MOSCOW: Sberbank of Russia has announced net profit before income tax grew by 5.9% to RUB 261.1 billion for the quarter ended March 31, 2019, while net profit increased by 11.4% to RUB 218.2 billion during the period under review.

Deputy Chairman of Sberbank Alexander Morozov stated: “Our net profit for the quarter increased by 11%, return on equity reached 22.4% and that on assets at 3.3%. The Bank is finalizing adjustment to the new interest-rate environment through optimization of the credit portfolio mix and cost of funding.”

Net interest income decreased by 0.8% as compared to 1Q 2018 and totaled RUB 299 billion. Interest income grew by 11.4% on the back of business expansion. In the meantime, interest expenses increased by 31.2% due to higher cost of funding and growth of its volume.

Net fee and commission income was up by 9.4% to RUB 98.9 billion as compared 1Q 2018. The largest contributors to fee income growth were operations with bank cards and settlement transactions. As part of convergence with IFRS, the Bank changed its methodology of expense recognition on ‘Spasibo’ loyalty program. This changed the timing of accounting for expenses and led to a one-off increase in the first quarter but will be leveled off on a full-year horizon.

Provision charges totaled RUB 1.5 billion in March and RUB 25.5 billion in 1Q 2019. As of April 1, loan-loss provisions were 2.6 times that of the overdue loans. Impairment of loans at fair value amounted to RUB 2.9 billion in 1Q 2019.

Operating expenses increased by 5.9% as compared to 1Q 2018. OpEx dynamics in 1H2019 will remain affected by staff reshuffling from Sberbank Technologies JSC to Sberbank PJSC that took place in the second half of 2018, as well as VAT rate increase from January 1, 2019. Cost-to-income ratio came at 31.4%.

Total assets increased by 0.3% in March to over RUB 27.2 trillion. Ruble strengthening had a slight impact on the balance sheet items.[the_ad id=”31605″]