As stated during our FY 2007 conference call, the VTB Group has continued to monitor the performance of its securities portfolio carefully. The Group believes that it is undertaking a prudent risk management strategy with a medium-term aim to reduce overall earnings volatility. In connection with this strategy, the Group has realized a loss on its securities portfolio, which will be charged against its profit and loss account in the first quarter of 2008. The Group has also made mark-to-market adjustments to the value of securities in the portfolio. The combined effect of these charges is expected to be a loss from the securities portfolio exceeding $400 million in the quarter.
As a consequence, net profit for the first quarter of 2008 will remain positive, but significantly below the results for the first quarter of 2007.
The underlying businesses continue to perform strongly with a growth in core income, and net interest margins have been maintained. The Group's balance sheet remains strong with satisfactory growth in loans and deposits. There is good momentum within the business and access to the international and domestic bond markets has been recently re-established with healthy appetite for both short and long-dated paper.
VTB CFO and Member of the Management Board Nikolai Tsekhomsky said:
"Despite this short-term effect, which reflects both the volatility in the securities markets and our strong risk controls, our underlying momentum remains with good growth in our corporate and retail businesses. We are confident that the Group remains on track to meet its goals for the full year, and we are on target to achieve our strategic goals for 2010."
The VTB Group expects to release detailed results for the first quarter of 2008 according to IFRS on July, 16 2008.
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About VTB Bank:
JSC VTB Bank and its subsidiaries (the VTB Group or the Group) is a leading Russian banking group, offering a wide range of banking services and products across Russia, certain CIS countries and in selected countries of Western Europe, Asia and Africa.
As of December 31, 2007 the Group had a network of 583 branches located across Russia, comprised of 152 branches of VTB, 328 branches of VTB24 and 103 branches of VTB North-West. Outside of Russia, the Group operates through four subsidiary banks located in the CIS (Armenia, Georgia, Ukraine and Belarus), six subsidiary banks located in Europe (UK, France, Germany, Austria, Switzerland and Cyprus), one subsidiary bank and one financial company in Africa (Angola, Namibia), and an associated bank in Vietnam. VTB also has a presence in Singapore through a branch of its UK subsidiary. VTB has operated under a full banking license, № 1000, from the Central Bank of the Russian Federation since 1990.
The Group's business franchise is in the areas of corporate, retail and investment banking. In corporate banking, the Group provides a broad range of commercial banking services and products including corporate lending, foreign trade transactions, syndicated loans, deposit and settlement services, as well as custody services, leasing and treasury services to large- and medium-sized corporations and financial institutions. In retail banking, VTB offers financial services, including deposit accounts, lending and certain ancillary services, to individuals and small-sized corporations. In investment banking it provides debt capital markets underwriting, project financing, merger and acquisition financing, advisory services, asset management and venture funds.
The Group had 35,945 employees as of December 31, 2007. The Government of the Russian Federation is VTB's main shareholder and owns, through the Federal Property Management Agency, 77.5 % of its registered share capital. For more information please visit www.vtb.com
Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of VTB. You can identify forward-looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might" the negative of such terms or other similar expressions. These statements are only predictions and actual events or results may differ materially. VTB does not intend to or undertake any obligation to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in VTB's projections or forward-looking statements, including, among others, general economic conditions, VTB's competitive environment, risks associated with operating in Russia, rapid technological and market change, and other factors specifically related to VTB and its operations.
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Information contained in this document is not an offer, or an invitation to make offers, sell, purchase, exchange or transfer any securities in Russia or to or for the benefit of any Russian person or any person in Russia, and does not constitute an advertisement of any securities in Russia.