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VTB Group announces IFRS results for August 2015 and eight months ended 31 August 2015

 
28 September 2015

VTB Bank (“VTB or “the Bank”), the parent company of VTB Group (“the Group”), today publishes its unaudited consolidated IFRS results for August 2015 and eight months ended 31 August 2015. 

Herbert Moos, Deputy Chairman of the Management Board, said: “In August we saw a continuation of the positive trends seen in the second quarter, with a further recovery of VTB Group’s net interest margin, normalisation of the cost of risk, and a slowdown in cost inflation. Moreover, the Group’s loan book resumed its growth, more than compensating for the decline in the first half of the year, which puts us well on track to deliver our full-year growth plans. The issue of preference shares substantially strengthened our capital position in line with the Group’s strategic objectives, making our business stronger and even more resilient.”

Income Statement:

  • Net profit in August 2015 was RUB 0.4 billion, further reducing the year-to-date net loss to RUB 14.6 billion;
  • The Group’s August performance was supported by an improved net interest margin (3.2% in August 2015 versus 2.1% in 1H 2015) and healthy net fee and commission income (RUB 6.3 billion in August and RUB 44.9 billion for the first eight months of 2015, up 43.2% and 20.1% year-on-year, respectively);
  • Net operating income before provisions for the first eight months of 2015 was RUB 255.1 billion, down 14.5% year-on-year;
  • The Group’s conservative risk policies and tighter origination standards led to a 17.6% year-on-year decrease in total provision charges in January-August 2015. Total provision charges for impairment of debt financial assets and for impairment of other assets, credit related commitments and legal claims amounted to RUB 109.7 billion, versus RUB 133.2 billion in January-August 2014;
  • Cost of risk was 1.8% in August 2015 and 1.7% in 8M 2015, down from 2.8% in August 2014 and 2.6% in 8M 2014;
  • Staff costs and administrative expenses amounted to RUB 19.6 billion in August and RUB 155.0 billion for 8M 2015, up 4.8% and 5.3% year-on-year, respectively. The Group’s costs continue to grow at a rate substantially below inflation, due to various cost control initiatives across key business lines;
  • The Group’s cost-to-income ratio in August was close to target and amounted to 51.2%, due to a combination of improved operating performance and strict cost control.

Statement of Financial Position:

  • Total assets grew 6.3% in August and 7.1% in January-August 2015, to RUB 13,057 billion;
  • In August 2015, gross loans and advances to customers increased 5.0%, the growth for the first eight months of 2015 was 3.9%. Growth was driven by new loan issuance, as well as the revaluation of the of the Group’s FX-denominated loans, since the Russian Rouble weakened against the US Dollar and Euro;
  • In August 2015, gross loans to legal entities grew 6.1% (up 5.3% year-to-date at 31 August 2015), and gross loans to individuals grew 1.0% (down 1.5% year-to-date);
  • The NPL ratio was 6.9% of total gross loans at 31 August 2015, down 10 bps from the end-June level;
  • NPL coverage ratio at 31 August 2015 remained at a solid 107.1% (30 June 2015: 109.0%);
  • Total customer deposits grew 9.9% in August and 23.0% in 8M 2015, and amounted to RUB 6,975 billion at 31 August 2015. Corporate and retail deposit funding performed similarly, growing by 11.1% and 7.9% in August (24.5% and 20.6% year-to-date), respectively;
  • The Group continued to reduce its reliance on wholesale funding, with the share of debt securities issued in total liabilities falling to 6.0% at 31 August 2015 (30 June 2015: 6.5%, 31 December 2014: 8.3%);
  • The adjusted loan-to-deposit ratio remained at a comfortable 102.9% as of 31 August 2015 (30 June 2015: 99.5%, 31 December 2014: 113.4%);
  • In July 2015, VTB Bank completed an issuance of class A preference shares in the amount of RUB 307 billion, significantly strengthening the Group’s capital base. At 31 August 2015, Tier 1 CAR was 12.8% (end-June 2015: 10.1%), and Total CAR was 15.3% (end-June 2015: 12.4%).
 

VTB Group IFRS Unaudited Financial Highlights as of 31 August 2015

P&L highlights (in RUB bn) Aug’15 Aug’14 y-o-y 8m’2015 8m’2014 y-o-y
Net interest income 30.8 28.5 8.1% 171.7 236.3 -27.3%
Net fee and commission income 6.3 4.4 43.2% 44.9 37.4 20.1%
Other operating income 0.9 0.1 800.0% 38.5 24.6 56.5%
Net operating income before provisions 38.0 33.0 15.2% 255.1 298.3 -14.5%
Provision charge for impairment -14.8 -23.1 -35.9% -109.7 -133.2 -17.6%
Staff costs and administrative expenses -19.6 -18.7 4.8% -155.0 -147.2 5.3%
Profit / loss before tax 3.6 -8.8 -140.9% -9.6 17.9 -153.6%
Income tax (expense) / benefit -3.2 0.6 -633.3% -5.0 -14.7 -66.0%
Net profit / (loss) 0.4 -8.2 -104.9% -14.6 3.2 -556.3%
Performance indicators Aug’15 Aug’14 y-o-y 8m’2015 8m’2014 y-o-y
NIM 3.2% 3.9% -70 bps 2.4% 4.3% -190 bps
NCM 0.6% 0.5% 10 bps 0.5% 0.6% -10 bps
CoR 1.8% 2.8% -100 bps 1.7% 2.6% -90 bps
CIR 51.2% 56.6% -540 bps 60.2% 49.9% 1030 bps
Cost / Assets 1.9% 2.3% -40 bps 1.9% 2.3% -40 bps
ROA 0.0% -1.0% 100 bps -0.2% 0.1% -30 bps
ROE 0.3% -10.4% 1070 bps -1.9% 0.5% -240 bps
Balance sheet highlights (in RUB bn) 31.08.2015 31.07.2015 31.12.2014 m-o-m ytd
Cash and short-term funds 502.7 554.7 695.2 -9.4% -27.7%
Financial assets 945.3 811.2 997.9 16.5% -5.3%
Due from other banks, including pledged under repurchase agreements 1,531.0 1,302.5 814.5 17.5% 88.0%
Loans and advances to customers, including pledged under repurchase agreements (gross) 9,502.8 9,050.7 9,150.4 5.0% 3.9%
— Loans to legal entities, gross 7,586.4 7,153.2 7,205.3 6.1% 5.3%
— Loans to individuals, gross 1,916.4 1,897.5 1,945.1 1.0% -1.5%
Allowance for impairment -701.5 -677.8 -613.1 3.5% 14.4%
Other assets 1,276.9 1,246.4 1,145.9 2.4% 11.4%
Total assets 13,057.2 12,287.7 12,190.8 6.3% 7.1%
Due to other banks and Other borrowed funds 2,945.4 2,976.7 3,462.4 -1.1% -14.9%
Customer deposits 6,974.8 6,348.2 5,669.4 9.9% 23.0%
— Deposits of legal entities 4,382.0 3,945.0 3,520.3 11.1% 24.5%
— Deposits of individuals 2,592.8 2,403.2 2,149.1 7.9% 20.6%
Debt securities issued 700.4 651.7 921.4 7.5% -24.0%
Subordinated debt 310.2 282.6 265.2 9.8% 17.0%
Other liabilities 691.9 624.4 741.4 10.8% -6.7%
Total liabilities 11,622.7 10,883.6 11,059.8 6.8% 5.1%
Total equity 1,434.5 1,404.1 1,131.0 2.2% 26.8%
Balance sheet and asset quality indicators 31.08.2015 31.07.2015 31.12.2014 m-o-m ytd
NPL ratio 6.9% 7.0% 5.8% -10 bps 110 bps
NPL coverage 107.1% 106.8% 114.8% 30 bps -770 bps
Adjusted LDR 102.9% 102.1% 113.4% 80 bps -1050 bps
LDR 126.2% 131.9% 150.6% -570 bps -2440 bps
Leverage 8.1 7.8 9.8 3.8% -17.3%
Tier 1 CAR 12.8% 13.3% 9.8% -50 bps 300 bps
Total CAR 15.3% 15.6% 12.0% -30 bps 330 bps

 

VTB Group IFRS Unaudited Financial Highlights as of 31 August 2015 (Analysis by Segment)

P&L highlights

(in RUB bn)
CIB Mid-corporate Retail Treasury Corporate center Other(1) Total
Net interest income before treasury result allocation 100.9 23.8 101.8 -46.9 - -7.9 171.7
Treasury result allocation -68.1 -3.4 2.9 74.7 - -6.1 -
Net interest income, including treasury result allocation 32.8 20.4 104.7 27.8 - -14.0 171.7
Net fee and commission income 9.8 7.9 26.4 0.2 - 0.6 44.9
Other operating income 60.3 1.4 19.2 -26.8 0.5 -16.1 38.5
Net operating income before provisions 102.9 29.7 150.3 1.2 0.5 -29.5 255.1
Provision charge for impairment of debt financial assets -15.9 -21.3 -67.9 2.3 - - -102.8
Provision charge for impairment of other assets, contingencies and credit related commitments -5.3 -0.7 -0.8 -0.1 - - -6.9
Staff costs and administrative expenses -43.3 -17.9 -81.7 -3.4 -10.6 1.9 -155.0
Segment result: profit before taxation 38.4 -10.2 -0.1 - -10.1 -27.6 -9.6
Income tax expense -12.8 2.0 0.9 - 1.5 3.4 -5.0
Net profit 25.6 -8.2 0.8 - -8.6 -24.2 -14.6
Balance sheet highlights

(in RUB bn)
СIB Mid-corporate Retail Treasury Corporate center Other(1) Total
Cash and short-term funds 33.2 0.5 141.1 326.4 - 1.5 502.7
Due from other banks 579.2 —  95.5 834.5 - 21.8 1,531.0
Loans and advances to customers (net) 5,573.6 706.3 1,920.2 587.0 - 14.2 8,801.3
Loans and advances to customers (gross) 5,924.6 787.4 2,167.2 609.3 - 14.3 9,502.8
Allowance for impairment -351.0 -81.1 -247.0 -22.3 - -0.1 -701.5
Other financial instruments 579.4 2.4 64.4 203.8 - 95.3 945.3
Other assets items 493.4 84.6 189.8 74.9 19.4 414.8 1,276.9
Net amount of intersegment settlements —  4.3 1,149.8 1,899.1 - -3,053.2 — 
Segment assets 7,258.8 798.1 3,560.8 3,925.7 19.4 -2,505.6 13,057.2
Due to other banks and other borrowed funds 228.4 0.6 142.8 2,563.9 - 9.7 2,945.4
Customer deposits 3,080.9 626.2 2,998.3 264.1 - 5.3 6,974.8
Debt securities issued 26.0 31.8 52.9 587.8 - 1.9 700.4
Subordinated debt —  —  2.2 308.0 - —  310.2
Other liabilities items 411.5 9.1 64.8 19.2 - 187.3 691.9
Net amount of intersegment settlements 2,695.0 —  —  —  - -2,695.0 — 
Segment liabilities 6,441.8 667.7 3,261.0 3,743.0 - -2,490.8 11,622.7

(1) Including segment "Other" and intersegment eliminations

 

Definitions

Net operating income before provisions Calculated including profit from subsidiaries acquired with a view to resale
NIM Net interest income divided by average interest earning assets, which include gross loans and advances to customers, due from other banks (gross), debt securities and correspondent accounts with other banks
NCM Net commission income divided by average total assets
CoR Provision charge for loan impairment divided by average gross loans and advances to customers
CIR Staff costs and administrative expenses divided by operating income before provisions, excluding profit from subsidiaries acquired with a view to resale
NPL ratio Non-performing loans represent impaired loans with repayments overdue by over 90 days. NPLs are calculated including the entire principal and interest payments. Ratio is calculated to total gross loans including pledged under repurchase agreements
LDR Net loans divided by customer deposits
Adjusted LDR Net loans divided by customer deposits and collateralised funding from the CBR
Leverage Total liabilities divided by total equity
Total CAR The Group’s international risk based capital adequacy ratio is computed in accordance with the Basel Accord guidelines issued in 1988, with subsequent amendments including the amendment to corporate market risks

The unaudited financial information set forth above has been prepared in accordance with IFRS principles but may include certain approximations and where relevant extrapolation of quarter-end data. It is preliminary and subject to adjustments and modifications that may be identified when audit and/or review work is performed on quarter-end and/or year-end financial statements of VTB Bank and its subsidiaries (the “Group”). Such adjustments and modifications could result in significant differences from this preliminary unaudited financial information.

Some of the information in this release may contain projections or other forward-looking statements regarding future events or the future financial performance of the Group. Such forward-looking statements are based on numerous assumptions regarding the Group’s present and future business strategies and the environment in which the Group will operate in the future. These statements are not guarantees of future performance and involve risks, uncertainties and other important factors which cannot be predicted with certainty, and the actual outcomes and results may materially differ from what is expressed or forecasted in the forward-looking statements. These forward-looking statements speak only as at the date of this release and are subject to change without notice. These statements will not be updated to make them conform with actual results.

 


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