Opening Statement from CEO and Chairman of the Executive Board

photo: Herman Gref

Herman Gref

CEO, Chairman of the Executive Board

Dear Shareholders, Clients, and Partners,

The year 2014 was a tough year for Sberbank, full of macroeconomic instability, geopolitical uncertainties and risks. Nonetheless, our team successfully mastered new challenges, delivering on the targets we had set for the first year of our Strategy 2018. Considering the challenging market environment the financial results that Sberbank achieved in 2014 evidence the bank’s decent performance.

The Sberbank Group earned a net profit of RUB 290 billion under IFRS. The bank reaffirmed its status as one of Europe’s leaders in terms of return on assets, which constituted 1.4%. The return on equity was also high, reaching almost 15%.

The total loan portfolio grew by 38%, reaching almost RUB 18,6 trillion, with corporate loan portfolio increasing 41% and retail loan portfolio — 29%.

Mortgage lending was the priority for our retail business. Sberbank enhanced its approach to mortgage sales model by simplifying loan application process and by building a network of partnerships with real estate agencies and developers. As a result, the home equity loan portfolio increased by 45% and Sberbank’s share on the home equity loan market in Russia reached 53% by the end of the year.

Customer servicing model in all segments of the corporate sector underwent a major revamp, which improved the quality of service, increased the number of products per customer and enhanced customer satisfaction with the bank’s services.

With every process in the bank fully transformed, including new approaches to risk management, IT systems and HR introduced over the last years, we faced the recent downturn in a much better shape than during the previous crisis of 2008–2009.

Sberbank has built an efficient risk management system that helps us maintain the quality of our portfolio at a level far above the market average. The flexibility to customise models and accuracy in predicting various scenarios enable the system to respond to any changes in the market environment in a timely manner. In an effort to further improve the system, the bank started working on the development of a „risk culture” that involves identification, analysis and minimisation of risks at all management levels across all business lines.

In 2014 Sberbank made a substantial step forward in IT development as part of creating an advanced system that would become the cornerstone of the bank’s competitive advantage in the world of widespread digital technologies. Among the key achievements in 2014 were an increase in the share of remote channel of corporate clients’ transactions to 94%, a great progress in implementing the IT platform consolidation project, substantially improved reliability and performance of IT systems and leadership in developing innovative banking products.

We would have never achieved such results without putting considerable effort into developing our corporate culture and investing in our greatest asset — our people. Sberbank pays special attention to employee training and professional development. In 2014 more than 250 thousand employees underwent our corporate training programmes, including those for top-managers in cooperation with the world’s leading business schools.

One of the highlights of our corporate life in the previous year was the launch of a new campus of our Corporate University that was built to meet the highest standards of the world’s leading business schools. The University is to become a training and talent development centre that will raise a new generation of managers who are ready to handle global challenges posed by new economic realities and who are committed to the bank’s strategic goal of becoming a leader among the world’s most innovative financial institutions.

The first year that we spent working on our Strategy 2018 demonstrated that the fundamental changes we had envisioned remained relevant in the new conditions; what is more, some of those changes had to be implemented even faster than we had planned. We are committed to continue working on the goals we have set and we will make every effort in order to be the best bank for our clients and partners, we will go the extra mile and create shareholder value through continuous development.