2016 · sberbank (switzerland) ag i annual report 2016 i 3 executive board peter mcnulty chairman...

Sberbank (Switzerland) AG

2016Annual Report

2 I Sberbank (Switzerland) AG I Geschäftsbericht 2015

Board of Directors 2016 2

Foreword by the Chairman of the Board of Directors and the CEO 4

Report by the Board of Directors 7

Management Report 2016 9

Balance Sheet 11

Income Statement 12

Statement of Cash Flows 13

Appropriation of Profit 14

Statement of Changes in Equity 14

Notes to the Financial Statements 2016 15

Report of the Statutory Auditor on the Financial Statements 34

Contents

2 I Sberbank (Switzerland) AG I Annual Report 2016

Maxim SafonovHead of Sberbank Global Markets, Managing Director, Sberbank CIB, (subsidiary of Sberbank of Russia, Moscow)

Moscow RussianFederation

Chairman of the Boardof Directors

Until 3 October 2016

Igor BulantsevSenior Vice President, Head of Sberbank CIB, (subsidiary of Sberbank of Russia, Moscow)



From 3 October 2016

Bruno Battaini Consultant

Zurich Switzerland

Deputy Chairman of the Board of Directors (Independent Member)

Dr. Thomas Frick1) Lawyer

Zollikon Switzerland

Deputy Chairman of the Board of Directors (Independent Member)

Alexander Morozov1) Chief Financial Officer, Deputy Chairman of the Executive Board, Sberbank of Russia, Moscow


Member of the Board of Directors

Andrey IvanovGlobal Head of Trade Financeand Correspondent Banking,Sberbank of Russia, Moscow


Member of the Boardof Directors

Retired as of 16 March 2017

Dr. Giuseppe Benelli Senior Financial Consultant

Bülach Switzerland

Member of the Board of Directors (Independent Member)

Dr. Hans W. Niederer Lawyer

Hernandarias Paraguay


Until 15 April 2016

Oleksandr Bazarov Deputy Head of Sberbank CIB, Senior Vice President, Member of the Executive Board,Sberbank of Russia, Moscow



Until 15 April 2016

Roland Müller-Ineichen1) Senior Banking Consultant, Certified Public Accountant

Rain Switzerland


1) The Board of Directors established an Audit Committee in accordance with the FINMA Circular 2008/24 cypher 28 and elected Dr. Thomas Frick and Roland Müller-Ineichen as independent members, as well as Alexander Morozov as an additional member. Roland Müller-Ineichen was elected Chairman of the Audit Committee.

In all cases the whole Board of Directors is collectively responsible for the delegated tasks of the Audit Committee or tasks delegated to individual persons within the Audit Committee.

Board of Directors 2016

Sberbank (Switzerland) AG I Annual Report 2016 I 3

Executive BoardPeter McNulty Chairman of the Executive Board

John Emerson Member of the Executive Board Until 31 October 2016

Paul Hawkes Member of the Executive Board From 26 April 2016

Tamas Haiman Member of the Executive Board Until 20 June 2016

Irina Kalinina Member of the Executive Board

Rudolf Müller Member of the Executive Board From 2 August 2016

Toms Silins Member of the Executive Board Until 26 April 2016

Igor Ukrasin Member of the Executive Board

Statutory AuditorsErnst & Young AG, Zurich

Internal AuditorsPricewaterhouseCoopers Ltd, Zurich

Organisation chart Sberbank (Switzerland) AG Board

of DirectorsInternal Audit

Tecnhnology Committee

ALM Committee

Internal Control Framework Committee

Risk Management Committee1)

Audit Committee

Executive Board

General Assembly

Chief RiskOfficer

Finance HRTrade Finance Legal and ComplianceITSales and

Structuring

ALMCredit & Corporate Lending

Representative Office MoscowOperationsTrading

Coverage AdministrationGM BusinessManagement

Collateral Management

Chief OperatingOfficer

Head of GlobalMarkets

Chief FinancialOfficer General Counsel

Head of Corporate Banking and

Coverage

CEO

Risk

1) Risk Management Commitee covers Credit Risk, Market Risk and Operational Risk.


Foreword by the Chairman of the Board of Directors and the CEOto the Annual General Meeting of Shareholders on 28 April 2017


IntroductionIn 2016 Sberbank (Switzerland) AG continued to build upon the momentum generated in 2015, when the Bank made its first profit as Sberbank (Switzer-land) AG. Despite the ongoing external challenges, such as the geopolitical situation and sanctions re-gime, the Bank was again profitable and thus marks two successive years of profitability.

Investments in developing the Bank’s platform contin-ued in 2016, in particular there has been a focus on de-veloping the global markets platform and systems to increase efficiency whilst enhancing risk and control.

In 2016 Sberbank (Switzerland) AG was granted its Securities Dealers Licence by the Swiss Financial Market Supervisory Authority (FINMA), an important milestone for the global markets business and recog-nition of the platform development within Sberbank (Switzerland) AG.

2016 year in reviewThe commodity trade finance business, which had its first full year of operation in 2015, continued on its growth path established in 2015. In the course of 2016 the Bank continued to increase the number of com-modity trade finance clients and the volume of financ-ing, providing nearly CHF 2 billion of funding to clients, up from CHF 0.5 billion in 2015. This growth demon-strates the Bank’s commitment to this business and establishes the Bank as a credible market participant.

The global markets business, established in 2015, continued to develop its platform whilst simultane-ously growing its revenue base. With the granting of the Securities Dealers Licence the Bank has demon-strated its commitment to developing its global markets business.

Another notable achievement is the Bank’s member-ship in the Shanghai Gold Exchange. As the largest physical metal exchange in the world, membership is a significant step in the expansion of the Bank’s international commodities business.

Funding restrictions, as a result of the EU and US sanctions, continued in 2016 and acted as a brake on the corporate lending business. Nonetheless, the Bank was able to redeploy repayments profitably and achieved some revenue growth in 2016.

In September, Fitch affirmed Sberbank (Switzerland) AG’s rating as BBB- (negative outlook), in line with the credit rating of Sberbank.

Financial performanceThe gross result from interest operations and com-mission business and services increased by CHF 14.2 million (85%) year-on-year, from CHF 16.7 million to CHF 30.9 million. Result from trading activities and the fair value option increased by CHF 21.1 million (515%), from CHF 4.1 million in 2015 to CHF 25.2 mil-lion in 2016.

Foreword by Igor Bulantsev, Chairman of the Board of Directors, and Peter McNulty, Chairman of the Executive Board and CEO


In 2016, the Bank’s provisions were primarily related to a single problematic exposure. In early 2017 the major-ity of this exposure was sold, thus removing the risk from the balance sheet of Sberbank (Switzerland) AG.

As a result of the provisions in 2016, changes in val-ue adjustments for default risks and losses from in-terest operations produced a negative effect of CHF 13.5 million. In 2015, there had been a positive effect of CHF 8.4 million driven primarily by the release of special provisions made in 2014 related to a prob-lematic exposure, which was fully recovered in 2015, and the release of a provision as a result of a global markets transaction.

Operating expenses rose by CHF 12.7 million (48%) year-on-year, from CHF 26.3 million to CHF 39.0 million, primarily driven by increased headcount as well as by building and maintaining infrastructure to support the growing business.

Including CHF 2.7 million in depreciation, write-offs and other adjustments, a net profit after tax of CHF 0.5 million was realised, compared with a profit of CHF 0.9 million in 2015.

During 2016 total assets grew by CHF 946 million to reach CHF 1,930 million, compared to CHF 984 million in 2015. This increase was primarily driven by higher liquidity, including deposits from entities related to Sberbank Group and a larger commodity trade finance portfolio. Total loans (before netting with value adjustments) increased by CHF 98 million (19%) year-on-year, from CHF 522 million to CHF 620 million.

To fund the increased level of business activities in 2016 and planned 2017 growth, deposits from cus-tomers grew by CHF 199 million (65%) year-on-year, from CHF 308 million to CHF 507 million.

Going forwardSberbank (Switzerland) AG remains committed to further growth and development. Maintaining

the momentum established across two successive years of profitability into 2017 will be a focus of management. Operating in a cost-conscious man-ner and ensuring a robust cost control environment will be no less important.

Attracting and retaining employees of the highest cal-ibre has been and remains a top priority, as the Bank continues working towards its ambitious targets.

Changes in the Board of DirectorsDr. Hans Niederer retired from the Board in April 2016. Dr. Hans Niederer was a member of the Board since 1988.

Bruno Battaini will retire from the Board in April 2017. Mr. Battaini has been a member of the Board since 1998 and acted as Deputy Chairman.

Andrey Ivanov left the Board in March 2017. Mr. Ivanov has been a member of the Board since 2013 and acted as Chairman from 2013 to 2014.

In October 2016, Igor Bulantsev was elected as Chairman of the Board following the departure of Maxim Safonov.

We would like to take this opportunity to thank them for their years of dedicated service.

Thank youWe would like to thank our clients for the continued trust and loyalty that they have placed in us. Building long-term solid partnerships is at the very core of our business model.

The development of the Bank has been driven by the hard work and dedication of our employees and we would like to thank them for their continuing efforts and commitment.

We would also like to thank Sberbank for its ongoing support of our development plans.

Igor Bulantsev Chairman of the Board of Directors

Peter McNulty CEO and Chairman of the Executive Board


1. Shareholders

As at 31 December 2016 Sberbank of Russia, Mos-cow, owned 99.28% (2015: 99.28%) of the Bank’s share capital through its owned subsidiary, Joint-Stock Company SIB Financial Broker (2015: SB Lux-embourg S.a.r.l., Luxembourg).

The remaining 0.72% (2015: 0.72%) of the Bank’s share capital is held by the State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)”, Moscow.

2. Report about participations

The Bank does not own shares or participations in any company.

Report by the Board of Directorsto the Annual General Meeting of Shareholders on 28 April 2017

Maxim SafonovHead of Sberbank Global Markets, Managing Director, Sberbank CIB, (subsidiary of Sberbank of Russia, Moscow)



Until 3 October 2016

Igor BulantsevSenior Vice President, Head of Sberbank CIB, (subsidiary of Sberbank of Russia, Moscow)



From 3 October 2016

Andrey IvanovGlobal Head of Trade Financeand Correspondent Banking,Sberbank of Russia, Moscow



Retired as of 16 March 2017

Dr. Hans W. Niederer Lawyer

Hernandarias Paraguay


Until 15 April 2016

Oleksandr Bazarov Deputy Head of Sberbank CIB, Senior Vice President, Member of the Executive Board,Sberbank of Russia, Moscow



Until 15 April 2016

3. Changes in the Board of Directors, Executive Board and Auditors


Executive BoardAs at the end of the year the members of the Execu-tive Board are as follows:

• Peter McNulty Chairman of the Executive Board

• Paul Hawkes Member of the Executive Board

• Irina Kalinina Member of the Executive Board

• Rudolf Müller Member of the Executive Board

• Igor Ukrasin Member of the Executive Board

AuditorsOn 15 April 2016 the Annual General Meeting re-elected Ernst & Young AG, Zurich, as statutory auditors.

PricewaterhouseCoopers Ltd, Zurich, agreed to con-tinue as internal auditors.

4. Events to be reported after the closing of the business year 2016

No events required to be reported have taken place since the closing of the business year 2016.

5. Proposal of the Board of Directors concerning the allocation of the net profit for the year and the balance sheet net loss carry forward

The Board of Directors proposes to the Annual General Meeting to apply the net profit for the year 2016 of CHF 0.5 million to the net loss brought forward from the previous year of CHF 41.2 million resulting in a balance sheet net loss carry forward of CHF 40.7 million.


Employees

As of 31 December 2016 the number of employees of the Bank amounted to 89 (2015: 83), including employees of the representative office in Moscow. The full-time equivalent number of employees at this date was 88.5 (2015: 80.1). The annual average headcount for 2016 was 85 (2015: 71.8) and the annu-al average full-time equivalent number of employ-ees was 84.5 (2015: 70.2).

Risk assessment

Risk management The risk policy is based on the Sberbank of Russia group principles and is regularly reviewed by the Board of Directors and provides the basis for risk management. The Board of Directors and the Exec-utive Board receive information on a regular basis about the Bank’s portfolios, liquidity, financial and profitability state, as well as the risks involved.

The observation of the risk limits set by the Board of Directors is continuously controlled. Positions are evaluated daily, whereby responsibility for risk con-trol at the Executive Board level is separated from the responsibility of the business areas generating those risks.

The Board of Directors regularly reviews all mate-rial risks of the Bank. This risk assessment is based on the data and tools that the Bank uses to manage risk. The Board of Directors has defined the internal control system to monitor all risks and has set risk limits as appropriate for the business of the Bank. The Executive Board has implemented the internal control system.

Default risks The approval of loans and other credit exposures comprises the prior application of an adequate in-

ternal rating system. The strict observation of the limits as set out in the Credit Committee decisions, business regulations and directives is independent-ly monitored. All loans and other exposures are evaluated regularly as to the credit-worthiness of the debtor, as well as to the value of collateral pro-vided, and reported to the Board of Directors on a regular basis. Doubtful or non-performing assets are dealt with by the Executive Board and its Credit Committee.

Interest rate risksRisks deriving from changing interest rates of on-balance sheet assets and liabilities as well as off-balance sheet instruments are centrally super-vised by the Executive Board / Asset and Liability Management (ALM) Committee of the Bank, even though these risks are restricted by the primarily short-term interest rate resetting of loans as well as the maturity matching refinancing in foreign currencies. Interest rate risks are managed by the ALM Department and independently monitored by the Risk Department and reported to the Board of Directors, Executive Board and its ALM Com-mittee.

Other market risksOther market risks are restricted by set limits. Positions in trading portfolios are evaluated daily at market conditions and monitored.

Liquidity risks

Liquidity risks are managed by the ALM Department, monitored independently by the Risk Department and supervised by the ALM Committee. The Bank’s liquidity is continuously monitored using a set of internal and external ratios attributing particular weight to liquidity gap analysis and the liquidity cov-erage ratio (LCR) to ensure compliance with FINMA regulations as well as the internal ALM limits and targets.

Management Report 2016


The values used to calculate the liquidity coverage ratio are simple monthly averages for the relevant quarter. The average for the year is calculated based on the values shown in the monthly liquidity reports submitted to FINMA and the Swiss National Bank (SNB).

The High Quality Liquid Assets (HQLA) are exclu-sively composed of deposits at the SNB. The varia-tion in the LCR is caused by relatively large swings in intercompany customer deposits which can be expected as the Bank acts as the CHF global clearing platform for the Sberbank Group.

Operational risksOperational risks are monitored and controlled con-tinuously by means of an internal control system, organisational directives, staff trainings and key process descriptions. The Chief Risk Officer monitors deviations from the control processes and reports regularly to the Board of Directors and the Executive Board.

Compliance and legal risks The Compliance Department examines on an annu-al basis the compliance risk inventory and prepares a risk-based activity plan related to the management of compliance risks. Where necessary it implements monitoring and control measures in the context of the compliance control framework, including staff training on relevant topics. Furthermore, the Compli-

ance Department is responsible for providing advice with the objective of avoiding or minimising identi-fied compliance risks. The Compliance Department is independent within the organisation and has a direct reporting line to the CEO and to the Audit Commit-tee.

The Bank has its own in-house Legal Department that manages the legal function in accordance with industry standards, with the engagement of external legal firms where appropriate.

Extraordinary eventsNo extraordinary events have occurred during the year.

Future prospectsThe future focus and future prospects of the Bank have been defined in the Bank’s strategy of growing the commodity trade finance business and develop-ing the global markets trading platform and Bank infrastructure to support further revenue growth. For further details please refer to the “Foreword by Igor Bulantsev, Chairman of the Board of Directors, and Peter McNulty, Chairman of the Executive Board and CEO”.


31/12/2016 31/12/2015 ChangeNote CHF 1,000 CHF 1,000 CHF 1,000

AssetsLiquid assets 989,965 331,047 658,918Amounts due from banks 177,177 50,949 126,228Amounts due from customers 3.1 604,318 519,136 85,182Trading portfolio assets 3.2 10,737 4,538 6,199Positive replacement values of derivative financial instruments 3.3 74,983 67,113 7,870Financial investments 3.4 56,786 2 56,784Accrued income and prepaid expenses 8,054 2,238 5,816Tangible fixed assets 3.5 6,722 6,124 598Other assets 3.6 805 2,478 –1,673Total assets 1,929,547 983,625 945,922

Total subordinated claims 5,282 4,565 717 of which subject to mandatory conversion and / or debt waiver 0 0 0

Liabilities Amounts due to banks 1,179,203 416,678 762,525Amounts due in respect of customer deposits 506,739 307,672 199,067Negative replacement values of derivative financial instruments 3.3 46,508 65,853 –19,345Accrued expenses and deferred income 11,602 8,794 2,808Other liabilities 3.6 705 218 487Provisions 3.9 509 624 –115Bank's capital 3.10 118,750 118,750 0Statutory capital reserve 106,251 106,251 0 of which tax-exempt capital contribution reserve 106,251 106,251 0Profit / loss (–) brought forward –41,215 –42,095 880Profit / loss (–) for the year 495 880 –385Total liabilities 1,929,547 983,625 945,922

Total subordinated liabilities 75,000 75,000 0 of which subject to mandatory conversion and / or debt waiver 75,000 75,000 0

Off-balance sheet transactions Contingent liabilities 76,233 95,182 –18,949Irrevocable commitments 100 88 12

Balance Sheet


2016 2015 ChangeNote CHF 1,000 CHF 1,000 CHF 1,000

Result from interest operations Interest and discount income 5.2 37,256 26,972 10,284Interest and dividend income on trading portfolios 135 0 135Interest and dividend income on financial investments 1,462 0 1,462Interest expense 5.2 –19,790 –17,461 –2,329Gross result from interest operations 19,063 9,511 9,552

Changes in value adjustments for default risks and losses from interest operations –13,505 8,419 –21,924

Subtotal net result from interest operations 5,558 17,930 –12,372

Result from commission business and services Commission income from securities trading and investment activities 20 20 0Commission income from lending activities 7,790 4,932 2,858Commission income from other services 4,019 2,253 1,766Commission expense –27 –1 –26Subtotal result from commission business and services 11,802 7,204 4,598

Result from trading activities and the fair value option 5.1 25,153 4,043 21,110

Other result from ordinary activities Other ordinary income 0 2 –2Subtotal other result from ordinary activities 0 2 –2

Operating expenses Personnel expenses 5.3 –26,814 –18,947 –7,867General and administrative expenses 5.4 –12,156 –7,337 –4,819Subtotal operating expenses –38,970 –26,284 –12,686

Value adjustments on participations and depreciation and amortisation of tangible fixed assets and intangible assets 3.5 –1,745 –1,482 –263

Changes to provisions and other value adjustments, and losses –972 –296 –676Operating result 826 1,117 –291

Extraordinary income 5.5 4 7 –3Extraordinary expenses 5.5 –11 –47 36Taxes 5.7 –324 –197 –127Profit / loss (–) for the year 495 880 –385

Income Statement


2016 2015Cash inflow Cash outflow Cash inflow Cash outflow

CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

Cash flow from operating activities (internal financing)Profit / loss (–) for the year 495 0 880 0Value adjustments on participations, depreciation and amortisation of tangible fixed assets and intangible assets 1,745 0 1,482 0Changes in value adjustments for default risks and losses 13,513 0 0 8,420Provisions and other value adjustments 0 115 0 396Accrued income and prepaid expenses 0 5,816 1,072 0Accrued expenses and deferred income 2,808 0 1,135 0Other assets 1,673 0 0 2,411Other liabilities 487 0 60 0Subtotal 20,721 5,931 4,629 11,227

Cash flow from shareholders' equity transactionsBank's capital 0 0 0 0Statutory capital reserve 0 0 0 0Changes in reserves from capital contributions 0 0 0 0Subtotal 0 0 0 0

Cash flow from transactions in respect of participa-tions, tangible fixed assets and intangible assetsTangible fixed assets 0 2,343 0 912Subtotal 0 2,343 0 912

Cash flow from banking operationsMedium- and long-term business (> 1 year)Amounts due to banks 0 90,611 0 19,211Amounts due from customers 261,839 0 41,547 0

Short-term businessAmounts due to banks 853,136 0 170,950 0Amounts due in respect of customer deposits 199,067 0 86,425 0Negative replacement values of derivative financial instruments 0 19,345 63,536 0Amounts due from banks 0 126,228 32,345 0Amounts due from customers 0 360,534 0 89,031Trading portfolio assets 0 6,199 0 4,538Positive replacement values of derivative financial instruments 0 7,870 0 65,494Financial investments 0 56,784 0 0

LiquidityLiquid assets 0 658,918 0 209,019Subtotal 1,314,042 1,326,489 394,803 387,293

Total 1,334,763 1,334,763 399,432 399,432

Statement of Cash Flows


Appropriation of Profit

Statement of Changes in Equity

31/12/2016 31/12/2015 ChangeCHF 1,000 CHF 1,000 CHF 1,000

Appropriation of profit / coverage of loss Profit / loss (–) brought forward –41,215 –42,095 880Profit / loss (–) for the year 495 880 –385Distributable profit / accumulated loss (–) –40,720 –41,215 495

Transfer from statutory capital reserve (tax-exempt capital contribution reserve) 0 0 0Total available for appropriation –40,720 –41,215 495

Appropriation of profit / coverage of lossAllocation to statutory retained earnings reserve 0 0 0Allocation to voluntary retained earnings reserves 0 0 0Distributions from distributable profit 0 0 0Other appropriation of profit 0 0 0Profit / loss (–) carried forward –40,720 –41,215 495

Bank’s capital

Capital reserve

Voluntary retained earnings reserves

and profit / loss (–) carried forward

Profit / loss (–) for the year Total

CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

Equity at start of current period 118,750 106,251 –42,095 880 183,786Capital increase / (decrease) 0 0 0 0 0Other contributions / other capital paid in 0 0 0 0 0Dividends and other distributions 0 0 0 0 0Other allocations to (transfers from) the reserves for general banking risks 0 0 0 0 0Other allocations to (transfers from) the other reserves 0 0 880 –880 0Profit / loss (–) for the year 0 0 0 495 495 Equity at end of current period 118,750 106,251 –41,215 495 184,281


1. Explanatory notes to the Bank’s business activities

Main activitiesDuring 2016 Sberbank (Switzerland) AG was an in-ternationally active bank whose major fields of business were commodity trade finance, corporate lending and global markets, supplemented by trans-actional banking services.

Balance Sheet transactionsThe interest differential business constitutes one of the major sources of revenue for the Bank, with the emphasis on loans and short-term commodity trade finance transactions.

In the course of 2016 the Bank invested CHF 56.8 million in USD-denominated held-to-maturity cor-porate bonds, with the purpose of diversifying its as-set portfolio and benefitting from favourable market conditions.

TradingThe Bank is active in structured finance transactions. Additionally during the year the Bank traded com-modity options transactions resulting in a significant increase in the result from trading activities.

Commissions and service feesCommissions and service fees result predominantly from the servicing of commodity trade finance loans and corporate loans, documentary business as well as transaction banking fees.

Risk assessment, risk management and various risksThe risk assessment, risk management and various risks are described in the “Management Report”.

Outsourcing A Swiss-based third party company provides the e-banking platform on a contractual basis.

With the introduction of the global markets busi-ness, the Bank leverages Sberbank Group’s front-to-back IT systems by outsourcing trade capture, risk and collateral management applications.

The Bank also leverages the Sberbank CIB general ledger system (Navision) which integrates with the global market business applications. The outsourc-ing contracts listed above are in line with regulations issued by FINMA.

The internal audit and payroll functions are out-sourced to a professional audit firm. These activities are not considered as outsourcing under the terms of the FINMA Circular 2008/7 (Outsourcing – Banks).

2. Accounting and valuation principles

Accounting, reporting and valuations are based on the provisions of the Swiss Code of Obligations, the Swiss Federal Banking Law and its Ordinance as well as the statutes and guidelines of the Swiss Financial Market Supervisory Authority (FINMA) concerning the preparation of financial statements for banks (FINMA Circular 2015/1).

Sberbank (Switzerland) AG’s stand-alone financial statements are prepared in accordance with Swiss GAAP.

Recording of business transactionsAll business transactions are recorded in the books of the Bank as at trade date and as of this time are shown in the balance sheet and the income state-ment of the Bank in accordance with set valuation principles, whereby the results of all concluded

Notes to the Financial Statements 2016


transactions are included in the income statement. Open forward transactions are shown off-balance sheet until maturity. As of maturity these transac-tions are included in the balance sheet.

Translation of foreign currenciesTransactions in foreign currencies are recorded at daily market rates. The values of assets and liabilities in foreign currencies are translated at the market rate of the balance sheet and the foreign exchange translation impact is recorded in the income state-ment. Revenues and expenses in foreign currencies are translated at the market rate prevailing on the transaction date and are recorded in the income statement. Profits and losses from foreign currency translation are recognised in the result from trading activities.

The following foreign currency exchange rates were used for translation as per the relevant balance sheet dates:

2016 2015

USD/CHF 1.01868 0.99635

EUR/CHF 1.07364 1.08478

GBP/CHF 1.25904 1.47654

100 RUB/CHF 1.66929 1.34733

General valuation principlesThe detailed positions stated in the balance sheet are evaluated individually and not grouped by class of assets.

Liquid assets and amounts due from banksThese assets and the related interest due but still un-paid are recorded in the balance sheet at nominal val-ue less required value adjustments for default risks.

Loans (amounts due from customers)Amounts due from customers are recorded in the balance sheet at nominal value. Interest is accrued according to the relevant period.

Doubtful claims, which are claims where it is un-likely that the debtor will be able to fulfill its future liabilities, are evaluated on an individual basis and value adjustments for default risks from impaired loans and latent default risks are netted against the individual loan exposures. Off-balance sheet trans-actions like firm commitments, guarantees and de-rivative financial instruments are also evaluated on an individual basis and any specific or general risk provisions are booked as provisions in the balance sheet. Interest due for more than 90 days is consid-ered overdue. Overdue interest and interest unlikely to be received is not recorded in the income state-ment but is added to provisions. As the number of loans is relatively small, the identification of default risks is based on the assessment of the individual loan positions.

The value reduction results from the difference between the nominal value of the claim and the amount likely to be recovered considering the coun-terparty risk and the result from the realisation of collateral. If it is to be expected that the realisation of collateral takes more than a year, the estimated result from the realisation is discounted to the pres-ent value as per the balance sheet date. Collateral is generally valued at current market prices less a haircut.

Trading portfolios in securities and precious metalsTrading portfolios are evaluated and recorded at fair value. Fair value is considered to be the price quoted in an efficient and liquid market or the value resulting from the calculation using an appropriate valuation model. Trading portfolios for which, as an exception, a fair value cannot be ascertained, are


treated according to the principle of lower of cost or market.

Financial investmentsFixed interest-bearing securities are valued ac-cording to the accrual method, i.e. a premium or a discount arising on acquisition amortised over the remaining term and recorded accordingly. A value reduction due to a change in quality is recorded im-mediately in the income statement.

Shares and similar securities are valued according to the principle of lower of cost or market.

Fixed assetsNew investments in fixed assets are capitalised and valued at purchase value provided they are used for more than one accounting period and the value ex-ceeds CHF 5,000. New investments in existing fixed assets are capitalised if this investment enhances the market or utilisation value or the lifetime significantly.

Fixed assets are recorded in the balance sheet at pur-chase value less accumulated depreciation. Depre-ciation is implemented systematically over the esti-mated utilisation period of the asset. Depreciation is recorded in the income statement under the heading “Value adjustments on participations and depreci-ation and amortisation of tangible fixed assets and intangible assets”.

The value of fixed assets is re-evaluated whenever events or circumstances indicate that the book value of the asset is no longer warranted.

The estimated utilisation terms for different fixed as-sets are as follows:

Bank software 60 months

Fixtures, fittings and installations 60 months

Computer and communication equipment 36 months

Other 60 months

Realised profits or losses from the disposal of fixed assets are recorded as “Extraordinary income” or “Extraordinary expense”.

Liabilities to pension planThe Bank does not have its own pension plan. The employees of the Bank are insured in the pension fund of Swiss Life. The pension fund of Swiss Life is a defined contribution scheme. All employees are in-sured against death and invalidity, and in addition, all employees who have reached the age of 24 are insured against old age from the start of the next calendar year. The pension age for men and women is as set by law. The Bank includes the employer con-tributions in “Personnel expenses”. The Bank has no further pension liabilities even in the case of the pen-sion fund having an undercoverage of its liabilities.

TaxesProvisions have been made for all Federal, Cantonal and Commune taxes estimated to be payable on the basis of reported results through to the end of the current year. Current taxes for the relevant period are calculated according to regulations prescribed by the tax authorities and recorded as expenses in the same period. Capital and income taxes are dis-closed under “Accrued expenses and deferred in-come”. Indirect taxes due such as VAT are disclosed under “Other liabilities”.


Valuation adjustments and provisionsValuation adjustments and provisions are prudently made for all risks identifiable at the balance sheet date. General valuation adjustments and provisions cover latent risks. The Bank uses a loan loss provision methodology based on individual credit ratings driv-en by probability of default (PD), exposure at default (EAD) and loss given default (LGD).

Contingent liabilities and irrevocable commitmentsContingent liabilities and irrevocable commitments are recorded off-balance sheet at nominal value. For identifiable risks, provisions are made on the balance sheet.

Derivative financial instruments Derivative financial instruments for trading purpos-es are valued at fair value and the results recorded in “Result from trading activities”.

Changes in comparison to the previous yearThere were no changes to the accounting and valu-ation principles compared to the previous year.

Events after the balance sheet dateNo extraordinary events occurred after the balance sheet date that could have a significant impact on the equity, financial state or results of the Bank with regard to the year under review.


3.1 Presentation of collateral for loans / receivables and off-balance sheet transactions, as well as impaired loans / receivables

Type of collateral

Secured by mortgage

Other collateral (cash and

commodities*) Unsecured TotalCHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

Loans (before netting with value adjustments) Amounts due from customers 0 556,411 63,913 620,324Total loans (before netting with value adjustments) Current year 0 556,411 63,913 620,324

Previous year 0 259,200 262,429 521,629Total loans (after netting with value adjustments) Current year 0 540,405 63,913 604,318

Previous year 0 258,562 260,574 519,136

Off-balance sheetContingent liabilities 0 72 76,161 76,233Irrevocable commitments 0 0 100 100

Total off-balance sheet Current year 0 72 76,261 76,333Previous year 0 610 94,660 95,270

Gross debtamount

Estimated liquidation value

of collateralNet debt amount

Individual valueadjustments

CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

Impaired loans / receivables Current year 39,725 25,773 13,952 13,952Previous year 0 0 0 0

*Commodities collateralThe Bank benefits from collateral for the commodity trade finance (CTF) business being physical commodities themselves or rights under purchase and sales contracts for underlying commodities. The bank has in its portfolio all types of regular CTF physical goods: Soft (Grains, seeds, fertilizer, etc), energy (oil products, petrochemicals, synthetic rubber, etc) and metals (nickel, aluminum, etc.).

Impaired loans and non-performing receivablesAs at 31 December 2016 the Bank had made value adjustments amounting to CHF 13.952 million for a customer loan where it was possible that impairment could occur. In the course of March 2017 the loan was sold with no material impact on the income statement.

Value adjustments for latent default risksAs at 31 December 2016 the Bank had value adjustments for latent default risks amounting to CHF 2.054 million (2015: CHF 2.493 million).

3. Information on the Balance Sheet


3.2 Breakdown of trading portfolios and other financial instruments at fair value (assets and liabilities)

31/12/2016 31/12/2015CHF 1,000 CHF 1,000

AssetsTrading portfolio assetsDebt securities, money market securities / transactions 5,282 4,538 of which listed 5,282 4,538Precious metals and commodities 5,455 0Total trading portfolio assets 10,737 4,538

Total assets 10,737 4,538 of which determined using a valuation model 0 0 of which securities eligible for repo transactions in accordance with liquidity requirements 0 0

LiabilitiesTrading portfolio liabilitiesDebt securities, money market securities / transactions* 0 0 of which listed 0 0Total trading portfolio liabilities 0 0

Total liabilities 0 0 of which determined using a valuation model 0 0

* for short positions (booked using the trade date accounting principle)


3.3 Presentation of derivative financial instruments (assets and liabilities)

Own trading contracts Hedging instruments

Positive replacement

values

Negative replacement

valuesContract

volume

Positive replacement

values

Negative replacement

valuesContract

volumeCHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

Interest rate instrumentsSwaps 18,862 12,368 4,939,647 0 0 0

Foreign exchange / precious metalsForward contracts 7,772 30 167,030 0 0 0Combined interest rate currency swaps 33,201 19,880 1,287,702 0 0 0Options (OTC) 15,148 14,230 999,912 0 0 0

Credit derivativesCredit default swaps 0 0 20,374 0 0 0

Total before netting agreements: Current year 74,983 46,508 7,414,665 0 0 0 of which determined using a valuation model 67,211 46,478 7,247,635 0 0 0

Previous year 67,113 65,853 5,915,303 0 0 0 of which determined using a valuation model 60,813 59,014 5,105,781 0 0 0

Positivereplacement

values

Negativereplacement

valuesCHF 1,000 CHF 1,000

Total after netting agreements Current year 74,983 46,508Previous year 67,113 68,583

Central clearing houses

Banks and securities dealers

Other customers

CHF 1,000 CHF 1,000 CHF 1,000Breakdown by counterpartyPositive replacement values (after netting agreements) 0 66,920 8,063


3.4 Breakdown of financial investments Book value Fair value

31/12/2016 31/12/2015 31/12/2016 31/12/2015CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

Financial investmentsDebt securities 56,784 0 63,210 0 of which intended to be held to maturity 56,784 0 63,210 0 of which not intended to be held to maturity (available for sale) 0 0 0 0Equity securities 2 2 2 2 of which, qualified participations (at least 10% of capital or votes) 0 0 0 0

Precious metals 0 0 0 0Real estate, commodities and motor vehicles 0 0 0 0Total 56,786 2 63,212 2 of which securities eligible for repo transactions in accordance with liquidity requirements 0 0 0 0

Fitch BB+ to B– Fitch A+ to A–Breakdown of counterparties by rating Debt and equity securities: book values 56,784 2


31/12/2016 31/12/2015CHF 1,000 CHF 1,000

Operating leasesDue up to 12 months 0 154Due within 12 months to 5 years 0 0Due after 5 years 0 0Total 0 154 of which, can be terminated within one year 0 154

3.6 Breakdown of other assets and other liabilities31/12/2016 31/12/2015

Otherassets

Otherliabilities

Otherassets

Otherliabilities

CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

Transit account 797 2 2,429 41Indirect taxes 0 0 26 77Other assets and liabilities 8 703 23 100Total 805 705 2,478 218

3.5 Presentation of tangible fixed assets31/12/2016

Acqui-sition

cost

Accumu-lated

depreci-ation

Book valueas at end of previ-ous year

Reclassi-fications Additions Disposals

Depre-ciation Reversals

Book valueas at end of

current year

CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

Proprietary or separately aquired soft-ware 3,182 –2,278 904 0 2,252 0 –392 0 2,764

Other tan-gible fixed assets 7,936 –2,716 5,220 0 91 0 –1,353 0 3,958

Total tan-gible fixed assets 11,118 –4,994 6,124 0 2,343 0 –1,745 0 6,722


3.8 Disclosure of liabilities relating to pension schemes, and number and nature of equity instruments of the Bank held by own pension schemes

The Bank has no own pension scheme. The employees of the Bank are insured under an occupational defined contribution plan with an independent pension company (Swiss Life). The last audited financial statements of this independent pension company (31 December 2015) showed a coverage of 100%. There are no economic benefits or economic costs attributable to the Bank.

3.9 Presentation of value adjustments and provisions, reserves for general banking risks, and changes therein during the current year

31/12/2016

Previousyear end

Use in conformity with

designatedpurpose

New creationscharged to

income Releases

Balance at current

year endCHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

Provisions for default risks 121 –38 68 –2 149Provisions for restructuring 103 –103 0 0 0Other provisions 400 –40 0 0 360Total provisions 624 –181 68 –2 509

Value adjustments for default and country risks 2,493 0 14,921 –1,408 16,006 of which value adjustments for default risks in respect of impaired loans / receivables 0 0 13,952 0 13,952

of which value adjustments for latent default risks 2,493 0 969 –1,408 2,054

The amount of the value adjustments for default and country risk was determined based upon the requirements that an adequate amount has to be provided for risks which will likely be a liability for the Bank.

The amount of the provisions is based upon information available to the Bank taking into account positive and negative factorsknown at the time these financial statements were prepared.

3.7 Disclosure of assets pledged or assigned to secure own commitments and of assets under reservation of ownership

31/12/2016 31/12/2015Collateral

book valueLiability

amount usedCollateral

book valueLiability

amount usedCHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

Pledged / assigned assetsDue from banks (margin deposits FX forward contracts) 12,710 0 10,926 0

Due from banks (rent deposits) 26 0 26 0Total of pledged assigned assets 12,736 0 10,952 0

There were no assets subject to ownership reservation in the year under review or in the previous year.At the balance sheet date there were no securities lending and borrowing transactions or repo transactions outstanding.


3.10 Presentation of the Bank's capital31/12/2016 31/12/2015

Total par value No. of shares

Capital eligible for dividend

Total par value No. of shares

Capital eligible for dividend

CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000Bank's capitalShare capital / cooperative capital 118,750 416,668 118,750 118,750 416,668 118,750 of which paid up 118,750 416,668 118,750 118,750 416,668 118,750Total Bank's capital 118,750 416,668 118,750 118,750 416,668 118,750

3.11 Number and value of equity securities or options on equity securities held by all executives and directors and by employees

The Bank does not have equity securities or an option on equity securities scheme for members of the Board of Directors, members of executive bodies or employees.

3.12 Disclosure of amounts due from / to related partiesAmounts due

from related partiesAmounts due

to related parties31/12/2016 31/12/2015 31/12/2016 31/12/2015CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

Holders of qualified participations: Group companies 29,133 16,018 834,231 280,971Linked companies 19,586 12,216 357,924 77,378Total 48,719 28,234 1,192,155 358,349

Amounts due from and due to related parties represent holdings on current accounts as well as loans, which are granted at the same conditions as for independent third parties.

The Bank does not grant loans to the Bank’s governing bodies.


3.13 Disclosure of holders of significant participations31/12/2016 31/12/2015

Nominal % of equity Nominal % of equityCHF 1,000 CHF 1,000

Significant shareholders of Sberbank (Switzerland) AG

Voting shareholdersJoint-Stock Company SIB Financial Broker 117,895 99.28 0 0.00SB Luxembourg S.a.r.l. Luxembourg 0 0.00 117,895 99.28

The State Corporation "Bank for Development and Foreign Economic Affairs (Vnesheconombank)", Moscow 855 0.72 855 0.72

Total Bank's capital 118,750 100.00 118,750 100.00

Joint-Stock Company SIB Financial Broker is owned 100% by the Open Joint Stock Company "Sberbank of Russia" in which the following shareholders held more than 5% as at 31 December 2016:

Share Capitalin %

Voting Sharesin %

NameCentral Bank of Russia, Moscow (share capital owned is 50% plus one share) 50.00 52.32


3.14 Presentation of the maturity structure of financial instruments Due

At sightCancel-

lablewithin

3 monthswithin 3 to 12 months

within 1 to 5 years

after 5 years

nomaturity Total

CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000Assets / financial instruments Liquid assets 989,965 0 0 0 0 0 0 989,965Amounts due from banks 63,798 0 5,477 107,902 0 0 0 177,177Amounts due from customers 100 0 361,398 196,710 46,110 0 0 604,318Trading portfolio assets 10,737 0 0 0 0 0 0 10,737Positive replacement val-ues of derivative financial instruments 74,983 0 0 0 0 0 0 74,983Financial investments 2 0 0 0 42,285 14,497 2 56,786Total current year 1,139,585 0 366,875 304,612 88,395 14,497 2 1,913,966Total previous year 437,830 19,128 110,974 96,902 211,538 96,411 2 972,785

Debt capital / financial instruments Amounts due to banks 647,041 5,000 100,051 336,839 15,272 75,000 0 1,179,203Amounts due in respect of customer deposits 233,901 0 265,327 7,511 0 0 0 506,739

Negative replacement values of derivative financial instruments 46,508 0 0 0 0 0 0

46,508

Current year 927,450 5,000 365,378 344,350 15,272 75,000 0 1,732,450Total previous year 413,078 4,042 192,200 0 35,013 145,870 0 790,203


3.15 Presentation of assets and liabilities by domestic and foreign origin in accordance with the domicile principle

31/12/2016 31/12/2015Domestic Foreign Domestic ForeignCHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

AssetsLiquid assets 989,965 0 331,034 13Amounts due from banks 15,140 162,037 6,386 44,563Amounts due from customers 201,771 402,547 145,928 373,208Trading portfolio assets 5,455 5,282 0 4,538Positive replacement values of derivative financial instruments 2,281 72,702 629 66,484Financial investments 0 56,786 0 2Accrued income and prepaid expenses 6,600 1,453 463 1,775Tangible fixed assets 6,722 0 6,099 25Other assets 444 362 2,478 0Total assets 1,228,378 701,169 493,017 490,608

31/12/2016 31/12/2015Domestic Foreign Domestic ForeignCHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

LiabilitiesAmounts due to banks 5,030 1,174,173 0 416,678Amounts due in respect of customer deposits 131,506 375,233 93,412 214,260Negative replacement values of derivative financial instruments 17,279 29,230 1,236 64,617Accrued expenses and deferred income 8,110 3,491 7,198 1,596Other liabilities 705 0 218 0Provisions 506 3 624 0Bank’s capital 118,750 0 118,750 0Capital reserve 106,251 0 106,251 0Retained earnings reserve –41,215 0 –42,095 0Group profit / group loss 495 0 880 0Total liabilities 347,417 1,582,130 286,474 697,151


3.16 Breakdown of total assets by country or group of countries (domicile principle)31/12/2016 31/12/2015

Amount Share Amount ShareCHF 1,000 in % CHF 1,000 in %

AssetsSwitzerland 1,228,378 63.7% 493,017 50.1%EuropeRussian Federation 235,013 12.2% 220,583 22.4%Turkey 53,654 2.8% 0 0.0%Malta 49,888 2.6% 0 0.0%United Kingdom 30,611 1.6% 6,491 0.7%Greece 25,769 1.3% 39,991 4.1%Luxembourg 18,680 1.0% 0 0.0%Bosnia and Herzegovina 13,502 0.7% 0 0.0%Ireland 9,487 0.5% 17,211 1.7%Belarus 4,239 0.2% 7,588 0.8%Cyprus 3,636 0.2% 0 0.0%Germany 845 0.0% 5,483 0.6%Netherlands 3 0.0% 30,019 3.1%Austria 3 0.0% 19,020 1.9%AmericasUnited States 88,483 4.6% 83,437 8.5%Virgin Islands 220 0.0% 2,320 0.2%AsiaUnited Arab Emirates 122,569 6.4% 49,382 5.0%Hong Kong 20,291 1.1% 8,848 0.9%Singapore 24,053 1.2% 0 0.0%OthersOthers 223 0.0% 235 0.0%Total assets 1,929,547 100.0% 983,625 100.0%

3.17 Breakdown of total foreign assets by credit rating of country groups (risk domicile view)

Net foreign exposure / current year end,

new method

Net foreign exposure / previous year end,

new method

Net foreign exposure / previous year end,

old methodCHF 1,000 Share in % CHF 1,000 Share in % CHF 1,000 Share in %

Fitch external ratingAAA to A– 365,133 52.1% 222,211 45.3% 23,215 4.7%BBB+ to BBB– 0 0.0% 0 0.0% 170,762 34.8%BB+ to BB– 292,203 41.7% 220,583 45.0% 269,754 55.0%B+ to B– 43,733 6.2% 47,814 9.7% 17,397 3.6%CCC+ to D 0 0.0% 0 0.0% 7,799 1.6%Without rating 0 0.0% 0 0.0% 1,681 0.3%Total net foreign exposure 701,069 100.0% 490,608 100.0% 490,608 100.0%

The country rating is based on Fitch external ratings. The Bank does not have its own country ratings. Methodology for 2016 has been changed and comparatives are also adjusted.


3.18 Presentation of assets and liabilities broken down by the most significant currencies for the Bank

CHF EUR USD RUB Other TotalCHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

AssetsLiquid assets 989,965 0 0 0 0 989,965Amounts due from banks 4,665 1,300 170,838 339 35 177,177Amounts due from customers 4 71,870 532,417 26 1 604,318Trading portfolio assets 0 0 5,282 0 5,455 10,737Positive replacement values of derivative financial instruments 15 24 50,681 24,263 0 74,983Financial investments 0 1 56,785 0 0 56,786Accrued income and prepaid expenses 916 199 6,931 0 8 8,054Tangible fixed assets 6,569 113 40 0 0 6,722Other assets 797 0 8 0 0 805Total assets shown in balance sheet 1,002,930 73,508 822,981 24,628 5,499 1,929,547Delivery entitlements from spot exchange, forward forex and forex options transac-tions*

405,121 19,079 921,864 659,945 526,251 2,532,259

Total assets 1,408,052 92,587 1,744,845 684,573 531,750 4,461,806LiabilitiesAmounts due to banks 733,923 22,598 55,643 367,039 0 1,179,203Amounts due in respect of customer deposits 11,213 49,286 429,080 7,065 10,095 506,739Negative replacement values of derivative financial instruments 3 12 46,351 122 20 46,508Accrued expenses and deferred income 8,476 43 924 2,155 4 11,602Other liabilities 1 210 116 171 207 705Provisions 365 5 139 0 0 509Bank’s capital 118,750 0 0 0 0 118,750Capital reserve 106,251 0 0 0 0 106,251Retained earnings reserve –41,215 0 0 0 0 –41,215Group profit / group loss 495 0 0 0 0 495Total liabilities shown in the balance sheet 938,262 72,154 532,253 376,552 10,326 1,929,547

CHF EUR USD RUB Other TotalCHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000 CHF 1,000

Delivery obligations from spot exchange, forward forex and forex options trans-actions* 486,959 34,669 1,247,558 272,579 465,688 2,507,453Total liabilities 1,425,221 106,823 1,779,811 649,131 476,014 4,437,000Net position per currency –17,169 –14,236 –34,966 35,442 55,736 * Options are delta-weighted.


4.1 Breakdown of contingent liabilities and contingent assets31/12/2016 31/12/2015 ChangeCHF 1,000 CHF 1,000 CHF 1,000

Guarantees to secure credits and similar 49,640 92,842 –43,202Performance guarantees and similar 1,393 0 1,393Irrevocable commitments arising from documentary letters of credit 25,200 2,340 22,860Total contingent liabilities 76,233 95,182 –18,949

4. Information on off-balance sheet transactions

5.1 Breakdown of the result from trading activities and the fair value option2016 2015 Change

CHF 1,000 CHF 1,000 CHF 1,000a) Breakdown by business area Trading activities with corporate customers 19,740 1,442 18,298Other trading activities 5,413 2,601 2,812Total result from trading activities 25,153 4,043 21,110

b) Breakdown by underlying risk Result from trading activities from:Interest rate instruments (including funds) 1,136 3,115 –1,979Foreign currencies 13,096 1,442 11,654Commodities / precious metals 10,921 –514 11,435Total result from trading activities 25,153 4,043 21,110 of which from fair value option 0 0 0 of which from fair value option on assets 0 0 0 of which from fair value option on liabilities 0 0 0

5. Information on the income statement


5.2 Disclosure of material refinancing income in the item Interest and discount income as well as material negative interest

2016 2015 ChangeCHF 1,000 CHF 1,000 CHF 1,000

Negative interestNegative interest included in interest and discount income (part of CHF 37,256) –4,361 –1,947 –2,414Negative interest included in interest expense (part of CHF 19,790) 2,123 1,723 400

5.3 Breakdown of personnel expenses 2016 2015 Change

CHF 1,000 CHF 1,000 CHF 1,000Personnel expensesSalaries (meeting attendance fees and fixed compensation to members of the Bank’s governing bodies, salaries and benefits) 19,587 14,340 5,247 of which expenses relating to share-based compensation and alternative forms of variable compensation 0 0 0

Social insurance benefits 2,969 1,234 1,735Changes in book value for economic benefits and obligations arising from pension schemes 1,266 2,137 –871Other personnel expenses 2,992 1,236 1,756Total personnel expenses 26,814 18,947 7,867

5.4 Breakdown of general and administrative expenses2016 2015 Change

CHF 1,000 CHF 1,000 CHF 1,000General and administrative expensesOffice space expenses 1,275 817 458Expenses for information and communications technology 4,210 2,503 1,707Expenses for vehicles, equipment, furniture and other fixtures, as well as operating lease expenses 163 372 –209Fees of audit firm (Art. 961a no. 2 CO) 467 771 –304 of which for financial and regulatory audits 467 771 –304 of which for other services 0 0 0Other operating expense 6,041 2,874 3,167Total general and administrative expenses 12,156 7,337 4,819


5.5 Explanations regarding material losses, extraordinary income and expenses, as well as material releases of hidden reserves, reserves for general banking risks, and value adjustments and provisions no longer required

2016 2015 ChangeCHF 1,000 CHF 1,000 CHF 1,000

Extraordinary incomeProfit on sale of fixed assets 4 0 4Other revenue related to the previous business year 0 7 –7Total extraordinary income 4 7 –3

Extraordinary expenseLoss on sale of fixed assets 0 47 –47Other expenses related to the previous business year 11 0 11Total extraordinary expense 11 47 –36

5.6 Disclosure of and reasons for revaluations of participations and tangible fixed assets up to acquisition cost at maximum

There were no revaluations of tangible fixed assets during the year under review or in the previous year.

5.7 Presentation of current taxes, deferred taxes, and disclosure of tax rate 2016 2015 Change

CHF 1,000 CHF 1,000 CHF 1,000Expenses for current income taxes* 0 0 0Expenses for current capital taxes 324 197 127Expenses for deferred taxes 0 0 0Total taxes 324 197 127Average tax rate weighted on the basis of the operating profit 0% 0%

* The Bank offsets the profit of the periods ended 31.12.2016 and 31.12.2015 against the loss carried forward and therefore no income taxes are due.

The cumulated loss carry forward was originated in the 2014, 2013 and 2012 reporting years.


Report of the Statutory Auditor on the Financial Statements


Ernst & Young LtdMaagplatz 1P.O. BoxCH-8010 Zurich

Phone +41 58 286 31 11Fax +41 58 286 30 04www.ey.com/ch

To the General Meeting ofSberbank (Switzerland) Ltd, Zurich

Zurich, 28 April 2017

Report of the statutory auditor on the financial statements

As statutory auditor, we have audited the financial statements of Sberbank (Switzerland) Ltd,which comprise the balance sheet, income statement, statement of cash flows and notes(pages 11 to 33), for the year ended 31 December 2016.

Board of Directors’ responsibilityThe Board of Directors is responsible for the preparation of the financial statements inaccordance with the requirements of Swiss law and the company’s articles of incorporation.This responsibility includes designing, implementing and maintaining an internal controlsystem relevant to the preparation of financial statements that are free from materialmisstatement, whether due to fraud or error. The Board of Directors is further responsible forselecting and applying appropriate accounting policies and making accounting estimates thatare reasonable in the circumstances.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Thosestandards require that we plan and perform the audit to obtain reasonable assurance whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor’sjudgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders the internal control system relevant to the entity’s preparation of the financialstatements in order to design audit procedures that are appropriate in the circumstances, butnot for the purpose of expressing an opinion on the effectiveness of the entity’s internalcontrol system. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of accounting estimates made, as well as evaluatingthe overall presentation of the financial statements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements for the year ended 31 December 2016 comply withSwiss law and the company’s articles of incorporation.


Page 2

Report on other legal requirementsWe confirm that we meet the legal requirements on licensing according to the AuditorOversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that thereare no circumstances incompatible with our independence.

In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, weconfirm that an internal control system exists, which has been designed for the preparation offinancial statements according to the instructions of the Board of Directors.

We recommend that the financial statements submitted to you be approved.

Ernst & Young Ltd

Stefan Fuchs Christoph WeidmannLicensed audit expert Licensed audit expert(Auditor in charge)

Sberbank (Switzerland) AG I Geschäftsbericht 2015 I 37

38 I Sberbank (Switzerland) AG I Geschäftsbericht 2015

Sberbank (Switzerland) AG

2016Annual Report

2016 · sberbank (switzerland) ag i annual report 2016 i 3 executive board peter mcnulty chairman...

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