The AAA(RU) credit rating of Sberbank (hereinafter, Sberbank, or the Bank) is based on its very high systemic importance for the Russian economy and the fact that it has a shareholder that is ready to provide support.  The Bank’s standalone creditworthiness is very high compared to other Russian credit institutions, which is supported by its exceptional market positions, strong capital position, and adequate risk and liquidity and funding profiles.

The credit ratings of the Bank’s bond issues (RU000A102FR3, RU000A102CU4, RU000A1025U5, RU000A101QW2, RU000A0ZYUJ0, RU000A0JXRW5, RU000A0ZZ117, RU000A0ZZBN9, RU000A0ZZE20, RU000A0ZZWZ9, RU000A0ZZXS2 RU000A100758, RU000A100KW7, RU000A100KX5, RU000A100K80, RU000A100VB8, RU000A1012R9, RU000A101C89) have been affirmed at AAA(RU). The credit rating of the subordinated bond issue (RU000A102HC1), which is a Tier 2 capital instrument, has been affirmed at AA-(RU).

Sberbank is Russia’s largest bank and holds over 30% of the total assets in the banking system. Sberbank occupies leading positions in most domestic banking business segments in Russia.

Key rating assessment factors

Very high likelihood of extraordinary support. As a key player in the market with strategic importance for the Russian authorities, Sberbank boasts very high systemic importance. This is reflected in the consequences of its potential default, which could lead to a systemic banking crisis and result in significant problems across the entire economy. Sberbank is a dominant lender for retail and corporate clients (with respective market shares of 42.7% and 30.6%, according to ACRA’s data), holds approximately 45.5% of retail deposits, and is a critical infrastructural entity acting as a nationwide settlement system. Therefore, its default could lead to an acute socioeconomic crisis and recession. In addition, thanks to its unique market position, the Bank is a de facto benchmark institution in terms of interest rates.

Very strong business profile. The Bank has a stable franchise and enjoys the largest market shares in most banking business segments. Sberbank’s key competitive advantages include a substantial amount (53.7% of the Bank’s total liabilities as of the end of 2020) of relatively low cost retail deposits (the share of funds in demand deposits and current accounts grew considerably in 2020 and amounted to 38%), which allows the Bank to earn high net interest income (the average NIM exceeds that of peer banks). In addition, the Bank has wide customer base coverage in terms of geography and industry, which provides for diverse operating income, including interest income from loans to corporates and individuals, significant investments in the most advanced customer financial and non-financial services, the focus on the development of which is reflected in the Bank’s 2023 Strategy.

Strong capital adequacy assessment. In recent years, Sberbank has recorded stable growth of profits. However, in 2020, profits fell by -10% compared to 2019, which was mainly due to additional creation of reserves for loan portfolio risks due to the coronavirus pandemic. The average capital generation ratio calculated by ACRA amounted to 175 bps. The conservative capital and risk management policies that the Bank adheres to, as well as the transition to Basel 3.5 approaches for calculating risk-weighted assets, and the inclusion of a perpetual subordinated loan in the sources of Tier 1 capital resulted in high Tier 1 capital adequacy in 2020 —14.3%. The Bank’s operational efficiency indicators exceed those of peer banks, which is positive for the rating assessment. According to ACRA’s calculations, CTI was practically unchanged, amounting to around 36% for the last three years, despite a small increase (5%) in operating costs compared to 2019. The average NIM for the last three years declined slightly (it was 5.4% according to ACRA’s calculations), however, in 2020 this indicator was supported by a noticeable decrease in expenses on funds raised from individuals and corporates caused by lower interest rates in the banking market. ACRA expects Sberbank’s NIM to decline this year, but it will still be higher than the market average for the banking system (largely due to access to cheaper funding and diversification of funding sources).

ACRA’s stress test shows that the Bank is able to withstand an additional increase in the cost of risk of over 500 bps without a decline in N1.2 below 6% within the 12 to 18-month horizon.

The adequate risk profile assessment is based on a moderate level of problem loans and concentration of the loan portfolio. The share of loans categorized as Stage 3 and initially impaired (as per IFRS) amounted to 6.6% of the total loan portfolio at the end of December 2020, measured at amortized cost, which is lower than the indicator recorded at the end of 2019 (7.5%). Loans to clients with high credit risk and defaulted loans at fair value through profit or loss account for 1.1% of the total loan portfolio. ACRA does not expect a significant deterioration in the quality of the loan portfolio by the end of the current year, however, the volume of loans restructured due to the coronavirus pandemic in 2020 on the Bank’s balance sheet (around RUB 2.5 tln at the end of February 2021) may cause a slight increase in the level of problem loans. The share of the 20 largest groups of related borrowers in the Bank’s portfolio amounted to 25.1% as of January 1, 2021.

The share of loans granted to companies operating in high-risk industries (as defined by ACRA’s methodology) was less than the threshold value of 100% of Tier 1 capital set by the methodology at the end of 2020.

ACRA also notes that the Bank’s risk management system is mature and sophisticated on both the operating and strategic levels.

The Bank’s comfortable liquidity and funding position is underpinned by the sufficient coverage of potential outflows with highly liquid assets (the short-term liquidity ratio (N26) equaled 112% as of January 1, 2021). If necessary, the Bank has access to a considerable volume of financing for repurchase and secured financing transactions, as well as market refinancing. Sberbank’s funding profile is assessed as well-balanced and is characterized by moderate concentration on both the largest lenders (at the end of 2020, the share of the top 20 lender groups equaled to 13.3% of the total amount of client funds) and funding sources. ACRA does not expect any significant changes in the funding structure within the 12 to 18-month horizon.

Key assumptions

  • Retaining the structure of shareholder control over the Bank;
  • Cost of credit risk no higher than 200 bps;
  • Tier 1 CAR above 12% within the 12 to 18-month horizon;
  • Maintaining high operating efficiency ratios.

Potential outlook or rating change factors

The Stable outlook assumes that the rating will most likely stay unchanged within the 12 to 18-month horizon.

A negative rating action may be prompted by:

  • Loss of shareholder or operational control over the Bank on the part of the shareholder and decreased standalone creditworthiness of the Bank.

Rating components

SCA: aaa.

Adjustments: on par with the RF.

Issue ratings

Rationale. In ACRA’s opinion, the bonds listed below are senior unsecured debt instruments of Sberbank. Due to the absence of either structural or contractual subordination of the issues, ACRA regards them as pari passu to other existing and future unsecured and unsubordinated debt obligations of the Bank. According to ACRA’s methodology, the credit ratings of the bonds correspond to the credit rating of Sberbank — AAA(RU).

Sberbank, 001P-SBER18 (RU000A102FR3), maturity date: December 9, 2022, issue volume: RUB 25 bln — AAA(RU).

Sberbank, 001Р-SBER19 (RU000A102CU4), maturity date: November 17, 2023, issue volume: RUB 18 bln — AAA(RU).

Sberbank, 001Р-SBER17 (RU000A1025U5), maturity date: October 29, 2023, issue volume: RUB 15 bln — AAA(RU).

Sberbank, 001Р-SBER16 (RU000A101QW2), maturity date: May 31, 2024, issue volume: RUB 40 bln — AAA(RU).

Sberbank, 001Р-04R (RU000A0ZYUJ0), maturity date: August 27, 2021, issue volume: RUB 50 bln — AAA(RU).

Sberbank, BО-19 (RU000A0JXRW5), maturity date: May 30, 2027, issue volume: RUB 15 bln — AAA(RU).

Sberbank, 001Р-06R (RU000A0ZZ117), maturity date: May 19, 2023, issue volume: RUB 40 bln — AAA(RU).

Sberbank, 001Р-12R (RU000A0ZZBN9), maturity date: February 2, 2022, issue volume: RUB 50 bln — AAA(RU).

Sberbank, 001Р-16R (RU000A0ZZE20), maturity date: January 18, 2023, issue volume: RUB 40 bln — AAA(RU).

Sberbank, 001Р-52R (RU000A0ZZWZ9), maturity date: February 7, 2022, issue volume: RUB 12 bln — AAA(RU).

Sberbank, 001Р-50R (RU000A0ZZXS2), maturity date: March 7, 2024, issue volume: RUB 15 bln — AAA(RU).

Sberbank, 001Р-78R (RU000A100758), maturity date: March 26, 2021, issue volume: RUB 40 bln — AAA(RU).

Sberbank, 001Р-SBER10 (RU000A100KW7), maturity date: July 12, 2021, issue volume: RUB 5 bln — AAA(RU).

Sberbank, 001Р-SBER11 (RU000A100KX5), maturity date: July 12, 2021, issue volume: RUB 10 bln — AAA(RU).

Sberbank, 001Р-SBER12 (RU000A100K80), maturity date: July 11, 2022, issue volume: RUB 40 bln — AAA(RU).

Sberbank, 001Р-SBER13 (RU000A100VB8), maturity date: September 24, 2021, issue volume: RUB 40 bln — AAA(RU).

Sberbank, 001Р-SBER14 (RU000A1012R9), maturity date: November 19, 2021, issue volume: RUB 40 bln — AAA(RU).

Sberbank, 001Р-SBER15 (RU000A101C89), maturity date: January 22, 2024, issue volume: RUB 50 bln — AAA(RU).

Rationale. The issue below is a debt instrument of Sberbank subordinated to preferred unsecured lenders. According to ACRA’s methodology, the credit rating of this issue type is set at three notches below the credit rating of Sberbank, which is AAA(RU).

Sberbank, 002SUB-02R (RU000A102HC1), maturity date: March 11, 2031, issue volume: RUB 56 bln — AA-(RU).

Regulatory disclosure

The credit ratings have been assigned to Sberbank and the bonds (RU000A102HC1, RU000A102FR3, RU000A102CU4, RU000A1025U5, RU000A101QW2, RU000A0ZYUJ0, RU000A0JXRW5, RU000A0ZZ117, RU000A0ZZBN9, RU000A0ZZE20, RU000A0ZZWZ9, RU000A0ZZXS2, RU000A100758, RU000A100KW7, RU000A100KX5, RU000A100K80, RU000A100VB8, RU000A1012R9, RU000A101C89) issued by Sberbank under the national scale for the Russian Federation based on the Methodology for Credit Ratings Assignment to Banks and Bank Groups Under the National Scale for the Russian Federation, the Methodology for Analyzing Relationships Between Rated Entities and the State, and the Key Concepts Used by the Analytical Credit Rating Agency Within the Scope of Its Rating Activities. The Methodology for Assigning Credit Ratings to Individual Issues of Financial Instruments Under the National Scale for the Russian Federation was also applied to assign credit ratings to the above issues.

The credit rating of Sberbank and the bonds (RU000A0ZYUJ0, RU000A0JXRW5, RU000A0ZZ117, RU000A0ZZBN9, RU000A0ZZE20, RU000A0ZZWZ9, RU000A0ZZXS2, RU000A100758, RU000A100KW7, RU000A100KX5, RU000A100K80, RU000A100VB8, RU000A1012R9, RU000A101C89, RU000A101QW2, RU000A1025U5, RU000A102CU4, RU000A102FR3, RU000A102HC1) issued by Sberbank were published by ACRA for the first time on March 20, 2017, March 5, 2018, May 31, 2017, May 29, 2018, July 5, 2018, December 14, 2018, December 14, 2018, December 14, 2018, March 29, 2019, July 16, 2019, July 16, 2019, July 16, 2019, September 30, 2019, November 22, 2019, January 24, 2020, June 5, 2020, October 2, 2020, November 20, 2020, December 11, 2020, and February 16, 2021, respectively. The credit rating of Sberbank and its outlook, as well as the credit ratings of the above bonds are expected to be revised within one year following the publication date of this press release.

The credit ratings were assigned based on data provided by Sberbank, information from publicly available sources, as well as ACRA’s own databases. The rating analysis was performed using the IFRS consolidated statements of Sberbank and the financial statements of Sberbank drawn up in compliance with Bank of Russia Ordinance No. 4927-U dated October 8, 2018. The credit ratings are unsolicited, and Sberbank participated in their assignment.

No material discrepancies between the provided data and the data officially disclosed by Sberbank in its financial statements have been discovered.

ACRA provided additional services to Sberbank. No conflicts of interest were discovered in the course of credit rating assignment.

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Irina Nosova
Director, Financial Institutions Ratings Group
+7 (495) 139 04 81
Suren Asaturov
Associate Director, Financial Institutions Ratings Group
+7 (495) 139 04 80, ext. 130
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