Sberbank CZ Annual Report (Unaudited)
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Sberbank CZ Annual Report (Unaudited) This version of the annual report was prepared for marketing purposes and has not been audited. Sberbank CZ Annual Report 2020 1. Table of Contents 1. Table of Contents 2. Bank Profile 3 3. Introduction by the Management Board 4 4. Key Figures in Summary 6 5. Most Important Events of the Year 7 6. Sberbank Group 9 7. Bank Bodies 12 8. Organisational Chart 27 9. Economic Conditions 28 10. Report of the Management Board 29 11. Products and Services 40 12. Risk Management 42 Sberbank CZ Annual Report 2020 13. Corporate Governance 47 14. Remuneration 58 15. Corporate Social Responsibility 61 16. Additional Information 64 17. Alternative Performance Indicators 67 18. Financial Statements 70 19. Quantitative Indicators 174 20. Capital Requirements 175 21. Report on Relationships 176 22. Affidavit 186 23. Independent Auditor's Report 187 24. Our Network 188 This annual report provides a true and accurate picture of the financial position, business activities and profit and loss of the Bank for the previous fiscal period and of the outlook for the future financial situation, business activities and profit and loss. Unless otherwise stated, the data and information in this report are always reported as of 31 December 2020. 1 Sberbank CZ Annual Report 2020 Sberbank CZ, centrála photo copyright: © Penta Investments 2 Sberbank CZ Annual Report 2020 2. Bank Profile Corporate name Sberbank CZ, a.s. Company identification number 25083325 Tax identification number CZ25083325 Registered office U Trezorky 921/2, Jinonice, 158 00 Prague 5, Czech Republic Legal form Joint-stock company File No. in the Commercial Register B 4353 maintained by the Municipal Court in Prague, Section B, Insert 4353 Date of incorporation 31 October 1996 Subject of enterprise Banking transactions and financial services of all types in accordance with Sections 1(1)a), 1(1)b) and 1(3)a) – o) of Act No. 21/1992 Sb., on Banks, as amended, which are listed in the banking licence issued under the above Act. Bank code 6800 BIC/SWIFT VBOECZ2XXXX Data box identifier f94gyc6 LEI 31570010000000029583 Phone +420 800 133 444 Fax +420 221 969 951 E-mail [email protected] Website www.sberbank.cz Banking supervisory authority Czech National Bank Law Czech Republic Bank does not have a branch abroad. 3 Sberbank CZ Annual Report 2020 3. Introduction by the Management Board Ladies and gentlemen, dear clients, business partners and shareholders, The year 2020 was severely affected by the unprecedented pan- demic of COVID-19 which had an impact on the entire society. Some industries were hit harder than others, but the overall economic impact of the COVID-19 pandemic has been extensive and will un- doubtedly affect 2021. We faced rising unemployment, reduced con- sumption, spreading inability of both people and companies to settle their financial obligations, worsening supplier-customer relationship, limitations in export and import and, naturally, cutback in tourism. Our Bank had to respond to this situation. Its crisis team has adopted a number of measures to protect the Bank’s stability and the health of our clients and employees. We managed to keep the entire branch network in operation and offer our clients new products and services to help them in this extraordinary situation. The Bank was also flexible in adopting all restrictions decreed by the Czech government in order to prevent the pandemic from spreading further. The COVID-19 epidemic has accelerated the arrival of digitisation in the entire financial sector. Clients began to focus on online com- munication with their bank and use all services and applications online. The transformation process, which we had already commenced in 2019, was instrumental in completing several key projects, such as new current account packages which we successfully introduced to our clients together with our new internet and mobile banking. As a result, the number of clients actively using mobile banking has more than doubled. We have strengthened the Bank’s responsible approach to the environment by, for example, launching the gradual transformation of our car fleet to electric and hybrid vehicles. We have also streamlined the Bank’s organisational structure. We learned to work within the online environment and more than 50% of our employees worked from home when needed. We continued to trans- form our performance together with strict cost control which trans- 1 For details on the alternative performance indicators, see Chapter 17. 4 Sberbank CZ Annual Report 2020 3. Introduction by the Management Board lated into the cost-income ratio stabilisation at 71.6%. We success- I would also like to take this opportunity and say special thanks fully implemented all new regulatory requirements (such as the to our clients for their trust and loyalty. We tried our best to help moratorium on deferred loan repayments) in an extremely short them overcome last year’s market crisis and move forward with time and offered our clients discounted loans to help them face the success. Finally, I would also like to thank our employees for all the COVID-19 pandemic consequences. I am really pleased to say that work and effort they have exerted for our clients and for our Bank last year we managed to cope with the crisis which interfered with to make it in 2020. I am very pleased that they went beyond their the entire market and keep our Bank healthy and stable. responsibilities and helped those in need during these difficult times, whether it was helping seniors or children in children’s homes, In 2020, the Bank achieved a net profit after tax of CZK 19 million, engaging in the Movember movement, supporting cancer prevention as it had to create the largest reserves and provisions in its history and treatment or volunteering in the field of environmental care. while its operating revenues lowered. In this annual report, you will see detail information on our business indicators, and I would like to I am convinced that our Bank is well prepared to face the uncer- take this opportunity to first highlight several facts. The decline in tainties and challenges brought by COVID-19 pandemic and subse- operating revenues was mainly due to a significant reduction in the quent world-wide crisis, and I look forward to 2021. interest rate by 200 basis points in the first half of last year. However, despite challenging market conditions and the impact of COVID-19 epidemic, we saw a growing interest in consumer loans and good income from insurance and investments commissions, especially in the last quarter of 2020. Growth in the corporate segment was in- fluenced by the fact that some of the frequently funded industries were hit hard last year. As a result, net income from financial oper- ations before the creation of reserves and provisions amounted to CZK 2.045 billion, i.e. 21% lower year-on-year. The balance sheet total increased by 7% to CZK 89.4 billion, the total volume of client deposits grew by 12% to CZK 78.1 billion, while the total volume of loans to clients slightly decreased to CZK 61.3 billion. Thanks to several cost- saving measures, our administrative costs further decreased by CZK 110 million to CZK 1,376 million. By strict risk monitoring during uncertain circumstances of last year, the Bank maintained a low share of non-performing loans in the unpredictable conditions of last year, reaching 2.14%. The capital adequacy ratio reached the level of 17.24%, which is well above the Dušan Baran threshold required by the regulator and allows further development Deputy Chairman of the Management Board of the Bank.1 1 For details on the alternative performance indicators, see Chapter 17. 5 Sberbank CZ Annual Report 2020 4. Key Figures in Summary The method of calculation quantitative indicators is described and explained in Chapter 17 Alternative Performance Indicators. in million CZK 2020 2019 2018 2017 2016 Total assets 89,404 83,710 79,755 81,464 71,965 Capital Adequacy Ratio 17.24% 16.59% 16.18% 16.44% 16.55% Liabilities to clients 78,131 69,568 66,088 64,129 55,787 Receivables from clients 61,360 63,059 62,902 60,483 55,613 Profit from financial operations before the creation of reserves and loss provisions 2,045 2,571 2,419 2,228 2,028 Administrative expenses 1,376 1,486 1,577 1,454 1,398 Profit on ordinary activities before tax 22 676 478 531 336 Profit for the year 19 539 377 424 272 Number of clients 110,706 110,846 117,056 112,559 108,310 Number of employees* 701 746 828 914 840 Number of points of sale 24 24 25 28 28 Share of non-performing loans (NPL) 2.14% 1.54% 2.63% 5.43% 5.74% * recalculated average registered number of employees TOTAL ASSETS PROFIT FROM FINANCIAL OPERATIONS BEFORE THE CREATION CZK billion OF RESERVES AND LOSS PROVISIONS 89.4 CZK billion 81.5 83.7 2.57 79.8 2.42 72.0 2.23 2.03 2.05 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 NUMBER OF CLIENTS SHARE OF NON-PERFORMING LOANS (NPL) thousandh in % 117.1 108.3 112.6 110.8 110.7 5.74 5.43 2.63 2.14 1.54 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 6 Sberbank CZ Annual Report 2020 5. Most Important Events of the Year In January... On 22 April 2020, a regular meeting of the Audit Committee and On 29 January 2020, Sberbank was announced as the winner of the Supervisory Board was held, where, among other things, the Bank’s the Financial Product of 2019 Prize and became No.