results came in slightly better than the consensus forecast, which had pencilled in full-year net profit of 1.502 trillion roubles and 353 billion roubles for the fourth quarter.

The bank restated its 2022 profit, revising it to 287.8 billion roubles from the 270.5 billion reported earlier. Against that base, net profit grew 5.2-fold in 2023. In the third quarter of 2023 Sberbank earned 411.4 billion roubles, so fourth-quarter profit declined 12.6% quarter on quarter. The bank did not disclose quarterly reporting last year, so year-on-year quarterly comparisons are unavailable. An update to the Interfax report added that in the fourth quarter the bank grew retail client funds by 7% under IFRS.

Profitability and reserves

Return on equity reached 25.3% in 2023, against 5.2% in 2022, and stood at 22.9% in the fourth quarter. Return on assets rose to 3.2% from 0.7% a year earlier, and to 2.8% in the fourth quarter. The cost of risk fell to 0.8% from 1.9% in 2022, and to just 0.3% in the fourth quarter.

• Net interest income grew 36.8% to 2 trillion 564.6 billion roubles, including 736.3 billion in the fourth quarter; the net interest margin widened to 5.98% from 5.32%, reaching 6.26% in the fourth quarter on the back of accelerating retail business growth;
• Net fee and commission income rose 9.4% to 763.9 billion roubles, with 210.4 billion earned in the fourth quarter;
• The group's operating income before provisions reached 3 trillion 165 billion roubles, up 66.3%, and totalled 806.3 billion in the fourth quarter;
• Operating expenses increased 27.2% to 924.4 billion roubles; the cost-to-income ratio came in at 29.2% for the full year and 36.2% in the fourth quarter;
• Total charges for reserves and fair-value revaluation of loans amounted to 265 billion roubles, down 52.3% from 555 billion in 2022, a dynamic the bank explains by improved portfolio quality; fourth-quarter provisioning of 30.1 billion roubles was far below the consensus expectation of 129 billion.

Capital and dividends

Core tier 1 capital grew 14.2% over the year to 6 trillion 097.8 billion roubles, adding 6.2% in the fourth quarter; tier 1 capital rose 13.8% to 6 trillion 247.8 billion; total capital increased 13.7% to 6 trillion 467.2 billion roubles. Capital adequacy ratios stood at 13.2% for core tier 1, 13.5% for tier 1 and 14% for total capital.

The banking group's H20.0 capital adequacy ratio, which the lender now uses as its reference for dividend payments, was 13.7% at the end of 2023. Under the new dividend policy, the key condition for distributing at least 50% of IFRS net profit as dividends is maintaining group total capital adequacy (H20.0) at no lower than 13.3%. The record result therefore leaves Russia's largest bank with comfortable headroom above that threshold.

Source: Interfax, 28 February 2024.