Structure of Sberbank Group’s liabilities and equity under IFRS

GENERAL TRENDS

The Group’s liability structure is dominated by amounts due to individuals and corporate customer totaling RUB 15.6 trillion, or 67.1% of total liabilities as of 2014 year-end. In 2014, the Group increased borrowings from banks by RUB 1,528.7 bn (up 72.4% y-o-y). The funds received from the Bank of Russia were the main component of the growth in interbank borrowings.

CUSTOMER DEPOSITS

Amounts due to customers increased by 29.0% to RUB 15.6 trillion in 2014. In 2014, the growth in amounts due to corporate customers outpaced the growth in amounts due to individuals thus increasing the share of due to corporate customers in total amounts due to customers by 10.0 pp to 40.1%.

In 2014, amounts due to individuals increased by 10.6% to RUB 9.3 trillion remaining the Group’s key source of funding. The volatility in the Russian economy had a great impact on amounts due to individuals as it changed an attitude to deposits. Amounts due to corporate customers grew by 71.8% to RUB 6.3 trillion.

Breakdown of amounts due to customers
December 31, 2014 December 31, 2013
RUB bn % of total RUB bn % of total
Due to individuals
— Current/demand accounts 1,886.2 12.1 1,748.4 14.5
— Term deposits 7,442.2 47.8 6,687.4 55.4
Total due to individuals 9,328.4 59.9 8,435.8 69.9
Due to corporate customers
— Current/settlement accounts 1,819.7 11.7 1,663.5 13.8
— Term deposits 4,414.8 28.4 1,964.9 16.3
Total due to corporate customers 6,234.5 40.1 3,628.4 30.1
Total 15,562.9 100.0 12,064.2 100.0
DEBT SECURITIES ISSUED
RUB bn December 31, 2014 December 31, 2013 Change Change,%
Loan participation notes, issued under the MTN programme of Sberbank 629.9 324.9 305.0 93.9
Savings certificates 456.8 344.5 112.3 32.6
Bonds issued:
— on the local market 80.2 44.7 35.5 79.4
— on international capital markets 33 14.7 18.3 124.5
Promissory notes 73.3 74.7 (1.4) -1.9
Notes issued under the ECP programme of Sberbank 15.9 46.9 (31.0) -66.1
Bonds issued under mortgage securitization programme of Sberbank 9.7 0 9.7
Deposit certificates 2.7 1.6 1.1 68.8
Equity linked notes and credit linked notes 1.1 1.4 (0.3) -21.4
Total debt securities issued 1,302.6 853.4 449.2 52.6

In 2014, the volume of debt securities issued increased by RUB 449.2 bn. Loan participation notes issued under MTN programme of Sberbank have made about 70% of an increase in debt securities issued (+ RUB 305 bn), another 25% was driven by an increase in savings certificates issued (+ RUB 112.3 bn). The increase in the balance of loan participation notes issued under MTN programme of Sberbank is primarily driven by considerable RUB depreciation as compared to other world currencies.

EQUITY
RUB bn December 31, 2014 December 31, 2013 Change Change,%
Share capital 87.7 87.7
Treasury shares (7.6) (7.2) (0.4) 5.6
Share premium 232.6 232.6
Revaluation reserve for office premises 72.3 75.8 (3.5) -4.6
Fair value reserve for investment securities available for sale (171.4) 1.3 (172.7) -13,284.6
Foreign currency translation reserve 83.2 (13.7) 96.9 -707.3
Retained earnings 1,718.8 1,495.2 223.6 15.0
Total equity attributable to shareholders of the bank 2,015.6 1,871.7 143.9 7.7
Non-controlling interest 4.5 9.7 (5.2) -53.6
TOTAL EQUITY 2,020.1 1,881.4 138.7 7.4

In 2014, the Group’s equity increased by 7.4% to RUB 2.0 trillion. The growth is attributed to the Group’s profit earned.

CAPITAL ADEQUACY
RUB bn December 31, 2014 December 31, 2013
Tier 1 capital
Share capital 87.7 87.7
Share premium 232.6 232.6
Retained earnings 1,718.8 1,495.2
Treasury shares (7.6) (7.2)
Less Goodwill (23.7) (20.2)
Total tier 1 capital (core capital) 2,007.8 1,788.1
Tier 2 capital
Revaluation reserve for premises 72.3 75.8
Fair value reserve for investment securities available-for-sale (77.1) 0.6
Foreign currency translation reserve 83.2 (13.7)
Subordinated capital 753.4 420.1
less investments in associates (4.3) (4.4)
Total tier 2 capital 827.5 478.4
Total capital 2,835.3 2,266.5
Risk weighted assets (RWA)
Credit risk 22,845.3 16,397.1
Market risk 519.7 550.0
Total risk weighted assets (RWA) 23,365.0 16,947.1
Core capital adequacy ratio (Total tier 1 to Total RWA) 8.6 10.6
Total capital adequacy ratio (Total capital to Total RWA) 12.1 13.4

Based on the 2014 results, the core capital and total capital adequacy ratios amounted to 8.6% and 12.1%, respectively, which is significantly higher than the baseline specified by the Basel Committee (8%). At the same time, 2014 was marked by a reduction in the capital adequacy ratio mainly due to risk weighted assets growth attributed to an increase in foreign currency assets caused by Russian currency devaluation.