Aggregate Profit and Loss Statement

Aggregate Profit and Loss Statement

The Bank increased its net interest income by 14.5%. Its 2011 amount was 575.8 bn rubles in absolute terms. The increase of net interest income was possible owing to both growth of interest yields and a drop in interest expenses.

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  Over half of the Bank's interest income is generated by loans to legal entities. The amount of interest paid under loans to legal entities added 0.7% or 3.5 bn rubles during the reporting year, reaching 489.0 bn rubles. The loan portfolio of legal entities³⁷ increased 34.1% over the year and was about 6.4 trillion rubles. The overall worth of loans granted by the Bank during the year to legal entities exceeded 5.5 trillion rubles, 28% more than in 2010.
  
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  Interest income generated by lending to retail clients rose 20.9 % or 37.3 bn rubles to 215.5 bn rubles, larger lending volumes being the main factor of income growth. Sberbank's retail loan portfolio grew 36.6 % during the year (11.3 % the year before) to about 1.8 trillion rubles. Such significant portfolio growth was, in many respects, facilitated by special promotions and programs carried out by Sberbank throughout the reporting year. In addition, portfolio growth is boosted by operations via the Loan Factory technology that the Bank has been developing since 2008. In 2011, all territorial banks were using this technology to grant consumer and car loans and started processing requests for housing loans.
  
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  Previous year's income, fines and penalties were collected by the Bank from its clients within its planned effort aimed at bad assets as part of restructuring or sale of assets. In 2011, 11.6 bn rubles of the income type in question was received against 12.3 bn rubles the year before.
  
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  Income from sale of insurance products³⁸ in 2011 reached 13.4 bn rubles against 9.4 bn rubles the year before. This comes as evidence that there is demand for banking insurance programs among the Bank's clients.
  
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  Interest income generated by securities investments fell 3.0% or by 3.1 bn rubles to 100.4 bn rubles. Despite a 15.9% reduction in the securities portfolio held by the Bank, interest income it generated barely changed against the year before. This came as a result of structural changes in the Bank's securities portfolio: the share of governmental securities went down from 67% to 52% after bonds of the Bank of Russia and certain series of the Federal Bonded Debt were redeemed, and the share of higher-yield securities such as corporate bonds increased from 20% to 31%. Here, the Bank was primarily purchasing bonds included in the Pawn List of the Bank of Russia.
  
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  Interest income on funds placed in lending institutions lost 2.2% and fell to 7.9 bn rubles because of a reduction in investments made in the Bank of Russia.
  
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  Interest expenses on funds from retail clients fell most dramatically, 12.1% or by 25.7 bn rubles. Their 2011 volume was 187.5 bn rubles. However, the amount of deposits was steadily increasing, with their balance growing 17.8% or 833 bn rubles over the year to 5,523 bn rubles.
  A reduction in interest expenses and a parallel growth in deposit volumes were mainly based on the following factors:
  

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  the Bank repeatedly lowered deposit interest rates during the two preceding years:
  In 2011, 2-plus year deposits opened in 2009 and 1-plus year deposits opened in 2010 were extended or replaced with deposits at lower rates as the Bank made several decisions in 2009 and 2010 to lower interest rates for the given deposits. This had a positive impact and reduced the overall cost of funds from retail clients;
  
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  growth of the balance on clients' bank card accounts and their share in the structure of funds from retail clients.
  

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  On the contrary, interest expenses on funds from legal entities increased 3.5% or by 1.4 bn rubles to 43.1 bn rubles. Their growth is caused, in many respects, by higher interest rates in the market in 2011 as compared to 2010.
  
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  Interest expenses on issued debentures³⁹ fell 61.8% or 5.1 bn rubles to 3.2 bn rubles. This item's dynamics were primarily affected by the Bank's decision to cut interest rates for promissory notes of legal entities.
  

In 2011 the Bank generated income from⁴² release of provisions in the amount of 11.2 bn rubles, while in 2010 the Bank's expenses incurred in creating reserves amounted to 86.9 bn rubles. Dynamics of reserves is based mainly on loan reserves: income from release of provisions in 2011, as part of planned arrangements with bad assets, amounted to 16.4 bn rubles as compared to expenses of 80.6 bn rubles in 2010. The Bank also continued to create reserves for newly issued loans.

Items that mostly affected the growth in operating costs:

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  planned growth of the cost of maintaining personnel;
  
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  administrative and business expenses that accompany development of a business;
  
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  charges transferred to the Fund of Deposits’ Mandatory Insurance and increased as a result of larger deposits.
  

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  a reduction in the negative revaluation of transactions in precious metals;
  
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  a lower cost of assignment of own claims.
  

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  2011 earnings before tax amounted to 408.9 bn rubles (in 2010: 242.2 bn rubles).
  
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  2011 earnings after tax amounted to 310.5 bn rubles (in 2010: 174.0 bn rubles)