FINANCIAL HIGHLIGHTS

The principal factors that influenced the Bank’s 2019 financial results included:

  • Corporate loan portfolio increased by 4.5% y-o-y and reached RUB 298.5 bn for FY 2019;
  • Net interest income for FY 2019 increased by 6.3% and amounted to RUB 23.3 billion;
  • Net fee and commission income for FY 2019 increased by 28.9% and amounted to RUB 6.8 billion;
  • Core banking revenues for FY 2019 increased by 11.2% and amounted to RUB 30.5 billion.
Income structure*, RUB mln
Income and expenses data*, RUB mln

NET INTEREST INCOME

The Bank’s interest income increased by 5.3% in 2019 to RUB 48.5 bn, compared to RUB 46.0 bn in 2018. Customer lending contributed to 74.7% of the total interest income: interest income from loans and advances to customers amounted to RUB 36.2 bn. Interest income from other operations, principally from securities, decreased by 8.4%, amounting to RUB 12.3 bn in 2019, compared to RUB 13.4 bn in 2018. Overall, this interest income component still comprises an insignificant amount of 25.3%.

Interest expense increased by 2.4%, amounting to RUB 23.4 bn in 2019, compared to RUB 22.9 bn in 2018. Interest expense on retail term deposits increased by 14.3% and amounted to RUB 9.7 bn (41.2% of total interest expenses). Interest expenses on corporate term deposits increased by 6.6% and amounted to RUB 5.0 bn (21.2% of total interest expenses). Interest expenses on due to banks decreased by 10.9% and amounted to RUB 7.5 bn (31.8% of total interest expenses).

Net interest income increased by 6.3% to RUB 23.3 bn, compared to RUB 21.9 bn in 2018. The main factor behind the NII increase is the lending expansion in the 2H 2019 with interest rates on liabilities decreasing.

NET FEE AND COMMISSION INCOME

The Bank’s fee and commission income increased by 21.7% in 2019, reaching RUB 8.9 bn, compared to RUB 7.3 bn in 2018. Plastic cards settlements (38.8% of total fee and commission income) increased by 13.6% and amounted to RUB 3.5 bn. Cash and settlement operation fees (40.8% of the total fee and commission income) increased by 11.4% to RUB 3.6 bn compared to 2018. Fees for issuing guarantees and letters of credit (11.5% of the total fee and commission income) increased by 27.8% and stood at RUB 1.0 bn.

Fee and commission expense increased by 3.7% in 2019 to RUB 2.2 bn, compared to RUB 2.1 bn in 2018. The aggregate of commissions on plastic cards settlements (including loyalty programs), securities and settlement transactions amounted to RUB 2.0 bn, or 92.1% of the total fee and commission expenses.

In 2019, the net fee and commission income increased by 28.9% to RUB 6.8 bn (RUB 5.2 bn for 2018).

TRADING INCOME RESULT


In 2019, net trading loss amounted to RUB 0.7 bn. Gains from operations with foreign currencies and derivatives amounted to RUB 0.1 bn, while losses from operations with securities amounted to RUB 0.8 bn. Results from operations in financial markets were driven by the position taken by the Bank to mitigate interest rate risk.

From 2007 onwards, Bank Saint Petersburg has been among the leaders in the most important segments of the Russian financial market and an active trader on foreign stock exchanges. The Bank is systematically included in the activity ratings of the MOEX currency derivatives market and the MOEX futures and options market. The Bank's currency futures trading volume currently represents a sizeable share of the total trading volume of the Chicago Mercantile Exchange. The Bank is also a major participant in the REPO market and a partner of leading domestic and international financial institutions. The Bank contributes to the interest rate indicators calculated by the National Securities Market Association and is a market maker for interest-bearing instruments of the Moscow Exchange.

Core banking vs trading*, RUB mln

COST EFFICIENCY


The Bank’s operating expenses grew by 8.0% to RUB 14.1 bn compared to 2018. The impact of weak trading, partially offset by core business growth resulted in the cost/income ratio of 45.5% in FY 2019 (39.8% in 2018).

Staff costs is a major component of the Bank’s operating expenses, comprising 45.8% of all costs. Staff costs increased by 8.6% and amounted to RUB 6.5 bn.

The Bank’s expenses related to premises and equipment amounted to RUB 2.6 bn in 2019, a 25.8% increase compared to 2018.

The Bank’s other operating expenses include rental payments, administrative costs, professional services, security, transportation, delivery and other expenses. In 2019, these expenses decreased by 0.2% to RUB 5.0 bn.

Operating Expenses*, RUB mln

KEY FINANCIAL INDICATORS

The core banking margin remains at a historically high level.

Core banking revenues increased by 11.2% and amounted to RUB 30.5 bn in FY 2019. Net income amounted to RUB 7.9 bn for FY 2019. The Bank’s return on equity (ROAE) amounted to 10.2% for FY 2019 (12.3% for FY 2018).

Core banking margin dynamics
Net income dynamics

BALANCE STRUCTURE


The Bank’s assets increased by 0.04% in 2019, reaching RUB 673.7 bn, compared to RUB 673.4 bn as at January 1, 2019.

Gross loans increased by 7.0% in 2019 and stood at RUB 401.4 bn, compared to RUB 375.3 bn as at January 1, 2019. The share of loans and advances to customers comprised 54.6% of total assets.

Securities portfolio decreased by 28.2% in 2019 and amounted to RUB 98.7 bn, compared to RUB 137.4 bn as at January 1, 2019. The share of the securities portfolio comprised 14.7% of total assets.

Amounts under reverse repo increased in 2019 by 8.3% to RUB 95.4 bn, compared to RUB 88.1 bn as at January 1, 2019. The share of the amounts under reverse repo comprised 14.2% of total assets.

The volume of customer deposits (customer accounts and promissory notes and deposit certificates issued) increased in 2019 by 0.7% to RUB 417.6 bn, compared to RUB 414.8 bn as at January 1, 2019. The share of customer deposits comprised 62.0% of the liabilities and equity total.

The volume of due to banks increased in 2019 by 7.3% to RUB 158.6 bn, compared to RUB 147.8 bn as at January 1, 2019. The share of due to banks comprised 23.5% of the liabilities and equity total

.

As at January 1, 2020, the share of funds attracted from capital markets was 0.7% of the liabilities and equity total, compared to 2.3% as of January 1, 2019.

Assets and liabilities structure,
January 1, 2020, RUB bn

LOAN PORTFOLIO QUALITY

Since lending constitutes the majority of the Bank’s assets, the Bank focuses on maintaining the high quality of its loan portfolio.

In 2019, the volume of loans to customers (gross loans) increased by 7.0% and stood at RUB 401.4 bn. The provision charge for FY 2019 decreased by 2.2% and amounted to RUB 7.0 bn. As at January 1, 2020, the allowance for loan impairment amounted to 8.3% of the loan portfolio (compared to 9.7% as of January 1, 2019).

Loan portfolio quality

As at January 1, 2020, the share of problem loans in the Bank’s portfolio (Stage 3 loans and POCI) amounted to 9.2% (compared to 10.8% as at January 1, 2019). The share of corporate problem loans amounted to 11.1% of the total corporate loans; the share of retail problem loans amounted to 3.9% of the total retail loans.

Provisions for the coverage of problem loans were 90%. In 2019, the volume of loans written off amounted to RUB 10.6 bn.

Provision charge and Cost-of-Risk

As at January 1, 2020, corporate loans comprised 74.4% of the loan portfolio, its volume increased by 4.5% in 2019 to RUB 298.5 bn. The breakdown of the Bank’s corporate portfolio by sector reflects St. Petersburg’s economic structure, which has a high proportion of construction, allowing the Bank to benefit from all the advantages of the region’s economic structure, as well as to contribute to its development.

Loan portfolio by sector, January 1, 2020



In 2019, the retail loan portfolio (mortgage, car and consumer loans) increased by 17.5% and amounted to RUB 99.1 bn. As of January 1, 2020, loans to individuals amounted to RUB 103.0 bn (up 14.7% compared to January 1, 2019). The share of loans to individuals in the loan portfolio amounted to 25.6% as at January 1, 2020 (compared to 23.9% in the previous year).

Retail loan portfolio dynamics, RUB bn

CUSTOMER DEPOSITS


The volume of customer deposits (customer accounts and promissory notes and deposit certificates issued) increased in 2019 by 0.7%, reaching RUB 417.6 bn (RUB 414.8 bn as of January 1, 2019). As of January 1, 2020, 59.6% of customer accounts belonged to individuals and 40.4% belonged to corporate customers.

Retail customer deposits decreased by 0.1%, amounting RUB 249.0 bn. In 2019 corporate customer deposits increased by 1.8% to RUB 168.6 bn.

Retail term deposits decreased by 4.7% and stood at RUB 174.8 bn. During 2019, corporate term deposits went up by 2.3% to RUB 88.8 bn.

Customer deposits, RUB bn

SHAREHOLDERS EQUITY AND CAPITAL


As of January 1, 2020, the Bank’s shareholders’ equity (EFRS) stood at RUB 80.1 bn (up 5.8% compared to January 1, 2019). The Bank’s total capital (RAS, Basel III) amounted to RUB 81.8 bn (up 10.5% compared to January 1, 2019). In compliance with Basel Committee requirements (RAS, Basel III), as of January 1, 2020, the Bank’s total capital adequacy stood at 14.8% and Tier 1 capital adequacy stood at 11.5%.

Capital Adequacy Ratio (RAS, BASEL III)