OREANDA-NEWS. VTB, Russia’s leading universal banking group, has today announced its consolidated IFRS financial results for 1H2007.

By the end of June 2007, the VTB Group’s total assets increased by 26.4% to US$66,223 million. Total gross loan portfolio of the Group grew by 21.7% to US$36,811 million, with loans to individuals up by 62.1% outperforming market averages. Net interest income before provisions increased by 26.4% year-on-year to US$1,004 million, and net fee and commission income went up by 65.8% amounting to US$267 million. In the reporting period, operating income of the Group increased by 14.2% to US$1,477 million from US$1,293 million in the first six months of 2006.

Financial Highlights

Profit and Loss Account (as compared to 6M2006):

Interest income increased to US$2,235 million, up 36.4% and fee and commission income increased to US$300 million, up 64.8%;

Net interest income before provisions increased to US$1,004 million, up 26.4% or US$210 million;

Net fee and commission income increased to US$267 million, up 65.8% or US$106 million. Adjusted for IPO related depositary appointment fee in the amount of US$57 million net fee and commission income grew by 30.4% to US$210 million, reaching 14.8% of operating income in the first half of 2007;

The Group’s effective taxation rate (consolidated) in the first six months of 2007 increased to 24% from 16% in the comparable period of 2006, reflecting gradual substitution of non-taxable FX and securities gains by interest and commission income;

Consolidated net profit for 6M2007 amounted to US$504 million, down 12.5%, mostly due to a decrease in securities gains, which in 6M2006 included income from sale of KamAZ shares in the amount of US$116 million;

Earnings per share stood at US$8.6 per 100,000 shares as compared to US$10.6 in the comparable period of 2006.

Assets and Funding (as compared to December 31, 2006):

Total gross loans and advances to customers increased by 21.7% to US$36,811 million. Gross loans to individuals grew strongly by US$1,573 million or 62.1% and totaled US$4,106 million. The share of loans to individuals in total gross loan portfolio increased to 11% by the end of June 2007 compared to 8% at the end of December 31, 2006. Corporate loan portfolio (gross) increased by 18.1% to US$32,705 million from US$27,702 at the end of 2006;

Securities portfolio totaled US$14,055 million as compared to US$8,957 million (including approximately 5% of shares of European Aeronautic Defense and Space Company (EADS));

Customer deposits increased to US$25,083 million, up 25.5%, with deposits of individuals up by 21.2% to US$8,876;

Wholesale funding (which includes debt securities issued, other borrowed funds and subordinated debt) increased by 10.8% to US$19,053 million. The major debt transactions closed in the first half of 2007 include: VTB EUR 1,000 million Eurobond with a floating rate of EURIBOR + 0.6% p.a. maturing in March 2009, VTB GBP 300 million Eurobond with an interest rate of 6.332% p.a. maturing in March 2010, and VTB Europe US$500 million Floating Rate Notes at LIBOR+0.625% p.a. maturing in April 2009.

6M2007 Important Events:

VTB completed the Initial Public Offering (IPO) of its shares in May 2007. On 24 May 2007, the Central Bank of Russia registered the issuance of 1,513,026,109,019 additional ordinary shares by VTB (22.5% of VTB number of shares after the increase) with a nominal value of RUR 0.01 each. The offer price per share was RUR 0.136 (USD 0.00528). The total number of shares placed in the form of GDRs was 983,387,340,000. Each GDR is worth 2,000 shares. The PO proceeds totalled US$7,977 million.

Vneshtorgbank was officially renamed to JSC VTB Bank;

OJSC Industry and Construction Bank was renamed into OJSC Bank VTB North-West;

Banco VTB Africa SA with 66% shareholding of VTB started its operations in Angola in March 2007.

6M2007 Major Acquisitions:

VTB purchased 50% plus one of the share capital of the CJSC Slavneftebank in Belarus for US$25 million in April 2007;

VTB purchased 25% plus one share in OJSC Terminal for US$40 million in March 2007.