23 Dec '09
Source: the Finmarket Information Agency
In the 3rd quarter of 2009 Sberbank halved the size of top managers' bonuses, up to 111 million rubles, as stated in the financial reporting of the credit organization. Over nine months in 2009 Sberbank managers' bonuses totaled at 302 million rubles vs 662 million rubles in 2008. The bank's net profit fell by 8.8 times, to 10.3 billion rubles.
Looking at overseas organizations, the largest Russian banks keep on reducing the size of bonuses for board members and top managers and sometimes abolish bonus schemes. Last year the majority of credit organizations in Russia decided not to pay bonuses to members of boards of directors and advisory boards. It was also reported that Sberbank raised the sum of payments to managers by 5%, up to 933.566 million rubles vs 892.112 million rubles in 2007. This was caused by the increase on the number of board members from 17 to 23 members. In 2008 the sum of bonuses per member decreased.
This year the largest state-run banks in Russia, VTB and Sberbank, also decided to decrease the size of top managers' remuneration, including salaries and bonuses.
Over nine months in 2009 the average number of Sberbank employees amounted to 255,094,000 people whereas in 2008 it equalled 259,999,000 people.
Overall, between January and September the personnel expenses fell 5.5%, from 100.3 million rubles to 94.8 million rubles last year.
For reference, the size of remuneration (salaries and bonuses) for VTB board members amounted to 120.089 million rubles in the first half of 2009 whereas last year it totaled at 533.919 million rubles. Due to the current economic conditions VTB decided not to pay board members' bonuses for 2008, reports the bank.
According to the Ministry of Finance of the Russian Federation, the largest Russian banks introduced far more stringent restrictions on bonus payments for the previous year than Western banks. “Restrictions, introduced by Sberbank and VTB, are very significant and considerably stricter than Western banks'. The new payment systems are very rigid,” said Minister of Finance Alexey Kudrin.
At the moment new approaches are being developed in accordance with recommendations of the Financial Stability Board. However, the latter has not prepared the final proposals on principles of bonus restrictions in Russian state banks. The work is expected to be completed in December. As for other banks, substantial regulations would be required, stated Mr Kudrin. He promised to personally control the execution of the requirements under new programs.
Profit forecasts proved wrong
Over nine months Sberbank decreased net profit under IFRS by 8.8 times to 10.3 billion rubles from 90.2 billion rubles on the same period, as reported by the bank. Under the consensus forecast analysts expected net profit reduction by 87% to 11.4 billion rubles over the same period.
Over the 1st half this year Sberbank net profit went down by 11.15 times, from 67.012 billion rubles to 6.01 billion rubles, as earlier reported by the bank.
According to Sberbank IFRS reporting over nine months, expenses on generating provision amounted to 105.8 billion rubles. Provision grew by 27.2% and reached 493.8 billion rubles in the 3rd quarter. The share of defaulted loans rose to 7.9% (over the 3rd quarter) from 6.4% (over the first half).
The bank's assets fell 0.4% to 6.708 trillion rubles over the 3rd quarter. The asset structure underwent some changes: reduction of cash and growth of securities portfolio (mainly due to the growth of corporate bond portfolio) by 42.6% to 704.1 billion rubles as of September 30, 2009. Over nine months of 2009 the corporate bond portfolio grew by 175.9% and a share of federal loan bonds fell from 53.5% to 34.5%.
Meanwhile the loan portfolio grew by 4.8% to 5.533 trillion rubles over nine months due to the growth of the corporate sector: the number of legal entities' loans rose by 8.4% and amounted to 4.357 trillion rubles as of September 30, 2009. However, the amount individuals' loans fell by 6.7% to 1.176 trillion rubles, according to the bank.
On September 30, 2009 Sberbank liabilities went down by 0.8% to 5.9 trillion rubles from the start of the year. This was mainly caused by reduction of legal entities' funds attracted from the Central Bank of the Russian Federation. Legal entities' funds fell by 7.3% to 1.6 trillion rubles. However, the withdrawal of legal entities' funds stopped in the 3rd quarter and grew 2.9%.
In turn, individuals' funds amont raised resources rose up to around 3,4 trillion rubles. The growth of retail deposits amounted to 9.9% as of the start of the year which compensated for withdrawal of legal entities' funds.
The bank's equity rose up to 770.2 billion rubles as of September 30, 2009, a 2.7 growth over nine months.
Share of non-performing loans
The RF Sberbank raised a share of non-performing loans (NPL) up to 7.9% of the loan portfolio
in the 3rd quarter of 2009 vs 6.4% on June 30, 2009.
On September 30, 2009 the size of non-performing loans amounted to 436.7 billion rubles vs 351.6 billion rubles on June 30, 2009.
At the same time the growth rate of non-performing credits nearly halved and reached 1.5% in the 3rd quarter of 2009 vs 2.9% in the 2nd quarter.
For reference, a share of NLP in Sberbank portfolio amounted to 94.7 billion rubles or 1.8% of the loan portfolio on December 31, 2008.
The NPL reserve cover ratio did not change over the 3rd quarter and amounted to 1.1 on September 30, 2009. On September 30m 2009 Sberbank created provision for loan impairment of 493.8 billion rubles, 2.4 high on the beginning of the year.