Sovcombank Reports a 54.7% Year-on-Year Decrease in Net Profit for the First Half of 2025
Key Financial Results
- Net Profit: RUB 17.5 billion (−54.7% year-on-year).
- Net Interest Income after Loan Loss Expenses: RUB 36.9 billion compared to RUB 45.3 billion the previous year.
- Net Commission Income: RUB 20.4 billion, an increase from RUB 15.7 billion a year earlier.
- Total Operating Income: RUB 42.8 billion, down from RUB 53.5 billion the previous year.
The decline in Sovcombank's net profit for the first half of 2025 is attributed to a reduction in interest income and rising expenses; however, the bank demonstrates growth in commission income, which partially cushions the drop in results.
Dynamics of Interest Income and Expenses
- Interest Income: RUB 317.4 billion, a decrease compared to RUB 351.3 billion the previous year.
- Interest Expenses: RUB 224.9 billion compared to RUB 186.7 billion the previous year — an increase in funding costs.
- Net Interest Income: RUB 92.5 billion compared to RUB 164.6 billion the previous year.
The decrease in net interest income reflects rising rates on attracted resources and pressure on the interest margin.
Loan Losses and Provisions
Loan loss expenses amounted to RUB 55.6 billion compared to RUB 32.2 billion the previous year, indicating a more cautious provisioning policy in light of potential risks in the loan portfolio.
Commission Business
- Commission Income: RUB 26.6 billion (up from RUB 21.3 billion).
- Commission Expenses: RUB 6.2 billion, higher than RUB 5.6 billion a year earlier.
The growth in commission income demonstrates resilience and diversification of revenue sources, particularly amid declining interest income.
Non-Banking Activities
Revenue from insurance and non-banking activities reached RUB 43.5 billion, an increase from RUB 34.4 billion the previous year. However, expenses in this segment also rose to RUB 39.8 billion.
Operating Expenses
Total operating expenses rose to RUB 53.8 billion (compared to RUB 45.7 billion the previous year), driven by inflationary pressures and investments in infrastructure and technology development.
Profit Before Tax and Taxes
- Profit Before Tax: RUB 20.5 billion compared to RUB 38.7 billion the previous year.
- Income Tax Expenses: RUB 4.1 billion compared to RUB 6.8 billion the previous year.
Earnings Per Share Metrics
- Basic Earnings Per Share: RUB 0.74 (compared to RUB 1.79 the previous year).
- Diluted Earnings Per Share: RUB 0.70 (compared to RUB 1.71 the previous year).
Investor Summary
Sovcombank's report for the first half of 2025 reflects a notable decline in profitability amid pressure on the interest margin, rising funding costs, and increased provisions for loan losses. However, the bank shows stable growth in commission businesses and the expansion of non-banking operations. For investors, assessing the bank's ability to stabilize the interest margin, manage credit risks, and maintain growth in commission income in the second half of the year will be crucial.
