14.11.2016, 14:54
VTB Announces Results for 3Q
OREANDA-NEWS. VTB Bank, the parent company of VTB Group ("the Group"), today publishes its Interim Condensed Consolidated Financial Statements as at 30 September 2016, with the Independent Auditor’s Report on Review of these Statements.
Net profit in 9M 2016 was RUB 34.1 billion, supported by improved core revenue generation as net interest income and net fee and commission income continued to grow.
VTB Group net interest income increased by 58.4% year-on-year to RUB 310.4 billion in 9M 2016, as repricing of assets and liabilities supported a recovery in net interest margin to 3.7% for 9M 2016, up from 2.4% in 9M 2015. Net interest margin for 9M 2016 was unchanged from 6M 2016 at 3.7%.
The Group’s Retail business and Transaction banking (as part of Corporate-Investment banking and Mid-Corporate banking) were the two main drivers of the 3.5% year-on-year growth in net fee and commission income to RUB 55.9 billion.
For 9M 2016, the Group’s provision charge grew significantly slower than net interest income, increasing 7.2% year-on-year to RUB 146.7 billion. The Group's cost of risk, taking into account provisions for credit related commitments (the annualised ratio of the provision charge for loan impairments including provision charge for impairment of credit related commitments to average gross loans and average credit related commitments), was 1.9% in 9M 2016 compared to 1.8% in 9M 2015.
In 9M 2016 the Group benefitted from ongoing cost management efforts as well as synergies from the Bank of Moscow merger. Staff costs and administrative expenses for 9M 2016 amounted to RUB 171.6 billion, an increase of 6.3% year-on-year. After the end of the reporting period, on 2 November 2016, the VTB Supervisory Council voted to merge the Group’s retail banking arm VTB24 into VTB Bank. This is expected to help the Group achieve significant cost reductions by optimising the structure of the Group’s retail business in Russia and creating synergies from the merger of operations, including regional networks.
The Group's annualised costs-to-average assets ratio was 1.8% for 9M 2016, unchanged from 9M 2015, while the ratio of costs to operating income before provisions improved to 47.5% for 9M 2016 versus 54.9% for 9M 2015.
The Group’s loan book contracted by 6.9% during 9M 2016 due to a decline in loans to legal entities during the first quarter of 2016 that was driven by repayment of several large FX-denominated loans in 1Q 2016 as well as the strengthening of the Russian ruble in the period and the corresponding revaluation of loans denominated in US dollars and other currencies. In 3Q 2016, the loan book grew for the second quarter in a row, increasing 0.5% despite a 0.1% reduction overall for the Russian market during the same period.
Retail lending continued to gain momentum, as loans to individuals increased by 8.2% during 9M 2016 (up 3.8% in 3Q 2016), and stood at RUB 2,121.4 billion as of 30 September 2016.
The Group’s NPL ratio was 7.2% of gross customer loans, including those pledged under repurchase agreements (the “total loan book”), as of 30 September 2016, compared to 7.1% at 30 June 2016 and 6.3% as of 31 December 2015. The allowance for loan impairments was 7.5% of the total loan book as of the end of 3Q 2016, versus 7.4% on 30 June 2016 and 6.7% as of 31 December 2015. The NPL coverage ratio remained at a comfortable 102.9% at 30 September 2016, versus 103.9% as of 30 June 2016, and 105.8% as of 31 December 2015.
Customer deposits grew by 10.1% in 9M 2016, driven by 15.8% growth in corporate deposits during the period. Growing deposits helped to further improve the Group’s balance sheet, with customer deposits representing 73% of total liabilities as of 30 September 2016, up from 60% at year-end 2015. As of 30 September 2016, the Group’s market shares in Russia in retail and corporate deposits stood at 11.2% and 24.8%, respectively.
The Group continued to reduce its reliance on wholesale funding, with the share of debt securities issued in total liabilities decreasing to 3.9% as of 30 September 2016, down from 4.2% as of 30 June 2016 and 5.1% as of 31 December 2015. Since the beginning of 2016, VTB and its subsidiaries have made repayments on their international public debt totalling USD 2.2 billion. After the end of the reporting period, on 17 October 2016, VTB Bank launched an overnight bond programme on Moscow Exchange. The Group expects that this tool will have a positive impact on its borrowing costs in the future.
VTB maintained solid capital adequacy ratios. As of 30 September 2016, the Group’s total and Tier 1 capital adequacy ratios were 15.4% and 13.5%, respectively, versus 15.1% and 13.3% as of 30 June 2016, and 14.3% and 12.4% as of 31 December 2015.
Net profit in 9M 2016 was RUB 34.1 billion, supported by improved core revenue generation as net interest income and net fee and commission income continued to grow.
VTB Group net interest income increased by 58.4% year-on-year to RUB 310.4 billion in 9M 2016, as repricing of assets and liabilities supported a recovery in net interest margin to 3.7% for 9M 2016, up from 2.4% in 9M 2015. Net interest margin for 9M 2016 was unchanged from 6M 2016 at 3.7%.
The Group’s Retail business and Transaction banking (as part of Corporate-Investment banking and Mid-Corporate banking) were the two main drivers of the 3.5% year-on-year growth in net fee and commission income to RUB 55.9 billion.
For 9M 2016, the Group’s provision charge grew significantly slower than net interest income, increasing 7.2% year-on-year to RUB 146.7 billion. The Group's cost of risk, taking into account provisions for credit related commitments (the annualised ratio of the provision charge for loan impairments including provision charge for impairment of credit related commitments to average gross loans and average credit related commitments), was 1.9% in 9M 2016 compared to 1.8% in 9M 2015.
In 9M 2016 the Group benefitted from ongoing cost management efforts as well as synergies from the Bank of Moscow merger. Staff costs and administrative expenses for 9M 2016 amounted to RUB 171.6 billion, an increase of 6.3% year-on-year. After the end of the reporting period, on 2 November 2016, the VTB Supervisory Council voted to merge the Group’s retail banking arm VTB24 into VTB Bank. This is expected to help the Group achieve significant cost reductions by optimising the structure of the Group’s retail business in Russia and creating synergies from the merger of operations, including regional networks.
The Group's annualised costs-to-average assets ratio was 1.8% for 9M 2016, unchanged from 9M 2015, while the ratio of costs to operating income before provisions improved to 47.5% for 9M 2016 versus 54.9% for 9M 2015.
The Group’s loan book contracted by 6.9% during 9M 2016 due to a decline in loans to legal entities during the first quarter of 2016 that was driven by repayment of several large FX-denominated loans in 1Q 2016 as well as the strengthening of the Russian ruble in the period and the corresponding revaluation of loans denominated in US dollars and other currencies. In 3Q 2016, the loan book grew for the second quarter in a row, increasing 0.5% despite a 0.1% reduction overall for the Russian market during the same period.
Retail lending continued to gain momentum, as loans to individuals increased by 8.2% during 9M 2016 (up 3.8% in 3Q 2016), and stood at RUB 2,121.4 billion as of 30 September 2016.
The Group’s NPL ratio was 7.2% of gross customer loans, including those pledged under repurchase agreements (the “total loan book”), as of 30 September 2016, compared to 7.1% at 30 June 2016 and 6.3% as of 31 December 2015. The allowance for loan impairments was 7.5% of the total loan book as of the end of 3Q 2016, versus 7.4% on 30 June 2016 and 6.7% as of 31 December 2015. The NPL coverage ratio remained at a comfortable 102.9% at 30 September 2016, versus 103.9% as of 30 June 2016, and 105.8% as of 31 December 2015.
Customer deposits grew by 10.1% in 9M 2016, driven by 15.8% growth in corporate deposits during the period. Growing deposits helped to further improve the Group’s balance sheet, with customer deposits representing 73% of total liabilities as of 30 September 2016, up from 60% at year-end 2015. As of 30 September 2016, the Group’s market shares in Russia in retail and corporate deposits stood at 11.2% and 24.8%, respectively.
The Group continued to reduce its reliance on wholesale funding, with the share of debt securities issued in total liabilities decreasing to 3.9% as of 30 September 2016, down from 4.2% as of 30 June 2016 and 5.1% as of 31 December 2015. Since the beginning of 2016, VTB and its subsidiaries have made repayments on their international public debt totalling USD 2.2 billion. After the end of the reporting period, on 17 October 2016, VTB Bank launched an overnight bond programme on Moscow Exchange. The Group expects that this tool will have a positive impact on its borrowing costs in the future.
VTB maintained solid capital adequacy ratios. As of 30 September 2016, the Group’s total and Tier 1 capital adequacy ratios were 15.4% and 13.5%, respectively, versus 15.1% and 13.3% as of 30 June 2016, and 14.3% and 12.4% as of 31 December 2015.
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