Sovcombank Reports 54.7% Year-on-Year Decline in Net Profit for H1 2025
Key Financial Results
- Net Profit: 17.5 billion RUB (−54.7% year-on-year).
- Net Interest Income After Credit Loss Expenses: 36.9 billion RUB, compared to 45.3 billion RUB last year.
- Net Fee Income: 20.4 billion RUB, an increase from 15.7 billion RUB a year earlier.
- Total Operating Income: 42.8 billion RUB, down from 53.5 billion RUB last year.
The decline in Sovcombank's net profit in H1 2025 is attributed to shrinking interest income and rising expenses; however, the bank demonstrates growth in fee income, which partially mitigates the drop in overall performance.
Trends in Interest Income and Expenses
- Interest Income: 317.4 billion RUB, down from 351.3 billion RUB last year.
- Interest Expenses: 224.9 billion RUB compared to 186.7 billion RUB last year — indicating an increase in funding costs.
- Net Interest Income: 92.5 billion RUB, down from 164.6 billion RUB last year.
The decrease in net interest income reflects the rise in rates on attracted funds and pressure on the interest margin.
Credit Losses and Reserves
Credit loss expenses amounted to 55.6 billion RUB compared to 32.2 billion RUB last year. This indicates a more cautious reserving policy in light of potential risks within the loan portfolio.
Fee-Based Business
- Fee Income: 26.6 billion RUB (up from 21.3 billion RUB).
- Fee Expenses: 6.2 billion RUB, higher than 5.6 billion RUB a year earlier.
The growth in fee income demonstrates resilience and diversification of revenue sources, especially amid declining interest income.
Non-Banking Activities
Revenue from insurance and non-banking activities reached 43.5 billion RUB, an increase from 34.4 billion RUB last year. However, expenses in this segment also grew — to 39.8 billion RUB.
Operating Expenses
Total operating expenses rose to 53.8 billion RUB (up from 45.7 billion RUB a year earlier), driven by inflationary pressures and investments in infrastructure and technology development.
Profit Before Tax and Taxes
- Profit Before Tax: 20.5 billion RUB compared to 38.7 billion RUB last year.
- Income Tax Expenses: 4.1 billion RUB versus 6.8 billion RUB last year.
Earnings Per Share Metrics
- Basic Earnings Per Share: 0.74 RUB (down from 1.79 RUB last year).
- Diluted Earnings Per Share: 0.70 RUB (down from 1.71 RUB last year).
Investor Outlook
Sovcombank's report for H1 2025 reflects a significant decrease in profitability due to pressure on the interest margin, rising funding costs, and increased reserves for credit losses. Nonetheless, the bank shows consistent growth in its fee-based business and expansion of non-banking operations. For investors, it is crucial to assess the bank's ability to stabilize the interest margin, manage credit risks, and maintain growth in fee income throughout the second half of the year.
