SBERBANK INVESTOR · PDF filesberbank investor presentation 2 content macro ... credit factory kpi driven model ... net promoter score 55% 58%

April 2017

SBERBANK

INVESTOR PRESENTATION

ALTAI MOUNTAINS, RUSSIA

SBERBANK INVESTOR PRESENTATION 2

CONTENT

MACRO

BANKING SECTOR

ASSET QUALITY AND COR

CAPITAL

RAS

CORPORATE GOVERNANCE

1 WHY SBERBANK

3 CORPORATE BUSINESS

4 TECHNOLOGY

7 GUIDANCE

6 STRATEGY TARGETS

2 RETAIL BUSINESS

8 DEEP DIVES

9 IFRS

5 OPPORTUNITIES

2

9

12

17

19

22

25

29

47

SBERBANK INVESTOR PRESENTATION

WHY SBERBANK

3

UNPRECEDENTED

SCALE AND

MARKET

PENETRATION

STRAIGHTFORWARD

SOLID BUSINESS

MODEL

DELIVERY ON

PROMISES

WITH CROSS-CYCLE

PROFITABILITY

SUCCESSFUL

TRANSFORMATION

IN A RAPIDLY

EVOLVING

ENVIRONMENT


UNPRECEDENTED SCALE

AND MARKET PENETRATION

4

Assets 28.9%

Retail deposits 46.6%

Corporate deposits 22.1%

Retail loans 40.1%

Corporate loans 31.7%

Payroll clients 50.3%

Credit card balances 39.1%

Sberbank market

shares in Russia

mln retail customers 145.6

mln corporate customers in Russia 1.8

ths branches in Russia 15

ths employees 325

ths ATMs and self-service terminals c.80

mln Sberbank Online and @900 clients ~47

*


STRAIGHTFORWARD SOLID BUSINESS MODEL

31/12/2016 LIABILITIES & EQUITY

• Net loans / deposits ratio of 90.6%4

• 12.3%5 IFRS Tier 1 and 15.7%5 IFRS Total CAR under Basel I

31/12/2016 ASSETS

5

Cash & equivalents 10% RUB 2,561 bn

Other assets 10% RUB 2,729 bn

Securities 1 11% RUB 2,718 bn

Loans

& advances

to customers (net)

68% RUB 17,361 bn

Retail loans,

27% of total net loans

Customer

deposits

74% RUB 18,685 bn

Equity 11% RUB 2,822 bn

Due to banks & other 7% RUB 1,683 bn

Medium and LT Funding 2 8% RUB 2,162 bn

Corporate deposits,

33% of total customer deposits

Total = RUB 25,368.5 bn (US$ 418.2 bn3)

Corporate loans,

73% of total net loans

Retail deposits,

67% of total customer deposits


19.1 21.1

13.3

4.1

0.3 2.9 2.2

7.3

21.3

9.7

20.3

30.3 33.6 32.3

27.6

19.6

27.9

23.8 23.8 21.7 21.3 20.3 20.9 20.8

15.3

20.1

14.3

9.7

5.9

10.3 11.8 12.6

19.3 22.8

20.5 20.4

9.2 7.9 6.4

-1.3

-9.2 -11.2

-8.6

-2.6

4.1 5.0 3.8 5.1 3.3 3.3

5.0 5.2 5.3 4.3 3.1 1.8 0.6 1.1 1.2 2.1 0.6 1.1 0.9 0.2

-2.8 -4.5 -3.7 -3.8

-0.4 -0.5 -0.4 0.3

2008 2009 2010 2011 2012 2013 2014 2015 2016

Sberbank ROE (quarterly)

Real GDP growth (quarterly YoY)

DELIVERY ON PROMISES WITH CROSS-CYCLE

PROFITABILITY

6

Strategy 2014 Guidance 2015

SBERBANK ROE VS. RUSSIA GDP DYNAMICS

Guidance 2014 Guidance 2016


SBERBANK ROE VS. GLOBAL BANKS

7

20.4%

18.8%

17.2%

16.5%

16.3%

15.9%

15.9%

15.6%

13.7%

13.7%

13.6%

13.4%

12.9%

11.9%

9.5%

7.6%

6.4%

5.7%

5.6%

5.2%

2.8%

Sberbank

Itau

Royal Bank of Canada

China Merchants Bank

Commonwealth Bank

China Construction Bank

ICBC

Agricultural Bank of China

Bank of Nova Scotia

Bank of China

US Bancorp

Westpac Banking

Toronto-Dominion Bank

Wells Fargo

JPMorgan Chase

BNP Paribas

Citigroup

Bank of America

Mitsubishi UFJ

Banco Santander

HSBC Holdings

Source: Bloomberg, latest quarter, IFRS data

vs. Top 20 Global Banks

by Market Capitalization

vs. Top 20 GEM Banks

with Market Capitalization >$10bn

21.1%

20.4%

20.3%

20.0%

18.8%

18.6%

17.2%

17.1%

17.1%

17.1%

16.9%

16.5%

15.9%

15.6%

15.2%

15.2%

13.7%

13.5%

8.7%

1.8%

Qatar National

Sberbank of Russia PJSC

Bank Central Asia

Credicorp Ltd

Itau Unibanco Holding SA

HDFC

Shanghai Pudong

Bradesco

Industrial Bank Co Ltd

ICBC

Al Rajhi

China Merchants Bank

China Construction Bank Corp

Agricultural Bank of China

Postal Savings

China Minsheng

Bank of China Ltd

CITIC

Santander Chile

State Bank


TRANSFORMATION

8

TECHNOLOGICAL MODERNIZATION AND EFFICIENCY TEAM AND CULTURE

Capacity >23 petabytes

DATA PROCESSING CENTER

4Х downtime reduction

260 terabytes of data stored

and analyzed

CREDIT FACTORY KPI DRIVEN MODEL

CENTRALIZATION OF IT SYSTEM

2008 2015

840 hours

9 hours

-90х

2008 2015

1 000 / day

40 000 / day

+40х

TIME

TO DECISION

VOLUMES OF

APPLICATIONS

EFFICIENCY

20.3 ths

in 2012 15.0 ths

4Х Assets per employee

increased

2.3Х Operating income

employee increased

2008

>2 500

2015

1 >800

support centers 8 system

52 17 headcount efficiency ths ths

BEST OVERALL CORPORATE UNIVERSITY

Business plan

goals

KPI KPI

goals

KPI KPI

goals

KPI KPI

goals

KPI KPI

goals

KPI KPI

goals

KPI KPI

branches

SBERBANK INVESTOR PRESENTATION 9

CONTENT

1 WHY SBERBANK


4 TECHNOLOGY

7 GUIDANCE 2016

6 STRATEGY TARGETS

2 RETAIL BUSINESS

8 DEEP DIVES

9 IFRS

5 OPPORTUNITIES

MACRO

BANKING SECTOR


CAPITAL

RAS


2

9

12

17

19

22

25

29

47


RETAIL BUSINESS

10

Retail loans

40.1% Mortgage loans

54.6% Credit card

balances

39.1% Retail deposits

46.6% Pension

distribution

61.0% Utility payments

43.5%

Net Promoter Score

55% 58%

4Q'15 4Q'16

MARKET SHARES IN RUSSIA AS OF 31/12/2016:

NPS

How likely is it that you would recommend our company / product / service to a

friend or colleague?

2.62 2.93 NUMBER OF

PRODUCTS PER

CLIENT


24.6 25.1

10.5 20.6

23.7

27.1

38.8

47.5

2015 2016

Text Bank

Apps

Web

Digital usets, total (no overlaps)

10% 12% 12%

14%

19%

5%

10%

15%

20%

25%

30%

35%

40%

45%

4Q'15 1Q'16 2Q'16 3Q'16 4Q'16

LOYAL AND FAST GROWING DIGITAL CLIENT

BASE

11

SBERBANK ONLINE

ACTIVE USERS (90 DAYS)

MLN

+22.4%

SHARE OF RETAIL PRODUCT SALES

DIGITALLY

%

Avg global leaders 29.4%*

*Finalta Research - December 2016 Source: management accounts

+14.3%

+96.2%

+2.0%


CONTENT

12

1 WHY SBERBANK


4 TECHNOLOGY

7 GUIDANCE

6 STRATEGY TARGETS

2 RETAIL BUSINESS

8 DEEP DIVES

9 IFRS

5 OPPORTUNITIES

MACRO

BANKING SECTOR


CAPITAL

RAS


2

9

12

17

19

22

25

29

47


21.3%

24.3%

25.0%

23.6% 23.6% 22.6%

22.1%

CORPORATE BUSINESS TODAY…

13

32.7% 32.7%

32.2%

32.5% 32.5% 32.3%

31.7%

CORPORATE LENDING CORPORATE DEPOSITS

NUMBER OF PRODUCTS

PER CORPORATE CLIENT

CUSTOMER SATISFACTION INDEX

(CSI) OF CIB CLIENTS

2.04

2.26

78.5

82

Market shares

Strategic development

Client

satisfaction

From traditional

compliant

management to…

• solving client problems on the

spot in any channel

• service culture

Clients From 25 industry

segments to…

• personalized offering based on

data analytics & RAROC-based

pricing

• integrated retail-corporate view

life-cycle relationship

management

• revenue growth per client X 1.15+

Products From traditional

banking product

sales to…

• packaged solutions ecosystems

(non-financial and partners

products & services)

• E- and ON-line products &

services

Channels From 1200+

branches to…

• 600+ branches

• online and contact-center for

mass segments and online

support for others

• new service formats

…AND WHERE WE WANT TO BE “TOMORROW”


“SBERBANK BUSINESS ONLINE”

14

Cash settlements

E-invoicing State reporting

FX transactions Е-factoring Payroll projects

Corporate banking cards

Online overdraft

E-deposits FX control and international

trade

$

mln corporate clients 1.4

%

• Share of remote transactions in 2015-16

increased from 93% to 99.8%

33 of corporate payments in Russia


“EVOTOR” – EVOLUTION OF TRADE

15

A Mobile Tool to replace an office

Online payments

Mobile cashbox

Accounting

Reporting

Procurement

CRM

Loyalty program

Other banking

and non-banking

services

500 ths.

“smartkassa`s”

30% Sberbank targeting 30%

market share by 2018


INTERNATIONAL BUSINESS RESULTS FOR 2016

(IFRS DATA, INCLUDING INTRAGROUP ELIMINATIONS)

NET INCOME*

Turkey Kazakhstan Belarus CEE Ukraine

RUB38.0 bn RUB1.5 bn RUB2.6 bn RUB6.7 bn -RUB7.5 bn

% OF ASSETS* 9.1% 1.2% 0.4% 3.2% 0.4%

*IFRS data, including intragroup eliminations

16


CONTENT

17

1 WHY SBERBANK


4 TECHNOLOGY

7 GUIDANCE 2016

6 STRATEGY TARGETS

2 RETAIL BUSINESS

8 DEEP DIVES

9 IFRS

5 OPPORTUNITIES

MACRO

BANKING SECTOR


CAPITAL

RAS


2

9

12

17

19

22

25

29

47


KEY PROJECTS

18

New Core Banking

Platform ‘18+‘ Flexible back

office

processing

Common data

environment on

Group level

In-memory

computing

Scale-out architecture

on commodity

hardware

New products

time-to-market х2

360 client

knowledge

≤6 months

Productivity х2 New products

time-to-market х2

Data Factory

Flexible data

analysis tools

Data lab and

initiatives piloting

Modeling with

machine learning

Internal and external

data sourcing

Business Intelligence

and Big Data

• Centralized data governance

• Data quality and data

availability

• New data services

Multichannel

Platform

Transaction

time 20%

Rapid launch

of new

products

Simple & user-

friendly

interface

Security &

reliability

Flexible cross-sell

processes

Multichannel

customer

experience

Net Promoter

Score (NPS) 5pp

Number of

errors 15%

Time required for

a new employee to

reach target KPIs 20%


CONTENT

19

1 WHY SBERBANK


4 TECHNOLOGY

7 GUIDANCE

6 STRATEGY TARGETS

2 RETAIL BUSINESS

8 DEEP DIVES

9 IFRS

5 OPPORTUNITIES

MACRO

BANKING SECTOR


CAPITAL

RAS


2

9

12

17

19

22

25

29

47


638

898

667 722

451 589

439 475

2 765

3 650

4 036

4 538 50.4%

53.0%

55.0% 54.6%

GROWTH OPPORTUNITIES:

MORTGAGES

20

MORTGAGE PORTFOLIO DYNAMIC MORTGAGE LOANS / GDP, 2015

3.5

5.2

6.1

19.8

20.0

23.4

33.7

40.5

58.4

60.3

76.6

100.8

Indonesia

Russia

Turkey

Poland

Czech Republic

Italy

Germany

France

USA

Sweden

UK

Switzerland

Growing… …but still low market penetration

-0.4%

MORTGAGE LOANS ISSUED

+8.3%

+8.2%


GROWTH OPPORTUNITIES:

NON-BANKING FINANCIAL SERVICES

21

90.6%

4Q'16

RUSSIAN MARKET AND SBERBANK POSITION

now

cost of liabilities

LOAN TO DEPOSIT RATIO

60%

22%

18% Non-State Pension Fund

Other Asset Management

Sberbank Life Insurance

POTENTIAL FOR RE-ALLOCATION OF

EXCESS LIQUIDITY

SBERBANK ASSETS UNDER

MANAGEMENT

to be

ROA on AuM

LIFE INSURANCE

PENSION INSURANCE

ASSET MANAGEMENT +12%

+27% 2,712

+30% 137

~ 7,000

12%

34%

3

1

6% -

NON-LIFE INSURANCE +6% 900 1% 34

9.4%


CONTENT

22

1 WHY SBERBANK


4 TECHNOLOGY

7 GUIDANCE

6 STRATEGY

2 RETAIL BUSINESS

8 DEEP DIVES

9 IFRS

5 OPPORTUNITIES

MACRO

BANKING SECTOR


CAPITAL

RAS


2

9

12

17

19

22

25

29

47


SBERBANK 2018 STRATEGIC DIRECTIONS

23

Personalized

products and pricing

Omni-channel client

experience

Instant feedback

New technological

platform

Advanced data

analytics

Improved

time-to-market

Culture ecosystem

Soft skills

development

Advanced

performance

management

Automated

decision-making

Predictive analytics

Advanced

identification

instruments

Business support

mаtrix in HQ

Service function

reengineering

Regional network

re-design

BUSINESS RISK

MANAGEMENT TECHNOLOGY

MANAGEMENT

MODEL

TEAM AND

CULTURE


2018 FINANCIAL TARGETS*

24

MACRO

BANKING

SECTOR

PROFITABILITY

& CAPITAL EFFICIENCY GROWTH

GDP growth %, average 2015-2018

1.3

Inflation %, average 2015-2018

7.5

Loans growth %, nominal CAGR

2015-2018

9.6

Deposits growth %, nominal CAGR

2015-2018

10.7

ROE %

~18

CAR Tier 1 %

>10

Cost / Income %

<40

Cost / Assets %

<2.5

Assets 2018 / 2015

х1.8

Net Profit 2018 / 2015

х1.8+

*Capital Markets Day – London, October 22, 2015


CONTENT

25

1 WHY SBERBANK


4 TECHNOLOGY

7 GUIDANCE

6 STRATEGY TARGETS

2 RETAIL BUSINESS

8 DEEP DIVES

9 IFRS

5 OPPORTUNITIES

MACRO

BANKING SECTOR


CAPITAL

RAS


2

9

12

17

19

23

25

29

47


ON TRACK FOR 2016

Efficiency Ratio <43.7% Around 40% - - 39.7%

NIM (average) >4.4% >5% - - 5.7%

Net Fees &

Commissions Growth High teens Mid-to-high- teens -

Low-to-mid

teens 9.4%

Cost of Risk c.250-300 bps c.200-250 bps Around 200 bps - 180 bps

ROE Low-to-mid-teens Mid-to-high-teens High teens - 20.8%

Loans

Growth

Corporate In line with the

sector - - - -8.9%

Retail Better than the

sector

In line with the

sector

Slightly better

than the sector - +1.3%

Deposits

Growth

Corporate In line with the

sector - - Below the sector -19.6%

Retail In line with the

sector -

Slightly better

than

the sector

Better than

the sector +3.4%

Core Tier 1 CAR under

Basel 1 for the Group >9% Around 10% Over 10.5% >11% 12.3%

EFFICIENCY

PROFITABILITY

BALANCE SHEET

AND CAPITAL

INITIAL 21 Jan 2016

1Q IFRS 25 May 2016

2Q IFRS 25 Aug 2016

3Q IFRS 15 Nov 2016

2016 ACTUAL


BALANCE SHEET FORECAST 2017

CORPORATE LOANS RETAIL LOANS CORPORATE DEPOSITS RETAIL DEPOSITS

Nominal growth dynamics

In line with the

sector

SECTOR

SBERBANK Slightly better

than the sector

In line with the

sector

In line with the

sector

5-7% 5-7% 6-8% 7-9%

27


SBERBANK GUIDANCE 2017

EFFICIENCY

PROFITABILITY

CAPITAL

Efficiency Ratio Mid to high 30-s

OPEX Growth Lower than inflation

NIM (average) Stable y-o-y

Net Fees & Commissions Growth High-teens

Cost of Risk 150-170 bps

ROE High teens

Core Tier 1 CAR under Basel 1 for the Group Around 12%

Core Tier 1 CAR under Basel 2 for the Group Over 10%

GUIDANCE

2017

28


CONTENT

29

1 WHY SBERBANK


4 TECHNOLOGY

7 GUIDANCE 2016

6 STRATEGY TARGETS

2 RETAIL BUSINESS

8 DEEP DIVES

9 IFRS

5 OPPORTUNITIES

MACRO

BANKING SECTOR


CAPITAL

RAS


2

9

12

17

19

22

25

29

47


THE MOST PROTRACTED CRISIS IN

THE RECENT HISTORY

Accumulated structural disproportions

Slumping oil prices From $100/bbl in 2013 to ~$40+/bbl in 2016

Sanctions Capital, technologies, risks of tougher sanctions

3 квартала 4 квартала 8 кварталов

-6

-4

-2

0

2

4

6

Q1 '1996 Q1 2000 Q1 2004 Q1 2008 Q1 2012 Q1 2016

3 quarters 4 quarters 8 quarters

GDP GROWTH, QOQ, SEASONALLY ADJUSTED

30


CAN ONLY GO UP NOW, BUT HOW FAST?

The economy will grow from now on

HOW FAST?

OIL AND RUBLE ELECTIONS SANCTIONS

Low prices are no longer the main impediment to growth

Prices are unlikely to fall

The economy has adapted

The real exchange rate dropped by 15%

It is not likely that the sanctions against Russia will be expanded

Trump wants to soften the policy

Inside Europe, there is no unity on the issue of sanctions

Presidential elections in Russia in March 2018

Pre-election expenses is an additional impetus

However, the resources are limited

GDP growth =1.5% a year GDP growth =3.5% a year

OR

The next time the GDP

will double in 50 years The next time the GDP

will double in 20 years

ONE GENERATION TWO GENERATIONS

Without structural reforms Reforms + technological breakthrough

31


• Moderate pre-election increase of state spending in 2017

• Sanctions and counter-sanctions will continue

• Gradual but limited oil price recovery

BASELINE SCENARIO: IN 2017-2019, OIL PRICES WILL

BE AT $50-55/BARREL

Economy: Sluggish growth Inflation: Gradual slowdown Rate: We do not expect any shocks

Pre-election spending will support growth in 2017

Inflation is decreasing slowly due to budget deficit and indexation

Moderately hard monetary policy: Key rate ~3.5% in real terms

Sourc

e:

Sta

te S

tatistics S

erv

ice,

CB

R,

Haver,

Centr

e f

or

Macro

econom

ic R

esearc

h o

f S

berb

ank

-3.7

-0.5

1.2 1.0 1.2

-9.6

-3.6

1.3 1.1 1.2

-14

-12

-10

-8

-6

-4

-2

0

2

4

6

2015 2016 2017 2018 2019

GDP growth Consumption growth

12.9

5.4 5.0 4.5 4.0

11.0 10.0

8.5 8.0

7.5

0

2

4

6

8

10

12

14

2015 2016 2017 2018 2019

Inflation (year-end)

Key rate (year-end)

52 41 50

55 55

61 67 64 62 64

0

10

20

30

40

50

60

70

80

90

2015 2016 2017 2018 2019

Oil price USD rate

32


Oil prices: $50-55-55 (‘17-’18-’19)

Pre-election spending growth

Oil prices: $25-25-25 (‘17-’18-’19)

Or a 50% quota on oil exports

Oil prices: $60-60-60 (‘17-’18-’19)

Sectoral sanctions lifted

SBERBANK 3 SCENARIOS

Economic growth Inflation RUB/US$

Basic scenario Pessimistic Optimistic

Sourc

e:

Rossta

t, C

BR

, H

aver,

CM

R S

berb

ank

61 68 64 62 64

85 87 89

56 57

58

0

10

20

30

40

50

60

70

80

90

100

2015 2016 2017 2018 2019

Базовый Песимизм Оптимизм

12.9 5.4 5.0 4.5 4.0

7.2

5.5

4.5 4.9 4.5

4.0

0

2

4

6

8

10

12

14

2015 2016 2017 2018 2019

Базовый Песимизм Оптимизм Basic Pessimistic Optimistic

-3.7 -0.5

1.2 1.0 1.2

-1.5

0.2

0.7

2 1.5 1.4

-4

-3

-2

-1

0

1

2

3

2015 2016 2017 2018 2019

Базовый Песимизм Оптимизм Basic Pessimistic Optimistic Basic Pessimistic Optimistic

33


BANKING SECTOR - STILL GROWING,

UNDERPENETRATED AND CONSOLIDATING

34

DOMESTIC CREDIT

TO PRIVATE SECTOR BY BANKS

BANKING SECTOR “CLEANSING”:

2014-2016

59.3

108.6

145.0

Russia OECD members

Euro area

Number of banks

Licences

withdrawn Sanation

Default

rate, %

Rank by assets

size Jan 2014 Dec 2016

Top 5 5 5 0 0 0.0%

6-21 th 15 15 0 1 6.7%

21-50 th 30 30 2 2 10.0%

51-200 th 150 150 27 16 28.7%

201 - 500 th 300 300 76 12 29.0%

500 th and smaller 422 233 105 0 24.9%

Total 922 733 210 31 25.9%


LOAN PORTFOLIO QUALITY (1)

35

NON-PERFORMING

LOANS IN LOAN

PORTFOLIO

PROVISIONS FOR LOAN

IMPAIRMENT (PLI)

TO TOTAL LOANS

NPL COVERAGE RATIO

(PLI TO NON-

PERFORMING LOANS)

5.0 5.2

4.9 4.9

4.4 6.0 6.3

6.6 6.9 7.0

1.205 1.208

1.34 1.418

1.573

NPL levels are stabilizing and coverage increased to 1.573


19 924.3 19 740.2 19 220.5 19 096.6 18 664.7

3 423.8 3 521.3 3 820.8 4 120.5 3 954.3

17.2 17.8 19.9

21.6 21.2

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

LOAN PORTFOLIO QUALITY (2)

36

NPLS SHARE IN RENEGOTIATED LOANS &

PROVISION COVERAGE OF NPLS

76.6

65.9

74.9 75.4 82.5

11.0 11.3

8.3 8.2 7.7

0

2

4

6

8

10

12

0

20

40

60

80

100

120

140

RENEGOTIATED LOANS &

THEIR SHARE IN TOTAL LOANS


33.3% 28.7% 26.6% 20.8%

29.0% 27.9%

39.7% 37.4%

32.3% 40.1%

41.2% 47.3%

20.1% 25.2%

31.7% 30.7% 24.5%

19.8%

7.0% 8.7% 9.4% 8.3% 5.3% 4.9%

LOAN PORTFOLIO QUALITY:

TOP 100 BORROWERS IN RENEGOTIATED LOAN PORTFOLIO

RENEGOTIATED LOAN PORTFOLIO STRUCTURE

Top 100 renegotiated borrowers` share in total renegotiated

portfolio in Russia (under management accounts)

delays on payments, mostly NPLs 4.9%

Criteria for red zone:

• cash flow deterioration

• collateral deterioration

• 30-90 days overdue

19.8%

performing well, no overdue 75.2%

85% 83% 85% 80%

material

37

80% 80% 83% 85% 80% 80% 80%


RENEGOTIATED LOAN PORTFOLIO:

RESTRUCTURINGS VS. MODIFICATIONS

38

3 423.8

4 120.5 3 954.3

31.12.15 30.09.16 31.12.16

2 192.6

2 928.6 2 745.2

1 231.2 1 191.9 1 209.1

36.0%

28.9% 30.6%

Modifications

Restructurings

Share of Restructurings in Totalrenegotiated loans

TOTAL RENEGOTIATED LOANS


10%

3%

4%

7%

14%

17%

20%

27%

Other

Food and agriculture

Mashinery

Energy

Telecom

Real estate

Oil and gas

Metallurgy

RESTRUCTURED LOAN PORTFOLIO STRUCTURE:

TOP 100 BORROWERS

39

SECTOR BREAKDOWN CURRENCY BREAKDOWN

23.6% 30.3%

45.2%

69.0% 61.6%

50.5%

7.5% 8.1% 4.3%


5.0% 4.9% 4.4%

120.5%

141.8%

157.3%

0

0.02

0.04

0.06

0.08

0.1

0.12

TOTAL PROVISION COVERAGE

OF NPLS & RESTRUCTURED NON-NPLS

40

NPL COVERAGE RATIO

(PLI TO NON-PERFORMING LOANS)

TOTAL PROVISION COVERAGE OF NPLS &

RESTRUCTURED NON-NPLS

5.0% 4.9% 4.4%

4.3% 4.6% 4.9%

64.5%

72.9% 74.6%

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0

0.02

0.04

0.06

0.08

0.1

0.12

Restructured

NPLs share

(already included in

NPLs share)

1.8% 1.6% 1.6%


SURPASSING THE SECTOR ON ASSET QUALITY

41

(OVERDUE LOANS)

CORPORATE OVERDUE LOANS (DOMESTIC ONLY) RETAIL OVERDUE LOANS (DOMESTIC ONLY)

1.9% 2.2%

2.7% 3.2% 3.1% 3.1%

2.8% 2.4%

2.0% 2.2%

5.8%

6.8%

7.7% 7.3%

8.1% 8.6%

9.2% 9.5%

8.8% 9.4%

Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Feb-17

Sberbank overdue ratio , % Sector overdue ratio*, %

3.9 p.p. 4.6 p.p.

5.0 p.p. 4.1 p.p. 5.0 p.p.

5.5 p.p. 6.4 p.p.

Sberbank overdue ratio , % Sector overdue ratio*, %

2.4% 2.9%

3.3% 3.8% 3.8% 4.0% 4.1% 4.0% 3.7% 3.8%

7.8%

9.3% 10.1%

10.6% 10.5% 11.0% 11.1%

11.6% 10.8%

11.2%

Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Feb-17

7.4 p.p.

6.8 p.p. 6.4 p.p.

5.4 p.p.

6.8 p.p. 6.7 p.p. 7.0 p.p. 7.0 p.p.

7.1 p.p. 7.6 p.p.

6.8 p.p. 7.1 p.p. 7.2 p.p.


11.2% 11.1% 11.0% 9.8% 9.2%

7.5% 6.3%

>15%

2015 2016 2017 2018

Total Tier 1

CAPITAL

42

CAPITAL ADEQUACY RATIOS

(TIER 1 & TOTAL), SBERBANK GROUP, IFRS, BASEL I EQUITY TO ASSETS *TOP 5 BANKS BY MARKET CAPITALIZATION FOR EACH REGION

REGULATION & INTERNAL FACTORS

Basel II

AIRB models to be approved

Recovery of ROE to “pre-crisis”

levels

Moderate growth of RWA

Quarterly audit of net profit

Tier 1 Sberbank comfortable level Basel 2

>12.0-12.5%

8.9%

15.7%

Core Tier 1 min level >4.5%

12.6% 12.3% ~12%


BASEL III CBR REGULATION

10% 10% 8% 8% 8% 8%

0.63% 1.25% 1.88% 2.50% 0.15% 0.35%

0.65% 1.00%

0-1.25%

0-1.88%

0-2.50%

10% 10% 8.78%

9.6%-10.85%

10.53%-12.4%

11.5%- 14%

2014 2015 2016 2017 2018 2019

TOTAL CAPITAL N20.0

%

SIFI buffer Conservation buffer CBR limit Countercyclical buffer

CORE CAPITAL N20.1

%

5% 5% 4.5% 4.5% 4.5% 4.5%

0.63% 1.25% 1.88% 2.50% 0.15% 0.35%

0.65% 1.00%

0-1.25%

0-1.88%

0-2.50%

5% 5% 5.28%

6.1%- 7.35%

7.03%- 8.9%

8.0%- 10.5%

2014 2015 2016 2017 2018 2019


SBERBANK MONTHLY NUMBERS UNDER RAS

44

RUB, mln 3M 2017 3M 2016 3M 2017 vs. 3M 2016

Net interest income 281 118 270 190 4.0%

Net fee and commission income 76 573 67 073 14.2%

Income from trading operations 7 040 -22 139 -

Total provision (charge)/gain -48 834 -109 604 -55.4%

Cost of risk 1.3% 2.6% -1.4%

Operating costs -112 811 -96 970 16.3%

Cost-to-income ratio 30.3% 30.4% -0.2%

Pre-tax Profit before provisions 259 691 221 603 17.2%

Net profit 154 989 100 444 54.3%

Return on assets (ROA) 2.9% 1.8% 1.2%

Return of equity (ROE) 21.7% 17.0% 4.7%


-0.7% -1.3%

-10%

0%

10%

SBERBANK`S MONTHLY NUMBERS UNDER RAS

45

Real growth dynamics (currency adjusted, cumulative YTD)

CORPORATE LOANS RETAIL LOANS CORPORATE DEPOSITS RETAIL DEPOSITS

4.9%

+0.8%

-10%

0%

10%

-10.2%

-3.2%

-20%

-10%

0%

10%

9.5%

+0.4%

-10%

0%

10%

20%

- 2017 - 2016



46

OWNERSHIP STRUCTURE –

SHARE CAPITAL

SUPERVISORY BOARD

COMPOSITION BOARD COMPOSITION

• The number of

independent directors

increased from 1 to 6

(out of 14) or from 7%

to 43% of the

Supervisory Board

• Audit committee

chaired by

independent director

• Annual Board

assessment launched

in 2012

50%+ 1 share

45.6%

Free float

Foreign Institutional

Central Bank of Russia

2.9% Domestic Retail

1.5% Domestic Institutional

29% (5) 36% (5)

47% (8)

14% (2)

6% (1)

43% (6)

18% (3)

7% (1)

26-Jun-2007 Current

Management

INEDs

GovernmentOfficials

CBR Officials


80

100

120

140

160

180

200


47

HISTORICAL DIVIDEND PAYOUT

SBERBANK SHARE PRICE PERFORMANCE FOR THE YEAR

2016 (MICEX) AND PRICE TARGET (BLOOMBERG)

+71.1% Sberbank

ordinary share

47.5 58.7

72.3

10.16

44.5

15.3% 16.9%

20.0%

3.5%

20.0%

2011 2012 2013 2014 2015

Share of the Group net profit under IFRS, %

Declared amount of dividends, RUB bn

Ordinary shares, RUB 2.08 2.57 3.20 0.45 1.97

Preferred shares, RUB 2.59 3.20 3.20 0.45 1.97

RUB

192

114

Sberbank price target

(Bloomberg consensus)


CONTENT

48

1 WHY SBERBANK


4 TECHNOLOGY

7 GUIDANCE

6 STRATEGY TARGETS

2 RETAIL BUSINESS

8 DEEP DIVES

9 IFRS

5 OPPORTUNITIES

MACRO

BANKING SECTOR


CAPITAL

RAS


2

9

12

17

19

22

25

29

47


KEY FINANCIAL INDICATORS

49

72.6

117.7

145.4 137.0

141.8

+95.3%

NET

PROFIT

EARNINGS PER

ORDINARY SHARE

RETURN

ON ASSETS (ROA)

RETURN

ON EQUITY (ROE)

3.40

5.49

6.62 6.36 6.54

+92.4%

1.1

1.7

2.2 2.1

2.2

+1.1 pp

12.6

19.3

22.8

20.5 20.4

+8.7 pp


OPERATING INCOME

50

OPERATING INCOME BEFORE PROVISION CHARGE

FOR IMPAIRMENT OF DEBT FINANCIAL ASSETS

297.2 325.5 339.3 342.8 355.2

95.6 77.2

85.9 88.6 97.4 25.8

-25.1

17.6 3.6

-10.5

+5.6%

418.6 377.6

442.8

19.4% 19.4% 22.8%

20.4%

435.0

- share of F&C income in

Operating Income

22.0%

442.1


NET INTEREST INCOME

NET INTEREST

INCOME

NET INTEREST MARGIN AND

NET INTEREST SPREAD

9.9 10.0 10.0 10.0 10.1

4.9

5.3 5.6 5.8

6.1

5.3

5.0 4.7 4.6 4.5

+19.5%

51

297.2

325.5

339.3 342.8

355.2


INTEREST INCOME

INTEREST INCOME AVERAGE LOAN YIELDS

14.7 14.9 14.9 15.0 14.9

11.2 11.1 11.1 11.0 11.2

10.0 9.9 9.8 9.5

9.9 363.8 366.7 354.5 337.9 342.1

181.3 184.9 184.7 187.4 187.6

53.8 61.4 60.3 65.8 65.7

-0.6%

52

598.9 613.0

Yield on corporate loans increased in Q4, 2016 due to seasonality, early prepayments and currency mix

599.5 591.1 595.4


INTEREST EXPENSE

INTEREST EXPENSE AVERAGE CUSTOMER DEPOSIT COSTS

5.0 4.5 4.3

3.9 4.3

6.7 6.5

6.0 6.1 5.5

1.6 1.6 1.7 1.4 1.4

159.2 159 148.1 152.1 141

78.7 73.1 65.5 53.3 57

63.8 55.4

46.6 42.9 42.2

-20.4%

53

310.8 301.7 287.5

The cost of funding continued to decrease in Q4, 2016 driven by downward repricing of individual term

deposits

260.2 248.3


384.1 436.3

-65.1 -87.2

2015 2016

Fee and comission expense

Fee and commission income

NET FEE AND COMMISSION INCOME

NET FEE AND COMMISSION INCOME

+9.4%

319.0

54

NET FEE AND COMMISSION INCOME EXCLUDING

OPERATIONS WITH FOREIGN CURRENCIES AND

PRECIOUS METALS

Operations with

foreign currencies

and precious metals

22.0 40.1

-0.5 -0.4

349.1

344.0 414.3

-64.6 -86.8

2015 2016

Fee and comission expense, excluding Operations withforeign currencies

Fee and commission income, excluding Operations withforeign currencies and precious metals

+17.2%

279.4

327.5


OPERATING EXPENSES

55

OPERATING

EXPENSES

99.1 86.1 97.8 94.2 106.2

92.6

57.7 71 68.8

95.8

+5.4%

191.7

143.8

168.8

SHARE OF SBERBANK AND ITS SUBSIDIARIES

IN OPERATING EXPENSES

78 74 80 79 81

22 26 20 21 19

Operating expenses were up just 8.7%, mostly driven by completed indexation of staff salaries

163.0

202.0


OTHER OPERATING EXPENSES

56

OTHER OPERATING EXPENSES

22.0 14.5 17.7 17.7 22.9

30.2

22.0 25.9 25.0

32.4

11.2

3.9

6.4 7.2

11.9

14.0

5.4

8.3 7.9

12.5

15.2

11.9

12.7 11.0

16.1

+3.5%

92.6

57.7

71.0 68.8

95.8


OPERATING EXPENSE STRUCTURE &

ACTUAL HEADCOUNT

57

ACTUAL HEADCOUNT

271.2 266.5 266.6 265.1 260

59.5 61.3 60.7 63.6 65.1

-1.7%

330.7 327.8

OPERATING EXPENSES SPLIT

4Q’15 1Q’16 2Q’16 3Q’16 4Q’16

Staff costs, Sberbank 78.3 69.1 80.5 76.0 84.0

Staff costs, subsidiaries 20.8 17.0 17.3 18.2 22.2

Other operating expenses,

Sberbank 72.0 37.2 53.8 52.4 80.5

Other operating expenses,

subsidiaries 20.6 20.5 17.2 16.4 15.3

327.3 328.7 325.1


NET PROVISION CHARGE FOR LOAN IMPAIRMENT

58

Cost of risk came in at 1.8% in 2016. Excluding the effect of ruble appreciation, it would have been close to

2%

NET PROVISION CHARGE FOR LOAN IMPAIRMENT

112.3

84.3

98.3 102.1

57.7

0

20

40

60

80

100

120

COST OF RISK

2.3 1.7

2.0 2.1

1.2

2.9

1.5

2.3 2.5

1.5

0.5

2.4

1.1 1.1

0.6

-49.2%


ASSET DYNAMICS AND STRUCTURE

59

Assets continued to contract in the back of revaluation and muted loan growth

ASSETS

17 756.6 18 727.8 17 361.3

2 231.9 2 906.0

2 717.5

2 308.8 2 333.6

2 560.8

2 903.5 3 367.3

2 728.9

+0.7%

27 334.7 25 368.5

-7.2%

SHARE OF INTEREST-EARNING ASSETS IN THE

GROUP`S TOTAL ASSETS

86.7 % 90.0 %

92.2 %

25 200.8


LOAN PORTFOLIO (1)

60

LOAN PORTFOLIO BEFORE

PROVISIONS FOR LOAN IMPAIRMENT

18 626.1

19 924.3

18 664.7

+0.2%

-6.3%

CORPORATE LOAN PORTFOLIO

STRUCTURE

RETAIL LOAN PORTFOLIO

STRUCTURE

Mortgage loan portfolio grew by 7.7%, while consumer loans decreased by 6.4% in 2016

10 368.0 9 916.0

4 590.7 3 717.0

14 958.7

13 633.0

-8.9%

2554.6 2750.9

142 119.8 587.2

586.9

1681.8 1574.1

4 965.6 5 031.7

+1.3%


LOAN PORTFOLIO (2)

61

CURRENCY BREAKDOWN INDUSTRY BREAKDOWN MATURITY BREAKDOWN

14.6 13.9

12.6 11.4

32.7 29.6

40.1 45.1

60.5 63.8

25.5 22.8

14.0 13.4

27.0%

8.3%

8.1%

7.8%

7.0%

5.8%

4.8%

4.7%

4.3%

4.0%

3.9%

3.8%

3.0%

3.0%

0.5%

4.0%

Individuals

Metallurgy

Real estate

Oil and gas

Trade

Food and agriculture

Energy

Machinery

Government and municipal bodies

Construction

Telecommunications

Services

Transport, aviation, space industry

Chemical industry

Timber industry

Other


1 638.4 2 023.6

1 739.8

86.7

245.7

335.8 48.9

86.6

63.8 457.9

550.1 578.4

SECURITIES PORTFOLIO

62

SECURITIES BY PORTFOLIO

+21.8%

2 231.9

2 906.0

-6.5%

SECURITIES BY TYPE

807.9 872.2 1019.1

217.3 325.7

273.6 93.3 76.4 78.7

712.7

1156.9 913.9 400.7

474.8 432.2

2 906.0

2 717.5 2 717.5

2 231.9


LIABILITIES DYNAMICS AND STRUCTURE

63

The decline in corporate funds in 2016 was mainly due to declining interest rates and ruble appreciation

LIABILITIES

CUSTOMER DEPOSITS

BY CURRENCY

CUSTOMER DEPOSITS

BY MATURITY

769.5 806.5 739.9

9328.4 12043.7 12449.6

6234.5

7754.6 6235.2 3640

1045.9 561.9

3 208.3 3 309.0

2 560.3

-2.7%

-9.7%

23 180.7 24 959.7

53.2 60.7

11.1

9.5

28.7 23.6

7.0 6.2

48.0 41.1

9.5

7.3

35.7 47.2

6.8 4.4

22 546.9


CURRENCY AND MATURITY MATCH¹

64

Retail term

deposits 53%

Retail current

accounts 13%

Corporate current

accounts 11%

Corporate term

deposits 23%

>3 years 2%

On demand and

<1 month 41% 1–3 years 14%

1–6 months 29% 6–12 months 14%

63%

22% 7% 4% 3%

59%

24% 10% 4% 3%

RUB USD EUR Turkish Lyra Other

Financial assets Financial liabilities

26%

9% 10%

24% 28%

3%

29%

17% 10%

32%

11% 1%

On demandand <1 month

1-6 months 6-12 months 1-3 years >3 years No statedmaturity

Assets Liabilities

Notes: (1) as of 31/12/2016

FOREIGN CURRENCY RISK EXPOSURE

LIQUIDITY RISK

DEPOSITS STRUCTURE BY INSTRUMENT

DEPOSITS STRUCTURE BY MATURITY


REDUCED WHOLESALE FUNDING POSITION¹

65

Instrument Total Amount Drawdown Date Maturity date Maturity Interest Rate, % p.a.

Notes: (1) As of 31.12.2016, local issuances of subsidiaries are not included Source: Sberbank’s audited IFRS financial statements for 2016

Wholesale funding accounts for <3% of total liabilities


IR CONTACT DETAILS

STRATEGIC PARTNERS

AND INVESTORS Jyrki Talvitie

[email protected]

HEAD OF INVESTOR

RELATIONS

Anastasia Belyanina

[email protected]

IR TEAM Kristina Bystrykh

[email protected]

Maria Shevtsova

[email protected]

Kirill Sokolov

[email protected]

CONTACTS Address: 19, Vavilova Street

Moscow, 117997

Russia

Phone: +7 (495) 957-59-60

Email : [email protected]

www.sberbank.com

SBERBANK IR APP

Sberbank IR App allows investors, analysts, the media and other interested

parties to remain up to date with current financial and corporate information on

Sberbank

Ekaterina Khromova

[email protected]

Andrey Raevskiy

[email protected]


DISCLAIMER

This presentation has been prepared by Sberbank of Russia (the

“Bank”) and has not been independently verified. This presentation

does not constitute or form part or all of, and should not be

construed as, any offer of, or any invitation to sell or issue, or any

solicitation of any offer to purchase, subscribe for, underwrite or

otherwise acquire, or a recommendation regarding, any shares or

other securities representing shares in, or any other securities of the

Bank, or any member of the Bank’s group, nor shall it or any part of

it nor the fact of its presentation or distribution form the basis of, or

be relied on in connection with, any contract or any commitment

whatsoever or any investment decision. The information in this

presentation is confidential and is being provided to you solely for

your information and may not be reproduced, retransmitted or

further distributed to any other person or published, in whole or in

part, for any purpose.

This presentation is only being distributed to and is only directed at

(A) persons in member states of the European Economic Area

(other than the United Kingdom) who are “qualified investors” within

the meaning of Article 2(1)(e) of Directive 2003/71/EC (as amended

and together with any applicable implementing measures in that

member state, the “Prospectus Directive”) (“Qualified Investors”);

(B) in the United Kingdom, Qualified Investors who are investment

professionals falling within Article 19(5) of the Financial Services

and Markets Act 2000 (Financial Promotion) Order 2005 (the

“Order”) and/or high net worth companies, and other persons to

whom it may lawfully be communicated, falling within Article 49(2)(a)

to (d) of the Order; and (C) such other persons as to whom this

presentation may be lawfully distributed and directed under

applicable laws (all such persons in (A) to (C) above together being

referred to as “relevant persons”). The shares, or other securities

representing shares, are only available to, and any invitation, offer

or agreement to subscribe, purchase or otherwise acquire such

securities will be engaged in only with, relevant persons. Any

person who is not a relevant person should not act or rely on this

presentation or any of its contents.

The information in this presentation or in oral statements of the

management of the Bank may include forward-looking statements.

Forward-looking statements include all matters that are not

historical facts, statements regarding the Bank’s intentions, beliefs

or current expectations concerning, among other things, the Bank’s

results of operations, financial condition, liquidity, prospects, growth,

targets, strategies, and the industry in which the Bank operates. By

their nature, forward-looking statements involve risks and

uncertainties, because they relate to events and depend on

circumstances that may or may not occur in the future. The Bank

cautions you that forward-looking statements are not guarantees of

future performance and that its actual results of operations, financial

condition and liquidity and the development of the industry in which

the Bank operates may differ materially from those made in or

suggested by the forward looking statements contained in this

presentation or in oral statements of the management of the Bank.

In addition, even if the Bank’s results of operations, financial

condition and liquidity and the development of the industry in which

the Bank operates are consistent with forward-looking statements

contained in this presentation or made in oral statements, those

results or developments may not be indicative of results or

developments in future periods.

Sberbank assumes no obligation to publicly update or revise any

forward-looking statements, whether as a result of new information

or for any other reason.

The information and opinions contained in this presentation or in

oral statements of the management of the Bank are provided as at

the date of this presentation or as at the other date if indicated and

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By attending or reviewing this presentation, you acknowledge and

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