OREANDA-NEWS. VTB Bank (“VTB” or “the Bank”), the parent company of VTB Group (“the Group”), today publishes its Interim Condensed Consolidated Financial Statements for the three months ended 31 March 2016, with the Independent Auditor’s Report on Review of these Statements.

Andrey Kostin, VTB President and Chairman of the Management Board, said: "VTB Group’s results for the first quarter reflect the continued stabilisation of business activity in the Russian economy as a whole, and more predictable macroeconomic conditions following the volatility seen in the same period a year ago.

"The Group started 2016 with solid performance: net interest income more than doubled, and fee and commission income also grew strongly. Cost of risk and provision charges have reduced both year-on-year and quarter-on-quarter, as the Group continued to strengthen its risk management policies.

"VTB Group’s already strong capital adequacy ratios improved further, leaving us well-positioned to expand the business as the Russian economy moves back towards growth.

“We continue to focus on efficiency and streamlining our businesses as we seek to benefit from improvements in sentiment across the Russian economy. The recently completed integration of Bank of Moscow will generate further cost savings over time. VTB Bank’s position in the retail segment will be further strengthened by the nationwide roll-out of Post Bank, the joint venture with Russian Post announced at the beginning of this year.”

FINANCIAL AND OPERATING HIGHLIGHTS

Income Statement

RUB billion

1Q 2016

1Q 2015
(restated)

Change, %

Net interest income

98.3

44.4

121.4%

Net fee and commission income

17.4

15.4

13.0%

Operating income before provisions

111.1

84.9

30.9%

Provision charge*

(40.6)

(48.9)

(17.0%)

Staff costs and administrative expenses

(60.6)

(54.6)

11.0%

Net (loss) / profit

0.6

(18.3)

-

*Includes provision charge for impairment of debt financial assets and provision charge for impairment of other assets, credit related commitments and legal claims.

  • Net profit in 1Q 2016 was RUB 0.6 billion, supported by strong net interest income and solid growth of net fee and commission income.

  • VTB Group net interest income increased by 121.4% year-on-year to RUB 98.3 billion in 1Q 2016, due to higher interest income and a significant 19.2% year-on-year decline in interest expenses. After the Central Bank of Russia’s key rate spike in December 2014, the easing of monetary policy throughout 2015, combined with continued re-pricing of assets and liabilities, helped bring the net interest margin for 1Q 2016 to 3.4%, up from 1.6% in 1Q 2015 and 3.2% in 4Q 2015.

  • The stabilisation of business activity in Russia, combined with the strong fee-generating capabilities of the Group’s Retail business and transaction banking (as part of Corporate-Investment banking and Mid-Corporate banking), contributed to 13.0% year-on-year growth in net fee and commission income.

  • For 1Q 2016, the Group’s provision charge was RUB 40.6 billion, down 17.0% year-on-year. The Group’s cost of risk (the annualised ratio of the provision charge for loan impairment to average gross loans and advances to customers) was 1.5% in 1Q 2016, compared to 1.6% in 4Q 2015 and 2.2% in 1Q 2015.

  • Staff costs and administrative expenses for 1Q 2016 amounted to RUB 60.6 billion, an increase of 11.0% year-on-year. The Group’s annualised costs-to-average assets ratio was 1.8% for 1Q 2015, unchanged from 1Q 2015.

Statement of financial position

RUB billion

31 Mar 2016

31 Dec 2015

Change, % or p.p.

Total assets

12,801.2

13,641.9

(6.2%)

Loans and advances to customers, including pledged under repurchase agreements (gross)

9,257.9

10,110.0

(8.4%)

Gross loans to legal entities

7,270.4

8,150.0

(10.8%)

Gross loans to individuals

1,987.5

1,960.0

1.4%

Customer deposits

7,431.7

7,267.0

2.3%

Deposits from legal entities

4,607.3

4,383.6

5.1%

Deposits from individuals

2,824.4

2,883.4

(2.0%)

NPL ratio

7.2%

6.3%

9 p.p.

Tier 1 CAR

13.7%

12.4%

1.3 p.p.

Total CAR

15.6%

14.3%

1.3 p.p.

  • The Group’s loan book contracted by 8.4% during 1Q 2016, primarily as a result of a 10.8% decline in loans to legal entities to RUB 7,270.4 billion, partly driven by the strengthening of the Russian ruble in the period and the corresponding revaluation of loans denominated in US dollars and other currencies. Loans to individuals increased by 1.4% during the period, and stood at RUB 1,987.5 billion as of 31 March 2016.

  • Loan quality ratios were largely influenced by the contraction in loans to legal entities. The Group’s NPL ratio was 7.2% of gross customer loans, including those pledged under repurchase agreements (the “total loan book”), as of 31 March 2016, compared to 6.3% as of 31 December 2015. The allowance for loan impairments was 7.3% of the total loan book as of the end of 1Q 2016, versus 6.7% as of 31 December 2015. The NPL coverage ratio remained at a comfortable 102.3% at 31 March 2016, compared to 105.8% as of 31 December 2015.

  • Customer deposits grew by 2.3% in 1Q 2016, driven by an inflow of corporate deposits. As of 31 March 2016, the Group’s market share in retail and corporate deposits stood at 10.8% and 21.8%, respectively.

  • The Group continued to reduce its reliance on wholesale funding, with the share of debt securities issued in total liabilities falling to 4.5% as of 31 March 2016, from 5.1% as of 31 December 2015. Since the beginning of 2016, VTB and its subsidiaries made repayments on their international public debt amounting to a total of USD 2.2 billion.

  • VTB maintained solid capital adequacy ratios supported by four straight quarters of profitable growth. As of 31 March 2016, the Group’s total and Tier 1 capital adequacy ratios rose to 15.6% and 13.7%, respectively, versus 14.3% and 12.4% as of 31 December 2015.